EXHIBIT 4.3
[Conformed Copy with Xxxxxxxx X, X-0, X-0
X-0 and I-2 Conformed as Executed]
AMENDED AND RESTATED CREDIT AGREEMENT
among
HOSIERY CORPORATION OF AMERICA, INC.,
VARIOUS LENDING INSTITUTIONS,
and
BANKERS TRUST COMPANY,
AS AGENT
------------------------------------
$85,000,000
Page
SECTION 1. Amount and Terms of Credit.............................. 1
1.01 Commitment.............................................. 1
1.02 Minimum Borrowing Amounts, etc.......................... 3
1.03 Notice of Borrowing..................................... 4
1.04 Disbursement of Funds................................... 5
1.05 Register................................................ 5
1.06 Conversions............................................. 6
1.07 Pro Rata Borrowings..................................... 6
1.08 Interest................................................ 6
1.09 Interest Periods........................................ 7
1.10 Increased Costs, Illegality, etc........................ 8
1.11 Compensation............................................ 10
1.12 Change of Lending Office................................ 11
1.13 Replacement of Banks.................................... 11
SECTION 2. Letters of Credit....................................... 12
2.01 Letters of Credit....................................... 12
2.02 Minimum Stated Amount................................... 13
2.03 Letter of Credit Requests; Notices of Issuance.......... 13
2.04 Agreement to Repay Letter of Credit Drawings............ 14
2.05 Letter of Credit Participations......................... 14
2.06 Increased Costs......................................... 17
SECTION 3. Fees; Commitments....................................... 18
3.01 Fees.................................................... 18
3.02 Voluntary Reduction of Commitments...................... 19
3.03 Mandatory Adjustments of Commitments, etc............... 19
SECTION 4. Payments................................................ 19
4.01 Voluntary Prepayments................................... 19
4.02 Mandatory Prepayments................................... 20
4.03 Method and Place of Payment............................. 23
4.04 Net Payments............................................ 24
SECTION 5. Conditions Precedent.................................... 26
5.01 Conditions Precedent to Restatement Effective Date...... 26
(a) Effectiveness; Notes..................................... 26
(b) Opinions of Counsel...................................... 26
(i)
Page
(c) Corporate Proceedings.................................... 26
(d) Initial Borrowing Base Certificate....................... 27
(e) Original Credit Agreement................................ 27
(f) Subsidiary Guaranty...................................... 27
(g) Security Documents....................................... 27
(h) Solvency................................................. 28
(i) Insurance Policies....................................... 28
(j) Fees..................................................... 28
(k) Consent Letter........................................... 28
5.02 Conditions Precedent to All Credit Events..................... 28
(a) Notice of Borrowing; Letter of Credit Request............ 28
(b) No Default; Representations and Warranties............... 29
SECTION 6. Representations, Warranties and Agreements.............. 29
6.01 Corporate Status........................................ 29
6.02 Corporate Power and Authority........................... 29
6.03 No Violation............................................ 30
6.04 Litigation.............................................. 30
6.05 Use of Proceeds; Margin Regulations..................... 30
6.06 Governmental Approvals.................................. 31
6.07 Investment Company Act.................................. 31
6.08 Public Utility Holding Company Act...................... 31
6.09 True and Complete Disclosure............................ 31
6.10 Financial Condition; Financial Statements............... 31
6.11 Security Interests...................................... 32
6.12 Tax Returns and Payments................................ 33
6.13 Compliance with ERISA................................... 33
6.14 Subsidiaries............................................ 34
6.15 Patents, etc............................................ 34
6.16 Pollution and Other Regulations......................... 34
6.17 Properties.............................................. 35
6.18 Labor Relations......................................... 35
6.19 Senior Subordinated Notes............................... 36
6.20 Existing Indebtedness................................... 36
SECTION 7. Affirmative Covenants................................... 36
7.01 Information Covenants................................... 36
(a) Annual Financial Statements...................... 36
(b) Quarterly Financial Statements................... 37
(ii)
Page
(c) Monthly Reports.................................. 37
(d) Budgets; etc..................................... 37
(e) Officer's Certificates........................... 37
(f) Notice of Default or Litigation.................. 38
(g) Borrowing Base Certificates...................... 38
(h) Auditors' Reports................................ 38
(i) Environmental Matters............................ 38
(j) Other Information................................ 39
7.02 Books, Records and Inspections.......................... 39
7.03 Insurance............................................... 39
7.04 Payment of Taxes........................................ 40
7.05 Consolidated Corporate Franchises....................... 40
7.06 Compliance with Statutes, etc........................... 40
7.07 ERISA................................................... 40
7.08 Good Repair............................................. 41
7.09 End of Fiscal Years; Fiscal Quarters.................... 41
7.10 Use of Proceeds......................................... 42
7.11 Additional Security; Further Assurances................. 42
7.12 Dividends on PIK Preferred Stock........................ 42
7.13 Compliance with Environmental Laws...................... 42
SECTION 8. Negative Covenants...................................... 43
8.01 Changes in Business..................................... 43
8.02 Consolidation, Merger, Sale or Purchase of Assets,
etc................................................... 43
8.03 Liens................................................... 45
8.04 Indebtedness............................................ 46
8.05 Capital Expenditures.................................... 47
8.06 Advances, Investments and Loans......................... 48
8.07 Leases.................................................. 49
8.08 Prepayments of Indebtedness, etc........................ 49
8.09 Dividends, etc.......................................... 49
8.10 Transactions with Affiliates............................ 51
8.11 Fixed Charge Coverage Ratio............................. 51
8.12 Minimum Consolidated EBITDA............................. 52
8.13 Leverage Ratio.......................................... 53
8.14 Issuance of Stock....................................... 53
SECTION 9. Events of Default....................................... 53
9.01 Payments................................................ 53
9.02 Representations, etc.................................... 53
9.03 Covenants............................................... 53
(iii)
Page
9.04 Default Under Other Agreements.......................... 54
9.05 Bankruptcy, etc......................................... 54
9.06 ERISA................................................... 55
9.07 Security Documents...................................... 55
9.08 Subsidiary Guaranty..................................... 55
9.09 Judgments............................................... 55
SECTION 10. Definitions............................................ 56
SECTION 11. The Agent.............................................. 80
11.01 Appointment............................................ 80
11.02 Nature of Duties....................................... 80
11.03 Lack of Reliance on the Agent.......................... 80
11.04 Certain Rights of the Agent............................ 81
11.05 Reliance............................................... 81
11.06 Indemnification........................................ 81
11.07 The Agent in Its Individual Capacity................... 82
11.08 Holders................................................ 82
11.09 Resignation by the Agent............................... 82
SECTION 12. Miscellaneous.......................................... 83
12.01 Payment of Expenses, etc............................... 83
12.02 Right of Setoff........................................ 83
12.03 Notices................................................ 84
12.04 Benefit of Agreement................................... 84
12.05 No Waiver; Remedies Cumulative......................... 86
12.06 Payments Pro Rata...................................... 86
12.07 Calculations; Computations............................. 87
12.08 Governing Law; Submission to Jurisdiction; Venue;
Waiver of Jury Trial.................................. 87
12.09 Counterparts........................................... 88
12.10 Effectiveness.......................................... 88
12.11 Headings Descriptive................................... 88
12.12 Amendment or Waiver.................................... 88
12.13 Survival............................................... 89
12.14 Domicile of Loans...................................... 89
12.15 Confidentiality........................................ 89
12.16 Register............................................... 89
(iv)
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Existing Letters of Credit
ANNEX IV -- Government Approvals
ANNEX V -- Subsidiaries
ANNEX VI -- Properties
ANNEX VII -- Existing Indebtedness
ANNEX VIII -- Insurance Policies
ANNEX IX -- Existing Liens
ANNEX X -- Management Fees
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B-1 -- Form of Term Note
EXHIBIT B-2 -- Form of Revolving Note
EXHIBIT B-3 -- Form of Swingline Note
EXHIBIT C -- Form of Letter of Credit Request
EXHIBIT D-1 -- Form of Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx
EXHIBIT D-2 -- Form of Opinion of White & Case
EXHIBIT E -- Form of Officers' Certificate
EXHIBIT F -- Form of Borrowing Base Certificate
EXHIBIT G -- Form of Subsidiary Guaranty
EXHIBIT H-1 -- Form of Borrower Pledge Agreement
EXHIBIT H-2 -- Form of Subsidiary Guarantor Pledge Agreement
EXHIBIT I-1 -- Form of Borrower Security Agreement
EXHIBIT I-2 -- Form of Subsidiary Guarantor Security Agreement
EXHIBIT J -- Form of Solvency Certificate
EXHIBIT K -- Form of Consent Letter
EXHIBIT L -- Form of Assignment Agreement
(v)
AMENDMENT AND RESTATEMENT, dated as of November 20, 1997, to CREDIT
AGREEMENT, dated as of October 17, 1994, among HOSIERY CORPORATION OF AMERICA,
INC. (the "Borrower"), a Delaware corporation, the lending institutions listed
from time to time on Annex I hereto (each, a "Bank" and, collectively, the
"Banks"), and BANKERS TRUST COMPANY, as Agent (the "Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 10 are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower and certain financial institutions are parties
to a Credit Agreement, dated as of October 17, 1994 (as the same has been
amended, modified or supplemented prior to the date hereof, the "Original Credit
Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the
Original Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows, provided if the Restatement Effective Date has not occurred on or prior
to the Expiration Date, this amendment and restatement shall be void and of no
further effect, with the Original Credit Agreement to remain in effect;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitment. Subject to and upon the terms and conditions herein
set forth, each Bank severally agrees to make a loan or loans (each, a "Loan"
and, collectively, the "Loans") to the Borrower, which Loans shall be drawn, to
the extent such Bank has a commitment under such Facility, under the Term
Facility and the Revolving Facility, as set forth below:
(a) Loans under the Term Facility (each, a "Term Loan" and,
collectively, the "Term Loans") (i) shall be made pursuant to a single
drawing on the Restatement Effective Date, (ii) may be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans
provided that all Term Loans outstanding as part of the same Borrowing
shall unless specifically provided herein, consist of Term Loans of the
same Type and (iii) shall not exceed in aggregate principal amount for any
TF Bank at the time of incurrence thereof the Term Commitment of such Bank
in effect on such date. Once repaid, Term Loans borrowed hereunder may not
be reborrowed.
(b) Loans under the Revolving Facility (each, a "Revolving Loan"
and, collectively, the "Revolving Loans") (i) shall be made at any time
and from time to time on and after the Restatement Effective Date and
prior to the Final Maturity Date, (ii) except as hereinafter provided,
may, at the option of the Borrower, be incurred and maintained as, and/or
converted into, Base Rate Loans or Eurodollar Loans, provided that all
Revolving Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Revolving Loans of the same Type,
(iii) may be repaid and reborrowed in accordance with the provisions
hereof, (iv) shall not exceed for all XX Xxxxx at any time outstanding
that aggregate principal amount which, when combined with the aggregate
principal amount of all Swingline Loans then outstanding, the Borrowing
Base at such time and (v) shall not exceed for any RC Bank at any time
outstanding that aggregate principal amount which, when combined with the
aggregate outstanding principal amount of all other Revolving Loans of
such Bank and such Bank's Adjusted RC Percentage of the sum of (x) the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of Revolving Loans) at such time and (y) the
outstanding principal amount of Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time,
equals (1) if such RC Bank is a Non-Defaulting Bank, the Adjusted
Revolving Commitment of such RC Bank at such time and (2) if such RC Bank
is a Defaulting Bank, the Revolving Commitment of such RC Bank at such
time.
(c) Subject to and upon the terms and conditions herein set forth,
BTCo in its individual capacity agrees to make at any time and from time
to time after the Restatement Effective Date and prior to the Swingline
Expiry Date, a loan or loans to the Borrower (each, a "Swingline Loan",
and, collectively, the "Swingline Loans"), which Swingline Loans (i) shall
be made and maintained as Base Rate Loans, (ii) may be repaid and
reborrowed in accordance with the provisions hereof, (iii) shall not
exceed in aggregate principal amount at any time outstanding, when
combined with the aggregate principal amount of all Revolving Loans made
by Non-Defaulting Banks then outstanding and the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time, an amount equal to the
Adjusted Total Revolving Commitment then in effect (after giving effect to
any reductions to the Adjusted Total Revolving Commitment on such date),
(iv) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of all
Revolving Loans then outstanding, the Borrowing Base at such time and (v)
shall not exceed in aggregate principal amount at any time outstanding the
Maximum Swingline Amount. BTCo will not make a Swingline Loan after it has
received written notice from the Required Banks that one or more of the
applicable conditions to Credit Events specified in Section 5.02 are not
then satisfied.
2
(d) On any Business Day, BTCo may, in its sole discretion, give
notice to the XX Xxxxx that its outstanding Swingline Loans shall be
funded with a Borrowing of Revolving Loans (provided that each such notice
shall be deemed to have been automatically given upon the occurrence of an
Event of Default under Section 9.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 9), in which case a
Borrowing of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the immediately
succeeding Business Day by all XX Xxxxx pro rata based on each RC Bank's
Adjusted RC Percentage, and the proceeds thereof shall be applied directly
to repay BTCo for such outstanding Swingline Loans. Each RC Bank hereby
irrevocably agrees to make Base Rate Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified in writing
by BTCo notwithstanding (i) that the amount of the Mandatory Borrowing may
not comply with the Minimum Borrowing Amount otherwise required hereunder,
(ii) whether any conditions specified in Section 5.02 are then satisfied,
(iii) whether a Default or an Event of Default has occurred and is
continuing, (iv) the date of such Mandatory Borrowing and (v) any
reduction in the Total Revolving Commitment or the Adjusted Total
Revolving Commitment or the Borrowing Base after any such Swingline Loans
were made. In the event that any Mandatory Borrowing cannot for any reason
be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code in respect of the Borrower), each RC Bank (other than
BTCo) hereby agrees that it shall forthwith purchase from BTCo (without
recourse or warranty) such assignment of the outstanding Swingline Loans
as shall be necessary to cause the XX Xxxxx to share in such Swingline
Loans ratably based upon their respective Adjusted RC Percentages,
provided that all interest payable on the Swingline Loans shall be for the
account of BTCo until the date the respective assignment is purchased and,
to the extent attributable to the purchased assignment, shall be payable
to the RC Bank purchasing same from and after such date of purchase.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
of each Borrowing under a Facility shall not be less than the Minimum Borrowing
Amount for such Facility. The aggregate principal amount of each Borrowing of
Swingline Loans shall not be less than $100,000, and, if greater, shall be in an
integral multiple of $50,000. More than one Borrowing may be incurred on any
day, provided that at no time shall there be outstanding more than seven
Borrowings of Eurodollar Loans.
3
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to incur
Loans under any Facility (excluding Borrowings of Swingline Loans and Mandatory
Borrowings), it shall give the Agent at its Notice Office, prior to 10:00 A.M.
(New York time), at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Eurodollar
Loans and at least one Business Day's prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Base Rate Loans to be made
hereunder. Each such notice (each, a "Notice of Borrowing") shall be in the form
of Exhibit A and shall be irrevocable and shall specify (i) the Facility
pursuant to which such Borrowing is being made, (ii) the aggregate principal
amount of the Loans to be made pursuant to such Borrowing, (iii) the date of
Borrowing (which shall be a Business Day) and (iv) whether the respective
Borrowing shall consist of Base Rate Loans or (to the extent permitted)
Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Agent shall promptly give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters covered by the
Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo, prior to 10:00 A.M. (New York
time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in each
case (x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(d), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section 1.01(d).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent, BTCo (in the case of a Borrowing of Swingline Loans) or the Letter of
Credit Issuer (in the case of the issuance of Letters of Credit), as the case
may be, may prior to receipt of written confirmation act without liability upon
the basis of such telephonic notice, believed by the Agent, BTCo or the Letter
of Credit Issuer in good faith to be from an Authorized Officer of the Borrower.
In each such case, the Borrower hereby waives the right to dispute the Agent's,
BTCo's or the Letter of Credit Issuer's record of the terms of such telephonic
notice.
4
1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing or each notice described
in Section 1.03(b)(i) or (ii), each Bank with a Commitment under the respective
Facility will make available its pro rata share of each Borrowing requested to
be made on such date (or in the case of Swingline Loans, BTCo shall make
available the full amount thereof) in the manner provided below. All such
amounts shall be made available to the Agent in U.S. dollars and immediately
available funds at the Payment Office and the Agent promptly will make available
to the Borrower by depositing to its account at the Payment Office the aggregate
of the amounts so made available in the type of funds received. Unless the Agent
shall have been notified by any Bank prior to the date of Borrowing that such
Bank does not intend to make available to the Agent its portion of the Borrowing
or Borrowings to be made on such date, the Agent may assume that such Bank has
made such amount available to the Agent on such date of Borrowing, and the
Agent, in reliance upon such assumption, may (in its sole discretion and without
any obligation to do so) make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Agent by such
Bank and the Agent has made available same to the Borrower, the Agent shall be
entitled to recover such corresponding amount from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Agent's demand therefor,
the Agent shall promptly notify the Borrower, and the Borrower shall immediately
pay such corresponding amount to the Agent. The Agent shall also be entitled to
recover on demand from such Bank or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the date
such corresponding amount is recovered by the Agent, at a rate per annum equal
to (x) if paid by such Bank, the overnight Federal Funds Effective Rate or (y)
if paid by the Borrower, the then applicable rate of interest, calculated in
accordance with Section 1.08, for the respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.05 Register. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made to it by each Bank shall be set forth in the
Register maintained by the Agent pursuant to Section 12.16 and, if requested by
any Bank, shall be evidenced by a promissory note (each a "Note" and
collectively, the "Notes") (i) if Term Loans, substantially in the form of
Exhibit B-1 with blanks appropriately completed in conformity herewith, (ii) if
Revolving Loans, substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith and (iii) if Swingline Loans, by
a promissory note substantially in the form of Exhibit B-3, with blanks
appropriately completed in conformity herewith.
5
(b) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes (if any), endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of such
Loans.
1.06 Conversions. The Borrower shall have the option to convert on
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans owing (other
than Swingline Loans, which at all times shall be maintained as Base Rate Loans)
pursuant to a single Facility into a Borrowing or Borrowings pursuant to such
Facility of another Type of Loan, provided that (i) except as otherwise provided
in Section 1.10(b), Eurodollar Loans may be converted into Base Rate Loans only
on the last day of an Interest Period applicable thereto and no partial
conversion of a Borrowing of Eurodollar Loans shall reduce the outstanding
principal amount of the Eurodollar Loans made pursuant to such Borrowing to less
than the Minimum Borrowing Amount applicable thereto, (ii) Base Rate Loans may
only be converted into Eurodollar Loans if no Default or Event of Default is in
existence on the date of the conversion and (iii) Borrowings of Eurodollar Loans
resulting from this Section 1.06 shall be limited in number as provided in
Section 1.02. Each such conversion shall be effected by the Borrower giving the
Agent at its Notice Office, prior to 10:00 A.M. (New York time), at least three
Business Days' (or two Business Days', in the case of a conversion into Base
Rate Loans) prior written notice (or telephonic notice promptly confirmed in
writing) (each, a "Notice of Conversion") specifying the Loans to be so
converted, the Type of Loans to be converted into and, if to be converted into a
Borrowing of Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Loans under this Agreement (other than
Swingline Loans) shall be made by the Banks pro rata on the basis of their Term
Commitments or Revolving Commitments, as the case may be. It is understood that
no Bank shall be responsible for any default by any other Bank in its obligation
to make Loans hereunder and that each Bank shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any other Bank
to fulfill its commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a
6
rate per annum equal to the Base Rate in effect from time to time plus the sum
of (i) 2% and (ii) the Applicable Base Rate Margin, provided that no Loan shall
bear interest after maturity (whether by acceleration or otherwise) at a rate
per annum less than 2% plus the rate of interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, on any prepayment or conversion (other than
the prepayment or conversion of any Revolving Loan that is a Base Rate Loan) (on
the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
1.09 Interest Periods. (a) At the time the Borrower gives a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 10:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month, or if available
to all XX Xxxxx or XX Xxxxx, as the case may be, twelve month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period expires;
7
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond the Final
Maturity Date;
(v) no Interest Period with respect to any Borrowing of Term Loans
may be elected that would extend beyond any date upon which a Scheduled
Repayment is required to be made if, after giving effect to the selection
of such Interest Period, the aggregate principal amount of Term Loans
maintained as Eurodollar Loans with Interest Periods ending after such
date would exceed the aggregate principal amount of Term Loans permitted
to be outstanding after such Scheduled Repayment; and
(vi) no Interest Period may be elected at any time when a violation
of Section 9.01 or an Event of Default is then in existence if the Agent
or the Required Banks have determined that such an election at such time
would be disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
8
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Restatement Effective Date in any applicable law, governmental rule,
regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental
rule, regulation, guideline or order) (such as, for example, but not
limited to, a change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent included in
the computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Bank in good faith with any
law, governmental rule, regulation, guideline (or would conflict with any
such governmental rule, regulation, guideline or order not having the
force of law but with which such Bank customarily complies even though the
failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the Restatement
Effective Date which materially and adversely affects the interbank
Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) on such date and (y) within ten Business Days of the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and to the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks). Thereafter (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to
such Bank, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the additional amounts owed
to such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by law.
9
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii), the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan, provided that if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank or any corporation
controlling such Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's or such corporation's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Bank or
such corporation could have achieved but for such adoption, effectiveness,
change or compliance (taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy), then from time to
time, within 15 days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such corporation for such reduction. Each Bank, upon
determining in good faith that any additional amounts will be payable pursuant
to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. (a) The Borrower shall compensate each Bank, upon
its written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding in any event the loss of anticipated
profits) which such Bank may sustain: (i) if for any reason (other than a
default by
10
such Bank or the Agent) a Borrowing of Eurodollar Loans does not occur on a date
specified therefor in a Notice of Borrowing or Notice of Conversion (whether or
not withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a));
(ii) if any prepayment, repayment or conversion of any of its Eurodollar Loans
occurs on a date which is not the last day of an Interest Period applicable
thereto; (iii) if any prepayment of any of its Eurodollar Loans is not made on
any date specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Eurodollar
Loans when required by the terms of this Agreement or (y) an election made
pursuant to Section 1.10(b).
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Bank more than 180 days after such Bank obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the additional
costs of the type described in such Section, such Bank shall not be entitled to
compensation under Section 1.10, 2.06 or 4.04 for any amounts incurred or
accruing prior to the giving of such notice to the Borrower.
1.12 Change of Lending Office. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.06 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Bank and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of any such Section. Nothing in this Section 1.12 shall affect or postpone any
of the obligations of the Borrower or the right of any Bank provided in Section
1.10, 2.06 or 4.04.
1.13 Replacement of Banks. (x) Upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
Section 2.06 or Section 4.04 with respect to any Bank which results in such Bank
charging to the Borrower increased costs in excess of those being generally
charged by the other Banks, (y) if a Bank becomes a Defaulting Bank and/or (z)
in the case of a refusal by a Bank to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which has been approved
by the Required Banks as provided in Section 12.12, the Borrower shall have the
right, if no Default or Event of Default then exists, to replace such Bank (the
"Replaced Bank") with one or more other Eligible Transferee or Transferees, none
of whom shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank") reasonably acceptable to the Agent,
provided that (i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Bank shall enter into one or more Assignment Agreements pursuant
to Section 12.04(b) (and with all fees payable pursuant to said Section 12.04(b)
to be paid by the Replacement Bank) pursuant to which the Replacement Bank shall
acquire all of the Commitments and outstanding Loans of, and in each case
participations in Letters of Credit by,
11
the Replaced Bank and, in connection therewith, shall pay to (x) the Replaced
Bank in respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Bank, (B) an amount equal to all Unpaid Drawings that have been funded by (and
not reimbursed to) such Replaced Bank, together with all then unpaid interest
with respect thereto at such time and (C) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Bank pursuant to Section 3.01 and
(y) the Letter of Credit Issuer an amount equal to such Replaced Bank's RC
Percentage of any Unpaid Drawing (which at such time remains an Unpaid Drawing)
to the extent such amount was not theretofore funded by such Replaced Bank, and
(ii) all obligations of the Borrower owing to the Replaced Bank (other than
those specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being, paid) shall be
paid in full to such Replaced Bank concurrently with such replacement. Upon the
execution of the respective Assignment and Assumption Agreements, the payment of
amounts referred to in clauses (i) and (ii) above, the recordation of the
assignment in the Register as provided in Section 12.16 and, if so requested by
the Replacement Bank, delivery to the Replacement Bank of the appropriate Note
or Notes executed by the Borrower, the Replacement Bank shall become a Bank
hereunder and the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions applicable to the Replaced
Bank under this Agreement, which shall survive as to such Replaced Bank.
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that a Letter of Credit
Issuer at any time and from time to time on or after the Restatement Effective
Date and prior to the date which is five Business Days prior to the Final
Maturity Date issue, for the account of the Borrower and in support of (x) trade
obligations of the Borrower and/or its Subsidiaries (each such letter of credit
a "Trade Letter of Credit" and, collectively, the "Trade Letters of Credit")
and/or (y) such other obligations of the Borrower that are acceptable to the
Agent (each such letter of credit, a "Standby Letter of Credit" and,
collectively, the "Standby Letters of Credit" and together with the Trade
Letters of Credit and the Existing Letters of Credit the "Letters of Credit")
and, subject to and upon the terms and conditions herein set forth, such Letter
of Credit Issuer agrees to issue from time to time, irrevocable letters of
credit denominated in U.S. dollars and issued on a sight basis, in such form as
may be approved by such Letter of Credit Issuer and the Agent.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued, the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $5,000,000 or (y) when added to the aggregate
12
principal amount of all Revolving Loans made by Non-Defaulting Banks and all
Swingline Loans then outstanding, the Adjusted Total Revolving Commitment at
such time and (ii) (x) each Standby Letter of Credit shall have an expiry date
occurring not later than one year after such Letter of Credit's date of
issuance, provided that any such Letter of Credit may be extendable for
successive periods of up to 12 months on terms acceptable to the Letter of
Credit Issuer and in no event shall any Standby Letter of Credit have an expiry
date occurring later than five Business Days prior to the Final Maturity Date
and (y) each Trade Letter of Credit shall have an expiry date occurring no later
than the earlier of (a) 180 days after the issuance thereof or (b) 30 days prior
to the Final Maturity Date.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, the Letter of Credit Issuer shall not be required to issue any Letter of
Credit unless the Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate the Letter of Credit Issuer's
risk with respect to the participation in Letters of Credit of the Defaulting
Bank or Banks, including by cash collateralizing such Defaulting Bank's or
Banks' Revolving Percentage of the Letter of Credit Outstandings.
(d) Annex III hereto contains a description of each letter of credit
issued under the Original Credit Agreement that is outstanding on, and that will
continue in effect after, the Restatement Effective Date and that is issued by a
Bank (each, an "Existing Letter of Credit"). Each such Existing Letter of Credit
shall (x) constitute a Letter of Credit issued for all purposes of this
Agreement on the Restatement Effective Date and (y) continue to have the same
expiry date as in effect on the Restatement Effective Date, subject to renewal
on a basis consistent with renewals permitted by Section 2.01(b).
2.02 Minimum Stated Amount. The initial Stated Amount of each Letter
of Credit shall be not less than $150,000 or such lesser amount acceptable to
the Letter of Credit Issuer.
2.03 Letter of Credit Requests: Notices of Issuance. (a) Whenever it
desires that a Letter of Credit be issued, the Borrower shall give the Agent and
the Letter of Credit Issuer written notice (including by way of facsimile
transmission) in the form of Exhibit C thereof prior to 1:00 P.M. (New York
time) at least three Business Days (or such shorter period as may be acceptable
to the Letter of Credit Issuer) prior to the proposed date of issuance (which
shall be a Business Day) (each, a "Letter of Credit Request"), which Letter of
Credit Request shall include any documents that the Letter of Credit Issuer
customarily requires in connection therewith.
(b) Each Letter of Credit Issuer shall, promptly after each issuance
of a Standby Letter of Credit by it, give the Agent, each RC Bank and the
Borrower written notice of the issuance of such Letter of Credit, accompanied by
a copy to the Agent of such Letter of
13
Credit or Letters of Credit issued by it. Each Letter of Credit Issuer shall
provide to the Agent a weekly summary describing each Trade Letter of Credit, if
any, issued by such Letter of Credit Issuer and then outstanding. Based on the
foregoing, the Agent will send to each RC Bank, upon such Letter of Credit fee
payment date, a report setting forth for the period covered by such fee the
daily aggregate Letter of Credit Outstandings during such period.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the
Agent at the Payment Office, for any payment or disbursement made by the Letter
of Credit Issuer under any Letter of Credit (each such amount so paid or
disbursed until reimbursed, an "Unpaid Drawing") immediately after, and in any
event on the date on which the Borrower is notified by the Letter of Credit
Issuer of such payment or disbursement with interest on the amount so paid or
disbursed by the Letter of Credit Issuer, to the extent not reimbursed prior to
1:00 P.M. (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but not including the date the Letter of
Credit Issuer is reimbursed therefor at a rate per annum which shall be the
Applicable Base Rate Margin plus the Base Rate as in effect from time to time
(plus an additional 2% per annum if not reimbursed by the third Business Day
after the date of such notice of payment or disbursement), such interest also to
be payable on demand.
(b) The Borrower's obligation under this Section 2.04 to reimburse
the Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Letter of Credit Issuer, the
Agent or any Bank, including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit to conform to the terms of the
Letter of Credit or any non-application or misapplication by the beneficiary of
the proceeds of such drawing; provided, however, that the Borrower shall not be
obligated to reimburse the Letter of Credit Issuer for any wrongful payment made
by the Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer.
2.05 Letter of Credit Participations. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of
Credit Issuer shall be deemed to have sold and transferred to each other RC
Bank, and each such RC Bank (each, a "Participant") shall be deemed irrevocably
and unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such Participant's Adjusted RC Percentage, in such Letter of
Credit, each substitute letter of credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto (although
the Letter of Credit Fee shall be
14
payable directly to the Agent for the account of the XX Xxxxx as provided in
Section 3.01(b) and the Participants shall have no right to receive any portion
of any Facing Fees) and any security therefor or guaranty pertaining thereto.
Upon any change in the Revolving Commitments or Adjusted RC Percentages of the
XX Xxxxx pursuant to Section 12.04(b) or upon a Bank Default, it is hereby
agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings, there shall be an automatic adjustment to the participations pursuant
to this Section 2.05 to reflect the new Adjusted RC Percentages of the assigning
and assignee RC Bank or of all XX Xxxxx, as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they strictly comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by the Letter of Credit Issuer under or in connection with
any Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for the Letter of Credit Issuer any
resulting liability.
(c) In the event that the Letter of Credit Issuer makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to the Letter of Credit Issuer pursuant to Section 2.04(a), the
Letter of Credit Issuer shall promptly notify the Agent, and the Agent shall
promptly notify each Participant of such failure, and each Participant shall
promptly and unconditionally pay to the Agent for the account of the Letter of
Credit Issuer, the amount of such Participant's Adjusted RC Percentage of such
payment in U.S. dollars and in same day funds; provided, however, that no
Participant shall be obligated to pay to the Agent its Adjusted RC Percentage of
such unreimbursed amount for any wrongful payment made by the Letter of Credit
Issuer under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of the Letter of Credit
Issuer. If the Agent so notifies any Participant required to fund an Unpaid
Drawing under a Letter of Credit prior to 11:00 A.M. (New York time) on any
Business Day, such Participant shall make available to the Agent for the account
of the Letter of Credit Issuer such Participant's Adjusted RC Percentage of the
amount of such payment on such Business Day in same day funds. If and to the
extent such Participant shall not have so made its Adjusted RC Percentage of the
amount of such Unpaid Drawing available to the Agent for the account of the
Letter of Credit Issuer, such Participant agrees to pay to the Agent for the
account of the Letter of Credit Issuer, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Agent for the account of the Letter of Credit Issuer at
the overnight Federal Funds Effective Rate. The failure of any Participant to
make
15
available to the Agent for the account of the Letter of Credit Issuer its
Adjusted RC Percentage of any Unpaid Drawing under any Letter of Credit shall
not relieve any other Participant of its obligation hereunder to make available
to the Agent for the account of the Letter of Credit Issuer its Adjusted RC
Percentage of any payment under any Letter of Credit on the date required, as
specified above, but no Participant shall be responsible for the failure of any
other Participant to make available to the Agent for the account of the Letter
of Credit Issuer such other Participant's Adjusted RC Percentage of any such
payment.
(d) Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account of
the Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, the Letter of Credit Issuer shall pay to the Agent and the
Agent shall promptly pay to each Participant which has paid its Adjusted RC
Percentage thereof, in U.S. dollars and in same day funds, an amount equal to
such Participant's Adjusted RC Percentage of the principal amount thereof and
interest thereon accruing at the overnight Federal Funds Effective Rate after
the purchase of the respective participations.
(e) The obligations of the Participants to make payments to the
Agent for the account of the Letter of Credit Issuer with respect to Letters of
Credit shall be irrevocable and not subject to counterclaim, set-off or other
defense or any other qualification or exception whatsoever (provided that no
Participant shall be required to make payments resulting from the Agent's gross
negligence or willful misconduct) and shall be made in accordance with the terms
and conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, the Letter of Credit Issuer, any Bank or other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transaction between the Borrower and the beneficiary named in
any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the
Credit Documents; or
16
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by
the Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective "percentages" of the Total Revolving
Commitment, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Letter of Credit Issuer in performing its respective duties in
any way relating to or arising out of its issuance of Letters of Credit;
provided that no Participants shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Letter of Credit Issuer's
gross negligence or willful misconduct.
2.06 Increased Costs. If at any time after the Restatement Effective
Date, the adoption or effectiveness of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Letter
of Credit Issuer or any Participant with any request or directive (whether or
not having the force of law) by any such authority, central bank or comparable
agency shall either (i) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against Letters of Credit issued by the
Letter of Credit Issuer or such Participant's participation therein, or (ii)
shall impose on the Letter of Credit Issuer or any Participant any other
conditions affecting this Agreement, any Letter of Credit or such Participant's
participation therein; and the result of any of the foregoing is to increase the
cost to the Letter of Credit Issuer or such Participant of issuing, maintaining
or participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by the Letter of Credit Issuer or such Participant
hereunder (other than any increased cost or reduction in the amount received or
receivable resulting from the imposition of or a change in the rate of taxes or
similar charges), then, upon demand to the Borrower by the Letter of Credit
Issuer or such Participant (a copy of which notice shall be sent by the Letter
of Credit Issuer or such Participant to the Agent), the Borrower shall pay to
the Letter of Credit Issuer or such Participant such additional amount or
amounts as will compensate the Letter of Credit Issuer or such Participant for
such increased cost or reduction. A certificate submitted to the Borrower by the
Letter of Credit Issuer or such Participant, as the case may be (a copy of which
certificate shall be sent by the Letter of Credit Issuer or such Participant to
the Agent), setting forth the basis for the determination of such additional
amount or amounts necessary to compensate the Letter of Credit Issuer or such
Participant as aforesaid shall be conclusive and binding on the Borrower absent
manifest error, although the failure to deliver any such certificate shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.06 upon the subsequent receipt thereof.
17
SECTION 3. Fees; Commitments.
3.01 Fees. (a) The Borrower agrees to pay to the Agent a commitment
commission ("Commitment Commission") for the account of each Non-Defaulting Bank
with a Revolving Commitment for the period from and including the Restatement
Effective Date to, but not including, the date the Total Revolving Commitment
has been terminated, computed at a rate for each day equal to 1/2 of 1% per
annum on the daily average of such Bank's Unutilized Revolving Commitment. Such
Commitment Commission shall be due and payable in arrears on the lst Business
Day of each March, June, September and December and on the date upon which the
Total Revolving Commitment is terminated.
(b) The Borrower agrees to pay to the Agent for the account of each
RC Bank that is a Non-Defaulting Bank pro rata on the basis of its respective
Adjusted RC Percentage, a fee in respect of each Letter of Credit (the "Letter
of Credit Fee") computed at the rate equal to the Applicable Eurodollar Margin
then in effect on the daily Stated Amount of such Letter of Credit. Accrued
Letter of Credit Fees shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December of each year and on the
date upon which the Total Revolving Commitment is terminated.
(c) The Borrower agrees to pay to each Letter of Credit Issuer a fee
in respect of each Letter of Credit issued by it (the "Facing Fee") computed at
the rate of 1/4 of 1% per annum on the daily Stated Amount of such Letter of
Credit, provided that in no event shall the annual Facing Fee be less than $500
per year per Letter of Credit. Accrued Facing Fees shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December of each year and on the date upon which the Total Revolving Commitment
is terminated.
(d) The Borrower agrees to pay directly to the Letter of Credit
Issuer upon each issuance of, payment under, and/or amendment of, a Letter of
Credit issued by such Letter of Credit Issuer such amount as shall at the time
of such issuance, payment or amendment be the administrative charge which such
Letter of Credit Issuer is customarily charging for issuances of, payments under
or amendments of, letters of credit issued by it.
(e) The Borrower shall pay to the Agent (x) on the Restatement
Effective Date for its own account and/or for distribution to the Banks such
fees as heretofore agreed by the Borrower and the Agent and (y) for its own
account such other fees as agreed to between the Borrower and the Agent, when
and as due.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
18
3.02 Voluntary Reduction of Commitments. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Agent at its Notice Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate or partially reduce the Total Unutilized
Revolving Commitment, provided that (x) any such termination shall apply to
proportionately and permanently reduce the Revolving Commitment of each Bank,
(y) no such reduction shall reduce any Non-Defaulting Bank's Revolving
Commitment to an amount that is less than the sum of (A) the outstanding
Revolving Loans of such Bank plus (B) such Bank's Adjusted RC Percentage of (i)
outstanding Swingline Loans and (ii) Letter of Credit Outstandings and (z) any
partial reduction pursuant to this Section 3.02 shall be in the amount of at
least $1,000,000.
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total Term
Commitment shall terminate in its entirety on the Restatement Effective Date
(after giving effect to the making of Term Loans on such date).
(b) The Total Revolving Commitment (and the Revolving Commitment of
each RC Bank) shall terminate in its entirety on the earlier of (i) the Final
Maturity Date and (ii) the date on which any Change of Control occurs.
(c) The Total Revolving Commitment shall be reduced at the time of
any mandatory repayment of Term Loans pursuant to Section 4.02(A)(c), (d), (e),
(f), (g) or (h) if Term Loans were then outstanding, in an amount, if any, by
which the amount of such repayment (determined as if an unlimited amount of Term
Loans were then outstanding) exceeds the aggregate amount of Term Loans then
outstanding.
(d) Each partial reduction of the Total Revolving Commitment
pursuant to this Section 3.03 shall apply proportionately to the Revolving
Commitment of each RC Bank.
SECTION 4. Payments.
4.01 Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent at
the Payment Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, whether such Loans are Term Loans,
Revolving Loans or Swingline Loans, the amount of such prepayment and (in the
case of Eurodollar Loans) the specific Borrowing(s) pursuant to which made,
which notice shall be given by the Borrower at least one Business Day prior to
the date of such prepayment with respect to Base Rate Loans (other than
Swingline Loans, with respect to which notice shall be given by the Borrower on
the day of prepayment) and at least two Business Days prior to the date of such
prepayment with respect to Eurodollar Loans, which notice shall
19
promptly be transmitted by the Agent to each of the Banks; (ii) (x) each partial
prepayment of any Borrowing (other than a Borrowing of Swingline Loans) shall be
in an aggregate principal amount of at least $1,000,000 and, if greater in an
integral multiple of $100,000 and (y) each partial prepayment of any Borrowing
of Swingline Loans shall be in an aggregate principal amount of at least
$100,000 and, if greater, in an integral multiple of $50,000, provided that no
partial prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce
the aggregate principal amount of the Loans outstanding pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) at the time of any prepayment of Eurodollar Loans pursuant to
this Section 4.01 on any date other than the last day of the Interest Period
applicable thereto, the Borrower shall pay the amounts required pursuant to
Section 1.11; (iv) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans, provided, that at the
Borrower's election in connection with any prepayment of Revolving Loans
pursuant to this Section 4.01, such prepayment shall not be applied to any
Revolving Loans of a Defaulting Bank; and (v) each prepayment of Term Loans
pursuant to this Section 4.01 shall reduce the remaining Scheduled Repayments on
a pro rata basis (based upon the then remaining principal amount of each such
Scheduled Repayment), provided that the amount of any such prepayment that is
made with the Available Excess Cash Flow Amount at such time (determined before
giving effect to such prepayment made with such Available Excess Cash Flow
Amount) may, at the Borrower's direction, reduce the then remaining Scheduled
Repayments in the direct order of their maturity.
4.02 Mandatory Prepayments.
(A) Requirements:
(a) (i) If on any date (i) the sum of the aggregate outstanding
principal amount of Revolving Loans made by Non-Defaulting Banks, Swingline
Loans and the Letter of Credit Outstandings, exceeds the Adjusted Total
Revolving Commitment as then in effect or (ii) the aggregate outstanding
principal amount of all Revolving Loans and of all Swingline Loans shall have
exceeded the Borrowing Base at such time for any period of three consecutive
Business Days, the Borrower shall repay on such date the principal of Swingline
Loans, and if no Swingline Loans are or remain outstanding, Revolving Loans of
Non-Defaulting Banks, in an aggregate amount equal to such excess. If, after
giving effect to the repayment of all outstanding Swingline Loans and Revolving
Loans of Non-Defaulting Banks, the aggregate amount of Letter of Credit
Outstandings exceeds the Adjusted Total Revolving Commitment then in effect, the
Borrower shall pay to the Agent an amount in cash and/or Cash Equivalents equal
to such excess (up to the aggregate amount of the Letter of Credit Outstandings
at such time) and the Agent shall hold such payment as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance satisfactory to the Agent (which shall
permit certain investments in Cash Equivalents satisfactory to the Agent, until
the proceeds are applied to the secured obligations).
20
(ii) If on any date the aggregate outstanding principal amount of
the Revolving Loans made by a Defaulting Bank exceeds the Revolving Commitment
of such Defaulting Bank, the Borrower shall repay principal of Revolving Loans
of such Defaulting Bank in an amount equal to such excess.
(b) On each date set forth below, the Borrower shall be required to
repay the principal amount of Term Loans set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01 and 4.02(B),
a "Scheduled Repayment"):
Date Amount
---- ------
March 31, 1998 $750,000
June 30, 1998 $750,000
September 30, 1998 $750,000
December 31, 1998 $750,000
March 31, 1999 $1,875,000
June 30, 1999 $1,875,000
September 30, 1999 $1,875,000
December 31, 1999 $1,875,000
March 31, 2000 $3,250,000
June 30, 2000 $3,250,000
September 30, 2000 $3,250,000
December 31, 2000 $3,250,000
March 31, 2001 $5,000,000
June 30, 2001 $5,000,000
September 30, 2001 $5,000,000
December 31, 2001 $5,000,000
Final Maturity Date $21,500,000
(c) On the Business Day following the date of receipt thereof by the
Borrower and/or any of its Subsidiaries of the Cash Proceeds from any Asset
Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset Sale
shall be applied as a mandatory
21
repayment of principal of the then outstanding Term Loans, provided that up to
an aggregate of $2,000,000 of Net Cash Proceeds from Asset Sales shall not be
required to be used to so repay Term Loans to the extent the Borrower elects, as
hereinafter provided, to cause such Net Cash Proceeds to be reinvested in
Reinvestment Assets (a "Reinvestment Election"). The Borrower may exercise its
Reinvestment Election (within the parameters specified in the preceding
sentence) with respect to an Asset Sale if (x) no Default or Event of Default
exists and (y) the Borrower delivers a Reinvestment Notice to the Agent on the
Business Day following the date of the consummation of the respective Asset
Sale, with such Reinvestment Election being effective with respect to the Net
Cash Proceeds of such Asset Sale equal to the Anticipated Reinvestment Amount
specified in such Reinvestment Notice.
(d) On the date of the receipt thereof by the Borrower and/or any of
its Subsidiaries, an amount equal to 100% of the proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) of
the incurrence of Indebtedness by the Borrower and/or any of its Subsidiaries
(other than Indebtedness permitted by Section 8.04), shall be applied as a
mandatory repayment of principal of the then outstanding Term Loans.
(e) On the date of the receipt thereof by the Borrower, an amount
equal to 100% of the proceeds (net of underwriting discounts and commissions and
other reasonable costs associated therewith) of any sale or issuance of its
equity (other than equity issued to management and other employees of the
Borrower and its Subsidiaries as provided for in Section 8.09(a)(ii)) and 100%
of any amount of cash received by the Borrower in connection with any capital
contributions shall be applied as a mandatory repayment of principal of the then
outstanding Term Loans.
(f) On each date which is 90 days after the last day of each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
1997), 50% of Excess Cash Flow (such amount, the "ECF Prepayment Amount") of the
Borrower and its Subsidiaries for the fiscal year then last ended shall be
applied as a mandatory repayment of principal of the then outstanding Term
Loans.
(g) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment Amount, if
any, for such Reinvestment Election shall be applied as a repayment of the
principal amount of the then outstanding Term Loans.
(h) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in full
on the Swingline Expiry Date and (ii) all other then outstanding Loans shall be
repaid in full on the Final Maturity Date.
22
(i) On the date on which any Change of Control occurs, the
outstanding principal amount of the Term Loans, if any, shall become due and
payable in full.
(B) Application:
(a) Each mandatory repayment of Term Loans required to be made
pursuant to Section 4.02(A) (other than pursuant to clause (b) thereof) shall
reduce the then remaining Scheduled Repayments on a pro rata basis (based upon
the then remaining principal amount of each such Scheduled Repayment).
(b) With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) under the affected Facility pursuant to which made,
provided that (i) Eurodollar Loans may so be designated for prepayment pursuant
to this Section 4.02 only on the last day of an Interest Period applicable
thereto unless all Eurodollar Loans made pursuant to such Facility with Interest
Periods ending on such date of required prepayment and all Base Rate Loans made
pursuant to such Facility have been paid in full; (ii) if any prepayment of
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount for such Borrowing, such Borrowing shall be immediately
converted into Base Rate Loans; (iii) each prepayment of any Revolving Loans
made by Non-Defaulting Banks pursuant to a Borrowing shall be applied pro rata
among such Revolving Loans; and (iv) each prepayment of any Revolving Loans made
by Defaulting Banks pursuant to a Borrowing shall be applied pro rata among such
Revolving Loans. In the absence of a designation by the Borrower as described in
the preceding sentence, the Agent shall, subject to the above, make such
designation in its sole discretion with a view, but no obligation, to minimize
breakage costs owing under Section 1.11.
4.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Agent
for the ratable (based on its pro rata share) account of the Banks entitled
thereto, not later than 1:00 P.M. (New York time) on the date when due and shall
be made in immediately available funds and in lawful money of the United States
of America at the Payment Office, it being understood that written notice by the
Borrower to the Agent to make a payment from the funds in the Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account. Any payments under this Agreement which are
made later than 1:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
23
4.04 Net Payments. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in Section 4.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (but excluding, except as provided in the second succeeding sentence,
any tax imposed on or measured by the net income (or any franchise tax) of a
Bank pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located) and all
interest, penalties or similar liabilities with respect thereto (collectively,
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due hereunder, under any Note or under any
other Credit Document, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such Note or
in such other Credit Document. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, then the Borrower shall also reimburse each
Bank, upon the written request of such Bank, for taxes imposed on or measured by
the net income of such Bank pursuant to the laws of the jurisdiction in which
the principal office or applicable lending office of such Bank is located or of
any political subdivision or taxing authority of any such jurisdiction and for
any Taxes as such Bank shall determine are payable by, or withheld from, such
Bank in respect of amounts paid to or on behalf of such Bank pursuant to this or
the preceding sentence. The Borrower will furnish to the Agent within 45 days
after the date the payment of any Taxes, or any withholding or deduction on
account thereof, is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Borrower. The Borrower will indemnify
and hold harmless the Agent and each Bank, and reimburse the Agent or such Bank
upon its written request, for the amount of any Taxes so levied or imposed and
paid or withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) that it will provide to the Borrower on or prior to the Restatement
Effective Date two original signed copies of Internal Revenue Service Form 4224
or Form 1001 certifying to such Bank's entitlement to a complete exemption from
United States withholding tax with respect to payments to be made under this
Agreement, under any Note and under any other Credit Document and (ii) that to
the extent legally entitled to do so, (x) with respect to a Bank that is an
assignee or transferee of an
24
interest under this Agreement pursuant to Section 12.04 hereof (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), upon the date of such assignment or transfer to such
Bank, and (y) with respect to any Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes (including, without limitation, any assignee or transferee), from
time to time, upon the reasonable request by the Borrower or the Agent after the
Restatement Effective Date, such Bank will provide to each of the Borrower and
the Agent two original signed copies of Internal Revenue Service Form 4224 or
Form 1001 (or any successor forms) certifying to such Bank's entitlement to a
complete exemption from, or reduction in, United States withholding tax with
respect to payments to be made under this Agreement, under any Note and under
any other Credit Document, or (iii) if the Bank, assignee or transferee, as the
case may be, is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clauses (i) or (ii) above (either initially or upon request, as the
case may be), such Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to provide two accurate and
complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Bank's entitlement to a complete exemption
from United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Note. Notwithstanding anything to the
contrary contained in Section 4.04(a), the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or other
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder (without any obligation under Section 4.04(a) to pay the
respective Bank such taxes or any additional amounts with respect thereto) for
the account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for United States federal income tax
purposes and which has not provided to the Borrower such forms required to be
provided to the Borrower by a Bank pursuant to the first sentence of this
Section 4.04(b), provided that if the Borrower shall so deduct or withhold any
such taxes, it shall provide a statement to the Agent and such Bank, setting
forth the amount of such taxes so deducted or withheld, the applicable rate and
any other information or documentation which such Bank may reasonably request
for assisting such Bank in obtaining any allowable credits or deductions for the
taxes so deducted or withheld in the jurisdiction or jurisdictions in which such
Bank is subject to tax. Notwithstanding anything to the contrary contained in
the preceding sentence, the Borrower agrees to indemnify each Bank in the manner
set forth in Section 4.04(a) in respect of any amounts deducted or withheld by
it as described in the previous sentence as a result of any changes after the
Restatement Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
25
SECTION 5. Conditions Precedent.
5.01 Conditions Precedent to Restatement Effective Date. This
Agreement shall become effective on the date (the "Restatement Effective Date")
when each of the following conditions are first satisfied:
(a) Effectiveness Notes. On or prior to the Restatement Effective
Date, (i) each Borrower and each of the Banks shall have signed a copy of this
Agreement (whether the same or different copies) and shall have delivered the
same to the Agent at its Notice Office or, in the case of the Banks, shall have
given to the Agent telephonic (confirmed in writing), written, telex or
facsimile transmitted notice (actually received) at its Notice Office that the
same has been signed and mailed to it.
(b) Opinions of Counsel. On the Restatement Effective Date, the
Agent shall have received opinions, addressed to the Agent, and each of the
Banks and dated the Restatement Effective Date, from (i) Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, counsel to the Borrower, which opinion shall cover the
matters contained in Exhibit D-1 hereto, (ii) White & Case, special counsel to
the Agent, which opinion shall cover the matters contained in Exhibit D-2 hereto
and (iii) from such local counsel, if any, satisfactory to the Agent as the
Agent may request, which opinions shall cover the perfection of the security
interests granted pursuant to the Security Documents and such other matters
incident to the transactions contemplated herein as the Agent may reasonably
request and shall be in form and substance satisfactory to the Agent.
(c) Corporate Proceedings. (I) On the Restatement Effective Date,
the Agent shall have received from the Borrower a certificate, dated the
Restatement Effective Date, signed by the President or any Vice-President of the
Borrower in the form of Exhibit E with appropriate insertions and deletions,
together with (x) copies of the certificate of incorporation, the by-laws, or
other organizational documents of each Credit Party and (y) the resolutions, or
such other administrative approval, of each Credit Party referred to in such
certificate and all of the foregoing (including each such certificate of
formation, certificate of incorporation and by-laws) shall be satisfactory to
the Agent and (z) a statement that all of the applicable conditions set forth in
Sections 5.01(f) and (i) and 5.02 exist as of such date.
(II) On the Restatement Effective Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all certificates, documents and papers,
including good standing certificates and any other records of corporate
proceedings and governmental approvals, if any, which the Agent may have
requested in connection therewith, such documents and papers, where appropriate,
to be certified by proper corporate or governmental authorities.
26
(d) Initial Borrowing Base Certificate. On the Restatement Effective
Date, the Agent shall have received a certificate in the form of Exhibit F
hereto (a "Borrowing Base Certificate") executed by the chief financial officer
of the borrower setting forth the Borrowing Base determined as of the B
Determination Date in the preceding month.
(e) Original Credit Agreement. On the Restatement Effective Date and
concurrently with the initial borrowing hereunder, the Borrower shall have (i)
repaid in full the outstanding principal amount of all Loans under, and as
defined in, the Original Credit Agreement, (ii) terminated all letters of credit
issued thereunder (other than Existing Letters of Credit) and (iii) paid all
accrued but unpaid interest and fees under the Original Credit Agreement,
whether or not otherwise then due and payable.
(f) Subsidiary Guaranty. On the Restatement Effective Date, each
Subsidiary Guarantor shall have duly authorized, executed and delivered an
amended and restated Subsidiary Guaranty in the form of Exhibit G hereto (as
modified, amended or supplemented from time to time in accordance with the terms
hereof and thereof, the "Subsidiary Guaranty"), and the Subsidiary Guaranty
shall be in full force and effect.
(g) Security Documents. (I) On the Restatement Effective Date, each
of the Borrower and the Subsidiary Guarantors shall have each duly authorized,
executed and delivered an amended and restated Pledge Agreement in the form of
Exhibits H-1 and H-2, respectively (each as modified, amended or supplemented
from time to time in accordance with the terms thereof and hereof, a "Pledge
Agreement" and, collectively, the "Pledge Agreements"), and each shall have
delivered to the Collateral Agent, as pledgee thereunder, all of the
certificates representing the Pledged Securities referred to therein, endorsed
in blank or accompanied by executed and undated stock powers, and each Pledge
Agreement shall be in full force and effect.
(II) On the Restatement Effective Date, the Borrower and each
Subsidiary Guarantor shall have each duly authorized, executed and delivered an
amended and restated Security Agreement substantially in the form of Exhibits
I-1 and I-2, respectively (each as modified, supplemented or amended from time
to time in accordance with the terms thereof and hereof, a "Security Agreement"
and collectively, the "Security Agreements") covering all of such Credit Party's
present and future Security Agreement Collateral.
(III) On the Restatement Effective Date, the Agent shall have
received:
(i) fully executed counterparts of amendments (the "Mortgage
Amendments"), in form and substance satisfactory to the Agent, to the
Existing Mortgages (the Existing
27
Mortgages as so amended, the "Mortgages"), together with evidence that
counterparts of the Mortgage Amendments have been delivered to the title
company insuring the Lien on the Existing Mortgages for recording in all
places to the extent necessary or desirable, in the judgment of the
Collateral Agent, effectively to maintain a valid and enforceable first
priority mortgage lien on the Mortgaged Properties in favor of the
Collateral Agent for the benefit of the Banks; and
(ii) endorsements of the authorized issuing agent for title insurers
reasonably satisfactory to the Collateral Agent to each Existing Mortgage
Policy assuring the Collateral Agent that each Mortgage is a valid and
enforceable first priority mortgage lien on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except
Permitted Encumbrances.
(h) Solvency. On the Restatement Effective Date, the Borrower shall
have delivered, or shall cause to be delivered to the Agent, a solvency letter
in the form of Exhibit J hereto from the Chief Financial Officer of the Borrower
and acceptable in form and substance to the Agent.
(i) Insurance Policies. On the Restatement Effective Date, the
Collateral Agent shall have received evidence of insurance complying with the
requirements of Section 7.03 for the business and properties of the Borrower and
its Subsidiaries, in form and substance satisfactory to the Agent and, with
respect to all casualty insurance, naming the Collateral Agent as an additional
insured and loss payee.
(j) Fees. On the Restatement Effective Date, the Borrower shall have
paid to the Agent and the Banks all Fees and expenses agreed upon by such
parties to be paid on or prior to such date.
(k) Consent Letter. On the Restatement Effective Date, the Agent
shall have received a letter from CT Corporation System, presently located at
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, substantially in the form of Exhibit K,
indicating its consent to its appointment by each Credit Party as such Credit
Party's agent to receive service of process as specified in Section 12.08.
5.02 Conditions Precedent to All Credit Events. The obligation of
each Bank to make Loans (including Loans made on the Restatement Effective Date)
and the obligation of a Letter of Credit Issuer to issue any Letter of Credit is
subject, at the time of each such Credit Event, to the satisfaction of the
following conditions:
(a) Notice of Borrowing; Letter of Credit Request. The Agent shall
have received a Notice of Borrowing meeting the requirements of Section 1.02
with respect to the incurrence of Loans or a Letter of Credit Request meeting
the requirements of Section 2.03 with respect to the issuance of a Letter of
Credit.
28
(b) No Default; Representations and Warranties. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties made by
any Credit Party contained herein or in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, except to the extent that such representations and warranties
expressly relate to an earlier date.
The acceptance of the benefits of each Credit Event shall constitute
a representation and warranty by the Borrower to the Agent and each of the Banks
that all of the applicable conditions specified in Section 5.01 (in the case of
the Credit Events occurring on the Restatement Effective Date) and/or 5.02, as
the case may be, exist as of that time. All of the certificates, legal opinions
and other documents and papers referred to in Section 5.01, unless otherwise
specified, shall be delivered to the Agent at its Notice Office for the account
of each of the Banks and, except for the Notes, in sufficient counterparts for
each of the Banks and shall be satisfactory in form and substance to the Agent.
SECTION 6. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Loans and issue
and/or participate in Letters of Credit provided for herein, the Borrower makes
the following representations and warranties to, and agreements with, the Banks,
all of which shall survive the execution and delivery of this Agreement and the
making of the Loans (with the making of each Credit Event thereafter being
deemed to constitute a representation and warranty that the matters specified in
this Section 6 are true and correct in all material respects on and as of the
date of each such Credit Event unless such representation and warranty expressly
indicates that it is being made as of any specific date):
6.01 Corporate Status. Each of the Borrower and its Subsidiaries (i)
is a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its organization and has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage and (ii) has duly qualified and
is authorized to do business and is in good standing in all jurisdictions where
it is required to be so qualified and where the failure to be so qualified would
have a Material Adverse Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Credit Documents to which it is a party. Each Credit Party has duly executed and
delivered each Credit Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Person enforceable
in accordance with its terms.
29
6.03 No Violation. Neither the execution, delivery and performance
by any Credit Party of the Credit Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of the Borrower
or any of its Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, agreement or other instrument to which the Borrower or any of its
Subsidiaries is a party or by which it or any of its property or assets are
bound or to which it may be subject or (iii) will violate any provision of the
certificate of incorporation or by-laws of the Borrower or any of its
Subsidiaries.
6.04 Litigation. There are no actions, suits or proceedings pending
or threatened with respect to the Borrower or any of its Subsidiaries (i) that
are likely to have a Material Adverse Effect or (ii) that could reasonably be
expected to have a material adverse effect on the rights or remedies of the
Banks or on the ability of any Credit Party to perform its obligations to them
hereunder and under the other Credit Documents to which it is a party.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
Term Loans shall be utilized on the Restatement Effective Date (i) to refinance
Loans under and as defined in the Original Credit Agreement and (ii) to pay
certain fees, premiums and expenses relating thereto.
(b) The proceeds of all Revolving Loans may be used for the general
corporate and working capital purposes of the Borrower and its Subsidiaries.
(c) The proceeds of all Swingline Loans shall be utilized for the
general corporate and working capital purposes of the Borrower and its
Subsidiaries.
(d) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
and no part of the proceeds of any Loan will be used to purchase or carry any
Margin Stock in violation of Regulation U or to extend credit for the purpose of
purchasing or carrying any Margin Stock.
30
6.06 Governmental Approvals. Except for filings and recordings in
connection with the Security Documents, SEC filings and those items listed on
Annex IV, no order, consent, approval, license, authorization, or validation of,
or filing, recording or registration with, or exemption by, any foreign or
domestic governmental or public body or authority, or any subdivision thereof,
is required to authorize or is required in connection with (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
6.07 Investment Company Act. None of the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
6.08 Public Utility Holding Company Act. Neither the Borrower nor
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6.09 True and Complete Disclosure. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower or any of its Subsidiaries in writing to the Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
herein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Person in writing to any Bank will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided. The projections and pro forma financial information
contained in such materials are based on good faith estimates and assumptions
believed by such Persons to be reasonable at the time made, it being recognized
by the Banks that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. There is no fact known to the
Borrower which would have a Material Adverse Effect, which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Banks for use in connection with the transactions contemplated
hereby.
6.10 (a) True and Complete Disclosure. On and as of the Restatement
Effective Date, on a pro forma basis after giving effect to the refinancing of
all Loans under and as defined in the Original Credit Agreement and all
Indebtedness incurred, and to be incurred, and Liens created, and to be created,
by each Credit Party in connection therewith, (x) the sum of the assets, at a
fair valuation, of the Borrower and its Subsidiaries taken as a whole will
exceed its debts, (y) the Borrower and its Subsidiaries taken as a whole will
not have incurred or intended to, or believe that they will, incur debts beyond
their ability to pay
31
such debts as such debts mature and (z) the Borrower and its Subsidiaries taken
as a whole will not have unreasonably small capital with which to conduct its
business. For purposes of this Section 6.10, "debt" means any liability on a
claim, and "claim" means (i) right to payment whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) (i) The consolidated balance sheet of the Borrower at December
31, 1996 and June 30, 1997 and the related consolidated statements of operations
and cash flows of the Borrower for the fiscal year or the six-month period, as
the case may be, ended as of said dates, which, in the case of the December 31,
1996 statements, have been examined by Deloitte & Touche LLP, independent
certified public accountants, who delivered an unqualified opinion in respect
therewith, and (ii) the pro forma consolidated balance sheet of the Borrower as
of June 30, 1997, copies of which have heretofore been furnished to each Bank,
present fairly the financial position of such entities at the dates of said
statements and the results for the periods covered thereby (or, in the case of
the pro forma balance sheet, presents a good faith estimate of the consolidated
pro forma financial condition of the Borrower at the date thereof) in accordance
with GAAP, except to the extent provided in the notes to said financial
statements and, in the case of the June 30, 1997 statements, subject to normal
and recurring year-end audit adjustment. All such financial statements (other
than the aforesaid pro forma balance sheets) have been prepared in accordance
with generally accepted accounting principles and practices consistently applied
except to the extent provided in the notes to said financial statements. Nothing
has occurred since December 31, 1996 that has had or could reasonably be
expected to have a Material Adverse Effect.
(c) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Restatement Effective
Date no liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of a nature (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower and its Subsidiaries taken as a whole, except as
incurred in the ordinary course of business consistent with past practices
subsequent to December 31, 1996.
6.11 Security Interests. On and after the Restatement Effective
Date, each of the Security Documents creates, as security for the Obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and Lien on all of the Collateral subject thereto, superior to and
prior to the rights of all third Persons and subject to no other Liens
32
(except (x) that the Security Agreement Collateral may be subject to the
security interests evidenced by Permitted Liens relating thereto and (y) the
Mortgaged Properties may be subject to Permitted Encumbrances relating thereto),
in favor of the Collateral Agent for the benefit of the Banks. No filings or
recordings are required in order to perfect the security interests created under
any Security Document except for filings or recordings required in connection
with any such Security Document (other than the Pledge Agreement) which shall
have been made upon or prior to (or are the subject of arrangements,
satisfactory to the Agent, for filing on or promptly after the date of) the
execution and delivery thereof.
6.12 Tax Returns and Payments. Each of the Borrower and each of its
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith. The
Borrower and each of its Subsidiaries have paid, or have provided adequate
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal, state and foreign income taxes applicable for all prior
fiscal years and for the current fiscal year to the date hereof.
6.13 Compliance with ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; neither the Borrower, nor any Subsidiary nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any
liability (including any indirect, contingent or secondary liability) under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary or any ERISA Affiliate of incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the Code; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans
(as defined in Section 4001(a)(3) of ERISA) in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan ended prior to the date of the most recent Credit Event, would not
exceed $1,000,000; no lien imposed under the Code or ERISA on the assets of the
Borrower or any Subsidiary or any ERISA Affiliate exists or is likely to arise
on account of any Plan; and the Borrower and its Subsidiaries do not maintain or
contribute to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) which provides benefits to retired employees (other than as required
33
by Section 601 of ERISA) or any employee pension benefit plan (as defined in
Section 3(2) of ERISA), except to the extent that all events described in the
preceding clauses of this Section 6.13 and then in existence would not, in the
aggregate, have or be likely to have a Material Adverse Effect. With respect to
Plans that are multiemployer plans (within the meaning of Section 4001(a)(3) of
ERISA) the representations and warranties in this Section 6.13 are made to the
best knowledge of the Borrower.
6.14 Subsidiaries. (a) Annex V hereto lists each Subsidiary of the
Borrower (and the direct and indirect ownership interest of the Borrower
therein), in each case existing on the Restatement Effective Date. The Borrower
will at all times own directly the percentages specified in said Annex V of the
outstanding capital stock of all of said entities, except to the extent
otherwise permitted pursuant to Section 8.02.
(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or other
assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents and the Senior Subordinated Note Documents, (ii)
applicable law, (iii) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices, (iv) any
restriction or encumbrance with respect to a Subsidiary of the Borrower imposed
pursuant to an agreement which has been entered into for the sale or disposition
of all or substantially all of the capital stock or assets of such Subsidiary,
so long as such sale or disposition is permitted under this Agreement, and (v)
any documents or instruments governing the terms of any Indebtedness or other
obligations secured by Liens permitted by Section 8.03, provided that such
prohibitions or restrictions apply only to the assets subject to such Liens.
6.15 Patents, etc. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
6.16 Pollution and Other Regulations. (a) Each of the Borrower and
its Subsidiaries is in compliance with all applicable Environmental Laws
governing its business for which failure to comply is likely to have a Material
Adverse Effect, and neither the Borrower nor any of its Subsidiaries is liable
for any material penalties, fines or forfeitures for failure to comply with any
of the foregoing in the manner set forth above. All licenses, permits,
registrations or approvals required for the business of the Borrower and each of
its Subsidiaries, as conducted as of the Restatement Effective Date, under any
Environmental Law have been secured and the Borrower and each of its
Subsidiaries is in substantial compliance therewith, except such licenses,
permits, registrations or approvals the failure to secure or to comply therewith
is not likely to have a Material Adverse Effect. Neither the Borrower nor any of
its
34
Subsidiaries is in any respect in noncompliance with, breach of or default under
any applicable writ, order, judgment, injunction, or decree to which the
Borrower or such Subsidiary is a party or which would affect the ability of the
Borrower or such Subsidiary to operate any real property and no event has
occurred and is continuing which, with the passage of time or the giving of
notice or both, would constitute noncompliance, breach of or default thereunder,
except in each such case, such noncompliance, breaches or defaults as are not
likely to, in the aggregate, have a Material Adverse Effect. There are as of the
Restatement Effective Date no Environmental Claims pending or, to the best
knowledge of the Borrower, threatened, which (a) question the validity, term or
entitlement of the Borrower or any of its Subsidiaries for any permit, license,
order or registration required for the operation of any facility which the
Borrower or any of its Subsidiaries currently operates and (b) wherein an
unfavorable decision, ruling or finding would be reasonably likely to have a
Material Adverse Effect. There are no facts, circumstances, conditions or
occurrences on any Real Property or, to the knowledge of the Borrower, on any
property adjacent to any such Real Property that could reasonably be expected
(i) to form the basis of an Environmental Claim against the Borrower, any of its
Subsidiaries or any Real Property of the Borrower or any of its Subsidiaries, or
(ii) to cause such Real Property to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Real Property under any
Environmental Law, except in each such case, such Environmental Claims or
restrictions that individually, or in the aggregate, are not reasonably likely
to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
6.17 Properties. The Borrower and each of its Subsidiaries have good
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheet of the Borrower and its Subsidiaries
as referred to in Section 6.10(b), free and clear of all Liens, other than (i)
as referred to in the consolidated balance sheet or in the notes thereto or (ii)
otherwise permitted by Section 8.03. Annex VI contains a true and complete list
of each Real Property owned or leased by the Borrower or any of its Subsidiaries
on the Restatement Effective Date, the type of interest therein held by the
Borrower or the respective Subsidiary and whether such Real Property is a
Mortgaged Property.
6.18 Labor Relations. No Credit Party is engaged in any unfair labor
practice that could reasonably be expected to have a Material Adverse Effect.
There is (i) no unfair labor practice complaint pending against any Credit Party
or threatened against any of them, before the National Labor Relations Board,
and no grievance or arbitration proceeding
35
arising out of or under any collective bargaining agreement is so pending
against any Credit Party or threatened against any of them, (ii) no strike,
labor dispute, slowdown or stoppage pending against any Credit Party or
threatened against any Credit Party and (iii) no union representation question
existing with respect to the employees of any Credit Party and no union
organizing activities are taking place, except with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate, such as is not reasonably likely to have a Material Adverse Effect.
6.19 Senior Subordinated Notes. The subordination provisions
contained in the Senior Subordinated Notes are enforceable by the Banks against
the Borrower and the holders of such Senior Subordinated Notes, and all
Obligations of the Borrower are or will be within the definition of "Senior
Indebtedness" included in such provisions of the Senior Subordinated Note
Documents.
6.20 Existing Indebtedness. Annex VII sets forth a true and complete
list of all Indebtedness of the Borrower and each of its Subsidiaries as of the
Restatement Effective Date and which is to remain outstanding after giving
effect to the refinancing of all Loans under and as defined in the Original
Credit Agreement (excluding the Loans, the Letters of Credit and the Senior
Subordinated Notes, the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower (or
issuer) and any other entity which directly or indirectly guaranteed such debt.
SECTION 7. Affirmative Covenants. The Borrower covenants and agrees
that on the Restatement Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Letters of
Credit or Notes are outstanding and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full:
7.01 Information Covenants. The Borrower will furnish to each Bank:
(a) Annual Financial Statements. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated balance sheet of the Borrower
and its Subsidiaries, as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
such fiscal year, in each case setting forth comparative consolidated figures
for the preceding fiscal year, and examined by independent certified public
accountants of recognized national standing whose opinion shall not be qualified
as to the scope of audit and as to the status of the Borrower or any of its
Subsidiaries as a going concern, together with a certificate of such accounting
firm stating that in the course of its regular audit of the business of the
Borrower, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default which has occurred and is continuing or, if in the
opinion of such accounting firm such a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof.
36
(b) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of the
Borrower and its Subsidiaries, as at the end of such quarterly period and the
related consolidated statements of income and retained earnings and of cash
flows for such quarterly period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, and in each case setting forth
comparative consolidated figures for the related periods in the prior fiscal
year, all of which shall be certified by the chief financial officer or
controller of the Borrower, subject to changes resulting from audit and normal
year-end audit adjustments.
(c) Monthly Reports. As soon as practicable, and in any event within
30 days, after the end of each monthly accounting period of each fiscal year
(other than the last monthly accounting period in such fiscal year) the
consolidated balance sheet of the Borrower and its Subsidiaries, as at the end
of such period, and the related consolidated statements of income and retained
earnings for such period, setting forth comparative figures for the
corresponding period of the previous year, all of which shall be certified by
the chief financial officer or controller of the Borrower subject to changes
resulting from audit and normal year-end audit adjustments.
(d) Budgets; etc. Not more than 60 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its Subsidiaries
in reasonable detail for each of the twelve months of such fiscal year. Together
with each delivery of consolidated financial statements pursuant to Sections
7.01(a), (b) and (c), a comparison of the current year-to-date financial results
against the budgets required to be submitted pursuant to this clause (d) shall
be presented.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate, in the case of the certificate delivered
pursuant to Sections 7.01(a) and (b), shall set forth the calculations required
to establish (I) the MRD Ratios for the Relevant Test Period ending on the last
day of such fiscal year or period and (II) whether the Borrower and its
Subsidiaries were in compliance with the provisions of Sections 8.05, 8.07,
8.09(a) (but only to the extent the Borrower has made payments of the type
described in clause (ii) thereof in such period or year), 8.11, 8.12, 8.13 and
8.14 as at the end of such fiscal period or year, as the case may be.
37
(f) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof, notice
of (x) the occurrence of any event which constitutes a Default or Event of
Default which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto and
(y) the commencement of or any significant development in any litigation or
governmental proceeding pending against the Borrower or any of its Subsidiaries
which is likely to have a Material Adverse Effect or is likely to have a
material adverse effect on the ability of the Borrower or any Credit Party to
perform its obligations hereunder or under any other Credit Document.
(g) Borrowing Base Certificates. Promptly after determining same,
and in any event within five days following the BB Determination Date for each
calendar month, a Borrowing Base Certificate executed by the chief financial
officer or controller of the Borrower setting forth the Borrowing Base
determined as of such BB Determination Date (together with reasonable detail as
to the computation thereof).
(h) Auditors' Reports. Promptly upon receipt thereof, a copy of each
other final report or "management letter" submitted to the Borrower by its
independent accountants in connection with any annual, interim or special audit
made by it of the books of the Borrower.
(i) Environmental Matters. Promptly after obtaining knowledge of any
of the following (but only to the extent that any of the following could
reasonably be expected to (x) have a Material Adverse Effect, either
individually or in the aggregate, or (y) result in a remedial cost to the
Borrower or any of its Subsidiaries in excess of $2,000,000), written notice of:
(i) any pending or threatened Environmental claim against the
Borrower or any of its Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on any Real Property owned or
operated by the Borrower or any of its Subsidiaries that (x) results in
noncompliance by the Borrower or any of its Subsidiaries with any
applicable Environmental Law or (y) could reasonably be anticipated to
form the basis of an Environmental claim against the Borrower or any of
its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned or
operated by the Borrower or any of its Subsidiaries that could reasonably
be anticipated to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability by the
Borrower or its Subsidiary, as the case may be, of its interest in such
Real Property under any Environmental Law; and
38
(iv) the taking of any removal or remedial action in response to the
actual or alleged presence of any Hazardous Material on any Real Property
owned or operated by the Borrower or any of its Subsidiaries.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower's response or proposed response thereto. In addition, the Borrower
agrees to provide the Banks with copies of all material communications by the
Borrower or any of its Subsidiaries with any Person, government or governmental
agency relating to any of the matters set forth in clauses (i)-(iv) above, and
such detailed reports relating to any of the matters set forth in clauses
(i)-(iv) above as may reasonably be requested by the Agent or the Required
Banks.
(j) Other Information. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by the Borrower or any
of its Subsidiaries, (ii) copies of any material complaints or correspondence
received from the Federal Trade Commission and/or the postal service (x)
regarding compliance with the Federal Trade Commission Act, as amended (15
U.S.C. Subsection 45) or (y) in connection with advertising materials
distributed by the Borrower, and (iii) with reasonable promptness, such other
information or documents (financial or otherwise) as the Agent on its own behalf
or on behalf of the Required Banks may reasonably request from time to time.
7.02 Books, Records and Inspections. The Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower (x) officers
and designated representatives of the Agent or the Required Banks to visit and
inspect any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
the Borrower and any of its Subsidiaries and discuss the affairs, finances and
accounts of the Borrower and of any of its Subsidiaries with, and be advised as
to the same by, its and their officers and independent accountants, all at such
reasonable times and intervals and to such reasonable extent as the Agent or the
Required Banks may desire and (y) not more than once per year the Agent, or a
third party designated by the Agent, to conduct, at the Borrower's expense, an
audit of the accounts receivable and inventories of the Borrower and its
Subsidiaries at such times as the Agent shall reasonably require.
7.03 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice,
provided that in no event will any such deductible or self-insured retention in
respect of liability claims or in respect of casualty damage, exceed, in each
such case, (i) $150,000 per occurrence or (ii) $3,000,000 in the aggregate per
fiscal year. At any time that
39
insurance at the levels described in Annex VIII is not being maintained by the
Borrower and its Subsidiaries, the Borrower will notify the Banks in writing
thereof and, if thereafter notified by the Agent to do so, the Borrower will,
and will cause its Subsidiaries to, obtain insurance at such levels at least
equal to those set forth in Annex VIII to the extent then generally available
(but in any event within the deductible or self-insured retention limitations
set forth in the preceding sentence) or otherwise as are acceptable to the
Agent. The Borrower will, and will cause each of its Subsidiaries to, furnish on
the Restatement Effective Date and annually thereafter to the Agent a summary of
the insurance carried together with certificates of insurance and other evidence
of such insurance, if any, naming the Collateral Agent as an additional insured
and/or loss payee.
7.04 Payment of Taxes. The Borrower will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of the Borrower or any of its Subsidiaries, provided that
neither the Borrower nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim which is being contested in good faith and by
proper proceedings if it has maintained adequate reserves (in the good faith
judgment of the management of the Borrower) with respect thereto in accordance
with GAAP.
7.05 Consolidated Corporate Franchises. The Borrower will do, and
will cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights and
authority, provided that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not have a
Material Adverse Effect or would not have a material adverse effect on the
ability of any Credit Party to perform its obligations under any Credit Document
to which it is party.
7.07 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any of its Subsidiaries knows or has reason to know of the
occurrence of any of the following, the Borrower will deliver to each of the
Banks a certificate of the chief financial officer of the Borrower setting forth
details as to such occurrence and such action, if any, which the Borrower, such
Subsidiary or such ERISA Affiliate is required or proposes to take, together
with any notices required or proposed to be given to or filed with or by the
Borrower, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant
(other than notices relating to an individual
40
participant's benefits) or the Plan administrator with respect thereto: that a
Reportable Event has occurred; that an accumulated funding deficiency has been
incurred or an application is reasonably likely to be or has been made to the
Secretary of the Treasury for a waiver or modification of the minimum funding
standard (including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability and there is a failure to make a required
contribution, which gives rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted to terminate a
Plan which has an Unfunded Current Liability; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
incur any liability (including, any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(l) or
502(l) of ERISA or that the Borrower or any Subsidiary may incur any material
liability pursuant to any employee welfare benefit plan (as defined in Section
3(1) of ERISA) that provides benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or any employee
pension benefit plan (as defined in Section 3(2) of ERISA). Upon request of a
Bank, the Borrower will deliver to such Bank a complete copy of the annual
report (Form 5500) of each Plan required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Banks
pursuant to the first sentence hereof, copies of any annual reports and any
other material notices received by the Borrower or any Subsidiary with respect
to a Plan shall be delivered to the Banks no later than 10 days after the later
of the date such notice has been filed with the Internal Revenue Service or the
PBGC, given to Plan participants (other than notices relating to an individual
participant's benefits) or received by the Borrower or such Subsidiary.
7.08 Good Repair. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in whomsoever's possession they may be, are kept in good repair,
working order and condition, normal wear and tear excepted, and, subject to
Section 8.05, that from time to time there are made in such properties and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the manner
useful or customary for companies in similar businesses.
7.09 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries' fiscal quarters to end on a Quarter End Date.
41
7.10 Use of Proceeds. All proceeds of the Loans shall be used as
provided in Section 6.05.
7.11 Additional Security; Further Assurances. (a) The Borrower will,
and will cause its Domestic Subsidiaries to, grant to the Collateral Agent
security interests and mortgages (each, an "Additional Mortgage") in such owned
Real Property of the Borrower and its Subsidiaries that is not owned or subject
to a Mortgage on the Restatement Effective Date as may be requested from time to
time by the Agent. All such mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the Agent and shall constitute
valid and enforceable Liens superior to and prior to the rights of all third
Persons and subject to no other Liens except as are permitted by Section 8.03.
The Additional Mortgages or instruments related thereto shall have been duly
recorded or filed in such manner and in such places as are required by law to
establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Mortgages and all taxes,
fees and other charges payable in connection therewith shall have been paid in
full.
(b) The Borrower will, and will cause its Domestic Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports
and other assurances or instruments and take such further steps relating to the
collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to the
Collateral Agent such opinions of counsel, title insurance and other related
documents as may be requested by the Agent to assure themselves that this
Section 7.11 has been complied with.
(c) The Borrower agrees that each action required above by this
Section 7.11 shall be completed as soon as possible, but in no event later than
60 days after such action is requested to be taken by the Agent or the Required
Banks, provided that in no event shall the Borrower be required to take any
action, other than using its reasonable commercial efforts without any material
expenditure, to obtain consents from third parties with respect to its
compliance with this Section 7.11.
7.12 Dividends on PIK Preferred Stock. The Borrower shall to the
maximum extent permitted by the terms thereof, pay all dividends on the PIK
Preferred Stock through the issuance of additional shares of such PIK Preferred
Stock in respect of which dividends are to be paid, rather than in cash.
7.13 Compliance with Environmental Laws. (i) The
Borrower will comply, and will cause each of its Subsidiaries to
comply, with all Environmental Laws applicable to the
42
ownership, lease or use of all Real Property now or hereafter owned, leased or
operated by the Borrower or any Subsidiary, will promptly pay or cause to be
paid all costs and expenses incurred in connection with such compliance, and
will keep or cause to be kept all such Real Property free and clear of any Liens
imposed pursuant to such Environmental Laws and (ii) neither the Borrower nor
any of its Subsidiaries will generate, use, treat, store, release or dispose of,
or permit the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
operated by the Company or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property, except
to the extent that the failure to comply with the requirements specified in
clause (i) or (ii) above, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
SECTION 8. Negative Covenants. The Borrower hereby covenants and
agrees that as of the Restatement Effective Date and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated, no
Letters of Credit or Notes are outstanding and the Loans and Unpaid Drawings,
together with interest, Fees and all other Obligations incurred hereunder, are
paid in full:
8.01 Changes in Business. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, materially alter the character of the
business of the Borrower and its Subsidiaries from that conducted at the
Restatement Effective Date, provided that this Section 8.01 shall not restrict
the making of any investment expressly permitted by Section 8.06.
(b) Borrower shall cause HCE to engage in no significant business
and at no time to have assets or liabilities with an aggregate value in excess
of $50,000.
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
sell or otherwise dispose of all or any part of its property or assets (other
than inventory or obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or purchase, lease
or otherwise acquire all or any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases, materials and
equipment in the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into, or be liquidated into, the Borrower or a Subsidiary
Guarantor (so long as the Borrower or such Subsidiary Guarantor is the
surviving corporation), or all or any part of its business, properties and
assets may be conveyed, leased, sold or transferred to the
43
Borrower or any Subsidiary Guarantor (or any other Subsidiary), provided
that neither the Borrower nor any Subsidiary Guarantor may be a party to
any merger, consolidation or liquidation otherwise permitted by this
clause (a) involving a Subsidiary that is not a Wholly-Owned Subsidiary;
(b) capital expenditures to the extent within the
limitations set forth in Section 8.05 hereof;
(c) the investments, acquisitions and transfers or
dispositions of properties permitted pursuant to Section 8.06;
(d) each of the Borrower and the Subsidiary Guarantors may lease (as
lessee) real or personal property in the ordinary course of business (so
long as such lease does not create a Capitalized Lease Obligation not
otherwise permitted by Section 8.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary
Guarantors of software, customer lists, trademarks and other intellectual
property in the ordinary course of business, provided, that such licenses
or sublicenses shall not interfere with the business of the Borrower or
any Subsidiary Guarantor;
(f) other sales or dispositions of assets in the ordinary course of
business, provided that (w) the aggregate Net Cash Proceeds received from
all such sales and dispositions shall not exceed $1,500,000 in any fiscal
year of the Borrower, (x) each such sale shall be in an amount at least
equal to the fair market value thereof (as determined by the Board of
Directors of the Borrower in the case of sales in excess of $500,000) and
for proceeds consisting solely of not less than (A) 80% cash and (B)
seller indebtedness evidenced by promissory notes which notes shall be
pledged and delivered to the Collateral Agent pursuant to the Borrower
Pledge Agreement, and (y) the Net Cash Proceeds of any such sale are
applied to repay the Loans to the extent required by Section 4.02(A)(c),
and provided further, that the sale or disposition of the capital stock of
(i) the Borrower or any Subsidiary Guarantor shall be prohibited and (ii)
any Subsidiary of the Borrower (other than a Subsidiary Guarantor) shall
be prohibited unless it is for all of the outstanding capital stock of
such Subsidiary owned by the Borrower;
(g) other sales or dispositions of assets in each case to the extent
the Required Banks have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary may be liquidated into the Borrower
or a Subsidiary Guarantor; and
44
(i) acquisitions and dispositions of Permitted Acquisitions,
Permitted Investments and Permitted Joint Ventures in accordance with
Section 8.06(g).
8.03 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested
in good faith and by appropriate proceedings for which adequate reserves
(in the good faith judgment of the management of the Borrower) have been
established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the
ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Borrower or
any Subsidiary or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement or
the other Credit Documents;
(d) Liens on assets of the Borrower and each Subsidiary existing on
the Restatement Effective Date and listed on Annex IX hereto, without
giving effect to any subsequent extensions or renewals thereof;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof,
except as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases,
45
government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business (exclusive
of obligations in respect of the payment for borrowed money), provided
that the aggregate amount of deposits at any time pursuant to this clause
(f) shall not exceed $5,000,000;
(g) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) purchase money Liens securing payables arising from the purchase
by the Borrower or any Subsidiary Guarantor of any equipment or goods in
the normal course of business, provided that such payables shall not
constitute Indebtedness;
(k) any interest or title of a lessor under any lease
permitted by this Agreement;
(l) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price of assets
acquired by the Borrower or any Subsidiary Guarantor, provided that any
such Liens attach only to the assets so acquired and that all Indebtedness
secured by Liens created pursuant to this clause (l) shall not exceed
$7,000,000 at any time outstanding;
(m) Liens created pursuant to Capital Leases permitted
pursuant to Section 8.04(d); and
(n) Liens securing Indebtedness not in excess of $2,500,000 at any
time outstanding.
8.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and
the other Credit Documents;
46
(b) Indebtedness owing by (i) any Subsidiary Guarantor to another
Subsidiary Guarantor or the Borrower, (ii) any other Subsidiary to another
Subsidiary that is not a Subsidiary Guarantor and (iii) the Borrower to
any Subsidiary Guarantor;
(c) Indebtedness of the Borrower evidenced by the Senior
Subordinated Notes, in an aggregate principal amount at any time
outstanding not to exceed $70,000,000;
(d) Capitalized Lease Obligations of the Borrower and each
Subsidiary Guarantor, provided that the aggregate Capitalized Lease
Obligations under all Capital Leases entered into after Restatement
Effective Date shall not exceed
$10,500,000;
(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Indebtedness under Interest Rate Agreements relating to the
Loans on terms and conditions satisfactory to the Agent to the extent
determined, in good faith by the Borrower, to be non-speculative in
nature;
(g) Indebtedness of the Borrower represented by the obligations of
the Borrower to make payments with respect to the cancellation or
repurchase of certain stock of officers, employees and directors (or their
estates) of the Borrower and its Subsidiaries, to the extent permitted by
Section 8.09;
(h) Indebtedness incurred pursuant to purchase money
mortgages permitted by Section 8.03(l); and
(i) additional Indebtedness of the Borrower and the Subsidiary
Guarantors not to exceed an aggregate outstanding principal amount of
$5,000,000 at any time.
8.05 Capital Expenditures. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower and the Subsidiary Guarantors may make Consolidated
Capital Expenditures of up to $3,000,000 in any fiscal year.
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section 8.05(a) (without giving effect to this clause (b)) is not
fully expended during such fiscal year, the maximum amount which may be expended
during the immediately succeeding fiscal year pursuant to Section 8.05(a) shall
be increased by such unutilized amount, provided that such increase shall not
exceed $1,000,000 in any fiscal year.
47
(c) In addition to the foregoing, the Borrower may make Consolidated
Capital Expenditures in amounts in excess of those permitted under Sections
8.05(a) and (b), provided that the amount of such additional Consolidated
Capital Expenditures shall not exceed the Available Excess Cash Flow Amount at
the time of such additional Consolidated Capital Expenditure (determined before
giving effect to the making of such additional Consolidated Capital
Expenditure).
8.06 Advances, Investments and Loans. The Borrower will not, and
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to any
Person, except:
(a) the Borrower or any Subsidiary may invest in cash
and Cash Equivalents;
(b) the Borrower and any Subsidiary may acquire and hold receivables
owing to them, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
(c) the intercompany Indebtedness described in Section
8.04(b) shall be permitted;
(d) loans and advances to employees in the ordinary course of
business in an aggregate principal amount not to exceed $500,000 at any
time outstanding shall be permitted;
(e) the Borrower and each Subsidiary Guarantor may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(f) Interest Rate Agreements permitted by Section
8.04(f) shall be permitted;
(g) the Borrower or any Subsidiary Guarantor may make Permitted
Acquisitions, Permitted Investments (in accordance with the requirements
contained in the definition thereof) and/or make investments in Permitted
Joint Ventures not to exceed $1,000,000 (plus amounts returned to the
Borrower as a result of sales of such investment or pursuant to a dividend
payment thereunder), in the aggregate for all the foregoing plus the
Available Excess Cash Flow Amount at the time of the making thereof
(before giving effect thereto);
48
(h) the Borrower may make contributions to an employee stock
ownership plan, provided such contributions are in Common Stock; and
(i) the Borrower may hold the promissory notes acquired in
accordance with Section 8.02(f).
8.07 Leases. The Borrower will not permit the aggregate payments
(including, without limitation, any property taxes paid by the Borrower and its
Subsidiaries as additional rent or lease payments) by the Borrower and its
Subsidiaries on a consolidated basis under agreements in effect as of the
Restatement Effective Date and/or entered into after the Restatement Effective
Date (including any such agreement that is an extension, replacement,
substitution, or renewal of any agreement entered into prior to such date) to
rent or lease any real or personal property (exclusive of Capitalized Lease
Obligations) to exceed $3,000,000 in any fiscal year of the Borrower.
8.08 Prepayments of Indebtedness etc. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of the Senior Subordinated Notes or any Existing
Indebtedness;
(b) amend or modify, or permit the amendment or modification of, any
provisions of any Senior Subordinated Note Documents; and/or
(c) amend, modify or change in any manner adverse to the interests
of the Banks the certificate of incorporation (including, without
limitation, by the filing of any certificate of designation) or by-laws of
the Borrower or any agreement entered into by the Borrower with respect to
its capital stock or enter into any new agreement in any manner adverse to
the interests of the Banks with respect to the capital stock of the
Borrower.
8.09 Dividends, etc. (a) The Borrower will not, and will not permit
any of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in capital stock of such Person) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any warrants for
or options or stock appreciation rights in respect of any of such shares), or
set aside any funds
49
for any of the foregoing purposes, or permit any of its Subsidiaries to purchase
or otherwise acquire for consideration any shares of any class of the capital
stock of the Borrower or any other Subsidiary, as the case may be, now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued by such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that:
(i) any Subsidiary of the Borrower may pay dividends to
the Borrower or to a Subsidiary Guarantor; and
(ii) the Borrower may redeem or repurchase Common Stock (or options
to purchase such Common Stock) from (1) officers, employees and directors
(or their estates) upon the death, permanent disability, retirement or
termination of employment of any such Person or otherwise in accordance
with (x) the Stockholders Agreement and (y) any stock option plan or any
employee stock ownership plan, or (2) other stockholders of the Borrower,
so long as the purpose of such purchase is to acquire Common Stock for
reissuance to new officers, employees and directors (or their estates) of
the Borrower to the extent so reissued within 12 months of any such
purchase, provided that in all such cases (A) no Default or Event of
Default is then in existence or would arise therefrom and (B) the
aggregate amount of all cash paid in respect of all such shares so
redeemed or repurchased in any calendar year does not exceed $2,500,000
plus (I) proceeds of key-man life insurance used for the purposes set
forth in subclause (2) and (II) the Available Excess Cash Flow Amount at
the time of any such redemption and repurchase (before giving effect
thereto) and, provided further, that in the event that the Borrower
subsequently resells to any member of its, or any Subsidiary Guarantors',
management any shares redeemed or repurchased pursuant to this clause
(ii), the amount of repurchases the Borrower may make from Management
Investors pursuant to this clause (ii) shall be increased by an amount
equal to any cash received by the Borrower upon the resale of such shares;
and
(iii) the Borrower may pay regularly scheduled Dividends on the PIK
Preferred Stock pursuant to the terms thereof through the issuance of
additional shares of such PIK Preferred Stock.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary, or (c) transfer any of its properties or
assets to the Borrower or any Subsidiary or (B) the ability of the Borrower or
any other Subsidiary of the Borrower to create, incur, assume or suffer to exist
any Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of:
50
(i) this Agreement, the other Credit Documents and the
Senior Subordinated Note Documents;
(ii) applicable law;
(iii) customary non-assignment provisions entered into in the ordinary
course of business and consistent with past practices;
(iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into
for the sale or disposition of all or substantially all of the capital
stock or assets of such Subsidiary, so long as such sale or disposition is
permitted under this Agreement; and
(v) Liens permitted under Section 8.03 and any documents or
instruments governing the terms of any Indebtedness or other obligations
secured by any such Liens, provided that such prohibitions or restrictions
apply only to the assets subject to such Liens.
8.10 Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary to, enter into any transaction or series of
transactions after the Restatement Effective Date whether or not in the ordinary
course of business, with any Affiliate other than on terms and conditions
substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable
arm's-length transaction with a Person other than an Affiliate, provided that
the foregoing restrictions shall not apply to (i) transactions with its
Affiliates set forth in Annex X hereto, (ii) employment arrangements entered
into in the ordinary course of business with officers of the Borrower and its
Subsidiaries, (iii) customary fees paid to members of the Board of Directors of
the Borrower and of its Subsidiaries and (iv) the payment of management fees to
Xxxxx in an amount not to exceed $300,000 in any fiscal year plus expenses and
indemnity payments.
8.11 Fixed Charge Coverage Ratio. The Borrower will not permit the
ratio of (i) Consolidated EBITDA to (ii) Consolidated Fixed Charges for any Test
Period ending at the end of any fiscal quarter of the Borrower set forth below,
to be less than the ratio set forth opposite such fiscal quarter:
51
Fiscal Quarter Ratio
Fiscal quarter ended in December, 1997 1.15 to 1
Fiscal quarter ended in March, 1998 1.15 to 1
Fiscal quarter ended in June, 1998 1.05 to 1
Fiscal quarter ended in September, 1998 1.05 to 1
Fiscal quarter ended in December, 1998 1.05 to 1
Fiscal quarter ended in March, 1999 1.05 to 1
Fiscal quarter ended in June, 1999 1.15 to 1
Fiscal quarter ended in September, 1999 1.15 to 1
Each fiscal quarter ended thereafter 1.15 to 1
8.12 Minimum Consolidated EBITDA. The Borrower will not permit
Consolidated EBITDA for any Test Period ending at the end of any fiscal quarter
of the Borrower set forth below to be less than the amount set forth opposite
such fiscal quarter:
Fiscal Quarter
Amount
Fiscal quarter ended in December, 1997 $28,000,000
Fiscal quarter ended in March, 1998 $26,500,000
Fiscal quarter ended in June, 1998 $29,000,000
Fiscal quarter ended in September, 1998 $32,500,000
Fiscal quarter ended in December, 1998 $35,000,000
Fiscal quarter ended in March, 1999 $35,000,000
Fiscal quarter ended in June, 1999 $37,500,000
Fiscal quarter ended in September, 1999 $38,500,000
Fiscal quarter ended in December, 1999 $41,500,000
Fiscal quarter ended in March, 2000 $42,500,000
Fiscal quarter ended in June, 2000 $43,500,000
Fiscal quarter ended in September, 2000 $45,500,000
Fiscal quarter ended in December, 2000 $49,500,000
Fiscal quarter ended in December, 2001 $50,000,000
Each fiscal quarter ended thereafter
$50,000,000
52
8.13 Leverage Ratio. The Borrower will not permit the Leverage Ratio
as of the end of any fiscal quarter of the Borrower set forth below of the
Borrower to be more than the ratio set forth opposite such fiscal quarter:
Fiscal Quarter Ratio
Fiscal quarter ended in December, 1997 2.75 to 1
Fiscal quarter ended in March, 1998 3.00 to 1
Fiscal quarter ended in June, 1998 2.75 to 1
Fiscal quarter ended in September, 1998 2.75 to 1
Fiscal quarter ended in December, 1998 2.50 to 1
Fiscal quarter ended in March, 1999 2.50 to 1
Fiscal quarter ended in June, 1999 2.25 to 1
Fiscal quarter ended in September, 1999 2.25 to 1
Fiscal quarter ended in December, 1999 2.25 to 1
Each fiscal quarter ended thereafter 2.00 to 1
8.14 Issuance of Stock. The Borrower will not permit any of its
Subsidiaries directly or indirectly to issue, sell, assign, pledge or otherwise
encumber or dispose of any shares of its capital stock or other securities (or
warrants, rights or options to acquire shares or other equity securities) of
such Subsidiary, except, to the extent permitted by Section 8.06, to the
Borrower or to qualify directors if required by applicable law.
SECTION 9. Events of Default. Upon the occurrence of
any of the following specified events (each, an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any Unpaid Drawing,
any interest on the Loans or any Fees or any other amounts owing hereunder or
under any other Credit Document; or
9.02 Representations, etc. Any representation, warranty or statement
made by any Credit Party herein or in any other Credit Document or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
9.03 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 7.11 or 8, or (b) default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in Section 9.01,
9.02 or clause (a) of this Section 9.03) contained in this Agreement and such
default shall continue unremedied for a period of at least 30 days after notice
to the defaulting party by the Agent or the Required Banks; or
53
9.04 Default Under Other Agreements. (a) The Borrower or any of its
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, applicable
thereto or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause any such
Indebtedness to become due prior to its stated maturity; or (b) any such
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, provided that it
shall not constitute an Event of Default pursuant to this Section 9.04 unless
the principal amount of any one issue of such Indebtedness exceeds $3,500,000 or
the aggregate amount of all Indebtedness referred to in clauses (a) and (b)
above exceeds $4,500,000 at any one time; or
9.05 Bankruptcy, etc. The Borrower or any of its Material
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy", as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Borrower or any of its Material Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any of its Material Subsidiaries; or the Borrower or
any of its Material Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to or any of its Material Subsidiaries; or there is
commenced against the Borrower or any of its Material Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or the Borrower or
any of its Material Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
the Borrower or any of its Material Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or the Borrower or any of its
Material Subsidiaries makes a general assignment for the benefit of creditors;
or any corporate action is taken by the Borrower or any of its Material
Subsidiaries for the purpose of effecting any of the foregoing; or
54
9.06 ERISA. (a) A single-employer plan (as defined in Section 4001
of ERISA) established by the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or shall provide security to induce the issuance of such waiver or
extension, (b) any Plan is or shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA or an event has occurred
entitling the PBGC to terminate a Plan under Section 4042(a) of ERISA, (c) any
Plan shall have an Unfunded Current Liability or (d) the Borrower or a
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a material
liability to or on account of a termination of or a withdrawal from a Plan under
Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and there shall result
from any such event or events described in the preceding clauses of this Section
9.06 the imposition of a Lien upon the assets of the Borrower or any Subsidiary,
the granting of a security interest, or a liability or a material risk of
incurring a liability to the PBGC or a Plan or a trustee appointed under ERISA
or a penalty under Section 4971 of the Code, in each case which would have, in
the opinion of the Required Banks a Material Adverse Effect; or
9.07 Security Documents. Any Security Document shall cease to be in
full force and effect, or shall cease to give the Collateral Agent any Lien
encumbering assets with an aggregate fair market value in excess of $1,000,000
(and, if encumbering assets with a fair market value of less than $5,000,000,
for a period greater than thirty or more days), or any material rights, powers
and privileges purported to be created thereby in favor of the Collateral Agent
or any Credit Party shall default in any material respect in the due performance
or observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document; or
9.08 Subsidiary Guaranty. The Subsidiary Guaranty or any provision
thereof shall cease to be in full force or effect, or any Subsidiary Guarantor
or any Person acting by or on behalf of any such Subsidiary Guarantor shall deny
or disaffirm such guarantor's obligations under such Subsidiary Guaranty or any
such Subsidiary Guarantor shall default in the due performance or observance of
any material term, covenant or agreement on its part to be performed or observed
by it pursuant to the Subsidiary Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving a liability of
$3,500,000 or more in the case of any one such judgment or decree and $4,500,000
or more in the aggregate for all such judgments and decrees for the Borrower and
its Subsidiaries (not paid or to the extent not covered by insurance) and any
such judgments or decrees shall not have been vacated, discharged or stayed or
bonded pending appeal within 60 days from the entry thereof;
55
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that, if an Event of Default specified
in Section 9.05 shall occur with respect to the Borrower, the result which would
occur upon the giving of written notice by the Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any Commitment Commission shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Loans and
all obligations owing hereunder (including Unpaid Drawings) and thereunder to
be, whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; (iii) enforce, as Collateral Agent (or direct the
Collateral Agent to enforce), any or all of the Liens and security interests
created pursuant to the Security Documents; (iv) terminate any Letter of Credit
which may be terminated in accordance with its terms; and (v) direct the
Borrower to pay (and the Borrower hereby agrees upon receipt of such notice, or
upon the occurrence of any Event of Default specified in Section 9.05 in respect
of the Borrower, it will pay) to the Collateral Agent at the Payment Office such
additional amounts of cash, to be held as security for the Borrower's
reimbursement obligations in respect of Letters of Credit then outstanding equal
to the aggregate Stated Amount of all Letters of Credit then outstanding.
SECTION 10. Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Additional Mortgages" shall have the meaning provided in
Section 7.11.
"Adjusted Cash Flow" for any fiscal year shall mean Consolidated Net
Income for such fiscal year (after provision for taxes) plus the amount of all
net non-cash charges (including, without limitation, depreciation, deferred tax
expense, non-cash interest expense, amortization of deferred customer
acquisition costs write-downs of inventory and other non-cash charges) that were
deducted in arriving at Consolidated Net Income for such fiscal year minus the
total amount of deferred customer acquisition costs capitalized during such
period, minus the amount of all non-cash gains and gains from sales of assets
(other than sales of inventory and equipment in the normal course of business)
that were added in arriving at Consolidated Net Income for such fiscal year.
56
"Adjusted RC Percentage" shall mean (x) at a time when no Bank
Default exists, for each RC Bank such RC Bank's Revolving Percentage and (y) at
a time when a Bank Default exists (i) for each RC Bank that is a Defaulting
Bank, zero and (ii) for each RC Bank that is a Non-Defaulting Bank, the
percentage determined by dividing such RC Bank's Revolving Commitment at such
time by the Adjusted Total Revolving Commitment at such time, it being
understood that all references herein to Revolving Commitments and the Adjusted
Total Revolving Commitment at a time when the Total Revolving Commitment or
Adjusted Total Revolving Commitment, as the case may be, has been terminated
shall be references to the Revolving Loan Commitments or Adjusted Total
Revolving Commitment, as the case may be, in effect immediately prior to such
termination, provided that (A) no RC Bank's Adjusted RC Percentage shall change
upon the occurrence of a Bank Default from that in effect immediately prior to
such Bank Default if, after giving effect to such Bank Default and any repayment
of Revolving Loans and Swingline Loans at such time pursuant to Section
4.02(A)(a) or otherwise, the sum of (i) the aggregate outstanding principal
amount of Revolving Loans of all Non-Defaulting Banks plus (ii) the aggregate
outstanding principal amount of Swingline Loans plus (iii) the Letter of Credit
Outstandings, exceeds the Adjusted Total Revolving Loan Commitment; (B) the
changes to the Adjusted RC Percentage that would have become effective upon the
occurrence of a Bank Default but that did not become effective as a result of
the preceding clause (A) shall become effective on the first date after the
occurrence of the relevant Bank Default on which the sum of (i) the aggregate
outstanding principal amount of the Revolving Loans of all Non-Defaulting Banks
plus (ii) the aggregate outstanding principal amount of the Swingline Loans plus
(iii) the Letter of Credit Outstandings is equal to or less than the Adjusted
Total Revolving Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted RC
Percentage is changed pursuant to the preceding clause (B) and (ii) any
repayment of such Bank's Revolving Loans, or of Unpaid Drawings with respect to
Letters of Credit or of Swingline Loans, that were made during the period
commencing after the date of the relevant Bank Default and ending on the date of
such change to its Adjusted RC Percentage must be returned to any Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of such
Borrower, then the change to such Non-Defaulting Bank's Adjusted RC Percentage
effected pursuant to said clause (B) shall be reduced to that positive change,
if any, as would have been made to its Adjusted RC Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted RC
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted RC Percentage of
the outstanding principal amount of Swingline Loans and of Letter of Credit
Outstandings equalling such Bank's Revolving Commitment at such time.
"Adjusted Revolving Commitment" for each RC Bank that is a
Non-Defaulting Bank shall mean at any time the product of such RC Bank's
Adjusted RC Percentage and the Adjusted Total Revolving
Commitment.
"Adjusted Total Revolving Commitment" shall mean at any time the
Total Revolving Commitment less the aggregate Revolving Commitments of all
Defaulting Banks.
57
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of
this Agreement and shall include any successor to the Agent appointed pursuant
to Section 11.09.
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time further modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Asset Sale that the Borrower intends to use to purchase,
construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean 0.50% less the Margin
Reduction Discount, if any.
"Applicable Eurodollar Margin" shall mean 1.50% less the Margin
Reduction Discount, if any.
"Asset Sale" shall mean the sale, transfer or other disposition by
the Borrower or any Subsidiary to any Person other than the Borrower or any
Subsidiary Guarantor of any asset of the Borrower or such Subsidiary (other than
sales, transfers or other dispositions in the ordinary course of business of
inventory and/or obsolete or excess equipment).
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower in each case to the
extent acceptable to the Agent.
"Available Excess Cash Flow Amount" shall mean at any time, an
amount equal to 50% of (A) the aggregate Excess Cash Flow determined for each
fiscal year of the Borrower (commencing with the fiscal year ending on December
31, 1997) then ended less (B) the sum of (w) the aggregate amount of the
Available Excess Cash Flow Amount with which the
58
Borrower has therefore made Permitted Acquisitions, Permitted Investments and/or
investments in Permitted Joint Ventures in accordance with Section 8.06(g), (x)
the aggregate amount of Consolidated Capital Expenditures theretofore made
pursuant to Section 8.05(c) hereof, (y) the aggregate amount of redemptions and
repurchases of the Borrower's Common Stock theretofore made pursuant to Section
8.09(a)(ii)(B)(II) and (z) the Available Excess Cash Flow Amount with which the
Borrower has therefore made voluntary prepayments in accordance with Section
4.01 that have been applied pursuant to the last proviso in such Section.
"BB Determination Date" shall mean for any month, the 15th of such
month, or if not a Business Day, the next succeeding Business Day.
"Bank" shall have the meaning provided in the first
paragraph of this Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans or
to fund its portion of any unreimbursed payment under Section 2.05(c) or (ii) a
Bank having notified the Agent and/or the Borrower that it does not intend to
comply with the obligations under Section 1.01 or under Section 2.05(c), in the
case of either clause (i) or (ii) as a result of the appointment of a receiver
or conservator with respect to such Bank at the direction or request of any
regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in
Section 9.05.
"Base Rate" at any time shall mean the higher, (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrowing" shall mean the incurrence of (i) Swingline Loans by the
Borrower from BTCo on a given date or (ii) one Type of Loan pursuant to a single
Facility by the Borrower from all of the Banks having Commitments with respect
to such Facility on a pro rata basis on a given date (or resulting from
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period; provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
59
"Borrowing Base" shall mean, at any time, the sum of (x) 80% of the
book value of the accounts receivable of the Borrower and the Subsidiary
Guarantors plus (y) 50% of the book value of the inventory of the Borrower and
the Subsidiary Guarantors, in each determined on a consolidated basis in
accordance with GAAP and as set forth in the last Borrowing Base Certificate
delivered by the Borrower pursuant to Section 5.01(d) or 7.01(g) as the case may
be, provided that the Borrowing Base shall be zero at any time when a Default
under 7.01(g) has occurred and is continuing.
"Borrowing Base Certificate" shall have the meaning
provided in Section 5.01(d).
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Ratings
Services, a division of XxXxxx-Xxxx, Inc. ("S&P") is at least A-1 or the
equivalent thereof or from Xxxxx'x Investors Service, Inc. ("Xxxxx'x") is at
least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), in each
case with maturities of not more than six months from the date of acquisition,
(iii) repurchase obligations with a term of not more than seven days for
underlying securities of the
60
types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
any Bank or Approved Bank or by the parent company of any Bank or Approved Bank
and commercial paper issued by, or guaranteed by, any industrial or financial
company with a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
(any such company, an "Approved Company"), or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be, and in each
case maturing within six months after the date of acquisition and (v)
investments in money market funds substantially all of whose assets are
comprised of securities of the type described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. ss. 9601 et seq.
"Change of Control" shall mean (a) prior to the Borrower's initial
public offering of common stock (it being understood that the term "initial
public offering" shall not include any registration of Common Stock under Form
S-4 or Form S-8 in connection with a transfer otherwise permitted by this
Agreement), the Permitted Holders cease to be the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act as currently in effect),
directly or indirectly, of a majority in the aggregate of the total voting power
of the Voting Stock of the Borrower, whether as a result of the issuance of
securities of the Borrower, any merger, consolidation, liquidation or
dissolution of the Borrower, any direct or indirect transfer of securities or
otherwise (for purposes of this clause (a) and clause (b) below, the Permitted
Holders shall be deemed to beneficially own any Voting Stock of a corporation
(the "specified corporation") held by any other corporation (the "parent
corporation") so long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the voting power of the
Voting Stock of the parent corporation), (b) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the "beneficial owner" (as defined in clause
(a) above), directly or indirectly, of more than 30% of the total voting power
of the Voting Stock of the Borrower unless the Permitted Holders "beneficially
own" (as defined in clause (a) above), directly or indirectly, in the aggregate
a greater percentage of the total voting power of the Voting Stock of the
Borrower than such other person, (c) occupation of a majority of the seats of
the Board of Directors of the Borrower by Persons whose nomination for election
by the stockholders of the Borrower was not approved by either (i) a majority of
the Permitted Holders or (ii) a majority of the directors of the Borrower whose
election or nomination for election was previously so approved or (d) any
"Change of Control or similar term as defined in the Senior Subordinated Note
Indenture.
61
"Co-Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Restatement
Effective Date and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined
in each of the Security Documents.
"Collateral Agent" shall mean the Agent acting as
collateral agent for the Banks.
"Commitment" shall mean, with respect to each Bank, such Bank's Term
Commitment and Revolving Commitment.
"Commitment Commission" shall have the meaning provided
in Section 3.01(a).
"Common Stock" shall mean the common stock of the
Borrower.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with GAAP,
are or are required to be included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, provided
that Consolidated Capital Expenditures shall in any event include the purchase
price paid in connection with the acquisition of any Person (including through
the purchase of all of the capital stock or other ownership interests of such
Person or through merger or consolidation) to the extent allocable to property,
plant and equipment, provided further, that Consolidated Capital Expenditures
shall only include the amount thereof actually paid in cash during such period.
"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense, but excluding, however, interest expense not
payable in cash and amortization of discount and deferred issuance and financing
costs.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
62
"Consolidated Current Liabilities" shall mean, as to any Person at
any time, the current liabilities of such Person and its Subsidiaries determined
on a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated EBIT" shall mean, for any period, (A) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization or
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary losses less (B) the
amount for such period of gains on sales of assets (excluding sales in the
ordinary course of business) and other extraordinary gains, all as determined on
a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense,
(iii) amortization expense and (iv) (x) amortization of deferred acquisition
cost minus (y) the total amount of deferred customer acquisition costs
capitalized during such period, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Fixed Charges" shall mean, for any period, the sum,
without duplication, of the amounts for such period of (i) Consolidated Cash
Interest Expense, and (ii) scheduled payments on the Term Loans and Existing
Indebtedness, all as determined on a consolidated basis for the Borrower and its
Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of the Borrower and its Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Agreements.
"Consolidated Net Income" shall mean for any period, the net income
(or loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP,
provided that there shall be excluded (i) the income (or loss) of any Person
(other than Subsidiaries of the Borrower) in which any other Person (other than
the Borrower or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Borrower or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Borrower or is merged into or consolidated with the Borrower or any of
its Subsidiaries or that Person's assets are acquired by the Borrower or any of
its Subsidiaries, (iii) the income of any Subsidiary of the Borrower to the
63
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary, (iv)
Transaction Expenses and (v) compensation expense resulting from the issuance of
capital stock, stock options or stock appreciation rights issued to employees,
including officers, of the Borrower or any Subsidiary, or the exercise of such
options or rights, in each case to the extent the obligation (if any) associated
therewith is not expected to be settled by the payment of cash by the Borrower
or any Affiliate of the Borrower and compensation expense resulting from the
repurchase of any such capital stock, options and rights.
"Consolidated Senior Debt" shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
the Borrower and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP other than such indebtedness in respect of the Senior
Subordinated Notes or any Indebtedness ranked pari passu with or subordinated to
the Senior Subordinated Notes.
"Contingent Obligations" shall mean as to any Person any obligation
of such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided however, that
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the
Security Documents and the Subsidiary Guaranty and any documents executed in
connection therewith.
64
"Credit Event" shall mean and include the making of a Loan or the
issuance of a Letter of Credit.
"Credit Party" shall mean the Borrower and the Subsidiary
Guarantors.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated Affiliate" shall mean any Affiliate of Xxxxx other than
any corporation or other Person (except for any corporation or other Person
engaged in a business similar, complementary or related to the nature or type of
the business of the Borrower and its Subsidiaries) controlled by, or any
investment fund (other than Xxxxx Investment Associates V, L.P. or any
investment fund that is not solely comprised of current and former professionals
of Xxxxx) managed by, Xxxxx.
"Dividends" shall have the meaning provided in Section 8.09.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
incorporated or organized in the United States or any state or territory
thereof.
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
65
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251 et
seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 7401 et seq.; the Clean
Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss.
3808 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq. and any
applicable state and local or foreign counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect as of
the Restatement Effective Date and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower, a Subsidiary or a Credit Party would
be deemed to be a "single employer" within the meaning of Sections 414(b), (c),
(m) and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the
rates provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period
for a Eurodollar Loan, (i) the offered quotation to first-class banks in the
interbank Eurodollar market by the Agent for dollar deposits of amounts in same
day funds comparable to the outstanding principal amount of the Eurodollar Loan
of the Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (including
without limitation any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System in respect
of Eurocurrency liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
66
"Event of Default" shall have the meaning provided in
Section 9.
"Excess Cash Flow" shall mean, for any fiscal year, the remainder of
(i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y)(I) the
decrease, if any, in Working Capital less (II) the decrease, if any, in the
principal amount of Revolving Loans, in each case from the first day to the last
day of such fiscal year, plus (ii) to the extent not included in (i) above, any
amounts received by the Borrower and its Subsidiaries in settlement of, or in
payment of any judgments resulting from, actions, suits or proceedings with
respect to the Borrower and/or its Subsidiaries from the first day to the last
day of such fiscal year, plus (iii) to the extent not included in (i) above, any
amounts received by the Borrower and/or its Subsidiaries in connection with the
repayment or redemption of any long-term promissory notes and/or preferred stock
of other Persons held by them, minus (iv) the sum of (w) the amount of
Consolidated Capital Expenditures (except to the extent financed through the
incurrence of Indebtedness) made during such fiscal year (x) the capitalized
software costs and capitalized cost for mailing list rights and (y)(I) the
increase, if any, in Working Capital less (II) the increase, if any, in the
principal amount of Revolving Loans, in each case from the first day to the last
day of such fiscal year and (z) any repayments or prepayments of the principal
amount of Term Loans, except prepayments of the principal amount of Term Loans
made pursuant to Sections 4.02(A)(c), (d), (e), (f), (g) and/or (i).
"Existing Indebtedness" shall have the meaning provided
in Section 6.20.
"Existing Letter of Credit" shall have the meaning
provided in Section 2.01(d).
"Existing Mortgage Policies" shall mean the Mortgage Policies under,
and as defined in, the Original Credit Agreement.
"Existing Mortgages" shall mean all the Mortgages under, and as
defined in, the Original Credit Agreement.
"Expiration Date" shall mean December 31, 1997.
"Facility" shall mean any of the credit facilities established under
this Agreement, i.e., the Term Facility or the Revolving Facility.
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
67
"Fees" shall mean all amounts payable pursuant to, or
referred to in, Section 3.01.
"Final Maturity Date" shall mean February 1, 2002.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances", "hazardous waste", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", "toxic
substances", "toxic pollutants", "contaminants", or "pollutants", or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"HCA Holdings" shall mean HCA Holdings, Inc., a Delaware
corporation.
"HCE" shall mean Hosiery Corporation Enterprises, a
Delaware corporation.
"Indebtedness" of any Person shall mean, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrower and/or its Subsidiaries to the extent
such guaranteed obligations do not constitute Indebtedness and are otherwise
permitted hereunder), provided that Indebtedness shall not include trade
payables and accrued expenses, in each case arising in the ordinary course of
business.
68
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, any interest rate cap agreement, any interest rate collar agreement
or other similar agreement or arrangement designed to protect the Borrower or
any Subsidiary against fluctuations in interest rates.
"Xxxxx" shall mean Xxxxx & Company, L.P., a Delaware limited
partnership doing business as Xxxxx & Company, Inc.
"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01(b).
"Letter of Credit Issuer" shall mean BTCo or any Bank which at the
request of the Borrower and with the consent of the Agent agrees, in such Bank's
sole discretion, to become a Letter of Credit Issuer for purposes of issuing
Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning
provided in Section 2.03(a).
"Leverage Ratio" shall mean, at any date of determination, the ratio
of Consolidated Senior Debt on such date to Consolidated EBITDA for the Test
Period most recently ended (taken as one accounting period) and ending on such
date.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
69
"Loan" shall have the meaning provided in Section 1.01.
"Management Investor" means the executive officers of the Borrower
(i) on the Restatement Effective Date and any persons who become executive
officers of the Borrower at a time when Xxxxx and its Affiliates "beneficially
own" (as defined in clause (a) of the definition of ("Change of Control"),
directly or indirectly, more than a majority of the capital stock of the
Borrower and (ii) who own capital stock of the Borrower.
"Mandatory Borrowing" shall have the meaning provided in
Section 1.01(d).
"Margin Reduction Discount" shall mean zero, provided that the
Margin Reduction Discount shall be increased to [1/4 of 1% or 1/2 of 1%], as the
case may be, as specified in clauses (i) or (ii) below, at any time on or after
the Restatement Effective Date, when, and for so long as, the ratio set forth in
such clause has been satisfied as at the end of the then Relevant Test Periods:
(i) the Margin Reduction Discount shall be 1/4 of 1% in the event
that as at the end of the Relevant Test Period the Leverage Ratio is
greater than 1.25 to 1 but less than or equal to 1.75 to 1; or
(ii) the Margin Reduction Discount shall be 1/2 of 1% in the event
that as at the end of the Relevant Test Period the Leverage Ratio is less
than or equal to 1.25 to 1.
The MRD Ratios shall be determined for the Relevant Test Period, by delivery of
an officer's certificate of the Borrower to the Banks pursuant to Section
7.01(e), which certificate shall set forth the calculation of the MRD Ratios.
The Margin Reduction Discount so determined shall apply, except as set forth
below, from five Business Days after the date on which such officer's
certificate is delivered to the Agent to the earlier of (x) the date on which
the next certificate is delivered to the Agent pursuant to Section 7.01(e) and
(y) the 45th day following the end of the fiscal quarter in which such first
certificate was delivered to the Agent. Notwithstanding anything to the contrary
contained above, the Margin Reduction Discount shall be zero (x) if no officer's
certificate has been delivered to the Banks pursuant to Section 7.01(e) which
sets forth the MRD Ratios for the Relevant Test Period or the financial
statements upon which any such calculations are based have not been delivered,
until such a certificate and/or financial statements are delivered and (y) at
all times when there shall exist a violation of Section 9.01 or an Event of
Default. It is understood and agreed that the Margin Reduction Discount as
provided above shall in no event be cumulative and only the Margin Reduction
Discount available pursuant to either clause (i) or (ii), if any, contained in
this definition shall be applicable.
70
"Margin Stock" shall have the meaning provided in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
the business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
"Material Subsidiary" shall mean, at any time, any Subsidiary of the
Borrower that (x) has assets at such time comprising 5% or more of the
consolidated assets of the Borrower and its Subsidiaries or (y) had net income
in the most recently ended fiscal year of the Borrower comprising 5% or more of
the consolidated net income of the Borrower and its Subsidiaries for such fiscal
year.
"Maximum Swingline Amount" shall mean $5,000,000.
"Minimum Borrowing Amount" shall mean (i) for Term Loans and
Revolving Loans maintained as Base Rate Loans, $1,000,000, (ii) for Term Loans
and Revolving Loans maintained as Eurodollar Loans, $5,000,000 and (iii) for
Swingline Loans, $100,000.
"Mortgage Amendments" shall have the meaning provided in
Section 5.01(g)(III).
"Mortgaged Properties" shall mean all Real Property of the Borrower
subject to the Existing Mortgages.
"Mortgages" shall have the meaning provided in Section
5.01(g)(III).
"MRD Ratio" shall mean at any time the ratio that is correctly
specified in the then latest officer's certificate delivered to the Banks
pursuant to Section 7.01(e) as the Leverage Ratio, as at the end of the Test
Period ended as of the last day of the fiscal quarter or year with respect to
which such officer's certificate has been delivered.
"Xxxxxx" shall mean Xx. Xxxxxx X. Xxxxxx.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale (including payment of
principal, premium and interest of Indebtedness secured by the assets the
subject of the Asset Sale and required to be, and which is, repaid under the
terms thereof as a result of such Asset Sale), and incremental taxes paid or
payable as a result thereof.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
71
"Note" shall have the meaning provided in Section 1.05.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03.
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Agent at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx or such other office as the Agent may designate to
the Borrower from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Participant" shall have the meaning provided in Section
2.05(a).
"Payment Office" shall mean the office of the Agent at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx or such other office as the Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any acquisition of property or
assets of a nature or type or which will be used in a business similar,
complementary or related to the nature or type of the property and assets of, or
the business of, the Borrower and its Subsidiaries existing on the date of such
investment (as determined in good faith by the Board of Directors of the
Borrower).
"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent.
"Permitted Holders" means Xxxxx, the Designated Affiliates, the
Management Investors, Xxxxxx, any employee stock ownership plan established by
the Borrower for the benefit of the employees of the Borrower or any Subsidiary
and their Permitted Transferees.
72
"Permitted Investment" shall mean any investment in a Person having
property and assets of a nature or type, or engaged in a business, similar,
complementary or related to the nature or type of the property and assets of, or
the business of, the Borrower and its Subsidiaries existing on the date of such
investment (as determined in good faith by the Board of Directors of the
Borrower), if as result of such investment (i) such Person becomes a Subsidiary
of the Borrower in which case such Subsidiary shall become a Subsidiary
Guarantor and shall deliver and become party to all Security Documents pursuant
to the requirements set forth in Section 7.11(b) or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Borrower or a Subsidiary
Guarantor.
"Permitted Joint Venture" shall mean any Person (other than a
Subsidiary) in which the Borrower or any Subsidiary Guarantor shall invest for
the purpose of engaging in the direct marketing of products other than those
currently offered by the Borrower and its Subsidiaries.
"Permitted Liens" shall mean Liens described in clauses (a), (b),
(d), (f), (h), (j) and (l) of Section 8.03.
"Permitted Transferees" means (i) in the case of Xxxxx, (A) any
Designated Affiliate, (B) any managing director, general partner, limited
partner, director, officer or employee of Xxxxx or any Designated Affiliate
(collectively, "Xxxxx Associates"), (C) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any Xxxxx Associate and (D)
any trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or partners of which, include only a Xxxxx Associate, his or her
spouse, parents, siblings, direct lineal descendants or adopted children, and
(ii) in the case of any Management Investors and Xxxxxx, (A) his executor,
administrator, testamentary trustee, legatee or beneficiaries, (B) his or her
spouse, parents, siblings, direct lineal descendants or adopted children or (C)
a trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or partners of which, include only the Management Investor or
Xxxxxx, as the case may be, and his or her spouse, parents, siblings, direct
lineal descendants and/or adopted children.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
73
"PIK Preferred Stock" shall mean the Borrower's pay-in-kind
preferred stock issued pursuant to the Certificate of the Designation Powers,
Preferences and Rights of Pay-In-Kind Preferred
Stock, dated October 17, 1994.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) the Borrower, a Subsidiary or
an ERISA Affiliate, and each such plan for the five year period immediately
following the latest date on which the Borrower, a Subsidiary, or an ERISA
Affiliate maintained, contributed to or had an obligation to contribute to such
plan.
"Pledge Agreements" shall have the meaning provided in
Section 5.01(g)(I).
"Pledged Securities" shall mean all the Pledged Securities as
defined in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"Quarter End Date" shall mean December 31 of each year and (i) March
28, June 27 and September 26 in 1998; (ii) March 27, June 26 and September 25 in
1999; (iii) April 1, July 1 and September 30 in 2000; and (iv) March 31, June 30
and September 29 in 2001.
"RCRA" shall mean the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. ss. 6901 et seq.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"XX Xxxxx" shall mean each Bank with Revolving Commitment.
"Register" shall have the meaning provided in Section 12.16.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
74
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as described in Section 8.01,
provided all such assets may be acquired pursuant to Section 4.10 of the Senior
Subordinated Note Indenture so long as such Section is in effect.
"Reinvestment Election" shall have the meaning provided
in Section 4.02(A)(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of an Asset Sale to purchase, construct or otherwise acquire Reinvestment
Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Banks, shall have delivered a written
termination notice to the Borrower, provided that such notice may only be given
while an Event of Default exists, (ii) the date occurring one year after such
Reinvestment Election and (iii) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, proceed with the purchase,
construction or other acquisition of Reinvestment Assets with the related
Anticipated Reinvestment Amount.
"Relevant Test Period" shall mean, at any time, the Test Period
ending on the last day of the then most recently ended fiscal quarter of the
Borrower with respect to which an officer's certificate has been delivered to
the Banks pursuant to Section 7.01(e).
"Reportable Event" shall mean an event described in Section 4043(b)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks whose outstanding
Term Loans and Revolving Commitments (or, if after the Total Revolving
Commitment has been terminated, Revolving Loans and Adjusted RC Percentages of
Letter of Credit Outstandings) constitute greater than 50% of the sum of (i) the
total outstanding Term Loans of Non-Defaulting Banks and (ii) the Adjusted Total
Revolving Commitment (or, if after the Total Revolving Commitment has been
terminated, the aggregate outstanding Revolving Loans and Letter of Credit
Outstandings).
75
"Restatement Effective Date" shall have the meaning
provided in Section 5.01.
"Revolving Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I hereto directly below the
column entitled "Revolving Commitment", as the same may be reduced from time to
time pursuant to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to time
as a result of assignments to or from such Bank pursuant to Section 12.04.
"Revolving Facility" shall mean the Facility evidenced by
the Total Revolving Commitment.
"Revolving Loan" shall have the meaning provided in
Section 1.01(b).
"Revolving Percentage" shall mean at any time for each Bank with a
Revolving Commitment, the percentage obtained by dividing such Bank's Revolving
Commitment by the Total Revolving Commitment, provided that if the Total
Revolving Commitment has been terminated, the Revolving Percentage of each Bank
shall be determined by dividing such Bank's Revolving Commitment immediately
prior to such termination by the Total Revolving Commitment immediately prior to
such termination.
"Scheduled Repayment" shall have the meaning provided in
Section 4.02(A)(b).
"SEC" shall have the meaning provided in Section 7.01(j).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the relevant Security Agreement.
"Security Agreement" shall have the meaning provided in
Section 5.01(g)(II).
"Security Documents" shall mean each Pledge Agreement,
each Security Agreement, each Mortgage and each Additional Mortgage,
if any.
"Senior Subordinated Note Documents" shall mean and include each of
the documents, instruments (including the Senior Subordinated Notes) and other
agreements entered into by the Borrower (including, without limitation, the
Senior Subordinated Note Indenture) relating to the issuance by the Borrower of
the Senior Subordinated Notes, as in effect on the Restatement Effective Date
and as the same may be supplemented, amended or modified from time to time in
accordance with the terms hereof and thereof.
76
"Senior Subordinated Note Indenture" shall mean the Indenture
entered into by and between the Borrower and United States Trust Company of New
York, as trustee thereunder, with respect to the Senior Subordinated Notes as in
effect on the Restatement Effective Date and as the same may be modified,
amended or supplemented from time to time in accordance with the terms hereof
and thereof.
"Senior Subordinated Notes" shall mean the Senior Subordinated Notes
due 2002 issued by the Borrower under the Senior Subordinated Note Indenture, as
in effect on the Restatement Effective Date and as the same may be supplemented,
amended or modified from time to time in accordance with the terms thereof and
hereof.
"Standby Letter of Credit" shall have the meaning
provided in Section 2.01(a).
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Stonebury" shall mean The Stonebury Group Incorporated,
a Nevada corporation.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantors" shall mean each Domestic Subsidiary of the
Borrower on the Restatement Effective Date other than HCE.
"Subsidiary Guaranty" shall have the meaning provided in
Section 5.01(f).
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Final Maturity Date.
"Swingline Loan" shall have the meaning provided in
Section 1.01(c).
77
"Taxes" shall have the meaning provided in Section
4.04(a).
"Term Commitment" shall mean, with respect to each Bank, the amount,
if any, set forth opposite such Bank's name on Annex I hereto directly below the
column entitled "Term Commitment" as the same may be terminated pursuant to
Section 3.03.
"Term Facility" shall mean the Facility evidenced by the
Total Term Commitment.
"Term Loan" shall have the meaning provided in Section
1.01(a).
"Test Period" shall mean for any determination the four consecutive
fiscal quarters of the Borrower then last ended (taken as one accounting
period).
"TF Bank" shall mean at any time each Bank with a Term Commitment
(or if the Total Term Commitment has been terminated, outstanding Term Loans) at
such time.
"Total Term Commitment" shall mean the sum of the Term
Commitments of each of the Banks.
"Total Commitment" shall mean the sum of the Total Term Commitment
and the Total Revolving Commitment.
"Total Revolving Commitment" shall mean the sum of the
Revolving Commitments of each of the Banks.
"Total Unutilized Revolving Commitment" shall mean, at any time, (i)
the Total Revolving Commitment at such time less (ii) the sum of the aggregate
principal amount of all Revolving Loans and Swingline Loans at such time plus
the Letter of Credit Outstandings at such time.
"Trade Letter of Credit" shall have the meaning provided
in Section 2.01(a).
"Transaction Expenses" shall mean (i) "Transaction Expenses" as
defined in the Original Credit Agreement and (ii) all fees and expenses incurred
in connection with, and payable prior to or substantially concurrently with the
closing of, the refinancing of the Loans under and as defined in the Original
Credit Agreement, and including all fees paid to any of the Banks and the Agent
hereunder, all fees paid to Xxxxx & Company, Inc. or its Affiliates and all
attorney's fees, accountants' fees and consultant fees, paid in connection with
the transactions contemplated by this Agreement. Transaction Expenses shall
include the amortization of any such fees and expenses that are capitalized and
not classified as an expense on the date incurred.
78
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets thereof,
determined in accordance with Section 412 of the Code.
"Unpaid Drawing" shall have the meaning provided in
Section 2.04(a).
"Unutilized Revolving Commitment" for any Bank with a Revolving
Commitment at any time shall mean the excess of (i) the Revolving Commitment of
such Bank over (ii) the sum of (x) the aggregate outstanding principal amount of
Revolving Loans made by such Bank plus (y) an amount equal to such Bank's
Revolving Percentage of the Letter of Credit Outstandings at such time.
"U.S. Textile" shall mean U.S. Textile Corp., a North
Carolina corporation.
"Voting Stock" shall mean, with respect to any corporation, the
outstanding stock of all classes (or equivalent interests) which ordinarily, in
the absence of contingencies, entitles holders thereof to vote for the election
of directors (or Persons performing similar functions) of such corporation, even
though the right so to vote has been suspended by the happening of such a
contingency.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors' qualifying shares, is owned directly
or indirectly by such Person.
"Working Capital" shall mean the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.
79
SECTION 11. The Agent.
11.01 Appointment. The Banks hereby designate Bankers Trust Company
as Agent (for purposes of this Section 11, the term "Agent" shall include BTCo
in its capacity as Collateral Agent pursuant to the Security Documents) to act
as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Agent to take such action on
its behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its respective officers,
directors, agents, employees or affiliates.
11.02 Nature of Duties. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
11.03 Lack of Reliance on the Agent. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Borrower and its
Subsidiaries in connection with the making and the continuance of the Loans and
the taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of the Borrower and its Subsidiaries and,
except as expressly provided in this Agreement, the Agent shall not have any
duty or responsibility, either initially or on a continuing basis, to provide
any Bank or the holder of any Note with any credit or other information with
respect thereto, whether coming into its possession before the making of the
Loans or at any time or times thereafter. The Agent shall not be responsible to
any Bank or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for
80
the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower and its Subsidiaries or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of the Borrower and its Subsidiaries or the
existence or possible existence of any Default or Event of Default.
11.04 Certain Rights of the Agent. If the Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, the Agent shall be entitled to refrain from such act or taking such
action unless and until the Agent shall have received instructions from the
Required Banks; and the Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, neither any Bank nor the
holder of any Note shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting hereunder or under any
other Credit Document in accordance with the instructions of the Required Banks.
11.05 Reliance. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
11.06 Indemnification. To the extent the Agent is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and indemnify the Agent,
in proportion to their respective "percentages" as used in determining the
Required Banks, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Agent in performing its respective duties hereunder or under any
other Credit Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
81
11.07 The Agent in Its Individual Capacity. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks", "Required Banks", "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with any Credit
Party or any Affiliate of any Credit Party as if it were not performing the
duties specified herein, and may accept fees and other consideration from the
Borrower or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
11.08 Holders. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
11.09 Resignation by the Agent. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Agent hereunder or thereunder who shall be a commercial bank or trust
company reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within
such 15 Business Day period, the Agent, with the consent of the Borrower, shall
then appoint a successor Agent who shall serve as Agent hereunder or thereunder
until such time, if any, as the Banks appoint a successor Agent as provided
above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Banks
appoint a successor Agent as provided above.
82
SECTION 12. Miscellaneous.
12.01 Payment of Expenses, etc. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of White & Case) and of the Agent and each of the Banks in
connection with the enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and disbursements of counsel for the Agent and for each of the Banks); (ii)
pay and hold each of the Banks harmless from and against any and all present and
future stamp and other similar taxes with respect to the foregoing matters and
save each of the Banks harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Bank) to pay such taxes; and (iii) indemnify each Bank
(including in its capacity as the Agent, Co-Agent or a Letter of Credit Issuer),
its officers, directors, employees, representatives and agents from and hold
each of them harmless against any and all losses, liabilities, claims, damages
or expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of, (a) any investigation, litigation or other
proceeding (whether or not the Agent, any Co-Agent or any Bank is a party
thereto and whether or not any such investigation, litigation or other
proceeding is between or among the Agent, any Co-Agent, any Bank, any Credit
Party or any third Person or otherwise) related to the entering into and/or
performance of any Document or the use of the proceeds of any Loans hereunder or
the consummation of any transactions contemplated in any Credit Document, and
(b) any such investigation, litigation or other proceeding relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries or any
Real Property owned or operated by them, or the actual or alleged presence or
release of Hazardous Materials on, under or from any Real Property at any time
owned or operated by Holdings or any of its Subsidiaries, and in each case
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified).
12.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Bank is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to any Credit Party or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of any Credit
Party against and on account of the
83
Obligations and liabilities of such Credit Party to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Credit Party purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
12.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to a Credit Party, at
the address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Bank, at its address specified
for such Bank on Annex II hereto; or, at such other address as shall be
designated by any party in a written notice to the other parties hereto. All
such notices and communications shall be mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, and shall be effective when
received.
12.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of the Notes to another financial institution,
provided that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Sections 1.10 and 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been entered into or sold, and, provided further
that no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Letter of
Credit (unless such Letter of Credit is not extended beyond the Final Maturity
Date) in which such participant is participating (it being understood that any
waiver of the application of any prepayment or the method of any application of
any prepayment to, the amortization of the Term Loans shall not constitute an
extension of the final maturity date), or reduce the rate or extend the time of
payment of interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in
84
effect (it being understood that a waiver of any Default or Event of Default or
of a mandatory reduction in the Total Commitment, or a mandatory prepayment,
shall not constitute a change in the terms of any Commitment), (ii) release any
Subsidiary Guarantor from its obligations under the Subsidiary Guaranty except
in accordance with the terms thereof, (iii) release all or substantially all of
the Collateral or (iv) consent to the assignment or transfer by any Credit Party
of any of its rights and obligations under this Agreement or any other Credit
Document.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its outstanding Term Loans and/or Revolving Commitment and its rights
and obligations hereunder to another Bank, and (y) with the consent of the Agent
(which consent shall not be unreasonably withheld), any Bank may assign all or a
portion of its outstanding Term Loans and/or Revolving Commitment and its rights
and obligations hereunder to one or more commercial banks or other financial
institutions (including one or more Banks). No assignment pursuant to the
immediately preceding sentence shall to the extent such assignment represents an
assignment to an institution other than one or more Banks hereunder, be in an
aggregate amount less than $5,000,000 unless the entire Commitment of the
assigning Bank is so assigned. If any Bank so sells or assigns all or a part of
its rights hereunder or under the Notes, any reference in this Agreement or the
Notes to such assigning Bank shall thereafter refer to such Bank and to the
respective assignee to the extent of their respective interests and the
respective assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would if it were
such assigning Bank. Each assignment pursuant to this Section 12.04(b) shall be
effected by the assigning Bank and the assignee Bank executing an Assignment
Agreement substantially in the form of Exhibit L (appropriately completed). At
the time of any such assignment, (i) either the assigning or the assignee Bank
shall pay to the Agent a nonrefundable assignment fee of $3,500, (ii) Annex I
shall be deemed to be amended to reflect the Commitment of the respective
assignee (which shall result in a direct reduction to the Commitment of the
assigning Bank) and of the other Banks, and (iii) upon the request of the
assignee and/or assigning Bank, the Borrower will issue Notes to the respective
assignee and/or to the assigning Bank in conformity with the requirements of
Section 1.05. Each Bank and the Borrower agree to execute such documents
(including without limitation amendments to this Agreement and the other Credit
Documents) as shall be necessary to effect the foregoing. Nothing in this clause
(b) shall prevent or prohibit any Bank from pledging its Notes or Loans to a
Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank.
(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
85
(d) Each Bank initially party to this Agreement hereby represents,
and each Person that became a Bank pursuant to an assignment permitted by this
Section 12 will, upon its becoming party to this Agreement, represent that it is
a commercial lender, other financial institution or other "accredited" investor
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business and that it will make or acquire Loans for its own account in the
ordinary course of such business, provided that subject to the preceding clauses
(a) and (b), the disposition of any promissory notes or other evidences of or
interests in Indebtedness held by such Bank shall at all times be within its
exclusive control.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and the Agent or any Bank shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Agent or any
Bank would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the Agent
or the Banks to any other or further action in any circumstances without notice
or demand.
12.06 Payments Pro Rata. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of any Credit Party in respect of
any Obligations of such Credit Party hereunder, it shall distribute such payment
to the Banks (other than any Bank that has expressly waived its right to receive
its pro rata share thereof) pro rata based upon their respective shares, if any,
of the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations of the
respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount, provided that if
all or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
86
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
12.07 Calculations; Computations. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by the Borrower
to the Banks), provided that (x) except as otherwise specifically provided
herein, all computations determining compliance with Section 8, including
definitions used therein, shall utilize accounting principles and policies in
effect at the time of the preparation of, and in conformity with those used to
prepare, the December 31, 1996 historical financial statements of the Borrower
delivered to the Banks pursuant to Section 6.10(b), (y) that if at any time the
computations determining compliance with Section 8 utilize accounting principles
different from those utilized in the financial statements furnished to the
Banks, such financial statements shall be accompanied by reconciliation
work-sheets and (z) all accounting computations will be made on the basis that
the Stock Repurchase is accounted for as a recapitalization and not as a
purchase.
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial. (a) This Agreement and the other Credit Documents and the rights and
obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the state of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, each Credit Party hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each Credit Party further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to each Credit Party located outside New York City and by hand
delivery to each Credit Party located within New York City, at its address for
notices pursuant to Section 12.03, such service to become effective 30 days
after such mailing. Each Credit Party hereby irrevocably designates appoints and
empowers CT Corporation System, with offices on the date hereof located at 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its agent for service of process in
respect of any such action or proceeding. Nothing herein shall affect the right
of the Agent, any Bank to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against any Credit Party in
any other jurisdiction.
87
(b) Each Credit Party hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any other Credit Document brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) Each of the parties to this agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this agreement, the other credit documents or the
transactions contemplated hereby or thereby.
12.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
12.10. Effectiveness. The Agent will give the Borrower and each Bank
prompt written notice of the occurrence of the Restatement Effective Date.
12.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 Amendment or Waiver. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Banks, provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) directly affected thereby, (i) extend the Final
Maturity Date, (it being understood that any waiver of the application of any
prepayment of or the method of application of any prepayment to the amortization
of, the Loans shall not constitute any such extension), or reduce the rate or
extend the time of payment of interest (other than as a result of waiving the
applicability of any post-default increase in interest rates) or Fees thereon,
or reduce the principal amount thereof, or increase the Commitment of any Bank
over the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total Commitment
shall not constitute a change in the terms of any Commitment of any Bank), (ii)
release or permit the release of all or substantially all of the Collateral or
release any Subsidiary Guarantor from the Subsidiary Guaranty (in each case
except as expressly provided in the Credit Documents), (iii) amend, modify or
waive any provision of this Section, (iv) reduce the percentage specified in, or
otherwise modify, the definition of Required Banks or (v) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement. No provision of Section 2 or 11 may be amended without the
consent of the Letter of Credit Issuer or the Agent, respectively.
88
12.13 Survival. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 4.04, 11.07 or 12.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank, provided that the Borrower shall not be responsible for costs arising
under Section 1.10 or 4.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Bank prior to such transfer.
12.15 Confidentiality. Subject to Section 12.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any bona fide transferee or participant in
connection with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to be bound by the provisions
of this Section 12.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Bank shall notify
the Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information, and provided
further that in no event shall any Bank be obligated or required to return any
materials furnished by the Borrower or any Subsidiary.
12.16 Register. The Borrower hereby designates the Agent to serve as
its agent, solely for purposes of this Section 12.16, to maintain a register
(the "Register") on which it will record the Commitments from time to time of
each of the Banks, the Loans made by each of the Banks and each repayment in
respect of the principal amount of the Loans of each Bank. Failure to make any
such recordation, or any error in such recordation, shall not affect the
Borrower's obligations in respect of such Loans. With respect to any Bank, the
transfer of any Term Loan or the Revolving Commitment of such Bank and the
rights to the principal of, and interest on, any Loan made pursuant to such
Revolving Commitment shall not be effective until such transfer is recorded on
the Register maintained by the Agent with respect to ownership of such
Commitment and/or Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitment and/or Loans shall remain owing to
the transferor.
89
The registration of assignment or transfer of all or part of any Commitment
and/or Loans shall be recorded by the Agent on the Bank Register only upon the
acceptance by the Agent of a properly executed and delivered Assignment
Agreement pursuant to Section 12.04(b). The Borrower agrees to indemnify the
Agent from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Agent in performing its duties under this Section 12.16 other than those
resulting from the Agent's willful misconduct or gross negligence.
************
90
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.
0000 Xxxxxxxx Xxxxx HOSIERY CORPORATION OF AMERICA, INC.,
Xxxxxxxx, Xxxxxxxxxxxx 00000 as Borrower
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000 /s/ Xxxxxx Xxxxxx
Facsimile: (000) 000-0000 By________________________________
Name: Xxxxxx Xxxxxx
Title: Vice President, CFO
with a copy to:
HCA Holdings, Inc.
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
BANKERS TRUST COMPANY,
Individually and as Agent
/s/ Xxxx Xxx Xxxxx
By________________________________
Name: Xxxx Xxx Xxxxx
Title: Managing Director
CORESTATES BANK, N.A.
/s/ Xxxx X. Xxxxxx
By________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
NATIONSBANK, N.A.
/s/ X. Xxxxxx Xxxxx
By________________________________
Name: X. Xxxxxx Xxxxx
Title: Senior Vice President
NATIONAL WESTMINSTER BANK PLC
NEW YORK and/or NASSAU BRANCH,
/s/ Xxxxxxxxxx X. Xxxxxxxx
By________________________________
Name: Xxxxxxxxxx X. Xxxxxxxx
Title: Vice President
ANNEX I
Commitments
Term Revolving
Bank Commitment Commitment
--------------------- ----------- ----------
Bankers Trust Company $30,588,235 $ 9,411,765
CoreStates Bank, N.A. $11,470,588 $ 3,529,412
National Westminster $11,470,588 $ 3,529,412
Bank Plc
NationsBank of North $11,470,588 $ 3,529,412
Carolina, N.A.
Total: $65,000,000 $20,000,000
========== ==========
ANNEX II
Bank Addresses
Bankers Trust Company 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxx Xxxxx
Tel. No.:000-000-0000
Fax No.:000-000-0000
CoreStates Bank, N.A. 0000 Xxxxxxxx Xxxxxx,
Xxxxxx Floor
Xxxxxxx Building
Philadelphia, Pennsylvania 19107
Attention: Xxxxxxx Xxxxxxxxx
Tel. No.:000-000-0000
Fax No.:000-000-0000
National Westminster Bank Plc 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Field Xxxxx
Tel. No.:000-000-0000
Fax No.:000-000-0000
NationsBank, N.A. 000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: X. Xxxxxx Xxxxx
Tel. No.:000-000-0000
Fax No.:000-000-0000
ANNEX III
Existing Letters of Credit
Letter of Credit issued to Branch Banking and Trust Company, dated June
15, 1996 in the amount of $1,292,325.35.
ANNEX IV
Government Approvals
NONE
ANNEX V
Subsidiaries
1. U.S. Textile Corp. - North Carolina corporation
Authorized: 100,000 Common Stock, par value $1.00 per share
Issued and outstanding: 600 shares Common Stock issued to
Hosiery Corporation of America, Inc.
2. The Stonebury Group Incorporated - Nevada corporation
Authorized: 4,000,000 Class A Common Stock, par value $.01 per share
4,000,000 Class B Common Stock, par value $.01 per share
Issued and outstanding: 1,000 shares Class A Common Stock issued to
Hosiery Corporation of America, Inc.
3. Hosiery Corporation International - Delaware corporation
Authorized: 1,500 of Common Stock, no par value
Issued and outstanding: 1,500 shares Common Stock issued to
Hosiery Corporation of America, Inc.
4. Hosiery Corporation Enterprises - Delaware corporation (Inactive)
Authorized: 1,500 shares of Common Stock, no par value
Issued and outstanding: 1,500 shares Common Stock issued to
Hosiery Corporation of America, Inc.
ANNEX VI
Properties
Not Mortgaged Property
Leased:
a. Office space - 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, XX, pursuant to a lease dated
May 27, 1983 between HCA and Emerik Properties Corp., a California
corporation.
b. Warehouse space - 000-00 Xxxxxxxxxx Xxxx, Xxxxxxxx, XX, pursuant to a lease
dated March 15, 1995 between HCA and Xxxxxx X. Xxxxxxxx
c. Office space - 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxx, XX, pursuant to a lease
dated November 22, 1985 between The Stonebury Group, Inc. and Mill
International General Partnership.
d. Office space - 000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX, pursuant to a lease dated
May 20, 1996 between HCI and The Merseyside Development Corporation of
Royal Liver Building Pier Head.
e. Warehouse space - Xxxxxxxxxx Dock, Liverpool, pursuant to a lease dated
November 26, 1996 between HCI and XxXxxxxx and King Ltd.
f. Office space - Xxxxxxxxxx Xxxxxxx 000, 00000 Xxxxxxxxx, Xxxxxxx, pursuant
to a lease dated October 1, 1996 between HCI and Media Profil Marketing
Service.
Owned:
a. Industrial - 000 Xxxxxxx Xxx., Xxxxx Xxxxxxx, XX, pursuant to a deed dated
September 10, 1996 between US Textile Corp. and Lancaster County Economic
Development Corporation.
Mortgaged Property
Owned:
a. Industrial - Lancaster, SC, pursuant to a deed dated May 7, 1992 between
HCA and Murnel Associates, L.P.
b. Industrial - Xxxxxxx, SC, pursuant to a deed dated December 5, 1988 between
U.S. Textile Corp. and Xxxx Xxxxx Xxxxx, Inc.
ANNEX VII
Existing Indebtedness
1. South Carolina Economic Development Bonds - Serial Bonds issued by the
South Carolina Jobs Economic Development Authority maturing from 1995
through 2004 with interest rates ranging from 5.8% to 7.1%.
2. Capital Leases
a. Hosiery Corporation of America, Inc.
Lessor Balance as of 9/30/97
------ ---------------------
XXX Xxxxxxxxxxx $485,359
IBM Credit Corporation $330,419
PNC Leasing Corporation $25,646
Siemens Credit Corporation $35,350
--------
Subtotal $876,774
--------
b. U.S. Textile Corp.
Lessor Balance as of 9/30/97
------ ---------------------
BancBoston $58,205
Ford Leasing $23,659
Meridian $13,006
Meridian $8,132
Meridian $18,728
Meridian $68,152
Meridian $5,456
Meridian $4,084
Meridian $9,875
Meridian $344,708
Meridian $11,497
Meridian $19,805
Meridian $50,234
Meridian $291,356
Metlife $163,743
NationsBanc $134,498
NationsBanc $33,983
NationsBanc $91,053
PNC Leasing $244,610
PNC Leasing $159,828
PNC Leasing $282,693
PNC Leasing $266,813
PNC Leasing $127,315
PNC Leasing $151,637
PNC Leasing $290,745
PNC Leasing $336,894
PNC Leasing $246,636
PNC Leasing $87,097
PNC Leasing $485,016
PNC Leasing $524,305
Sovran $29,674
USL Capital $243,429
USL Capital $64,291
----------
Subtotal $4,891,157
----------
Totals $5,767,931
==========
ANNEX VIII
Insurance Policies
SEE ATTACHED
HOSIERY CORPORATION OF AMERICA
Page: 9
PROPERTY CURRENT RENEWAL
Description:
Special Perils Subject to Policy
Conditions and Exclusions Yes Yes
Collapse Yes Yes
Back-Up of Sewers & Drains Yes Yes
Valuation:
Building Replacement Cost
Inventory Replacement Cost
Finished Stock Selling Price
Other Personal Property Replacement Cost
Agreed Amount Yes Yes
Personal Property of Others Yes Yes
Inflation Guard Yes Yes
Peak Season No No
Reporting Form No No
Brand & Labels Yes Yes
Improvements & Betterments Yes Yes
Increased Cost of Construction Yes Yes
Demolition Due to Building Laws Yes Yes
Value of Undamaged Portion Yes Yes
Increased Time to Rebuild (Time Element) No No
Extended Period of Indemnity Unlimited Unlimited
Ordinary Payroll Included Yes Yes
Contingent Time Element Yes Yes
Loading & Unloading (Transit) Yes Yes
Coverage & Limits:
Blanket Limit 92,061,000 See Below
Blanket Building Included (1)43,855,000
Blanket Personal Property Included Included
Blanket Stock Included Included
Demolition Included Included
Increased Cost of Construction Included Included
Value Undamaged Portion Included Included
Blanket Business Income Included 51,870,000
Blanket EDP Included 2,676,000
Blanket Extra Expense Included Included
Flood Annual Aggregate 10,000,000 10,000,000
Earthquake Annual Aggregate 10,000,000 10,000,000
Unnamed Locations 50,000 50,000
Valuable Papers 500,000 500,000
Transit 400,000 400,000
Bulk Mail Facility Included Yes Yes
Contingent Business Income 250,000 250,000
HOSIERY CORPORATION OF AMERICA
Page: 10
PROPERTY Continued CURRENT RENEWAL
Coinsurance/Monthly Limitations
Real & Personal Property Nil Nil
Stock Reporter Nil Nil
Business Interruption Nil Nil
Extra Expense Nil Nil
Deductibles:
Real & Personal Property 10,000 10,000
Stock Combined Combined
Business Interruption Nil Nil
Extra Expense Nil Nil
Demolition Combined Combined
Flood 25,000 25,000
Earthquake 25,000 25,000
Transit 5,000 5,000
EDP 5,000 5,000
Valuable Papers 5,000 5,000
Unnamed Locations 5,000 5,000
(1) Building value for Lancaster, SC increased to $9,000,000 per Xxxxx'x
Xxxxxxxx & Swift appraisal. If we kept Building limit at $4,000,000, Chubb
would not provide Agreed Amount coverage and a coinsurance clause would
apply.
HOSIERY CORPORATION OF AMERICA
Page: 11
COMMERCIAL GENERAL LIABILITY CURRENT RENEWAL
Coverage Description & Limits
Bodily Injury & Property Damage
Each Occurrence Limit 1,000,000 1,000,000
General Aggregate (Other Than
Products/Completed Operations) 2,000,000 2,000,000
Products/Completed Operations Aggregate 1,000,000 1,000,000
Personal & Advertising Injury Aggregate 1,000,000 1,000,000
Fire Damage to Rented Property 1,000,000 1,000,000
Medical Expense (any one person) 10,000 10,000
Bodily Injury/Property Damage Deductible None None
Employee Benefit Liability (Claims Made)
Each Claim 1,000,000 1,000,000
Aggregate 1,000,000 1,000,000
Deductible Each Claim 1,000 1,000
Including:
Premises Operations
Limited Worldwide Products
Contractual Liability
Broad Form Property Damage
Employees as Insureds
Host Liquor Liability
Extended Bodily Injury
Nonowned Watercraft Liability
Length Limit 25'
Owners & Contractors Protective
Extensions of Coverage:
Incidental Malpractice Yes Yes
Knowledge of Occurrence Yes Yes
Unintentional Errors & Omissions Yes Yes
Vendors Coverage Blanket Blanket
Blanket Additional Insureds Yes Yes
Stop Gap Liability (Nevada) Yes Yes
Exclusions include, but are not limited to, the following:
Pollution Yes Yes
Discrimination Yes Yes
HOSIERY CORPORATION OF AMERICA
Page: 12
COMMERCIAL GENERAL LIABILITY cont'd CURRENT RENEWAL
Rating Basis:
Clothing Distribution Sales 2,000,000 1,500,000
Clothing Manufacturing Sales 150,000,000 157,675,000
Office Square Footage (Bensalem) 62,138 62,138
Office Square Footage (Reno) 1,500 1,500
Warehouse Square Footage (Montgomeryville) 2,000 2,000
Warehouse Square Footage (Bensalem) 12,700 12,700
Warehouse Square Footage (Meadeville) 60,000 60,000
Mail Order Sales (Non-Hosiery) 12,000,000 12,000,000
Building or Premises - LRO
(Xxxxxxx Trailer) 2,520 2,520
Employee Benefits (# of Employees) 860 000
XXXXXXX XXXXXXXXXXX XX XXXXXXX
Page: 13
BOILER & MACHINERY CURRENT RENEWAL
Coverages and Limits:
Combined Limit for Direct Damage and
Business Interruption 25,000,000 25,000,000
Direct Damage Limit Included Included
Combined Business Interruption and
Extra Expense Limit Included Included
Consequential Damage Limit 500,000 500,000
Expediting Expense Policy Limit Policy Limit
Ammonia Contamination 100,000 100,000
Water Damage Policy Limit Policy Limit
Hazardous Substance Removal 100,000 100,000
Ordinance or Law Coverage Policy Limit Policy Limit
Description:
Comprehensive Group Form Yes Yes
Production Equipment Included Included
Valuation:
Direct Damage Repair or Replace
Business Interruption Actual Loss
Sustained
Property of Others Covered Yes Yes
Consequential Damage Coverage Yes Yes
Off Premises Power Service Interruption Yes Yes
Coverage
Time Element Loss Reporting Provision Yes Yes
Coinsurance:
Direct Damage Nil Nil
Business Interruption Nil Nil
HOSIERY CORPORATION OF AMERICA
Page: 14
BOILER & MACHINERY cont'd CURRENT RENEWAL
Deductibles:
Direct Damage 5,000 5,000
Business Interruption 24 Hours 24 Hours
Consequential Damage 5,000 5,000
Off Premises Service Interruption 24 Hours 24 Hours
Exclusions include, but are not limited to,
the following:
Testing Yes Yes
Ordinance or Law (Limited) No No
Flood No No
Earthquake No No
Leakage at any seal, joint, fitting Yes Yes
Package Insurer: Chubb Chubb
A.M. Best Rating: A++ (Superior) A++ (Superior)
PACKAGE PREMIUM: $ 94,985 $ 98,316
(Property, General Liability, Boiler)
*Premium would be $95,466 using a limit of $4,000,000 for the
Lancaster, SC building.
HOSIERY CORPORATION OF AMERICA
Page: 15
AUTOMOBILE CURRENT RENEWAL
Coverages and Limits
Each Accident (Combined Single Limit
for Bodily Injury and Property Damage) 1,000,000 1,000,000
Under/Uninsured Motorists Limit 1,000,000 1,000,000
First Party Benefits (PA) Basic Basic
Combination First Party Benefits (PA) 277,500 277,500
Extraordinary Medical Benefits (PA) 1,000,000 1,000,000
Personal Injury Protection (NJ/SC) Max by State Max by State
Added PIP (nj) Included Included
Liability Deductible N/A N/A
Hired Auto Liability Included Included
Auditable - Cost of Hire If any If any
Non-Owned Auto Liability Included Included
Rating Basis; Number of Employees 900 900
Contractual Liability Yes Yes
Extended to Lease of Vehicle
Drive Other Car (Liability & Uninsured
Motorists) and Broadened First
Party Benefits) None None
Physical Damage: Actual Cash Value
Comprehensive Deductible 500 500
Collision Deductible 1,000 1,000
Hired Car Limit 25,000 25,000
Comprehensive Deductible 500 500
Collision Deductible 1,000 1,000
Extensions:
Fellow Employee Coverage Yes Yes
All Employees Yes Yes
Mobile Phone Coverage No No
HOSIERY CORPORATION OF AMERICA
Page: 16
AUTOMOBILE cont'd CURRENT RENEWAL
Extensions (cont'd):
Rental Reimbursement (Private Passenger) Yes Yes
Daily Limit $30 $30
Number of Days 30 30
Towing and Labor (Private Passenger) Yes Yes
Limit Per Disablement $50 $50
Exclusions include, but are not limited to,
the following:
Pollution Yes Yes
Rating basis: (Number of Units)
Private Passenger 11 11
Light Trucks 3 3
Medium Trucks 0 0
Heavy Trucks 3 3
Trailers 11 11
Total 28 28
Auditable Yes Yes
Insurer: Chubb Chubb
A.M. Best Rating: A++ (Superior) A++(Superior)
Deposit Premium: $ 34,040 $ 35,985
PACKAGE & AUTO PREMIUM TOTAL: 129,025 134,301
XXXXX-XXXXXXX SERVICE FEE: 36,000 33,000
TOTAL PACKAGE & AUTO: $ 165,025 $ 167,301
HOSIERY CORPORATION OF AMERICA
Page: 17
CRIME CURRENT RENEWAL
Description & Limits
Blanket Employee Dishonesty 350,000 *500,000
Monies & Securities
On Premises 300,000 300,000
In Transit 300,000 300,000
Depositors Forgery 300,000 300,000
Computer Theft & Funds Transfer 300,000 300,000
Pension/Profit Sharing Plans Covered Yes Yes
Deductible: 10,000 10,000
Rating Basis:
Sales 164,000,000 171,000,000
# of Employees 860 980
Insurer: Federal Federal
A.M. Best Rating: A++ (Superior) A++ (Superior)
Annual Premium: $ 2,570 $ 2,827
* Increased to $500,000 for renewal to be in compliance with ERISA
requirements. Required to insure up to 10% of assets of plan, but not
required to carry higher than $500,000 limit.
Plan assets are in excess of $5,000,000.
OPTIONS: $750,000 Limit for Employee Dishonesty - $3,109 Annual
Premium
$1,000,000 Limit for Employee Dishonesty - $3,410 Annual
Premium
HOSIERY CORPORATION OF AMERICA
Page: 18
COMMERCIAL UMBRELLA LIABILITY CURRENT RENEWAL
Coverage and Limits:
Each Occurrence 10,000,000 10,000,000
General Aggregate (Other than
Products/Completed Operations) 20,000,000 20,000,000
Products/Completed Operations Aggregate 10,000,000 10,000,000
Retained Limit (Cov. B Ded.) 0 0
Employee Benefits Liability Included Included
Foreign Liability Included Included
60-Day Notice of Cancellation Yes Yes
Auditable Policy No No
First Dollar Defense Yes Yes
Defense Cost Outside Limit Yes Yes
Pay on Behalf Yes Yes
Exclusions include, but are not limited to,
the following:
Pollution Yes Yes
Asbesto Yes Yes
Discrimination Partial Partial
Care, Custody & Control for:
Real Property Yes Yes
Personal Property Yes Yes
ERISA Yes Yes
Insurer: Chubb Chubb
A.M. Best Rating: A++ (Superior) A++ (Superior)
Annual Premium: $ 22,000 $ 20,800
HOSIERY CORPORATION OF AMERICA
Page: 19
WORKERS COMPENSATION CURRENT RENEWAL
State/Classification Rate Payroll Rate Payroll
PA Clerical Office Employees .49 5,496,000 .36 5,700,000
Experience Modification 1.101 .931
Employer's Liability
Each Accident 100,000 100,000
Each Employee (Disease) 100,000 100,000
Policy Limit (Disease) 500,000 500,000
Voluntary Compensation Endorsement Yes Yes
US Longshoremen Harbor Workers Act No No
"Other States" Coverage Yes Yes
Rating/Dividend Plan Slide Scale Dividend
Premium Discount Stock Stock
Insurer: EBI/Orion EBI/Orion
A.M. Best Rating: A (Excellent) A (Excellent)
Annual Premium: $ 26,181 $ 16,860
HOSIERY CORPORATION OF AMERICA
Page: 20
WORKERS COMPENSATION CURRENT RENEWAL
State/Classification Rate Payroll Rate Payroll
NC Hosiery Manufacturing 2.88 6,600,000 2.78 6,300,000
Clerical Office Employees .37 200,000 .32 200,000
Experience Modification .800 .800
SC Wholesale Clothing Store 2.14 2,200,000 2.14 3,000,000
Clerical Office Employees .29 500,000 .29 500,000
Hosiery Manufacturing 1.27 3,678,000 1.27 5,036,000
Experience Modification .800 .800
Employer's Liability
Each Accident 100,000 100,000
Each Employee (Disease) 100,000 100,000
Policy Limit (Disease) 500,000 500,000
Voluntary Compensation Endorsement Yes Yes
U.S. Longshoremen Harbor Workers Act No No
Nevada Stop Gap Liability Yes Yes
Rating/Dividend Plan Slide Scale Dividend
Premium Discount Stock Stock
Insurer: EBI/Orion EBI/Orion
A.M. Best Rating: A (Excellent) A (Excellent)
North Carolina Premium: $ 134,955 $ 124,264
South Carolina Premium: $ 67,418 $ 91,645
HOSIERY CORPORATION OF AMERICA
Page: 21
97/98 DIVIDEND PLAN
LOSS ESTIMATED
RATIO % PAYOUT PAYOUT
0 - 5% 38.7 89,966
5.1 - 10% 34.7 80,667
10.1 - 15% 30.6 71,136
15.1 - 20% 27.0 62,767
20.1 - 25% 22.9 53,235
20.1 - 30% 18.9 43,937
30.1 - 35% 15.3 35,568
35.1 - 40% 11.3 26,269
40.1 - 45% 7.3 16,970
45.1 - 50% 2.3 5,347
OVER 50% 0.0 0
This is the third year of your three year commitment from EBI/Orion. Payout
percentage is the same as expiring.
HOSIERY CORPORATION OF AMERICA
Page: 22
FIDUCIARY CURRENT RENEWAL
Plan(s) Covered:
HCA Retirement/401K Profit Sharing Plan
The United States Textile Corporation Employee Benefit Trust
Limits:
Each Loss 500,000 500,000
Each Policy Year 500,000 500,000
Deductible: 5,000 5,000
Description:
Claims Made Form: Yes Yes
Retroactive Date: 08/01/91 08/01/91
Extended Discovery if Company Cancels Yes Yes
Percentage of Premium for Option 25%/90 Days 25%/90 Days
Pay on Behalf Yes Yes
Defense Costs In Addition To Limit No No
Deductible Applies to Defense Yes Yes
Rating Basis (Plan Assets): 4,779,217 5,874,292
Insurer: Fidelity & Deposit Company of MD
A.M. Best Rating: A+ (Superior) A+ (Superior)
Annual Premium: $ 1,381 $ 1,492
*Need to verify plan sponsors.
HOSIERY CORPORATION OF AMERICA
Page: 23
FOREIGN PACKAGE CURRENT RENEWAL
Property
Description:
Special Perils Subject to Exclusions Yes Yes
Valuation:
Personal Property Replacement Cost
Finished Stock & Stock Sold Selling Price
Agreed Amount Yes Yes
Personal Property of Others Yes Yes
Brands & Labels Yes Yes
Improvements & Betterments Yes Yes
Business Income/Extra Expense No *No
Coverage & Limits:
Xxxxx 0, Xxxxx Xxxxxxxxxx Xxxx.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx
Furniture & Fixtures 50,000 50,000
Mclntyre & King Ltd.
Commercial Road
Liverpool, England
Stock 150,000 150,000
MVS; Xxxxxxxxxxx Xxxxxxx 000
00000 Xxxxxxxxx, Xxxxxxx
Furniture & Fixtures 50,000 50,000
Stock 50,000 50,000
Crawfords United Biscuits
Xxxxx Road, Off Edge Lane
Liverpool, England
Stock 50,000 50,000
MVS Fulfillment Center
Zone Industrielle SUD
Xxx Xx X'Xxxxxxxxx
00000 Xxxxxxxxxxx, Xxxxxx
Furniture & Fixtures 75,000 75,000
Stock 300,000 300,000
HOSIERY CORPORATION OF AMERICA
Page: 24
FOREIGN PACKAGE Cont'd. CURRENT RENEWAL
Coverage & Limits cont'd:
Mclntyre & King, Ltd.
Xxxxxxxxxx Dock
Glacier Building
Liverpool, England
Furniture & Fixtures 220,000 220,000
Stock 2,728,000 2,728,000
All Locations:
Flood 1,000,000 1,000,000
Earthquake 1,000,000 1,000,000
Transit Included Included
Exclusions include, but are not limited to the following:
Business Income/Extra Expense Yes Yes
War & Military Action Yes Yes
Disappearance Yes Yes
Coinsurance/MonthlyLimitations:
Personal Property Nil Nil
Stock Nil Nil
Deductibles:
Personal Property 2,500 2,500
Stock 2,500 2,500
Flood 25,000 25,000
Earthquake 25,000 25,000
*Coverage is available. Need limit to add.
HOSIERY CORPORATION OF AMERICA
Page: 25
FOREIGN PACKAGE CURRENT RENEWAL
Foreign General Liability DIC/Excess
Limit Per Occurrence for Bodily
Injury & Property Damage Combined 1,000,000 1,000,000
Personal Injury & Advertising Injury 1,000,000 1,000,000
Product/Completed Operations
Annual Aggregate 1,000,000 1,000,000
Fire Legal Liability 100,000 100,000
Medical Expense Aggregate 10,000 10,000
Coverage Extensions:
Premises Operations
Contractual Liability
Broad Form Vendors
Host Liquor Liability
Employees as Insureds
Advertising Injury
Personal Injury
Nonowned watercraft - 50' Length Limit
Incidental Malpractice
Products Liability
Policy Territory Worldwide excluding
the U.S., its
territories
and possessions
Exclusions include, but are not limited to the following:
Employment Related Practices Yes Yes
Asbestos Yes Yes
Rating Basis (Sales): 12,000,000 22,000,000
HOSIERY CORPORATION OF AMERICA
Page: 26
FOREIGN PACKAGE cont'd CURRENT RENEWAL
Foreign Auto DIC/Excess Liability
Combined Limit for Bodily Injury
and Property Damage Each Occurrence 1,000,000 1,000,000
Medical Payments 10,000 10,000
Foreign Voluntary Workers Compensation
Benefits Applicable: Statutory according to state of hire
Employers Liability 100,000 100,000
Repatriation 25,000 25,000
24 Hour Coverage Yes Yes
War/Terrorism Yes Yes
Insurer: Chubb Chubb
A.M. Best Rating: A++ (Superior) A++ (Superior)
Annualized Premium: $ 13,644 $ 14,684
Note: The Primary General Liability, Automobile and Employers Liability
coverages must be purchased through an admitted carrier in the U.K. Please
provide evidence that primary coverage has been placed.
ANNEX IX
Existing Liens
SEE ATTACHED
ATTACHMENT
Hosiery Corporation of America, Inc.
Secured Party/Lessor Jurisdiction Filing Type Filing Number Filing Date Collateral Description
-------------------- ------------ ----------- ------------- ----------- ----------------------
Meridian Leasing Inc. PA-S/C UCC-1 21440175 12/8/92 Equipment Lease
Meridian Leasing Inc. PA-S/C UCC-1 21471358 12/21/92 Equipment Lease
Meridian Leasing Inc. PA-S/C UCC-1 21810435 4/5/93 Equipment
Meridian Leasing Inc. PA-S/C UCC-1 21970884 5/27/93 Equipment
Meridian Leasing Inc. PA-S/C UCC-1 21850633 4/19/93 Equipment
NationsBanc Leasing Corporation PA-S/C UCC-1 20901875 6/16/92 Equipment
NationsBanc Leasing Corporation PA-S/C UCC-1 20901877 6/16/92 Equipment
NationsBanc Leasing Corporation PA-S/C UCC-3 22900720 3/8/94 Amendment refers to original
Amendment file #: 20901877/Amending
equipment location
NationsBanc Leasing Corporation PA-S/C UCC-1 20901879 6/16/92 Equipment
NationsBanc Leasing Corporation PA-S/C UCC-3 22900721 3/8/94 Amendment refers to original
Amendment file #:
20901879/Amending equipment
location
NationsBanc Leasing Corporation PA-S/C UCC-1 22750073 1/11/94 Equipment
NationsBanc Leasing Corporation PA-S/C UCC-1 21241381 10/2/92 Equipment
Triumphe Financial Corp. t/a PA-S/C UCC-1 17451843 7/3/89 Equipment
Triumphe Leasing
Company/Assignee: First
Pennsylvania Bank N.A.
Triumphe Financial Corp. t/a PA-S/C UCC-1 17171352 3/27/89 Equipment
Triumphe Leasing
Company/Assignee: First
Pennsylvania Bank N.A.
Triumphe Financial Corp. t/a PA-S/C UCC-1 17290683 5/2/89 Equipment
Triumphe Leasing
Company/Assignee: First
Pennsylvania Bank X.X.
X.X. Textile Corp.
Secured Party/ Filing Filing Filing Collateral
Lessor Jurisdiction Type Number Date Description
--------------------------------- -------------- ---------- ------------------ ---------------- ============================
Carolina Recycling Inc. NC-Mecklenburg UCC-1 006021 5/2/95 Equipment
Carolina Recycling Inc. NC-Mecklenburg UCC-1 006081 4/11/97 Equipment
Co.
CoreStates Leasing, Inc. NC-Mecklenburg UCC-1 009845 6/17/97 Equipment Lease
Co.
Independent Capital Corp./ SC-Lancaster UCC-1 93-072 2/24/93 Computer Equipment
Assignee: Citicorp Leasing Inc. Co.
Master Lease Div. of Tokai NC-Mecklenburg UCC-1 017617 12/22/92 Computer Equipment Lease
Financial Services, Inc. Co.
Meridian Leasing Inc. SC-Lancaster UCC-1 93-118 4/5/93 Equipment Lease
Meridian Leasing Inc. SC-Lancaster UCC-1 93-119 4/5/93 Equipment Lease
Meridian Leasing Inc. SC-Lancaster UCC-1 93-138 4/20/93 Equipment Lease
Meridian Leasing Inc. SC-Lancaster UCC-1 93-139 4/20/93 Equipment Lease
Meridian Leasing Inc. SC-Lancaster UCC-1 93-242 7/8/93 Equipment Lease
Meridian Leasing Inc. SC-Lancaster UCC-1 93-347 9/29/93 Equipment Lease
Triumphe Financial Corporation/ NC-Mecklenburg UCC-1 014801 10/22/90 Equipment Lease
Assignee: Ford Motor Credit Co. UCC-3* 006898 5/16/95
Company
Triumphe Financial Corporation/ NC-Mecklenburg UCC-1 005726 4/16/90 Equipment Lease
Assignee: Ford Motor Credit Co. UCC-3* 002074 2/10/95
Company
Triumphe Financial Corporation NC-Mecklenburg UCC-1 010690 7/26/90 Equipment Lease
Co. UCC-3* 002073 2/10/95
Triumphe Financial Corporation/ NC-Mecklenburg UCC-1 007816 5/24/90 Equipment Lease
Assignee: Ford Motor Credit Co. UCC-3* 003034 3/2/95
Company
The Stonebury Group Incorporated
None.
Hosiery Corporation International
None.
ANNEX X
Management Fees
Employment Agreements:
1. Employment Agreement between U.S. Textile Corp. and Xxxx Xxxxxxx, dated as
of August 29, 1980.
2. Executive Employment Agreement between HCA and Xxxxxx X. Xxxxxx, dated as
of September 16, 1993.
3. Executive Employment Agreement between HCA and Xxxxxx X. Xxxxx, dated as of
August 7, 1995.
4. Executive Employment Agreement between HCA and Xxxxxxx X. Xxxxx, dated as
of July 30, 1996.
EXHIBIT A
FORM OF NOTICE OF BORROWING
[Date]
Bankers Trust Company, as Agent
for the Banks party to the
Credit Agreement referred
to below
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned, Hosiery Corporation of America, Inc. (the
"Borrower"), refers to the Amendment and Restatement, dated as of November 20,
1997 amending and restating the Credit Agreement, dated as of October 17, 1994
(as subsequently amended, modified or supplemented from time to time, the
"Credit Agreement", the terms defined therein being used herein as therein
defined), among the Borrower, the financial institutions from time to time party
thereto (the "Banks") and you, as Agent for such Banks, and, pursuant to Section
1.03(a) of the Credit Agreement, hereby gives you irrevocable notice that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 1.03(a) of the Credit Agreement:
(i) The Proposed Borrowing is to consist of [Term Loans]
[Revolving Loans].
(ii) The aggregate principal amount of the Proposed Borrowing is $______.
(iii) The Business Day of the Proposed Borrowing is [Date].1/
(iv) The Loans to be made pursuant to the Proposed Borrowing shall be
initially maintained as [Base Rate Loans] [Eurodollar Loans].
[(v) The initial Interest Period for the Proposed Borrowing is [one month]
[three months] [six months][, subject to availability of all Banks with
Commitments and/or outstanding Loans under the respective Facility, twelve
months, and if such Interest Period is unavailable [specify alternative
desired]].2/
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit
Agreement and the other Credit Documents are and will be true and correct
in all material respects, both before and after giving effect to the
Proposed Borrowing and to the application of the proceeds thereof, as
though made on such date, unless stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date; and
(B) no Default or Event of Default has occurred and is continuing,
or would result from such Proposed Borrowing or from the application of
the proceeds thereof.
Very truly yours,
HOSIERY CORPORATION OF
AMERICA, INC.
By:_______________________
Name:
Title:
EXHIBIT B-1
FORM OF TERM NOTE
$________ New York, New York
----------- --- ----
FOR VALUE RECEIVED, HOSIERY CORPORATION OF AMERICA, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
________________ (the "Bank"), in lawful money of the United States of America
in immediately available funds, at the Payment Office (as defined in the
Agreement referred to below) initially located at One Bankers Trust Plaza, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Final Maturity Date (as defined
in the Agreement) the principal sum of ___________ DOLLARS ($________) or, if
less, the then unpaid principal amount of all Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower also promises to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Notes referred to in the Amendment and
Restatement, dated as of November 20, 1997, amending and restating the Credit
Agreement, dated as of October 17, 1994 , among the Borrower, the financial
institutions from time to time party thereto (including the Bank) and Bankers
Trust Company, as Agent (as from time to time in effect, the "Agreement"), and
is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). This Note is secured pursuant to the Security
Documents (as defined in the Agreement). As provided in the Agreement, this Note
is subject to mandatory repayment prior to the Final Maturity Date, in whole or
in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
be declared to be due and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
HOSIERY CORPORATION OF
AMERICA, INC.
By____________________________
Name:
Title:
EXHIBIT B-2
FORM OF REVOLVING NOTE
$________ New York, New York
------------ --- ----
FOR VALUE RECEIVED, HOSIERY CORPORATION OF AMERICA, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the Payment Office (as defined in the
Agreement referred to below) initially located at One Bankers Trust Plaza, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Final Maturity Date (as defined
in the Agreement the principal sum of __________________ DOLLARS ($________) or,
if less, the then unpaid principal amount of all Revolving Loans (as defined in
the Agreement) made by the Bank pursuant to the Agreement.
The Borrower also promises to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Notes referred to in the Amendment and
Restatement, dated as of November 20, 1997, amending and restating the Credit
Agreement, dated as of October 17, 1994, among the Borrower, the financial
institutions from time to time party thereto (including the Bank) and Bankers
Trust Company, as Agent (as from time to time in effect, the "Agreement"), and
is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). This Note is secured pursuant to the Security
Documents (as defined in the Agreement). As provided in the Agreement, this Note
is subject to mandatory repayment prior to the Final Maturity Date, in whole or
in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
be declared to be due and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
HOSIERY CORPORATION OF
AMERICA, INC.
By____________________________
Name:
Title:
EXHIBIT B-3
FORM OF SWINGLINE NOTE
$_________ New York, New York
-------- -- -------
FOR VALUE RECEIVED, HOSIERY CORPORATION OF AMERICA, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of Bankers
Trust Company (the "Bank"), in lawful money of the United States of America in
immediately available funds, at the Payment Office (as defined in the Agreement
referred to below) initially located at One Bankers Trust Plaza, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Swingline Expiry Date (as defined in
the Agreement referred to below) the principal sum of _________________ DOLLARS
($_________) or, if less, the then unpaid principal amount of all Swingline
Loans (as defined in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Notes referred to in the Amendment and
Restatement, dated as of November 20, 1997, amending and restating the Credit
Agreement, dated as of October 17, 1994, among the Borrower, the financial
institutions from time to time party thereto (including the Bank) and Bankers
Trust Company, as Agent (as from time to time in effect, the "Agreement"), and
is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). This Note is secured pursuant to the Security
Documents (as defined in the Agreement). As provided in the Agreement, this Note
is subject to voluntary prepayment and mandatory repayment prior to the
Swingline Expiry Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
be declared to be due and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
HOSIERY CORPORATION OF
AMERICA, INC.
By____________________________
Name:
Title:
EXHIBIT C
FORM OF LETTER OF CREDIT REQUEST
No.___3/ Dated ______ ___, ___4/
Bankers Trust Company, as Agent and Letter of Credit Issuer, [and __________, as
Letter of Credit Issuer,] under the Credit Agreement referred to below
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ___________
Ladies and Gentlemen:
The undersigned, Hosiery Corporation of America, Inc. (the
"Borrower"), refers to the Amendment and Restatement, dated as of November 20,
1997 amending and restating the Credit Agreement, dated as of October 17, 1994
(as subsequently amended, modified or supplemented from time to time, the
"Credit Agreement", the terms defined therein being used herein as therein
defined), among the Borrower, the financial institutions from time to time party
thereto (the "Banks") and Bankers Trust Company, as Agent for such Banks.
The undersigned hereby requests that __________, as Letter of Credit
Issuer, issue a [Trade] [Standby] Letter of Credit for the account of the
undersigned on ______ ___, ____ (the "Date of Issuance") in the aggregate amount
of $_______.5/
The beneficiary of the requested Letter of Credit will be
__________,6/ and such Letter of Credit will be in support of ______________7/
and will have a stated termination date of ____________.8/
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the Date of Issuance:
(A) the representations and warranties contained in the Credit
Agreement and the other Credit Documents are and will be true and correct
in all material respects, before and after giving effect to the issuance
of the Letter of Credit requested hereby, as though made on the Date of
Issuance, unless stated to relate to a specific earlier date, in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date; and
(B) no Default or Event of Default has occurred and is continuing,
or would result after giving effect to the issuance of the Letter of
Credit requested hereby.
Copies of all documentation with respect to the supported
transaction are attached hereto.
HOSIERY CORPORATION OF
AMERICA, INC.
By _______________________
Name:
Title:
November 20, 1997
Bankers Trust Company,
as Agent
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Financial Institutions listed
on Schedule I hereto
Re: Hosiery Corporation of America, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Hosiery Corporation of America,
Inc., a Delaware corporation ("HCA"), in connection with the execution and
delivery of the Amendment and Restatement, dated as of November 20, 1997, to the
Credit Agreement, dated as of October 17, 1994 (as so amended and restated, the
"Credit Agreement"), among HCA, the lending institutions identified on Annex I
thereto from time to time (the "Lenders") and Bankers Trust Company ("BTCo"), as
Agent (in such capacity, the "Agent") for the Lenders. We have also acted as
special counsel to The Stonebury Group Incorporated, a Nevada corporation and a
wholly-owned subsidiary of HCA ("Stonebury"), U.S. Textile Corp., a North
Carolina corporation and a wholly-owned subsidiary of HCA ("U.S. Textile"), and
Hosiery Corporation International, a Delaware corporation and a wholly-owned
subsidiary of HCA ("International" and together with Stonebury and U.S. Textile,
the "Subsidiary Guarantors").
Bankers Trust Company
November 20, 1997
Page 2
This opinion is being delivered pursuant to Section 5.01(b)(i) of
the Credit Agreement. Capitalized terms used herein and not otherwise defined
herein shall have the same meanings herein as ascribed thereto in the Credit
Agreement.
In rendering the opinions set forth herein, we have examined and
relied on originals or copies of the following:
(a) the Credit Agreement;
(b) the Amendment and Restatement, dated as of November 20, 1997, to
the Subsidiary Guaranty, dated as of October 17, 1994 (as so amended and
restated, the "Subsidiary Guaranty"), made by each of the Subsidiary Guarantors
in favor of the Agent for the benefit of the Creditors (as defined therein);
(c) the Amendment and Restatement, dated as of November 20, 1997
(the "Pledge Agreement Amendment"), to the Pledge Agreement, dated as of October
17, 1994 (as so amended and restated by the Pledge Agreement Amendment, the
"Pledge Agreement"), made by HCA in favor of BTCo, as Collateral Agent (in such
capacity the "Collateral Agent"), for the benefit of the Secured Creditors (as
defined therein);
(d) the Amendment and Restatement, dated as of November 20, 1997
(the "Security Agreement Amendment"), to the Security Agreement, dated as of
October 17, 1994 (as so amended and restated by the Security Agreement
Amendment, the "Security Agreement"), made by HCA in favor of the Collateral
Agent for the
benefit of the Secured Creditors (as defined therein);
(e) the Amendment and Restatement, dated as of November 20, 1997
(the "Subsidiary Security Agreement Amendment"), to the Security Agreement,
dated as of October 17, 1994 (as so amended and restated by the Subsidiary
Security Agreement Amendment, the "Subsidiary Security Agreement"), made by each
of the Subsidiary Guarantors in favor of the Collateral Agent for the benefit of
the Secured Creditors (as defined therein);
Bankers Trust Company
November 20, 1997
Page 3
(f) the First Amendment to Mortgage, Security Agreement, Assignment
of Leases, Rents and Profits, Financing Statement and Fixture Filing, dated as
of November 20, 1997 (the "Mortgage Amendment"), by and between HCA and the
Collateral Agent;
(g) the First Amendment to Deed of Trust, Security Agreement,
Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing,
dated as of November 20, 1997 (the "Deed of Trust Amendment"), by U.S. Textile
to J. Xxxxxxxxxxx Xxxxx, as Trustee for the benefit of the Collateral Agent;
(h) the certificate executed by an officer of each of HCA and each
Subsidiary Guarantor (collectively, the "Loan Parties" and each individually a
"Loan Party"), dated the date hereof, a copy of which is attached as Exhibit A
hereto (the "Loan Parties' Certificate");
(i) certified copies of the Certificate of Incorporation and
copies of the By-laws of each Loan Party;
(j) the stock certificate of International listed on Annex A to the
Pledge Agreement Amendment, together with an undated stock power attached and
executed in blank (collectively, the "International Certificate");
(k) signed but unfiled form UCC-3 amendments (copies of which have
been delivered to the Collateral Agent on or before the date hereof) under the
Uniform Commercial Code as in effect on the date hereof in the State of Nevada
naming Stonebury as debtor and the Collateral Agent as secured party, which we
understand will be filed in the office of the Secretary of State of the State of
Nevada and in the filing office in Washoe county (the "Filing Offices") (such
UCC-3 amendments, the "UCC-3 Amendments"); and
(l) such other documents as we have deemed necessary or appropriate
as a basis for the opinions set forth below.
Bankers Trust Company
November 20, 1997
Page 4
The agreements referred to in clauses (a) through (e) above are
referred to herein as the "Subject Documents" and together with the Mortgage
Amendment and the Deed of Trust Amendment, the "Financing Documents".
In our examination we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied upon
statements and representations of the Loan Parties and their officers and other
representatives in the Subject Documents and the Loan Parties' Certificate and
of public officials.
Unless otherwise indicated, references to the term "New York UCC"
shall mean the Uniform Commercial Code as in effect on the date hereof in the
State of New York. In addition, references to the term (i) "Applicable Laws"
shall mean the General Corporation Law of the State of Delaware and those laws,
rules and regulations of the State of New York and of the United States of
America (including, without limitation, Regulations G, U and X of the Federal
Reserve Board) which, in our experience, are ordinarily applicable to
transactions of the kind contemplated by the Subject Documents, each as in
effect on the date hereof; (ii) "Governmental Authorities" shall mean any New
York or federal executive, legislative, judicial, administrative or regulatory
body; (iii) "Governmental Approval" shall mean any consent, approval, license,
authorization or validation of, or filing, recording or registration with, any
Governmental Authority pursuant to Applicable Laws; (iv) "Applicable Orders"
shall mean those orders, judgments or decrees of Governmental Authorities
applicable to or binding upon the Loan Parties and identified on Schedule II to
the Loan Parties' Certificate; and (v) "Applicable Contracts" shall mean those
agreements and instruments set forth on Schedule II hereto which have been
identified to us on Schedule I of the Loan Parties' Certificate as all the
agreements and instruments that are material to the business or operation of the
Loan Parties.
Bankers Trust Company
November 20, 1997
Page 5
We express no opinion as to the laws of any jurisdiction other than
(i) the laws of the State of New York, (ii) the General Corporation Law of the
State of Delaware and (iii) the federal laws of the United States of America to
the extent specifically referred to herein. To the extent that the opinion set
forth in paragraph 9 involves the laws of the State of Nevada, please note that
we are not admitted to practice and are not expert in the laws of the State of
Nevada. Therefore, our opinion in paragraph 9, with your permission, is based
solely on our review of Sections 9-401 and 9-402 of the Uniform Commercial Code
of the State of Nevada as the same appears in the Secured Transactions Guide
published by Commerce Clearing House, Inc., without regard to cases decided
thereunder (such Sections of the Uniform Commercial Code in effect in the State
of Nevada on the date hereof, the "Nevada UCC"). In particular, we call your
attention to the fact that we express no opinion with respect to the effect on
the opinions herein expressed of any tax or filing fee required to be paid in
connection with the filing of the UCC-3 Amendments.
In rendering the opinions set forth herein, we have assumed, with
your consent, that:
(a) the execution, delivery and performance by each Loan Party of
any of the Financing Documents to which it is a party does not and will not
conflict with, contravene, violate or constitute a default under (i) any lease,
indenture, instrument or other agreement to which such Loan Party or its
property is subject (other than the Applicable Contracts as to which we express
our opinion in paragraph 4 herein), (ii) any rule, law or regulation to which
such Loan Party is subject (other than Applicable Laws as to which we express
our opinion in paragraph 5 herein), or (iii) any judicial or administrative
order or decree of any governmental authority (other than the Applicable Orders
as to which we express our opinion in paragraph 7 herein); and
Bankers Trust Company
November 20, 1997
Page 6
(b) no authorization, consent or other approval of, notice to or
filing with any court, governmental authority or regulatory body (other than
Governmental Approvals as to which we express our opinion in paragraph 6 herein)
is required to authorize or is required in connection with the execution,
delivery or performance by each Loan Party of any Financing Document to which it
is a party or the transactions contemplated thereby.
Our opinions are also subject to the following assumptions and
qualifications:
(a) each of the Subject Documents constitutes the legal, valid and
binding obligation of each party to such Subject Document (other than the Loan
Parties) enforceable against each such party in accordance with its terms;
(b) we express no opinion as to the effect on the opinions herein
stated of (i) the compliance or non-compliance of any party (other than the Loan
Parties) to the Subject Documents with any state, federal or other laws or
regulations applicable to it or (ii) the legal or regulatory status or the
nature of the business of any such party;
(c) we express no opinion as to any provision in the Security
Agreement, the Subsidiary Security Agreement or the Pledge Agreement with
respect to governing law to the extent that it purports to affect the choice of
law governing perfection and the effect of perfection and non-perfection of the
security interests;
(d) in rendering our opinions expressed below, we express no opinion
as to the applicability or effect of any fraudulent transfer or similar law on
the Subject Documents or any transactions contemplated thereby;
(e) enforcement of the Subject Documents may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in equity or at law);
Bankers Trust Company
November 20, 1997
Page 7
(f) certain of the remedial provisions with respect to the security
including waivers with respect to the exercise of remedies against the
collateral contained in the Security Agreement, the Subsidiary Security
Agreement, the Pledge Agreement and the Subsidiary Guaranty (collectively, the
"Security Documents") may be unenforceable in whole or in part, but the
inclusion of such provisions does not affect the validity of each such Security
Document, taken as a whole, and each such Security Document, taken as a whole,
together with applicable law, contains adequate provisions for the practical
realization of the benefits of the security created thereby;
(g) we advise you that with respect to collateral in which the
Collateral Agent for the benefit of the Secured Creditors (as such term is
defined in the Security Agreement, the Subsidiary Security Agreement and each of
the Existing Mortgages, respectively) is granted a security interest (i) by HCA
in both the Security Agreement and the Existing Mortgage to which it is a party
(as amended by the Mortgage Amendment) or (ii) by U.S. Textile in both the
Subsidiary Security Agreement and the Existing Mortgage to which it is a party
(as amended by the Deed of Trust Amendment), a court may limit the Collateral
Agent's right to choose among the remedies otherwise given to it with respect to
such collateral by such agreements;
(h) enforcement of the Security Agreement and the Subsidiary
Security Agreement with respect to the collateral consisting of a Loan Party's
interest in instruments, leases, contracts or other agreements between such Loan
Party and the other parties to such agreements ("Contracts") may be subject to
the terms of such Contracts, the rights of such other parties thereto and any
claims or defenses of such other parties against such Loan Party arising under
or outside such Contracts;
(i) we express no opinion as to the enforceability of any rights to
contribution or indemnification provided for in the Subject Documents which are
violative of the public policy underlying any law, rule or regulation (including
any federal or state securities law, rule or regulation);
Bankers Trust Company
November 20, 1997
Page 8
(j) we have assumed for purposes of rendering the opinions set forth
herein that (x) the Subsidiary Guaranty and the Subsidiary Security Agreement
have been duly authorized, executed and delivered by each of U.S. Textile and
Stonebury pursuant to the laws of their respective states of incorporation, (y)
each of U.S. Textile and Stonebury is duly incorporated and validly existing
under the laws of the state of its incorporation and (z) each of U.S. Textile
and Stonebury has full power, authority and legal right to make and perform its
obligations under the Subsidiary Guaranty and the Subsidiary Security Agreement.
We understand that you are separately receiving an opinion with
respect to certain of the foregoing from Xxxxxxxx & Xxxxxxxx, special North
Carolina counsel to U.S. Textile (the "Local Opinion"), and we are advised that
such opinion contains qualifications. Our opinions herein stated are based on
the assumptions and qualifications specified above and we express no opinion as
to the effect on the opinions herein stated of the qualifications contained in
the Local Opinion.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. HCA and International (the "Delaware Loan Parties") have each
been duly incorporated and are validly existing and in good standing under the
laws of the State of Delaware.
2. Each Delaware Loan Party has the corporate power and corporate
authority to execute, deliver and perform all of its obligations under each of
the Financing Documents to which it is a party. The execution and delivery by
each Delaware Loan Party of each of the Financing Documents to which it is a
party and the consummation by each Delaware Loan Party of the transactions
contemplated thereby have been duly authorized by all requisite corporate action
on the part of such Delaware Loan Party. Each of the Subject Documents and the
Mortgage Amendment has been duly executed and delivered by each Delaware Loan
Party which is a party thereto.
Bankers Trust Company
November 20, 1997
Page 9
3. Each Subject Document constitutes the valid and binding
obligation of each Loan Party which is a party thereto, enforceable against each
such Loan Party in accordance with its terms.
4. The execution and delivery by each Loan Party of each Financing
Document to which it is a party and the performance by each such Loan Party of
its obligations under each such Financing Document, each in accordance with its
terms, do not (a) conflict with the Certificate of Incorporation or By-laws of
such Delaware Loan Party, (b) constitute a violation of or a default under any
Applicable Contract or (c) in the case of each Delaware Loan Party, cause the
creation of any security interest or lien (other than the liens granted under or
created by the Security Documents and the Existing Mortgages (as amended by the
Mortgage Amendment and the Deed of Trust Amendment, respectively)) upon any of
the property of such Loan Party pursuant to any Applicable Contracts. We do not
express any opinion, however, as to whether the execution, delivery or
performance by each Loan Party of any Financing Document to which it is a party
will constitute a violation of or a default under any covenant, restriction or
provision with respect to financial ratios or tests or any aspect of the
financial condition or results of operations of such Loan Party, to the extent
the determination of such violation or default requires a quantitative
determination.
5. Neither the execution, delivery or performance by any Loan Party
of any of the Financing Documents to which it is a party nor the compliance by
any Loan Party with the terms and provisions thereof, will contravene any
provision of any Applicable Law.
5. No Governmental Approval, which has not been obtained or taken
and is not in full force and effect, is required to authorize or is required in
connection with the execution, delivery or performance of any of the Financing
Documents by any Loan Party except the filings and recordings required by or in
connection with the Security Documents (as defined in the Credit Agreement).
Bankers Trust Company
November 20, 1997
Page 10
6. Neither the execution, delivery or performance by any Loan Party
of its obligations under any of the Subject Documents to which it is a party nor
the compliance by such Loan Party with the terms thereof will contravene any
Applicable Order applicable to such Loan Party.
7. The Security Agreement Amendment does not, of itself, adversely
affect the validity of the security interest of the Collateral Agent for the
benefit of the Lenders as security for the Obligations (as defined in the
Security Agreement Amendment) in that portion of the collateral described in the
Security Agreement Amendment which is subject to Article 9 of the New York UCC
(the "Article 9 Collateral") and after giving effect to the Security Agreement
Amendment, the security interest of the Collateral Agent for the benefit of the
Lenders as security for the Obligations in the Article 9 Collateral will be a
valid security interest to the same extent to which it would otherwise have been
immediately prior to giving effect to the Security Agreement Amendment. The
Subsidiary Security Agreement Amendment does not, of itself, adversely affect
the validity of the security interest of the Collateral Agent for the benefit of
the Lenders as security for the Obligations (as defined in the Subsidiary
Security Agreement Amendment) in the Article 9 Collateral and after giving
effect to the Subsidiary Security Agreement Amendment, the security interest of
the Collateral Agent for the benefit of the Lenders as security for the
Obligations in the Article 9 Collateral will be a valid security interest to the
same extent to which it would otherwise have been immediately prior to giving
effect to the Subsidiary Security Agreement Amendment.
Our opinions in paragraph 8 are limited to Article 9 of the New York
UCC, and therefore such opinions do not address (i) laws of jurisdictions other
than New York, and of New York except for Article 9 of the New York UCC, (ii)
collateral of a type not subject to Article 9 of the New York UCC, and (iii)
under Section 9-103 of the New York UCC, what law governs perfection of the
security interest granted in the collateral covered by this opinion.
Bankers Trust Company
November 20, 1997
Page 11
8. The UCC-3 Amendments are in the appropriate form for filing in
the Filing Offices under the Nevada UCC. The Filing Offices are the appropriate
filing offices in the State of Nevada for filing financing statements with
respect to that portion of the Article 9 Collateral which may be perfected by
the filing of a financing statement in the State of Nevada.
9. The Pledge Agreement Amendment does not of itself, adversely
affect the validity, perfection or priority of the security interest of the
Collateral Agent for the benefit of the Lenders as security for the Obligations
(as defined in the Pledge Agreement) in the certificates representing the shares
of U.S. Textile and Stonebury identified on Annex A to the Pledge Agreement (the
"Prior Pledged Securities").
10. The provisions of the Pledge Agreement are effective to create
in favor of the Collateral Agent for the benefit of the Lenders as security for
the Obligations (as defined in the Pledge Agreement) a valid security interest
in the International Certificate. The delivery by HCA to the Collateral Agent
for the benefit of the Lenders in the State of New York of the International
Certificate will perfect the security interest of the Collateral Agent in the
International Certificate. Upon such delivery, under the New York UCC, no
interest of any creditor of HCA will be equal or prior to the security interest
of the Collateral Agent for the benefit of the Lenders in the International
Certificate.
Our opinion in paragraphs 10 and 11 are subject to the following
additional assumptions and qualifications:
(i) Our opinions in paragraphs 10 and 11 are limited to
Articles 8 and 9 of the New York UCC, and therefore, such opinions do not
address (a) laws of jurisdictions other than New York, and of New York
except for Articles 8 and 9 of the New York UCC, (b) collateral of a type
not subject to Articles 8 and 9 of the New York UCC and (c) under Section
9-103 of the New York UCC, what law governs perfection of the security
interest granted in the Prior Pledged Securities and International
Certificate;
Bankers Trust Company
November 20, 1997
Page 12
(ii) we have assumed that HCA has sufficient rights in
the International Certificate for the security interest of the Collateral
Agent for the benefit of the Lenders to attach, and we express no opinion
as to the nature or extent of any of HCA's rights in, or title to, the
International Certificate;
(iii) we have assumed that neither the Collateral Agent
nor any of the Lenders has notice prior to or on the date hereof of an
adverse claim with respect to the International Certificate;
(iv) we express no opinion with respect to the priority
of the security interest of the Collateral Agent for the benefit of the
Lenders in the International Certificate against a lien creditor (as such
term is defined in Section 9-301(3) of the New York UCC) with respect to
future advances to the extent such future advances do not constitute
advances made pursuant to a commitment as set forth in Section 9-301(4) of
the New York UCC;
(v) we express no opinion with respect to proceeds of,
or distributions on, the International Certificate;
(vi) we have assumed that (a) the Prior Pledged
Securities were delivered to the Collateral Agent for the benefit of the
Lenders on October 17, 1994, (b) such securities have been continuously in
the possession of the Collateral Agent in the State of New York since
October 17, 1994 through the date hereof, and (c) the Collateral Agent
currently has possession of the Prior Pledged Securities; and
(vii) we express no opinion as to the security interest
of the Collateral Agent for the benefit of the Lenders in any portion of
the Prior Pledged Securities, the continuous possession of which has not
been maintained in the State of New York.
Bankers Trust Company
November 20, 1997
Page 13
11. No Loan Party is required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
12. No Loan Party is a "holding company" as defined in the Public
Utility Holding Company Act of 1935, as amended.
This opinion is being furnished only to you and is solely for your
benefit in connection with the transactions contemplated by the Subject
Documents and is not to be used, circulated, quoted, relied upon or otherwise
referred to by any other Person or for any other purpose without our prior
written consent, provided that this opinion may be furnished to prospective
assignees and participants, but only Lenders shall have the right to rely
hereon.
Very truly yours,
Schedule I
Lenders
Bankers Trust Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
CoreStates Bank, N.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
National Westminster Bank Plc
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
NationsBank of North Carolina, N.A.
000 Xxxxx Xxxxx Xxxxxx
XX-XX0000-0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Schedule II
Applicable Contracts
1. Loan Agreement by and between South Carolina Jobs-Economic Development
Authority as Issuer and Hosiery Corporation of America, Inc. as Borrower,
dated as of June 1, 1992.
2. Restructuring Agreements: Xxxx of Sale and Assignment, dated as of October
17, 1994 made by Hosiery Corporation of America, Inc. as Seller to Xxxxxx
X. Xxxxxx; Xxxx of Sale and Assignment, dated as of October 17, 1994 made
by U.S. Textile Corporation as Seller to Xxxxxx X. Xxxxxx; Agreement of
Corporate Separation, dated as of October 17, 1994 by and between Hosiery
Corporation of America, Inc. and Xxxxxx X. Xxxxxx; Instrument and Transfer
of Hosiery Corporation of America, Inc. rights, interest and title in Trust
Adoption Agreement by and between Hosiery Corporation of America, Inc. and
Nationsbanc of Tennessee, N.A. to Burgundy Investments, Inc.
3. Employment Agreement between U.S. Textile Corp. and Xxxx Xxxxxxx, dated
August 29, 1980, and an Amendment thereto by and between U.S. Textile
Corp., Hosiery Corporation of America, Inc. and Xxxx Xxxxxxx, dated
September 12, 1994.
4. Executive Employment Agreement between Hosiery Corporation of America, Inc.
and Xxxxxx X. Xxxxxx, dated September 16, 1993.
5. Computer Services Agreement between AMS and New Jersey Insurance
Underwriting Association dated as of August 15, 1990.
6. Computer Services Agreement between AMS and Enchantress Hosiery Corporation
of Canada, Ltd. dated September 13, 1990 and Agreement Amending Computer
Services Agreement dated February 15, 1993.
7. Computer Services Agreement between AMS and RAM Technologies, Inc. dated as
of April 1, 1994.
8. Hosiery Supply Agreement between U.S. Textile Corporation and Enchantress
Hosiery Corporation of Canada Ltd. dated September 13, 1990 and Agreement
Amending Hosiery Supply Agreement dated as of February 15, 1993.
9. Real Property Lease Agreement (and Letter Amendments thereto) for Office
space at 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxxx, between Hosiery
Corporation of America, Inc. and Emerik Properties Corp., a California
corporation, dated May 27, 1983.
10. Lease Agreement for warehouse and storage space at 000-00 Xxxxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxxxx between Hosiery Corporation of America, Inc. and
Xxxxxx X. Xxxxxxxx, dated March 15, 1995, and extended by Lease Extension
Agreement, dated December 9, 1996.
11. Real Property Lease Agreement for Office space at 0000 Xxxx Xxxxxx, Xxxxx
000, Xxxx, Xxxxxx, between The Stonebury Group, Inc. and Mill
International, dated October 13, 1992.
12. Letter Agreement, dated as of October 17, 1994, Hosiery Corporation of
America, Inc. and Xxxxx & Company, Inc. providing for financial advisory
services fees.
Exhibit A to Opinion of Special Counsel to
Hosiery Corporation of America, Inc.
Officer's Certificate
The undersigned, Xxxx X. Xxxxxxx, President and Chief Executive
Officer of Hosiery Corporation of America, Inc. ("HCA"), President and Chief
Executive Officer of The Stonebury Group Incorporated ("Stonebury"), and
President of Hosiery Corporation International ("HCI") and Xxxxxx X. Xxxxxx,
Assistant Secretary of U.S. Textile Corp. (together with HCA, Stonebury and HCI,
the "Loan Parties") understand that pursuant to Section 5.01(b)(i) of that
certain Amendment and Restatement, dated as of November 20, 1997, to the Credit
Agreement, dated as of October 17, 1994 (the "Credit Agreement"), among HCA, the
financial institutions listed from time to time on Annex I thereto (the
"Lenders") and Bankers Trust Company, as agent for the Lenders (all of such
parties other than HCA, the "Recipients"), Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP is rendering an opinion dated November 20, 1997 (the "Opinion") to the
Recipients. Capitalized terms used herein but not otherwise defined shall have
the meanings set forth in the Credit Agreement. We further understand that
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP is relying on this officer's
certificate and the statements made herein in rendering such Opinion.
With regard to the foregoing, on behalf of each of the Subsidiary
Guarantors or Loan Parties, as the case may be, we certify (with respect to each
Loan Party of which we are an officer) that:
1. Set forth on Schedule I hereto are all of the agreements and
instruments to which the Loan Parties are party or by which they or any of their
assets are bound and which are material to the business or operation of the Loan
Parties.
2. Set forth on Schedule II hereto are all of the orders, judgments
and decrees, known to us, of any governmental authority which are specifically
applicable to each Loan Party.
3. Less than 20 percent of the assets of each Loan Party on a
consolidated basis and on an unconsolidated basis consist of margin stock (as
such term is defined in Regulation G or Regulation U of the Board of Governors
of the Federal Reserve System).
4. Each Loan Party (a) is primarily engaged, directly or through a
wholly-owned subsidiary or subsidiaries, in a business or businesses other than
that of investing, reinvesting, owning, holding or trading in securities and (b)
is not engaged and does not propose to engage in the business of investing,
reinvesting, owning, holding or trading in securities, and does not own or
propose to acquire investment securities having a value exceeding 40 per cent of
the value of such Loan Party's total assets (exclusive of government securities
and cash items) on an unconsolidated basis.
5. As of June 30, 1997, the total value of investment securities
(other than securities of majority or wholly-owned subsidiaries) of each Loan
Party represented less than 45 percent of the total assets of such Loan Party on
an unconsolidated basis and such securities (other than as aforesaid) are not
expected upon consummation of the transactions contemplated by the Credit
Agreement and the Security Documents to exceed 30 percent of such Loan Party's
total assets as defined in the Investment Company Act of 1940, as amended. For
purposes of this certificate, "investment securities" means any note, stock,
treasury stock, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit for a
security, fractional undivided interest in oil, gas, or other mineral rights,
any put, call, straddle, option or privilege on any security (including a
certificate of deposit) or on any group or index of securities (including any
interest therein or based on the value thereof), or any put, call, straddle,
option or privilege entered into on a national securities exchange relating to
foreign currency, or, in general, any interest or instrument commonly known as a
"security," or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to or purchase, any of the foregoing.
2
6. None of the Loan Parties owns or operates facilities used for the
generation, transmission, or distribution of electric energy for sale ("electric
utility facilities").
7. None of the Loan Parties owns or operates facilities used for the
distribution at retail of natural or manufactured gas for heat, light or power
("gas utility facilities").
8. None of the Loan Parties directly or indirectly, or through one
or more intermediary companies, owns, controls, or holds with power to vote (a)
10 percent or more of the outstanding securities (such as notes, drafts, stock,
treasury stock, bonds, debentures, certificates of interest or participation in
any profit sharing agreements or in oil, gas, or other mineral royalties or
leases, collateral trust certificates, preorganization certificates or
subscriptions, transferable shares, investment contracts, voting-trust
certificates, certificates of deposit for a security, receiver's or trustee's
certificates, or including any instrument commonly known as a "security"
(including any certificate of interest or participation in, temporary or interim
certificate for, receipt for, guaranty of, assumption of liability on, or
warrant or right to subscribe to or purchase any of the foregoing)) presently
entitling the owner or holder thereof to vote upon the direction of management
of, or any such instrument issued under or pursuant to any trust, agreement or
arrangement whereby a trustee or trustees or agent or agents for the owner or
holder of such instrument is presently entitled to vote in the direction or
management of, any corporation, partnership, association, joint-stock company,
joint venture or trust that owns or operates any electric utility facilities or
gas utility facilities, or (b) any other interest directly or indirectly, or
through one or more intermediary entities, in (i) any corporation, partnership,
association, joint-stock company, joint venture or trust that owns or operates
any electric utility facilities or gas utility facilities, or (ii) any of the
foregoing types of entities which have received notice of the sort described in
Paragraph 9 below.
9. None of the Loan Parties has received notice that the Securities
and Exchange Commission has determined, or may determine, that such Loan Party
exercises a controlling influence over the management or direction of the
policies of a gas utility
3
company or an electric utility company as to make it subject to the obligations,
duties and liabilities imposed upon holding companies by the Public Utility
Holding Company Act of 1935, as amended.
4
IN WITNESS WHEREOF, each of the undersigned has executed this
certificate this ____ day of November, 1997.
-------------------------
Name: Xxxx X. Xxxxxxx
Title: President & CEO,
HCA and Stonebury
President, HCI
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Assistant Secretary,
U.S. Textile Corp.
5
Schedule I
APPLICABLE CONTRACTS
1. Loan Agreement by and between South Carolina Jobs-Economic Development
Authority as Issuer and Hosiery Corporation of America, Inc. as Borrower,
dated as of June 1, 1992.
2. Restructuring Agreements: Xxxx of Sale and Assignment, dated as of October
17, 1994 made by Hosiery Corporation of America, Inc. as Seller to Xxxxxx
X. Xxxxxx; Xxxx of Sale and Assignment, dated as of October 17, 1994 made
by U.S. Textile Corporation as Seller to Xxxxxx X. Xxxxxx; Agreement of
Corporate Separation, dated as of October 17, 1994 by and between Hosiery
Corporation of America, Inc. and Xxxxxx X. Xxxxxx; Instrument and Transfer
of Hosiery Corporation of America, Inc. rights, interest and title in Trust
Adoption Agreement by and between Hosiery Corporation of America, Inc. and
Nationsbanc of Tennessee, N.A. to Burgundy Investments, Inc.
3. Employment Agreement between U.S. Textile Corp. and Xxxx Xxxxxxx, dated
August 29, 1980, and an Amendment thereto by and between U.S. Textile
Corp., Hosiery Corporation of America, Inc. and Xxxx Xxxxxxx, dated
September 12, 1994.
4. Executive Employment Agreement between Hosiery Corporation of America, Inc.
and Xxxxxx X. Xxxxxx, dated September 16, 1993.
5. Computer Services Agreement between AMS and New Jersey Insurance
Underwriting Association dated as of August 15, 1990.
6. Computer Services Agreement between AMS and Enchantress Hosiery Corporation
of Canada, Ltd. dated September 13, 1990 and Agreement Amending Computer
Services Agreement dated February 15, 1993.
7. Computer Services Agreement between AMS and RAM Technologies, Inc. dated as
of April 1, 1994.
I-1
8. Hosiery Supply Agreement between U.S. Textile Corporation and Enchantress
Hosiery Corporation of Canada Ltd. dated September 13, 1990 and Agreement
Amending Hosiery Supply Agreement dated as of February 15, 1993.
9. Real Property Lease Agreement (and Letter Amendments thereto) for Office
space at 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxxx, between Hosiery
Corporation of America, Inc. and Emerik Properties Corp., a California
corporation, dated May 27, 1983.
10. Lease Agreement for warehouse and storage space at 000-00 Xxxxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxxxx between Hosiery Corporation of America, Inc. and
Xxxxxx X. Xxxxxxxx, dated March 15, 1995 and extended by Lease Extension
Agreement dated December 9, 1996.
11. Real Property Lease Agreement for Office space at 0000 Xxxx Xxxxxx, Xxxxx
000, Xxxx, Xxxxxx, between The Stonebury Group, Inc. and Mill
International, dated October 13, 1992.
12. Letter Agreement, dated as of October 17, 1994, Hosiery Corporation of
America, Inc. and Xxxxx & Company, Inc. providing for financial advisory
services fees.
I-2
Schedule II
APPLICABLE ORDERS
None.
II-1
November 20, 1997
Bankers Trust Company,
as Agent
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
VIA FACSIMILE
RE: AMENDED AND RESTATED SUBSIDIARY AGREEMENTS ENTERED INTO BY U.S. TEXTILE
CORPORATION ON BEHALF OF HOSIERY CORPORATION OF AMERICA, INC. - CREDIT
AGREEMENT WITH BANKERS TRUST COMPANY
Gentlemen:
We have served as counsel to U.S. Textile corp. ("U.S. Textile), in
connection with the Amendment and Restatement, dated as of November 20, 1997, to
Credit Agreement, dated as of October 17, 1994, (as so amended, the "Credit
Agreement") among Hosiery Corporation of America, Inc., the lending institutions
party thereto (the "Lenders") and Bankers Trust Company, as Agent (in such
capacity the "Agent") for the Lenders. This opinion is being rendered pursuant
to Section 5.01(b)(iii) of the Credit Agreement. Capitalized terms used herein
and not otherwise defined herein shall have the same meanings as set forth in
the Credit Agreement.
In rendering this opinion, we have prepared and/or examined each of the
following documents:
1. Amendment and Restatement, dated as of November 20, 1997, to the Subsidiary
Guaranty dated as of October 17, 1994, made by each of The Stonebury Group
Incorporated, U.S. Textile and Hosiery Corporation International
(collectively, the "Guarantors") in favor of the Agent for the benefit of
the Bank Creditors and Interest Rate Creditors (as defined therein).
2. Amendment and Restatement, dated as of November 20, 1997, to the Subsidiary
Security Agreement, dated as of October 17, 1994, made by each of the
guarantors in favor of Bankers Trust Company, as Collateral Agent for the
benefit of the Secured Creditors (as defined therein).
Bankers Trust Company
November 20, 1997
Page Two
3. First Amendment dated November 20, 1997 to Deed of Trust, Security
Agreement, Assignment of Lease, Rents and Profits, Financing Statement and
Financing Statement and Fixture Filing dated October 17, 1994.
4. Consent in lieu of meeting of the Board of Directors of U.S. Textile dated
November 20, 1997.
Based upon the foregoing and our further investigation, we are of the
opinion that:
1. U.S. Textile has been duly incorporated and is validly existing and in good
standing under the laws of the State of North Carolina as evidenced by the
attached Certificate of Existence issued November 17, 1997, by the
Secretary of State of North Carolina.
2. U.S. Textile has the corporate power and authority to execute, deliver and
perform all of its obligations under each of the above documents.
3. The execution and delivery by U.S. Textile of the subsidiary documents and
the consummation by it of all transactions contemplated thereby have been
duly authorized by all requisite corporate action on the part of U.S.
Textile. Subject to confirmation to us by facsimile of the signature pages
on the date of closing, that the subsidiary documents have been duly
executed and delivered by U.S. Textile.
ASSUMPTIONS
Rendering this opinion, we have made the following assumptions:
a. The signatures and notary acknowledgments relating to the subsidiary
documents are genuine and complete.
b. The subsidiary documents were not executed or delivered under fraud, duress
or mistake.
Bankers Trust Company
November 20, 1997
Page Three
c. The parties executing and delivering the subsidiary documents had the
requisite mental capacity to do same.
d. The copies of the documents which we examined were true and complete copies
of the original documents.
QUALIFICATIONS
The opinions expressed above are subject to the following qualifications
and limitations:
a. The effect of the applicable bankruptcy insolvency moratorium
reorganization arrangement or other similar laws now or hereafter in effect
affecting the rights of creditors generally.
b. The opinion delivered herein is limited to matters of North Carolina law.
c. Matters expressly stated herein and no opinion is inferred or may be
implied beyond the matters expressly stated.
This opinion is furnished to you pursuant to your request and is solely
for your benefit and may not be relied upon, nor copies delivered to any other
person without our prior written consent.
Sincerely,
Xxxx X. Xxxxxxxx
JRC:emo
cc: Mr. Xxxx Xxxxxx
U.S. Textile Corporation
SJG:LAN November 20, 1997
To: The Agent and various lending institutions
(collectively, the "Banks") party to the
Credit Agreement referred to below
re Amendment and Restatement, dated as of November 20, 1997 to Credit
Agreement, dated as of October 17, 1994, among Hosiery Corporation of
America, Inc., (the "Borrower") and the Banks (the "Credit Agreement")
Ladies and Gentlemen:
We have acted as special counsel to the Banks party to the Credit
Agreement in connection with the execution and delivery of the Credit Agreement.
This opinion is delivered to you pursuant to Section 5.01(b)(ii) of the Credit
Agreement. Terms used herein which are defined in the Credit Agreement shall
have the respective meanings set forth in the Credit Agreement unless otherwise
defined herein.
In connection with this opinion, we have examined the originals, or
certified, conformed or reproduction copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinions hereinafter expressed. In stating our opinion, we have assumed
the genuineness of all signatures on original or certified copies, the
authenticity of documents submitted to us as originals and the conformity to
original or certified copies of all copies submitted to us as certified or
reproduction copies.
We have also assumed, for purposes of the opinions expressed herein,
that the parties to the Credit Agreement have the corporate power and authority
to enter into and perform the Credit Agreement and that the Credit Agreement has
been duly authorized, executed and delivered by each such party.
Based upon the foregoing, and subject to the limitations set forth
herein, we are of the opinion that the Credit Agreement constitutes the valid
and binding obligation of the Borrower enforceable in accordance with its terms
except to the extent that enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by equity principles (regardless of whether enforcement is sought
in equity or at law).
We have not been requested to render and, with your permission, we
express no opinion as to the applicability to the obligations of the Borrower
under the Credit Agreement of Section 548 of the Bankruptcy Code and Article 10
of the New York Debtor & Creditor Law relating to fraudulent transfers and
obligations. We understand, without independent verification, that, to the
extent they have deemed necessary in the context of the proposed transaction,
the Banks have satisfied themselves on the basis of, among other things, the
financial information furnished to the Banks and their knowledge of the credit
facilities available to the Borrower, that neither the Borrower nor any of its
Subsidiaries is insolvent and that neither the Borrower nor any of its
Subsidiaries will be rendered insolvent by the transactions contemplated by the
Credit Agreement and the other Credit Documents and that, after giving effect to
such transactions, neither the Borrower nor any of its Subsidiaries will be left
with unreasonably small capital with which to engage in its anticipated business
and that neither the Borrower nor any of its Subsidiaries will have intended to
incur, or will have believed it has incurred, debts beyond its ability to pay as
such debts mature.
This opinion is limited to the federal law of the United States of
America and the law of the State of New York.
Very truly yours,
EXHIBIT E
FORM OF OFFICER'S CERTIFICATE
I, the undersigned, [President][Vice President] of Hosiery
Corporation of America, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Company"), do hereby certify on behalf of
the Company that:
1. This Certificate is furnished pursuant to the Amendment and
Restatement, dated as of November 20, 1997, amending and restating the Credit
Agreement, dated October 17,1994, among the Company, the Banks from time to time
party thereto and Bankers Trust Company, as Agent (such Credit Agreement, as in
effect on the date of this Certificate, being herein called the " Credit
Agreement"). Unless otherwise defined herein, capitalized terms used in this
Certificate shall have the meanings set forth in the Credit Agreement.
2. The following named individuals are elected or appointed officers
of the Company and the other Credit Parties, each holds the office of the
Company or such other Credit Party set forth opposite his name and has held such
office since ______ ___, 19__.9/ The signature written opposite the name and
title of each such officer is his genuine signature.
Name10/ Office Credit Party Signature
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
3. Attached hereto as Exhibit A is a certified copy of the
Certificate of Incorporation of the Company and each other Credit Party, as
filed in the Office of the Secretary of State of the State of incorporation of
such Credit Party, together with all amendments thereto adopted through the date
hereof.
EXHIBIT E
Page 2
4. Attached hereto as Exhibit B is a true and correct copy of the
By-Laws of the Company and each other Credit Party which were duly adopted, were
in full force and effect on the date of adaption of the resolutions referred to
in paragraph 5 hereof and are in full force and effect on the date hereof.
5. Attached hereto as Exhibit C is a true and correct copy of
resolutions of the Company and each other Credit Party which were duly adopted
on __________, 19__ [by unanimous written consent of the Board of Directors of
the Company or such other Credit Party] [by a meeting of the Board of Directors
of the Company or such other Credit Party at which a quorum was present and
acting throughout], and said resolutions have not been rescinded, amended or
modified. Except as attached hereto as Exhibit C, no resolutions have been
adopted by the Board of Directors of the Company or any other Credit Party which
deal with the execution, delivery or performance of any of the Credit Documents
to which any such Credit Party is party.
6. On the date hereof, all of the applicable conditions set forth in
Sections 5.01(f) and (i) and 5.02 have been satisfied.
7. On the date hereof, the representations and warranties
contained in the Credit Agreement and in the other Credit Documents are true and
correct in all material respects with the same effect as though such
representations and warranties had been made on the date hereof, both before and
after giving effect to the incurrence of Loans on the date hereof and the
application of the proceeds thereof, unless stated to relate to a specific
earlier date, in which case such representations and warranties were true and
correct in all material respects as of such earlier date.
8. On the date hereof, no Default or Event of Default has occurred
and is continuing or would result from the Borrowing to occur on the date hereof
or from the application of the proceeds thereof.
EXHIBIT E
Page 3
9. There is no proceeding for the dissolution or liquidation of the
Company or threatening its existence.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
November, 1997.
HOSIERY CORPORATION OF
AMERICA, INC.
By_______________________
Name:
Title:
EXHIBIT E
PAGE 4
I, the undersigned, [Secretary/Assistant Secretary] of the Company, do hereby
certify that:
1. [Name of Person making above certifications] is the duly elected
and qualified [President/Vice President] of the Company and the signature above
is his genuine signature.
2. The certifications made by [name of Person making above
certifications] in Items 2, 3, 4, 5 and 9 above are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand this __th day of
November, 1997.
HOSIERY CORPORATION OF
AMERICA, INC.
By__________________________
Name:
Title:
EXHIBIT F
FORM OF BORROWING BASE CERTIFICATE AS OF _________ ISSUED
BY HOSIERY CORPORATION OF AMERICA, INC. (THE BORROWER")
Dollars ($)
in Thousands
I. ADVANCE RATE ELIGIBILITY
A. GAAP BOOK VALUE OF ACCOUNTS RECEIVABLE OF
THE BORROWER AND THE SUBSIDIARY GUARANTORS $______
B. A X 80% $______
C. GAAP BOOK VALUE OF INVENTORY OF THE
BORROWER AND THE SUBSIDIARY GUARANTORS $______
D. C X 50% $______
E. BORROWING BASE (B + D) $______
F. REVOLVING LOANS AND SWINGLINE LOANS
OUTSTANDING $______
G. TOTAL BORROWING AVAILABILITY (E - F) $______
I, the undersigned, Vice President and Controller of Hosiery
Corporation of America, Inc. do hereby certify that the figures stated above are
true and correct as of the date first above written.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
_____________.
By:___________________________
Xxxxxx Xxxxxx
Vice President & Controller
[EXHIBIT G CONFORMED
AS EXECUTED]
SUBSIDIARY GUARANTY
AMENDMENT AND RESTATEMENT dated as of November 20, 1997, to the
SUBSIDIARY GUARANTY, dated as of October 17, 1994 (as amended, modified or
supplemented from time to time, the "Guaranty"), made by each Subsidiary
Guarantor of the Borrower whose name appears below (each Subsidiary Guarantor a
"Guarantor" and collectively the "Guarantors"). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as defined below)
shall have their respective meanings as set forth therein.
W I T N E S S E T H :
WHEREAS Hosiery Corporation of America, Inc. (the "Borrower"), the
financial institutions from time to time party thereto (the "Banks") and Bankers
Trust Company, as Agent (the "Agent" and together with the Banks and the
Collateral Agent, the "Bank Creditors"), have entered into an Amendment and
Restatement, dated as of November 20, 1997, amending and restating the Credit
Agreement dated as of October 17, 1994 (as amended, modified or supplemented
from time to time, the "Credit Agreement"), providing for the making of Loans
and the issuance of, and participation in, Letters of Credit as contemplated
therein;
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Agreements (each such Interest Rate Agreement with an Interest
Rate Creditor (as defined below), a "Secured Interest Rate Agreement") with
Bankers Trust Company, in its individual capacity ("BTCo"), any Bank or a
syndicate of financial institutions organized by BTCo or an affiliate of BTCo
(even if BTCo or any such Bank ceases to be a Bank under the Credit Agreement
for any reason), and any institution that participates therein, and in each case
their subsequent assigns (collectively, the "Interest Rate Creditors", and the
Interest Rate Creditors together with the Bank Creditors, collectively the
"Creditors");
WHEREAS, each Guarantor is a wholly-owned direct Subsidiary of the
Borrower;
WHEREAS, it is a condition to the making of Loans and the issuance
of, and participation in, Letters of Credit under the Credit Agreement that each
Guarantor shall have executed and delivered this Guaranty; and
1
WHEREAS, each Guarantor will obtain benefits from the extensions of
credit to the Borrower under the Credit Agreement and entering into of Secured
Interest Rate Agreements and accordingly desires to execute this Guaranty in
order to satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:
1. Each Guarantor irrevocably and unconditionally, and jointly and
severally, guarantees:
(i) to the Bank Creditors the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of:
(a) the principal of and interest on the Notes issued by, and the
Loans made to, the Borrower under the Credit Agreement, (b) all reimbursement
obligations and Unpaid Drawings with respect to Letters of Credit issued
under the Credit Agreement, and (c) all other obligations (including
obligations which, but for any automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities owing by the Borrower to a
Bank Creditor under the Credit Agreement and the Credit Documents (including,
without limitation, indemnities, Fees and interest thereon) now existing or
hereafter incurred under, arising out of or in connection with the Credit
Agreement or any other Credit Document and the due performance and compliance
with the terms of the Credit Documents (all such principal, interest,
liabilities and obligations, the "Credit Document Obligations"); and
(ii) to each Interest Rate Creditor the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for any automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities
owing by the Borrower under any Secured Interest Rate Agreement, whether now
in existence or hereafter arising, and the due performance and compliance by
the Borrower with all terms, conditions and agreements contained therein (all
such obligations and liabilities, the "Interest Rate Obligations", and the
Interest Rate Obligations together with the Credit Document Obligations,
collectively the "Guaranteed Obligations"); provided, that the maximum amount
payable hereunder by
2
each Guarantor with respect to the Guaranteed Obligations shall at no time
exceed the Maximum Amount (as defined below) of such Guarantor. As used
herein, Maximum Amount means an amount equal to 90% of the amount by which
(i) the present fair saleable value of such Guarantor's assets exceeds (ii)
the total liabilities of such Guarantor (including the maximum amount
reasonably expected to come due in respect of contingent liabilities, other
than contingent liabilities of such Guarantor hereunder), in each case
determined on the Restatement Effective Date or on the day any demand is made
under this Guaranty, whichever date results in the higher Maximum Amount.
Each Guarantor understands, agrees and confirms that the Creditors may
enforce this Guaranty up to the full amount of the Guaranteed Obligations
against each Guarantor (subject to the proviso in the second preceding
sentence) without proceeding against the Borrower or any security for the
Guaranteed Obligations, or under any other guaranty covering all or a portion
of the Guaranteed Obligations. All payments by each Guarantor under this
Guaranty shall be made on the same basis as payments by the Borrower under
Sections 4.03 and 4.04 of the Credit Agreement.
2. Additionally, each Guarantor, jointly and severally
unconditionally and irrevocably guarantees the payment of any and all Guaranteed
Obligations (subject to the proviso contained above) upon the occurrence in
respect of the Borrower not a party of any of the events specified in Section
9.05 of the Credit Agreement, and unconditionally and irrevocably promises to
pay such Guaranteed Obligations to the Creditors on demand.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of the
Borrower whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other party, and the liability of each Guarantor hereunder
shall not be affected or impaired by (a) any direction as to application of
payment by the Borrower or by any other party, (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the indebtedness of the Borrower, (c) any payment on or in reduction of
any such other guaranty or undertaking, (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower or (e) any payment
made to any Creditor on the indebtedness which any Creditor repays to the
Borrower pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.
4. The obligations of each Guarantor hereunder are independent of
the obligations of any other Guarantor, any other guarantor or the Borrower, and
a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower and whether or not any other Guarantor, any
other guarantor of the Borrower be joined in any such action or actions.
3
5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by the Agent or any other Creditor against, and any other notice to, any party
liable thereon (including each Guarantor or any other guarantor of the
Borrower).
6. Any Creditor may at any time and from time to time without the
consent of, or notice to, each Guarantor, without incurring responsibility to
each Guarantor, without impairing or releasing the obligations of each Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(i) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(ii) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(iii) exercise or refrain from exercising any rights against the
Borrower, any other guarantor or others or otherwise act or refrain from
acting;
(iv) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to creditors of the
Borrower;
(v) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Creditors regardless of
what liabilities of the Borrower remain unpaid;
(vi) consent to or waive any breach of, or any act, omission or
default under, any of the Credit Documents, the Secured Interest Rate
Agreements or any of the instruments or agreements referred to therein, or
otherwise amend, modify or supplement any of the Credit Documents, the
Secured Interest Rate Agreements or any of such other instruments or
agreements; and/or
4
(vii) act or fail to act in any manner referred to in this Guaranty
which may deprive such Guarantor of its right to subrogation against the
Borrower to recover full indemnity for any payments made pursuant to this
Guaranty.
7. No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on each
Guarantor in any case shall entitle each Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Creditor to any other or further action in any circumstances without
notice or demand. It is not necessary for any Creditor to inquire into the
capacity or powers of the Borrower or any of its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness of the Borrower now or hereafter held by each
Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to each Guarantor, if the
Collateral Agent, after an Event of Default has occurred, so requests, shall be
collected, enforced and received by each Guarantor as trustee for the Creditors
and be paid over to the Creditors on account of the indebtedness of the Borrower
to the Creditors, but without affecting or impairing in any manner the liability
of each Guarantor under the other provisions of this Guaranty. Prior to the
transfer by each Guarantor of any note or negotiable instrument evidencing any
indebtedness of the Borrower to each Guarantor, each Guarantor shall xxxx such
note or negotiable instrument with a legend that the same is subject to this
subordination.
5
10. (a) Each Guarantor hereby waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Creditors
to: (i) proceed against the Borrower, any other guarantor of the Borrower or any
other party; (ii) proceed against or exhaust any security held from the
Borrower, any other guarantor of the Borrower or any other party; or (iii)
pursue any other remedy in the Creditors' power whatsoever. Each Guarantor
waives any defense based on or arising out of any defense of the Borrower, any
other guarantor of the Borrower or any other party other than payment in full of
the Guaranteed Obligations, including, without limitation, any defense based on
or arising out of the disability of the Borrower, any other guarantor of the
Borrower or any other party, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower other than payment in full of the Guaranteed
Obligations. The Creditors may, at their election, foreclose on any security
held by the Agent, the Collateral Agent or the other Creditors by one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy the Creditors may have against the
Borrower or any other party, or any security, without affecting or impairing in
any way the liability of each Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid in full. Each Guarantor waives any defense
arising out of any such election by the Agent, the Collateral Agent and the
Creditors, even though such election operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of each Guarantor
against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor 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 Guaranteed
Obligations and the nature, scope and extent of the risks which each Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise each Guarantor of information known to them regarding such
circumstances or risks.
11. If and to the extent that each Guarantor makes any payment to
any Creditor or to any other Person pursuant to or in respect of this Guaranty,
any claim which each Guarantor may have against the Borrower by reason thereof
shall be subject and subordinate to the prior payment in full of the Guaranteed
Obligations to each Creditor. Prior to the transfer by any Guarantor of any note
or negotiable instrument evidencing any indebtedness of the Borrower to such
Guarantor, such Guarantor shall xxxx such note or negotiable instrument with a
legend that the same is subject to this subordination.
6
12. Each Guarantor covenants and agrees that on and after the date
hereof and until the Total Commitment and all Secured Interest Rate Agreements
have been terminated, no Loan or Letter of Credit remains outstanding and all
Guaranteed Obligations have been paid in full, such Guarantor shall take, or
will refrain from taking, as the case may be, all actions that are necessary to
be taken or not taken so that no violation of any provision, covenant or
agreement contained in Section 7 or 8 of the Credit Agreement, and so that no
Event of Default, is caused by the actions of such Guarantor or any of its
Subsidiaries.
13. Each Guarantor hereby jointly and severally agrees to pay all
reasonable out-of-pocket costs and expenses (including, without limitation, the
reasonable fees and disbursement of counsel) of each Creditor in connection with
the enforcement of this Guaranty and of the Agent in connection with any
amendment, waiver or consent relating hereto.
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns to the extent permitted under the Credit Agreement.
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of the Required
Banks (or to the extent required by Section 12.12 of the Credit Agreement, with
the written consent of each Bank) and each Guarantor affected thereby (it being
understood that the addition or release of any Guarantor hereunder shall not
constitute a change, waiver, discharge or termination affecting any Guarantor
other than the Guarantor so added or released), provided that (x) no such
change, waiver, modification or variance shall be made to the last sentence of
Section 1 or to this Section 15 without the consent of each Creditor adversely
affected thereby and (y) any change, waiver, modification or variance affecting
the rights and benefits of a single Class (as defined below) of Creditors (and
not all Creditors in a like or similar manner) shall require the written consent
of the Requisite Creditors (as defined below) of such Class. For the purpose of
this Guaranty, the term "Class" shall mean each class of Creditors, i.e.,
whether (i) the Bank Creditors as holders of the Credit Document Obligations or
(ii) the Interest Rate Creditors as holders of the Interest Rate Obligations.
For the purpose of this Guaranty, the term "Requisite Creditors" of any Class
shall mean (a) with respect to the Credit Document Obligations, the Required
Banks and (b) with respect to the Interest Rate Obligations, the holders of at
least a majority of all obligations outstanding from time to time under the
Secured Interest Rate Agreements.
16. Each Guarantor acknowledges that an executed (or conformed) copy
of each of the Credit Documents has been made available to its principal
executive officers and such officers are familiar with the contents thereof.
7
17. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement or
any payment default under any Interest Rate Agreement continuing after any
applicable grace period), each Creditor is hereby authorized, to the extent not
prohibited by applicable law, at any time or from time to time, without notice
to each Guarantor or to any other Person, any such notice being expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Creditor
to or for the credit or the account of each Guarantor, against and on account of
the obligations and liabilities of each Guarantor to such Creditor under this
Guaranty, irrespective of whether or not such Creditor shall have made any
demand hereunder and although said obligations, liabilities, deposits or claims,
or any of them, shall be contingent or unmatured. Each Creditor agrees to
promptly notify each Guarantor after any such set off and application, provided,
however, that the failure to give such notice shall not affect the validity of
such set off and application.
18. All notices, requests, demands or other communications provided
for hereunder made in writing (including telegraphic, telexed, telecopier or
cable communication) shall be deemed to have been duly given or made when
delivered to the Person to which such notice, request, demand or other
communication is required or permitted to be given or made under this Guaranty,
addressed to such party at (i) in the case of any Bank Creditor, as provided in
the Credit Agreement, (ii) in the case of each Guarantor, at its address set
forth opposite its signature below and (iii) in the case of any Interest Rate
Creditor, at such address as such Interest Rate Creditor shall have specified in
writing to each Guarantor; or in any case at such other address as any of the
Persons listed above may hereafter notify the others in writing.
19. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid Creditors repays all or part
of said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such Creditor or any of its
property or (ii) any settlement or compromise of any such claim effected by such
Creditor with any such claimant (including the Borrower), then and in such event
each Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon each Guarantor, notwithstanding any revocation
hereof or other instrument evidencing any liability of the Borrower, and each
Guarantor shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such Creditor.
8
20. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Guaranty, each Guarantor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
irrevocably designates, appoints and empowers CT Corporation System with offices
on the date hereof at 0000 Xxxxxxxx, Xxx Xxxx, XX 00000, as its designee,
appointee and agent to receive, accept and acknowledge for and on its behalf,
and in respect of its property, service of any legal process, summons, notices
and documents which may be served in any such action or proceeding. If for any
reason such designee, appointee and agent shall cease to be available to act as
such, each Guarantor agrees to designate a new designee, appointee and agent in
New York City on the terms and for the purposes of this provision satisfactory
to the Agent under this agreement. Each Guarantor further irrevocably consents
to the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to each Guarantor at its address set forth opposite its
signature below, such service to become effective 30 days after such mailing and
appoints the Borrower as its agent for services of process in respect of any
such action or proceeding. Nothing herein shall affect the right of any of the
Creditors to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against each Guarantor in any other
jurisdiction.
(b) Each Guarantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Guaranty or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) Each Guarantor hereby irrevocably waives all right to a trial by
jury in any action, proceeding or counterclaim arising out of or relating to
this Guaranty, the other Credit Documents or the transactions contemplated
hereby or thereby.
21. This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Agent.
9
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
0000 Xxxx Xxxxxx THE STONEBURY GROUP INCORPORATED
Xxxxx 000
Xxxx, Xxxxxx 00000
Attention: President By__________________________
Name: Xxxxxx Xxxxxx
Title: Assistant Secretary
Chesterfield Avenue U.S. TEXTILE CORP.
RD SC 903
AIKIA 0000 Xxxxxxx Xxxx.
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President By__________________________
Name: X. Xxxxxxx
Title: President
0000 Xxxxxxxx Xxxxx HOSIERY CORPORATION INTERNATIONAL
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
By__________________________
Name: Xxxx Xxxxxxx
Title: President, CEO
Accepted and Agreed to:
BANKERS TRUST COMPANY,
As Agent for
By________________________
Name: Xxxx Xxx Xxxxx
Title: Managing Director
10
[EXHIBIT H-1 Conformed
as Executed]
BORROWER PLEDGE AGREEMENT
AMENDMENT AND RESTATEMENT, dated as of November 20, 1997 to PLEDGE
AGREEMENT, dated as of October 17, 1994 (as amended, modified or supplemented
from time to time, "this Agreement"), made by HOSIERY CORPORATION OF AMERICA,
INC., a Delaware corporation (the "Pledgor"), in favor of BANKERS TRUST COMPANY,
as Collateral Agent (including any successor collateral agent, the "Pledgee")
for the benefit of (x) the Banks and the Agent under, and any other financial
institutions from time to time party to, the Credit Agreement referred to below
(such Banks, the Agent and other lenders, if any, are hereinafter called the
"Bank Creditors") and (y) Bankers Trust Company, in its individual capacity
("BTCo"), any Bank or syndicate of financial institutions organized by BTCo or
an affiliate of BTCo (even if BTCo or any such Bank subsequently ceases to be a
Bank under the Credit Agreement for any reason) and any institution that
participates in one or more Interest Rate Agreements, and in each case their
subsequent assigns, if any (collectively, the "Interest Rate Creditors", and,
together with the Bank Creditors, the "Secured Creditors"). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement shall be
used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Pledgor, the financial institutions from time to time
party thereto (the "Banks") and Bankers Trust Company, as Agent (the "Agent"),
have entered into an Amendment and Restatement, dated as of November 20, 1997,
amending and restating the Credit Agreement dated as of October 17, 1994 (as
amended, modified or supplemented from time to time, the "Credit Agreement"),
providing for the making of Loans and the issuance of, and participation in,
Letters of Credit as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Agreements (each such Interest Rate Agreement with an Interest
Rate Creditor or Interest Rate Creditors, a "Secured Interest Rate Agreement");
WHEREAS, it is a condition precedent to the making of Loans and the
issuance of, and participation in, Letters of Credit under the Credit Agreement
that the Pledgor shall have executed and delivered to the Pledgee this
Agreement;
WHEREAS, the Pledgor desires to execute this Agreement to satisfy
the conditions Described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is for (a) the
benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of (x) the principal of and
interest on the Notes issued by, and the Loans made to, the Pledgor under
the Credit Agreement, (y) all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit issued under the Credit
Agreement and (z) all other obligations and indebtedness (including,
without limitation, indemnities, Fees and interest thereon) of the
Pledgor, now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement and the other Credit Documents and
the due performance of and compliance with the terms of the Credit
Documents (all such obligations and liabilities under this clause (i)
being herein collectively called the "Credit Agreement Obligations");
(ii) the full and prompt payment when due of all obligations and
liabilities of the Pledgor to the Interest Rate Creditors pursuant to any
Secured Interest Rate Agreement, whether now in existence or hereinafter
incurred under, arising out of or in connection with any Secured Interest
Rate Agreement, and the due performance and compliance with the terms of
the Secured Interest Rate Agreements by the Pledgor (all such obligations
and liabilities under this clause (iii) being herein collectively called
the "Interest Rate Obligations");
(iii) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) and/or its security interest
therein; and
(iv) in the event of any proceeding for the collection of the
Obligations (as defined below) or the enforcement of this Agreement, after an
Event of Default (such term, as used in this Agreement, shall mean any Event of
Default under, and as defined in, the Credit Agreement, or any payment default
after any applicable grace period under any Secured Interest Rate Agreement)
shall have occurred and be continuing, the reasonable expenses of retaking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Pledgee of its rights
hereunder, together with reasonable attorneys' fees and court costs;
2
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iv) of this Section 1 being collectively called the "Obligations", it
being acknowledged and agreed that the "Obligations" shall include extensions of
credit described above, whether outstanding on the date of this Agreement or
extended from time to time after the date of this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein, (i)
the term "Stock" shall mean (x) with respect to corporations incorporated under
the laws of the United States or any State or territory thereof (each a
"Domestic Corporation") all of the issued and outstanding shares of stock at any
time owned by the Pledgor of any Domestic Corporation and (y) with respect to
corporations not Domestic Corporations (each, a "Foreign Corporation"), all of
the issued and outstanding shares of stock at any time owned by the Pledgor of
any Foreign Corporation and all certificates and instruments evidencing the
same, provided that, (a) the Pledgor shall not be required to pledge hereunder
more than 65% of the total combined voting power of all classes of capital stock
of any Foreign Corporation entitled to vote (herein called "Voting Stock") and
(b) the Pledgor shall be required to pledge hereunder 100% of the issued and
outstanding shares of all capital stock which is not Voting Stock (herein called
"Non-Voting Stock") at any time owned by the Pledgor of any Foreign Corporation;
(ii) the term "Notes" shall mean all promissory notes at any time issued to, or
held by, the Pledgor and (iii) the term "Securities" shall mean all of the Stock
and Notes. The Pledgor represents and warrants that on the date hereof: (a) the
Stock consists of the number and type of shares of the stock of the corporation
as described in Part I of Annex A hereto; (b) such Stock constitutes that
percentage of the issued and outstanding capital stock of the issuing
corporation as set forth in Part I of Annex A hereto; (c) the Notes consist of
the promissory notes described in Part II of Annex A hereto; (d) the Pledgor is
the holder of record and sole beneficial owner of the Stock and Notes and there
exists no options or preemption rights in respect of any of the Stock; and (e)
on the date hereof, the Pledgor owns or possesses no other Securities.
3. PLEDGE OF SECURITIES, ETC.
3.1 Plede. To secure the Obligations and for the purposes set forth
in Section 1, the Pledgor hereby: (i) grants to the Pledgee a security interest
in all of the Collateral; (ii) pledges and deposits as security with the Pledgee
all Securities owned by the Pledgor on the date hereof; and delivers to the
Pledgee certificates or instruments therefor, duly endorsed in blank in the case
of promissory notes and accompanied by undated stock powers duly executed in
blank by the Pledgor (and accompanied by any transfer tax stamps required in
connection with the pledge of such securities, with signatures appropriately
guaranteed to the extent required) in the case of Stock, or such other
instruments of transfer as are acceptable to the Pledgee; and (iii) hereby
collaterally assigns, transfers, hypothecates, mortgages, charges and sets over
to the Pledgee all of the Pledgor's right, title and interest in and to such
Securities (and in and to the certificates or instruments evidencing such
Securities), to be held by the Pledgee, upon the terms and conditions set forth
in this Agreement.
3
3.2 Subsequently Acquired Securities. If the Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Securities at any time
or from time to time after the date hereof, the Pledgor will forthwith pledge
and deposit such Securities as security with the Pledgee and deliver to the
Pledgee certificates thereof, duly endorsed in blank in the case of promissory
notes and accompanied by undated stock powers duly executed in blank by the
Pledgor (and accompanied by any transfer tax stamps required in connection with
the pledge of such Securities, with signatures appropriately guaranteed to the
extent required) in the case of Stock, or such other instruments of transfer as
are acceptable to the Pledgee, and will promptly thereafter deliver to the
Pledgee a certificate executed by a principal executive officer of the Pledgor
describing such Securities and certifying that the same have been duly pledged
with the Pledgee hereunder. Without limiting the foregoing, the Pledgor shall be
required to pledge hereunder any shares of stock at any time and from time to
time after the date hereof acquired by such Pledgor of any Foreign Corporation,
provided that (x) the Pledgor shall not be required at any time to pledge
hereunder more than 65% of the Voting Stock of any Foreign Corporation and (y)
the Pledgor shall be required to pledge hereunder 100% of any Non-Voting Stock
at any time and from time to time acquired by such Pledgor of any Foreign
Corporation.
3.3 Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2, if any Securities (whether or not
now owned or hereafter acquired) are uncertificated securities, the Pledgor
shall promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-313 and 8-321 of the New York Uniform
Commercial Code if applicable). The Pledgor further agrees to take such actions
as the Pledgee deems necessary or desirable to effect the foregoing and to
permit the Pledgee to exercise any of its rights and remedies hereunder, and
agrees to provide an opinion of counsel reasonably satisfactory to the Pledgee
with respect to any such pledge of uncertificated Securities promptly upon
request of the Pledgee.
3.4 Definitions of Pledged Stock, Pledged Notes; Pledge Securities
and Collateral. All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock"; all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes", all Pledged Stock and Pledged Notes together are called the "Pledged
Securities" and the Pledged Securities, together with all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, are hereinafter called the "Collateral".
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of the Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
4
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing an Event of Default and (except to the
extent an Event of Default as specified in Section 9.05 of the Credit Agreement
has occurred) the Pledgor shall be entitled to exercise all voting rights
attaching to any and all Pledged Securities owned by it, and to give consents,
waivers or ratifications in respect thereof, provided that no vote shall be cast
or any consent, waiver or ratification given or any action taken which would
violate, result in breach of any covenant contained in, or be inconsistent with,
any of the terms of this Agreement, the Credit Agreement, any other Credit
Document or any Secured Interest Rate Agreement (collectively, the "Secured Debt
Agreements"), or which would have the effect of impairing the value of the
Collateral or any part thereof or the position or interests of the Pledgee or
any Secured Creditor therein. All such rights of such Pledgor to vote and to
give consents, waivers and ratifications shall cease in case an Event of Default
shall occur and be continuing and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until an Event of
Default shall have occurred and be continuing, all cash dividends payable in
respect of the Pledged Stock and all payments in respect of the Pledged Stock
shall be paid to the Pledgor provided that all dividends payable in respect of
the Pledged Securities which are determined by the Pledgee, in its absolute
discretion, to represent in whole or in part an extraordinary, liquidating or
other distribution in return of capital shall be paid, to the extent so
determined to represent an extraordinary, liquidating or other distribution in
return of capital, to the Pledgee and retained by it as part of the Collateral
(unless such cash dividends are applied to repay the Obligations pursuant to
Section 9 of this Agreement). The Pledgee shall also be entitled to receive
directly, and to retain as part of the Collateral:
(i) all other or additional stock, or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock.
(ii) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Securities
by way of stock-split, spin-off, split-up, reclassification, combination
of shares or similar rearrangement; and
(iii) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
5
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive the proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments which are received by the Pledgor contrary to the provisions of
this Section 6 or Section 7 shall be received in trust for the benefit of the
Pledgee, shall be segregated from other property or funds of the Pledgor and
shall be forthwith paid over to the Pledgee as Collateral in the same form as so
received (with any necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or any other Secured Debt Agreement or by law) for the protection and
enforcement of its rights in respect of the Collateral, including, without
limitation, all the rights and remedies of a secured party upon default under
the Uniform Commercial Code of the State of New York, and the Pledgee shall be
entitled, without limitation, to exercise any or all of the following rights,
which the Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 to the Pledgor;
(ii) to transfer all or any part of the Collateral into the Pledgee's
name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect
upon any Pledged Note (including, without limitation, to make any demand
for payment thereon);
(iv) to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (the Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of the Pledgor, with full power of substitution to do
so); and
(v) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time
or place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by the Pledgor), for cash, on credit or for other
property, for
6
immediate or future delivery without any assumption of credit risk, and
for such price or prices and on such terms as the Pledgee in its absolute
discretion may determine, provided that at least 10 days' notice of the
time and place of any such sale shall be given to the Pledgor. The Pledgee
shall not be obligated to make such sale of Collateral regardless of
whether any such notice of sale has theretofore been given. Each purchaser
at any such sale shall hold the property so sold absolutely free from any
claim or right on the part of the Pledgor, and the Pledgor hereby waives
and releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, all rights, if any, of marshalling the Collateral and any other
security for the Obligations or otherwise, and all rights, if any, of stay
and/or appraisal which it now has or may at any time in the future have
under rule of law or statute now existing or hereafter enacted. At any
such sale, unless prohibited by applicable law, the Pledgee on behalf of
all Secured Creditors (or certain of them) may bid for and purchase (by
bidding in Obligations or otherwise) all or any part of the Collateral so
sold free from any such right or equity of redemption. Neither the Pledgee
nor any Secured Creditor shall be liable for failure to collect or realize
upon any or all of the Collateral or for any delay in so doing nor shall
it be under any obligation to take any action whatsoever with regard
thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement, or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee of any one or
more of the rights, powers or remedies provided for in this Agreement or any
other Secured Debt Agreement or now or hereafter existing at law or in equity or
by statute or otherwise shall not preclude the simultaneous or later exercise by
the Pledgee or any Secured Creditor of all such other rights, powers or
remedies, and no failure or delay on the part of the Pledgee or any Secured
Creditor to exercise any such right, power or remedy shall operate as a waiver
thereof. Unless otherwise required by the Credit Documents, no notice to or
demand on the Pledgor in any case shall entitle it to any other or further
notice or demand in similar other circumstances or constitute a waiver of any of
the rights of the Pledgee or any Secured Creditor to any other further action in
any circumstances without demand or notice.
9. APPLICATION OF PROCEEDS. All moneys collected by the Pledgee upon
any sale or other disposition of the Collateral pursuant to the terms of this
Agreement, together with all other moneys received by the Pledgee hereunder,
shall be applied to the payment of Obligations in the manner provided in Section
7.4 of the Borrower Security Agreement.
7
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or 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 Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. The Pledgor agrees (i) to indemnify and hold harmless
the Pledgee and the Secured Creditors from and against any and all claims,
demands, losses, judgments and liabilities (including liabilities for penalties)
of whatsoever kind or nature, and (ii) to reimburse the Pledgee and the Secured
Creditors for all reasonable costs and expenses, including reasonable attorneys'
fees, growing out of or resulting from this Agreement or the exercise by the
Pledgee of any right or remedy granted to it hereunder or under any other
Secured Debt Agreement except, with respect to clauses (i) and (ii) above, for
those arising from the Pledgee's gross negligence or willful misconduct. In no
event shall the Pledgee be liable, in the absence of gross negligence or willful
misconduct on its part, for any matter or thing in connection with this
Agreement other than to account for moneys or other property actually received
by it in accordance with the terms hereof or thereof. If and to the extent that
the obligations of the Pledgor under this Section 11 are unenforceable for any
reason, the Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) The Pledgor agrees
that it will join with the Pledgee in executing and, at the Pledgor's own
expense, file and refile under the Uniform Commercial Code such financing
statements, continuation statements and other documents in such offices as the
Pledgee may deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee's security interest in the
Collateral hereunder and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of the Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional conveyances, assignments, agreements and instruments as the Pledgee
may reasonably require or deem advisable to carry into effect the purposes of
this Agreement or to further assure and confirm unto the Pledgee its rights,
powers and remedies hereunder or thereunder.
(b) The Pledgor hereby appoints the Pledgee, the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default, in the Pledgee's reasonable
discretion to take any action and to execute any instrument which the Pledgee
may reasonably deem necessary or advisable to accomplish the purposes of this
Agreement.
8
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on the
terms and conditions set forth herein and in Section 11 of the Credit Agreement.
14. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except in accordance
with the terms of this Agreement and the Credit Documents).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PLEDGOR. (a) The Pledgor represents, warrants and covenants that:
(i) it is, or at the time when pledged hereunder will be, the legal,
beneficial and record owner of, and has (or will have) good and marketable
title to, all Securities pledged by it hereunder, subject to no pledge,
lien, mortgage, hypothecation, security interest, charge, option or other
encumbrance whatsoever, except the liens and security interests created by
this Agreement;
(ii) it has full power, authority and legal right to pledge all the
Securities pledged by it pursuant to this Agreement; and
(iii) this Agreement has been duly authorized, executed and
delivered by the Pledgor and constitutes a legal, valid and binding
obligation of the Pledgor enforceable in accordance with its terms, except
to the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no consent of
any other party (including, without limitation, any stockholder or
creditor of the Pledgor or any of its Subsidiaries) and no consent,
license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required to be obtained by the Pledgor in connection with (a)
the execution, delivery or performance of this Agreement, (b) the validity
or enforceability of this Agreement, (c) the perfection or enforceability
of the Pledgee's security interest in the Collateral or (d) except for
compliance with or as may be required by applicable securities laws, the
exercise by the Pledgee of any of its rights or remedies provided herein;
9
(v) the execution, delivery and performance of this Agreement will
not violate any provision of any applicable law or regulation or of any
order, judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, applicable to the Pledgor, or
of the Certificate of Incorporation or By-Laws of the Pledgor or of any
securities issued by the Pledgor or any of its Subsidiaries, or of any
mortgage, indenture, lease, loan agreement, credit agreement or other
contract, agreement or instrument or undertaking to which the Pledgor or
any of its Subsidiaries is a party or which purports to be binding upon
the Pledgor or any of its Subsidiaries or upon any of their respective
assets and will not result in the creation or imposition of (or the
obligation to create or impose) any lien or encumbrance on any of the
assets of the Pledgor or any of its Subsidiaries except as contemplated by
this Agreement;
(vi) all the shares of the Stock have been duly and validly issued,
are fully paid and non-assessable and are subject to no options to
purchase or similar rights;
(vii) each of the Pledged Notes constitutes, or when executed by the
obligor thereof will constitute, the legal, valid and binding obligation
of such obligor, enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and
(viii) the pledge, collateral assignment and delivery to the Pledgee
of the Securities (other than uncertificated securities) pursuant to this
Agreement creates a valid and perfected first priority Lien in the
Securities, and the proceeds thereof, subject to no other Lien or to any
agreement purporting to grant to any third party a Lien on the property or
assets of the Pledgor which would include the Securities.
(b) The Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Securities and the
proceeds thereof against the claims and demands of all persons whomsoever; and
the Pledgor covenants and agrees that it will have like title to and right to
pledge any other property at any time hereafter pledged to the Pledgee as
Collateral hereunder and will likewise defend the right thereto and security
interest therein of the Pledgee and the Secured Creditors.
(c) The Pledgor covenants and agrees that it will take no action
which would violate or be inconsistent with any of the terms of any Secured Debt
Agreement, or which would have the effect of impairing the position or interests
of the Pledgee or any Secured Creditor under any Secured Debt Agreement.
10
16. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from any of the Secured Debt
Agreements, or any other instrument or agreement referred to therein, or
any assignment or transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of any such agreement or instrument or this
Agreement;
(iii) any furnishing of any additional security to the Pledgee or
its assignee or any acceptance thereof or any release of any security by
the Pledgee or its assignee;
(iv) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such instrument or agreement or any term thereof;
or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
the Pledgor or any Subsidiary of the Pledgor, or any action taken with
respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not the Pledgor shall have notice or
knowledge of any of the foregoing.
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and the Pledgor shall have received from the Pledgee
a written request or requests that the Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Pledged Stock, the Pledgor as
soon as practicable and at its expense will use its best efforts to cause such
registration to be effected (and be kept effective) and will use its best
efforts to cause such qualification and compliance to be effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Pledged Stock, including, without limitation, registration
under the Securities Act of 1933, as then in effect (or any similar statute then
in effect), appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other governmental
requirements, provided that the Pledgee shall furnish to the Pledgor such
information regarding the Pledgee as the Pledgor may request in
11
writing and as shall be required in connection with any such registration,
qualification or compliance. The Pledgor will cause the Pledgee to be kept
reasonably advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, will furnish to
the Pledgee such number of prospectuses, offering circulars and other documents
incident thereto as the Pledgee from time to time may reasonably request, and
will indemnify the Pledgee and all others participating in the distribution of
such Stock against all claims, losses, damages or liabilities caused by any
untrue statement (or alleged untrue statement) of a material fact contained
therein (or in any related registration statement, notification or the like) or
by any omission (or alleged omission) to state therein (or in any related
registration statement, notification or the like) a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same may have been caused by an untrue statement or
omission based upon information furnished in writing to the Pledgor by the
Pledgee expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7,
and such Pledged Securities or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act of 1933,
as then in effect, the Pledgee may, in its sole and absolute discretion, sell
such Pledged Securities or part thereof by private sale in such manner and under
such circumstances as Pledgee may deem necessary or advisable in order that such
sale may legally be effected without such registration. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion, (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under such Securities Act, (ii)
may approach and negotiate with a single possible purchaser to effect such sale
and (iii) may restrict such sale to a purchaser who will represent and agree
that such purchaser is purchasing for its own account, for investment, and not
with a view to the distribution or sale of such Pledged Securities or part
thereof. In the event of any such sale, the Pledgee shall incur no
responsibility or liability for selling all or any part of the Pledged
Securities at a price which the Pledgee, in its sole and absolute discretion,
may in good xxxxx xxxx reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might be realized if the sale were
deferred until the registration as aforesaid.
18. TERMINATION; RELEASE. (a) After the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination) and the Pledgee, at the request and expense of the Pledgor,
will execute and deliver to the Pledgor a proper instrument or instruments
acknowledging the satisfaction and termination of this Agreement as
12
provided above, and will duly assign, transfer and deliver to the Pledgor
(without recourse and without any representation or warranty) such of the
Collateral as may be in the possession of the Pledgee and as has not theretofore
been sold or otherwise applied or released pursuant to this Agreement, together
with any moneys at the time held by the Pledgee hereunder. As used in this
Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Secured Interest Rate Agreements have been terminated, no
Letter of Credit, Loan or Note is outstanding and all other Obligations have
been paid in full.
(b) In the event that any part of the Collateral is sold in connection
with a sale permitted by Section 8.02 of the Credit Agreement or is otherwise
released at the direction of the Required Banks (or all the Banks if required by
Section 12.12 of the Credit Agreement), and the proceeds of such sale or sales
or from such release are applied in accordance with the terms of the Credit
Agreement to the extent required to be so applied, the Pledgee, at the request
and expense of the Pledgor will duly assign, transfer and deliver to such
Pledgor (without recourse and without any representation or warranty) such of
the Collateral as is then being (or has been) so sold or released and as may be
in possession of the Pledgee and has not theretofore been released pursuant to
this Agreement.
(c) At any time that a Pledgor desires that Collateral be released
as provided in the foregoing Section 18(a) or (b), it shall deliver to the
Pledgee a certificate signed by its principal executive officer stating that the
release of the respective Collateral is permitted pursuant to Section 18(a) or
(b). If requested by the Pledgee (although the Pledgee shall have no obligation
to make any such request), the Pledgor shall furnish appropriate legal opinions
(from counsel, which may be in-house counsel, reasonably acceptable to the
Pledgee) to the effect set forth in the immediately preceding sentence. The
Pledgee shall have no liability whatsoever to any Secured Creditor as the result
of any release of Collateral by it as permitted by this Section 18.
19. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(i) if to the Pledgor, at:
Hosiery Corporation of America, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
13
With a copy to:
HCA Holdings, Inc
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
(ii) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxx Xxxxx
(iii) if to any Bank (other than the Pledgee), at such address as such
Bank shall have specified in the Credit Agreement;
(iv) if to any Interest Rate Creditor, at such address as such
Interest Rate Creditor shall have specified in writing to the Pledgor and
the Pledgee;
or at such address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Pledgor and the Collateral Agent (with the
consent of the Required Banks or, to the extent required by Section 12.12 of the
Credit Agreement, all of the Banks), provided however that no such change,
waiver, modification or variance shall be made to Section 9 hereof or this
Section 20 without the consent of each Secured Creditor adversely affected
thereby, provided further that any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Secured Creditors. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
Agreement Obligations or (y) the Interest Rate Creditors as holders of the
Interest Rate Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (x) with respect to the
Credit Agreement Obligations, the Required Banks and (y) with respect to the
Interest Rate Obligations, the holders of 51% of all obligations outstanding
from time to time under the Secured Interest Rate Agreements.
14
21. MISCELLANEOUS. This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect,
subject to release and/or termination as set forth in Section 18, (ii) be
binding upon the Pledgor, its successors and assigns; provided, however, that
the Pledgor shall not assign any of its rights or obligations hereunder without
the prior written consent of the Pledgee (with the prior written consent of the
Required Banks or to the extent required by Section 12.12 of the Credit
Agreement, all of the Banks), and (iii) inure, together with the rights and
remedies of the Pledgee hereunder, to the benefit of the Pledgee, the Secured
Creditors and their respective successors, transferees and assigns. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. The headings of the several sections and subsections in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument. In the event that any provision of this Agreement shall prove to
be invalid or unenforceable, such provision shall be deemed to be severable from
the other provisions of this Agreement which shall remain binding on all parties
hereto.
22. WAIVER OF JURY TRIAL. The Pledgor hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this agreement or the transactions contemplated hereby.
15
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
HOSIERY CORPORATION OF AMERICA, INC.,
as Pledgor
By_______________________________
Name: Xxxxxx Xxxxxx
Title: Vice President, CFO
BANKERS TRUST COMPANY,
as Collateral Agent and as Pledgee
By_____________________________
Name: Xxxx Xxx Xxxxx
Title: Managing Director
ANNEX A
PART I
LIST OF STOCK
------------------ ------------ ------------ -------------- --------------
Name of
Issuing Type of Number of Certificate Percentage
Corporation Shares Shares No. Owned
------------------ ------------ ------------ -------------- --------------
------------------ ------------ ------------ -------------- --------------
U.S. Textile Common 600 5 100%
Corp.
------------------ ------------ ------------ -------------- --------------
------------------ ------------ ------------ -------------- --------------
The Stonebury Class A 1,000 A-2 100%
Group Common
Incorporated
------------------ ------------ ------------ -------------- --------------
------------------ ------------ ------------ -------------- --------------
Hosiery Common 1,500 1 100%
Corporation
International
------------------ ------------ ------------ -------------- --------------
ANNEX A
PART II
LIST OF NOTES
Amount Maturity Date Obligor
------- ------------- -------
None.
[EXHIBIT H-2 CONFORMED
AS EXECUTED]
SUBSIDIARY GUARANTOR PLEDGE AGREEMENT
AMENDMENT AND RESTATEMENT, dated as of November 20, 1997, to PLEDGE
AGREEMENT, dated as of October 17, 1994 (as amended, modified or supplemented
from time to time, "this Agreement"), made by each of the undersigned (each a
"Pledgor" and collectively as the "Pledgors"), in favor of BANKERS TRUST
COMPANY, as Collateral Agent (including any successor collateral agent, the
"Pledgee") for the benefit of (x) the Banks and the Agent under, and any other
financial institutions from time to time party to, the Credit Agreement referred
to below (such Banks, the Agent and other lenders, if any, are hereinafter
called the "Bank Creditors") and (y) Bankers Trust Company, in its individual
capacity ("BTCo"), any Bank or a syndicate of financial institutions organized
by BTCo or an affiliate of BTCo (even if BTCo or any such Bank ceases to be a
Bank under the Credit Agreement for any reason), and any institution that
participates, and in each case their subsequent assigns, in one or more Interest
Rate Agreements (collectively, the "Interest Rate Creditors", and together with
the Bank Creditors, collectively, the "Secured Creditors"). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement shall be
used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Hosiery Corporation of America, Inc. (the "Borrower"), the
financial institutions from time to time party thereto (the "Banks") and Bankers
Trust Company, as Agent (the "Agent"), have entered into an Amendment and
Restatement, dated as of November 20, 1997, amending and restating the Credit
Agreement dated as of October 17, 1994 (as amended, modified or supplemented
from time to time, the "Credit Agreement"), providing for the making of Loans
and the issuance of, and participation in, Letters of Credit as contemplated
therein;
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Agreements (each such Interest Rate Agreement with an Interest
Rate Creditor or Interest Rate Creditors, a "Secured Interest Rate Agreement");
WHEREAS, each of the Pledgors is a Wholly-Owned Subsidiary of the
Borrower;
WHEREAS, pursuant to the Subsidiary Guaranty, dated as of November
20, 1997 (as amended, modified or supplemented from time to time, the
"Subsidiary Guaranty"), each Pledgor has guaranteed to the Secured Creditors the
payment when due of the Guaranteed Obligations (as defined in the Subsidiary
Guaranty);
WHEREAS, it is a condition precedent to the making of Loans and the
issuance of, and participation in, Letters of Credit under the Credit Agreement
that each Pledgor shall have executed and delivered to the Pledgee this
Agreement;
WHEREAS, each Pledgor desires to execute this Agreement to satisfy
the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is for the
benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all of each Pledgor's
obligations and liabilities (including, without limitation, indemnitees,
fees and interest thereon) now existing or hereafter incurred under,
arising out of or in connection with the Subsidiary Guaranty) in respect
of (x) the principal of and interest on the Notes issued by, and the Loans
made to, the Borrower under the Credit Agreement, (y) all reimbursement
obligations and Unpaid Drawings with respect to Letters of Credit issued
under the Credit Agreement, and (z) all other obligations and indebtedness
(including, without limitation, indemnities, Fees and interest thereon) of
the Borrower, now existing or hereafter incurred under, arising out of or
in connection with the Credit Agreement and the other Credit Documents and
the due performance of and compliance with the terms of the Credit
Documents by the Borrower and each Pledgor (all such obligations and
liabilities under this clause (i) being herein collectively called the
"Credit Agreement Obligations");
(ii) the full and prompt payment when due of all obligations of each
Pledgor's obligations and liabilities now existing or hereafter incurred
under (including, without limitation, the obligations of each Pledgor
arising out of or in connection with the Subsidiary Guaranty), in respect
of all obligations and liabilities of the Borrower, now existing or
hereafter incurred under, arising out of or in connection with any Secured
Interest Rate Agreement (whether now in existence or hereinafter arising)
and the due performance and compliance with the terms of the Secured
Interest Rate Agreements by the Borrower (all such obligations and
liabilities under this clause (iii) being herein collectively called the
"Interest Rate Obligations");
2
(iii) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) and/or its security interest
therein; and
(iv) in the event of any proceeding for the collection of the
Obligations (as defined below) or the enforcement of this Agreement, after
an Event of Default (such term, as used in this Agreement, shall mean any
Event of Default under, and as defined in, the Credit Agreement, or any
payment default after any applicable grace period under any Secured
Interest Rate Agreement) shall have occurred and be continuing, the
reasonable expenses of retaking, holding, preparing for sale or lease,
selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Pledgee of its rights hereunder, together with
reasonable attorneys' fees and court costs;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iv) of this Section 1 being collectively called the "Obligations", it
being acknowledged and agreed that the "Obligations" shall include extensions of
credit described above, whether outstanding on the date of this Agreement or
extended from time to time after the date of this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein, (i)
the term "Stock" shall mean (x) with respect to corporations incorporated under
the laws of the United States or any State or territory thereof (each a
"Domestic Corporation") all of the issued and outstanding shares of stock at any
time owned by each Pledgor of any Domestic Corporation and (y) with respect to
corporations not Domestic Corporations (each, a "Foreign Corporation"), all of
the issued and outstanding shares of stock at any time owned by each Pledgor of
any Foreign Corporation and all certificates and instruments evidencing the
same, provided that, (a) such Pledgor (to the extent that it is a Domestic
Subsidiary of the Borrower) shall not be required to pledge hereunder more than
65% of the total combined voting power of all classes of capital stock of any
Foreign Corporation entitled to vote (herein called "Voting Stock") and (b) the
Pledgor shall be required to pledge hereunder 100% of the issued and outstanding
shares of all capital stock which is not Voting Stock (herein called "Non-Voting
Stock") at any time owned by the Pledgor of any Foreign Corporation; (ii) the
term "Notes" shall mean all promissory notes at any time issued to, or held by,
each Pledgor; and (iii) the term "Securities" shall mean all of the Stock and
Notes. Each Pledgor represents and warrants that on the date hereof: (a) each
Subsidiary of each Pledgor, and the direct ownership thereof, is listed on Annex
A hereto; (b) the Stock consists of the number and type of shares of the stock
of the corporations as described in Annex B hereto; (c) each Pledgor is the
holder of record and beneficial owner of such Stock; (d) such Stock constitutes
that percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Annex B hereto; (e) the Notes held by each
Pledgor consist of the promissory notes described in Annex C hereto; and (f) on
the date hereof, each Pledgor owns or possesses no other Securities.
3
3. PLEDGE OF SECURITIES, ETC.
3.1 Pledge. To secure the Obligations and for the purposes set forth
in Section 1, each Pledgor hereby: (i) grants to the Pledgee a security interest
in all of the Collateral; (ii) pledges and deposits as security with the Pledgee
all Securities owned by each Pledgor on the date hereof, and delivers to the
Pledgee certificates or instruments therefor, duly endorsed in blank in the case
of Notes and accompanied by undated stock powers duly executed in blank by each
Pledgor in the case of Stock (and accompanied by any transfer tax stamps
required in connection with the pledge of such securities, with signatures
appropriately guaranteed to the extent required), or such other instruments of
transfer as are acceptable to the Pledgee; and (iii) assigns, transfers,
hypothecates, mortgages, charges and sets over to the Pledgee all of each
Pledgor's right, title and interest in and to such Securities (and in and to the
certificates or instruments evidencing such Securities), to be held by the
Pledgee, upon the terms and conditions set forth in this Agreement.
3.2 Subsequently Acquired Securities. If the Pledgors shall acquire
(by purchase, stock dividend or otherwise) any additional Securities at any time
or from time to time after the date hereof, each Pledgor will forthwith pledge
and deposit such Securities as security with the Pledgee and deliver to the
Pledgee certificates or instruments thereof, duly endorsed in blank in the case
of Notes and accompanied by undated stock powers duly executed in blank in the
case of Stock (and accompanied by any transfer tax stamps required in connection
with the pledge of such securities, with signatures appropriately guaranteed to
the extent required), by each Pledgor or such other instruments of transfer as
are acceptable to the Pledgee, and will promptly thereafter deliver to the
Pledgee a certificate executed by a principal executive officer of each Pledgor
describing such Securities and certifying that the same have been duly pledged
with the Pledgee hereunder. Without limiting the foregoing, each Pledgor shall
be required to pledge hereunder any shares of stock at any time and from time to
time after the date hereof acquired by such Pledgor of any Foreign Corporation,
provided that (x) no Pledgor (to the extent that it is a Domestic Subsidiary of
the Borrower) shall be required at any time to pledge hereunder more than 65% of
the Voting Stock of any Foreign Corporation and (y) each Pledgor shall be
required to pledge hereunder 100% of any Non-Voting Stock at any time and from
time to time acquired by such Pledgor of any Foreign Corporation.
3.3 Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2, if any Securities (whether or not
now owned or hereafter acquired) are uncertificated securities, each Pledgor
shall promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-313 and 8-321 of the New York
4
Uniform Commercial Code if applicable). Each Pledgor further agrees to take such
actions as the Pledgee deems necessary or desirable to effect the foregoing and
to permit the Pledgee to exercise any of its rights and remedies hereunder, and
agrees to provide an opinion of counsel reasonably satisfactory to the Pledgee
with respect to any such pledge of uncertificated Securities promptly upon
request of the Pledgee.
3.4 Definitions of Pledged Stock, Pledged Notes, Pledged Securities
and Collateral. All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock;" all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes;" all Pledged Stock and Pledged Notes together are called the "Pledged
Securities", and the Pledged Securities, together with all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, are hereinafter called the "Collateral".
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of each Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing an Event of Default and (except to the
extent an Event of Default as specified in Section 9.05 of the Credit Agreement
has occurred) each Pledgor shall be entitled to exercise all voting rights
attaching to any and all Pledged Securities owned by it, and to give consents,
waivers or ratifications in respect thereof, provided that no vote shall be cast
or any consent, waiver or ratification given or any action taken which would
violate, result in breach of any covenant contained in, or be inconsistent with,
any of the terms of this Agreement any other Credit Document or any Secured
Interest Rate Agreement (collectively, the "Secured Debt Agreements"), or which
would have the effect of impairing the value of the Collateral or any part
thereof or the position or interests of the Pledgee or any Secured Creditor
therein. All such rights of such Pledgor to vote and to give consents, waivers
and ratifications shall cease in case an Event of Default shall occur and be
continuing and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until an Event of
Default shall have occurred and be continuing, all cash dividends payable in
respect of the Pledged Securities shall be paid to each Pledgor, provided that
all dividends payable in respect of the Pledged Securities which are determined
by the Pledgee, in its absolute discretion, to represent in whole or in part an
extraordinary, liquidating or other distribution in return of capital shall be
paid, to the extent so determined to represent an extraordinary, liquidating or
other distribution in return of capital, to the Pledgee and retained by it as
part of the Collateral (unless such cash dividends are applied to repay the
Obligations pursuant to Section 9 of this Agreement). The Pledgee shall also be
entitled to receive directly, and to retain as part of the Collateral:
5
(i) all other or additional stock, or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock;
(ii) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Stock by
way of stock-split, spin-off, split-up, reclassification, combination of
shares or similar rearrangement; and
(iii) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. All dividends, distributions or other payments
which are received by each Pledgor contrary to the provisions of this Section 6
or Section 7 shall be received in trust for the benefit of the Pledgee, shall be
segregated from other property or funds of each Pledgor and shall be forthwith
paid over to the Pledgee as Collateral in the same form as so received (with any
necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or any other Secured Debt Agreement or by law) for the protection and
enforcement of its rights in respect of the Collateral, including, without
limitation, all the rights and remedies of a secured party upon default under
the Uniform Commercial Code of the State of New York, and the Pledgee shall be
entitled, without limitation, to exercise any or all of the following rights,
which each Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 to each Pledgor;
(ii) to transfer all or any part of the Collateral into the Pledgee's
name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect
upon any Pledged Note (including, without limitation, to make any demand
for payment thereon);
6
(iv) to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of each Pledgor, with full power of substitution to do
so); and
(v) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time
or place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of
credit risk, and for such price or prices and on such terms as the Pledgee
in its absolute discretion may determine. Each purchaser at any such sale
shall hold the property so sold absolutely free from any claim or right on
the part of each Pledgor, and each Pledgor hereby waives and releases to
the fullest extent permitted by law any right or equity of redemption with
respect to the Collateral, whether before or after sale hereunder, all
rights, if any, of marshalling the Collateral and any other security for
the Obligations or otherwise, and all rights, if any, of stay and/or
appraisal which it now has or may at any time in the future have under
rule of law or statute now existing or hereafter enacted. At any such
sale, unless prohibited by applicable law, the Pledgee on behalf of all
Secured Creditors (or certain of them) may bid for and purchase (by
bidding in Obligations or otherwise) all or any part of the Collateral so
sold free from any such right or equity of redemption. Neither the Pledgee
nor any Secured Creditor shall be liable for failure to collect or realize
upon any or all of the Collateral or for any delay in so doing nor shall
it be under any obligation to take any action whatsoever with regard
thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement now
or hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee of any one or more of
the rights, powers or remedies provided for in this Agreement or any other
Secured Debt Agreement or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
the Pledgee or any Secured Creditor of all such other rights, powers or
remedies, and no failure or delay on the part of the Pledgee or any Secured
Creditor to exercise any such right, power or remedy shall operate as a waiver
thereof. Unless otherwise required by the Credit Documents, no notice to or
demand on the Pledgor in any case shall entitle it to any other or further
notice or demand in similar other circumstances or constitute a waiver of any of
the rights of the Pledgee or any Secured Creditor to any other further action in
any circumstances without demand or notice.
7
9. APPLICATION OF PROCEEDS. All moneys collected by the Pledgee upon
any sale or other disposition of the Collateral pursuant to the terms of this
Agreement, together with all other moneys received by the Pledgee hereunder,
shall be applied in accordance with Section 7 of the Subsidiary Guaranty
Security Agreement.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or 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 Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor agrees (i) to indemnify and hold
harmless the Pledgee and the Secured Creditors from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for
penalties) of whatsoever kind or nature, and (ii) to reimburse the Pledgee and
the Secured Creditors for all reasonable costs and expenses, including
reasonable attorneys' fees, growing out of or resulting from this Agreement or
the exercise by the Pledgee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement except, with respect to clauses (i) and
(ii) above, for those arising from the Pledgee's gross negligence or willful
misconduct. In no event shall the Pledgee be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in
connection with this Agreement other than to account for moneys or other
property actually received by it in accordance with the terms hereof or thereof.
If and to the extent that the obligations of each Pledgor under this Section 11
are unenforceable for any reason, each Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
12. FURTHER ASSURANCES. (a) Each Pledgor agrees that it will join
with the Pledgee in executing and, at each Pledgor's own expense, file and
refile under the Uniform Commercial Code such financing statements, continuation
statements and other documents in such offices as the Pledgee may deem necessary
or appropriate and wherever required or permitted by law in order to perfect and
preserve the Pledgee's security interest in the Collateral hereunder and hereby
authorizes the Pledgee to file financing statements and amendments thereto
relative to all or any part of the Collateral without the signature of each
Pledgor where permitted by law, and agrees to do such further acts and things
and to execute and deliver to the Pledgee such additional conveyances,
assignments, agreements and instruments as the Pledgee may reasonably require or
deem advisable to carry into effect the purposes of this Agreement or to further
assure and confirm unto the Pledgee its rights, powers and remedies hereunder or
thereunder.
8
(b) Each Pledgor hereby appoints the Pledgee, each Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default, in the Pledgee's reasonable
discretion to take any action and to execute any instrument which the Pledgee
may reasonably deem necessary or advisable to accomplish the purposes of this
Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on the
terms and conditions set forth herein and in Section 11 of the Credit Agreement.
14. TRANSFER BY THE PLEDGORS. Each Pledgor will not sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except in
accordance with the terms of this Agreement and the Credit Documents).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
(a) Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has good
and marketable title to, all Securities pledged by it hereunder, subject
to no pledge, lien, mortgage, hypothecation, security interest, charge,
option or other encumbrance whatsoever, except the liens and security
interests created by this Agreement;
(ii) it has full power, authority and legal right to pledge all the
Securities pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and delivered
by such Pledgor and constitutes a legal, valid and binding obligation of
such Pledgor enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no consent of any
other party (including, without limitation, any stockholder or creditor of
such Pledgor or any of its Subsidiaries) and no consent, license, permit,
approval or
9
authorization of, exemption by, notice or report to, or registration,
filing or declaration with, any governmental authority is required to be
obtained by such Pledgor in connection with (a) the execution, delivery or
performance of this Agreement, (b) the validity or enforceability of this
Agreement, (c) the perfection or enforceability of the Pledgee's security
interest in the Collateral or (d) except for compliance with or as may be
required by applicable securities laws, the exercise by the Pledgee of any
of its rights or remedies provided herein;
(v) the execution, delivery and performance of this Agreement will
not violate any provision of any applicable law or regulation or of any
order, judgment, writ, award or decree of such court, arbitrator or
governmental authority, domestic or foreign, applicable to such Pledgor,
or of the Certificate of Incorporation or By-Laws of such Pledgor or of
any securities issued by the Pledgor or any of its Subsidiaries, or of any
mortgage, indenture, lease, loan agreement, credit agreement or other
contract, agreement or instrument or undertaking to which such Pledgor or
any of its Subsidiaries is a party or which purports to be binding upon
such Pledgor or any of its Subsidiaries or upon any of their respective
assets and will not result in the creation or imposition of (or the
obligation to create or impose) any lien or encumbrance on any of the
assets of such Pledgor or any of its Subsidiaries except as contemplated
by this Agreement;
(vi) all the shares of the Stock have been duly and validly issued,
are fully paid and non-assessable and are subject to no options to
purchase or similar rights;
(vii) each of the Pledged Notes constitutes, or when executed by the
obligor thereof will constitute, the legal, valid and binding obligation
of such obligor, enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and
(viii) the pledge, collateral assignment and delivery to the Pledgee of
the Securities (other than uncertificated securities) pursuant to this
Agreement creates a valid and perfected first priority Lien in the
Securities, and the proceeds thereof, subject to no other Lien or to any
agreement purporting to grant to any third party a Lien on the property or
assets of such Pledgor which would include the Securities.
10
(b) Each Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Securities and the
proceeds thereof against the claims and demands of all persons whomsoever; and
each Pledgor covenants and agrees that it will have like title to and right to
pledge any other property at any time hereafter pledged to the Pledgee as
Collateral hereunder and will likewise defend the right thereto and security
interest therein of the Pledgee and the Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no action
which would violate or be inconsistent with any of the terms of any Secured Debt
Agreement, or which would have the effect of impairing the position or interests
of the Pledgee or any Secured Creditor under any Secured Debt Agreement.
16. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from any of the Secured Debt
Agreements, or any other instrument or agreement referred to therein, or
any assignment or transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of any such agreement or instrument or this
Agreement;
(iii) any furnishing of any additional security to the Pledgee or its
assignee or any acceptance thereof or any release of any security by the
Pledgee or its assignee;
(iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such instrument or agreement or any term thereof;
or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
each Pledgor or any Subsidiary of each Pledgor, or any action taken with
respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not each Pledgor shall have notice or
knowledge of any of the foregoing.
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and each Pledgor shall have received from the Pledgee
a written request or requests that each Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Securities each Pledgor
11
as soon as practicable and at its expense will use its best efforts to cause
such registration to be effected (and be kept effective) and will use its best
efforts to cause such qualification and compliance to be effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Securities, including, without limitation, registration
under the Securities Act of 1933, as then in effect (or any similar statute then
in effect), appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other governmental
requirements, provided that the Pledgee shall furnish to each Pledgor such
information regarding the Pledgee as each Pledgor may request in writing and as
shall be required in connection with any such registration, qualification or
compliance. Each Pledgor will cause the Pledgee to be kept reasonably advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars and other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee and all others participating in the distribution of such Securities
against all claims, losses, damages or liabilities caused by any untrue
statement (or alleged untrue statement) of a material fact contained therein (or
in any related registration statement, notification or the like) or by any
omission (or alleged omission) to state therein (or in any related registration
statement, notification or the like) a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to each Pledgor by the Pledgee
expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7,
such Pledged Securities or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act of 1933, as then
in effect, the Pledgee may, in its sole and absolute discretion, sell such
Pledged Securities or part thereof by private sale in such manner and under such
circumstances as Pledgee may deem necessary or advisable in order that such sale
may legally be effected without such registration, provided that at least 10
days' notice of the time and place of any such sale shall be given to each
Pledgor. Without limiting the generality of the foregoing, in any such event the
Pledgee, in its sole and absolute discretion, (i) may proceed to make such
private sale notwithstanding that a registration statement for the purpose of
registering such Pledged Securities or part thereof shall have been filed under
such Securities Act, (ii) may approach and negotiate with a single possible
purchaser to effect such sale and (iii) may restrict such sale to a purchaser
who will represent and agree that such purchaser is purchasing for its own
account, for investment, and not with a view to the distribution or sale of such
Pledged Securities or part thereof. In the event of any such sale, the Pledgee
shall incur no responsibility or liability for selling all or any part of the
Pledged Securities at a price which the Pledgee, in its sole and absolute
discretion, may in good xxxxx xxxx reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until the registration as aforesaid.
12
18. TERMINATION; RELEASE. (a) After the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination) and the Pledgee, at the request and expense of each Pledgor,
will execute and deliver to each Pledgor a proper instrument or instruments
acknowledging the satisfaction and termination of this Agreement as provided
above, and will duly assign, transfer and deliver to each Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Pledgee and as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement, together with any
moneys at the time held by the Pledgee hereunder. As used in this Agreement,
"Termination Date" shall mean the date upon which the Total Commitment and all
Secured Interest Rate Agreements have been terminated, no Letter of Credit, Loan
or Note is outstanding and all other Obligations have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 8.02 of the Credit Agreement or is
otherwise released at the direction of the Required Banks (or all the Banks if
required by Section 12.12 of the Credit Agreement), and the proceeds of such
sale or sales or from such release are applied in accordance with the terms of
the Credit Agreement to the extent required to be so applied, the Pledgee, at
the request and expense of such Pledgor will duly assign, transfer and deliver
to such Pledgor (without recourse and without any representation or warranty)
such of the Collateral as is then being (or has been) so sold or released and as
may be in possession of the Pledgee and has not theretofore been released
pursuant to this Agreement.
(c) At any time that a Pledgor desires that Collateral be released
as provided in the foregoing Section 18(a) or (b), it shall deliver to the
Pledgee a certificate signed by its principal executive officer stating that the
release of the respective Collateral is permitted pursuant to Section 18(a) or
(b). If requested by the Pledgee (although the Pledgee shall have no obligation
to make any such request), the relevant Pledgor shall furnish appropriate legal
opinions (from counsel, which may be in-house counsel, reasonably acceptable to
the Pledgee) to the effect set forth in the immediately preceding sentence. The
Pledgee shall have no liability whatsoever to any Secured Creditor as the result
of any release of Collateral by it as permitted by this Section 18.
19. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
13
(i) if to Stonebury, at:
The Stonebury Group Incorporated
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxx, Xxxxxx 00000
Attention: President
With a copy to:
HCA Holdings, Inc.
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
(ii) if to Hosiery Corporation International, at:
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
With a copy to:
HCA Holdings, Inc.
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
(iii) if to U.S. Textile, at:
U.S. Textile Corp.
Chesterfield Avenue
RD SC 903
a/k/a 0000 Xxxxxxx Xxxx.
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
With a copy to:
HCA Holdings, Inc.
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
14
Attention: Xxxxx X. Xxxxxxx, XX
(iv) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxx Xxxxx
(v) if to any Bank (other than the Pledgee), at such address as such
Bank shall have specified in the Credit Agreement;
(vi) if to any Interest Rate Creditor, at such address as such
Interest Rate Creditor shall have specified in writing to each Pledgor and
the Pledgee;
or at such address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Pledgor and the Collateral Agent (with the
consent of the Required Banks or, to the extent required by Section 12.12 of the
Credit Agreement, all of the Banks); provided, however, that no such change,
waiver, modification or variance shall be made to Section 9 hereof or this
Section 20 without the consent of each Secured Creditor adversely affected
thereby, provided further, that any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Secured Creditors. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
Agreement Obligations or (y) the Interest Rate Creditors as holders of the
Interest Rate Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (x) with respect to the
Credit Agreement Obligations, the Required Banks and (y) with respect to the
Interest Rate Obligations, the holders of 51% of all obligations outstanding
from time to time under the Secured Interest Rate Agreements.
15
21. MISCELLANEOUS. This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect,
subject to release and/or termination as set forth in Section 18, (ii) be
binding upon each Pledgor, its successors and assigns; provided, however, that
each Pledgor shall not assign any of its rights or obligations hereunder without
the prior written consent of the Pledgee (with the prior written consent of the
Required Banks or to the extent required by Section 12.12 of the Credit
Agreement, all of the Banks), and (iii) inure, together with the rights and
remedies of the Pledgee hereunder, to the benefit of the Pledgee, the Secured
Creditors and their respective successors, transferees and assigns. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. The headings of the several sections and subsections in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument. In the event that any provision of this Agreement shall prove to
be invalid or unenforceable, such provision shall be deemed to be severable from
the other provisions of this Agreement which shall remain binding on all parties
hereto.
22. WAIVER OF JURY TRIAL. Each Pledgor hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this agreement or the transactions contemplated hereby.
16
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
THE STONEBURY GROUP INCORPORATED,
as Pledgor
By____________________________
Name: Xxxxxx Xxxxxx
Title: Assistant Secretary
U.S. TEXTILE CORP.,
as Pledgor
By____________________________
Name: X. Xxxxxxx
Title: President
HOSIERY CORPORATION INTERNATIONAL
By____________________________
Name: Xxxx Xxxxxxx
Title: President
BANKERS TRUST COMPANY,
as Collateral Agent and as Pledgee
By____________________________
Name: Xxxx Xxx Xxxxx
Title: Managing Director
ANNEX A
LIST OF SUBSIDIARIES
Jurisdiction
of
Name Incorporation
---- -------------
None.
ANNEX B
LIST OF STOCK
Name of Issuing Type of Number of Percentage
Corporation Shares Shares Certificate No. Owned
--------------- ------- --------- --------------- ----------
None.
ANNEX C
LIST OF NOTES
Issuer Principal Amount Interest Rate Maturity Date
------ ---------------- ------------- -------------
None.
[EXHIBIT I-1 CONFORMED
AS EXECUTED]
BORROWER
SECURITY AGREEMENT
between
HOSIERY CORPORATION OF AMERICA, INC
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of November 20, 1997
TABLE OF CONTENTS
Page
ARTICLE I SECURITY INTERESTS................................... 2
1.1 Grant of Security Interests.............................. 2
1.2 Power of Attorney........................................ 2
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS..... 3
2.1 Necessary Filings........................................ 3
2.2 No Liens................................................. 3
2.3 Other Financing Statements............................... 3
2.4 Chief Executive Office; Records.......................... 4
2.5 Location of Inventory and Equipment...................... 4
2.6 Trade Names; Change of Name.............................. 5
2.7 Recourse................................................. 5
ARTICLE III SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS............ 6
3.1 Additional Representations and Warranties................ 6
3.2 Maintenance of Records................................... 6
3.3 Modification of Terms; etc............................... 7
3.4 Collection............................................... 7
3.5 Direction to Account Debtors; etc........................ 7
3.6 Instruments.............................................. 8
3.7 Further Actions.......................................... 8
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS............. 8
4.1 Additional Representations and Warranties................ 8
4.2 Licenses and Assignments................................. 8
4.3 Infringements............................................ 8
4.4 Preservation of Marks.................................... 9
4.5 Maintenance of Registration.............................. 9
4.6 Future Registered Marks.................................. 9
4.7 Remedies................................................. 9
ARTICLE V SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS............................... 10
5.1 Additional Representations and Warranties................ 10
5.2 Licenses and Assignments................................. 10
5.3 Infringements............................................ 10
(i)
5.4 Maintenance of Patents................................... 11
5.5 Prosecution of Patent Application........................ 11
5.6 Other Patents and Copyrights............................. 11
5.7 Remedies................................................. 11
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL................. 12
6.1 Protection of Collateral Agent's Security................ 12
6.2 Warehouse Receipts Non-negotiable........................ 12
6.3 Further Actions.......................................... 12
6.4 Financing Statements..................................... 13
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF
DEFAULT.............................................. 13
7.1 Remedies; Obtaining the Collateral Upon Default.......... 13
7.2 Remedies; Disposition of the Collateral.................. 14
7.3 Waiver of Claims......................................... 15
7.4 Application of Proceeds.................................. 16
7.5 Remedies Cumulative...................................... 17
7.6 Discontinuance of Proceedings............................ 18
ARTICLE VIII INDEMNITY............................................ 18
8.1 Indemnity................................................ 18
8.2 Indemnity Obligations Secured by Collateral; Survival.... 20
ARTICLE IX DEFINITIONS.......................................... 20
ARTICLE X MISCELLANEOUS........................................ 24
10.1 Notices................................................. 24
10.2 Waiver; Amendment....................................... 24
10.3 Obligations Absolute.................................... 25
10.4 Successors and Assigns.................................. 25
10.5 Headings Descriptive.................................... 26
10.6 Severability............................................ 26
10.7 GOVERNING LAW........................................... 26
10.8 Assignor's Duties....................................... 26
10.9 Termination; Release.................................... 26
10.10 Collateral Agent........................................ 27
ANNEX A Schedule of Existing Financing Statements
ANNEX B Schedule of Record Locations
(ii)
ANNEX C Schedule of Equipment and Inventory Locations
ANNEX D Schedule of Trade and Fictitious Names
ANNEX E Schedule of Marks
ANNEX F Schedule of Patents and Applications
ANNEX G Schedule of Copyrights and Applications
(iii)
BORROWER SECURITY AGREEMENT
AMENDMENT AND RESTATEMENT, dated as of November 20, 1997, to
Security Agreement dated as of October 17, 1994 (as amended, modified or
supplemented from time to time, the "Security Agreement") between HOSIERY
CORPORATION OF AMERICA, INC., a Delaware corporation (the "Assignor") and
BANKERS TRUST COMPANY, as Collateral Agent (the "Collateral Agent") for the
Secured Creditors (as defined below). Capitalized terms used herein shall have
the meaning specified in Article IX herein or, if not defined therein, as
specified in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Assignor, the financial institutions from time to time
party thereto (the "Banks") and Bankers Trust Company, as Agent (the "Agent"),
have entered into an Amendment and Restatement, dated as of November 20, 1997,
amending and restating the Credit Agreement dated as of October 17, 1994 (as
amended, modified or supplemented from time to time, the "Credit Agreement"),
providing inter alia for the making of Loans, and the issuance of, and
participation in, Letters of Credit as contemplated therein (the Banks from time
to time party to the Credit Agreement and the Agent being herein called the
"Bank Creditors");
WHEREAS, the Assignor may from time to time be party to one or more
Interest Rate Agreements (each such Interest Rate Agreement with an Interest
Rate Creditor (as defined below), a "Secured Interest Rate Agreement") with
Bankers Trust Company, in its individual capacity ("BTCo"), any Bank or a
syndicate of financial institutions organized by BTCo or an affiliate of BTCo
(even if BTCo or any such Bank ceases to be a Bank under the Credit Agreement
for any reason), and any institution that participates, and in each case their
subsequent assigns, (collectively, the "Interest Rate Creditors", and the
Interest Rate Creditors together with the Bank Creditors, collectively the
"Secured Creditors");
WHEREAS, it is a condition precedent to the making of Loans and the
issuance of, and participation in, Letters of Credit under the Credit Agreement
that the Assignor shall have executed and delivered to the Collateral Agent this
Agreement;
WHEREAS, the Assignor desires to execute this Agreement to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefit accruing to the
Assignor, the receipt and sufficiency of which are hereby acknowledged, the
Assignor hereby makes the following representations and warranties and hereby
covenants and agrees as follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of the Obligations, the
Assignor does hereby sell, assign and transfer unto the Collateral Agent, and
does hereby grant to the Collateral Agent for the benefit of the Secured
Creditors a continuing security interest of first priority in, all of the right,
title and interest of the Assignor in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) each and every
Receivable, (ii) all Contracts, together with all Contract Rights arising
thereunder, (iii) all Inventory, (iv) all Equipment, (v) all Marks, together
with the registrations and right to all renewals thereof, and the goodwill of
the business of the Assignor symbolized by the Marks, (vi) the Cash Collateral
Account established for the Assignor and all monies, securities and instruments
deposited or required to be deposited in such Cash Collateral Account, (vii) all
Patents and Copyrights and all reissues, renewals or extensions thereof, (viii)
all computer programs of the Assignor and all intellectual property rights
therein and all other proprietary information of the Assignor, including, but
not limited to, Trade Secrets, (ix) all other Goods, General Intangibles,
Chattel Paper, Documents and Instruments (other than the Pledged Securities),
and (x) all Proceeds and products of any and all of the foregoing (all of the
above collectively, the "Collateral").
(b) The security interest of the Collateral Agent under this Agreement
extends to all Collateral of the kind which is the subject of this Agreement
which the Assignor may acquire at any time during the continuation of this
Agreement.
1.2 Power of Attorney. The Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of the Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all monies and claims for monies due
or to become due to the Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable in the premises, which
appointment as attorney is coupled with an interest.
2
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1 Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by the Assignor to the Collateral Agent hereby in respect of
the Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral constitutes
a perfected security interest therein superior and prior to the rights of all
other Persons therein (except that the Collateral may be subject to the security
interests evidenced by the financing statements disclosed on Annex A hereto (the
"Permitted Filings")) and subject to no other Liens (except Permitted Liens) and
is entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests.
2.2 No Liens. The Assignor is, and as to Collateral acquired by it
from time to time after the date hereof the Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than Liens created hereby, permitted
under Sections 8.03 (a), (b) and (d) of the Credit Agreement or evidenced by the
Permitted Filings), and Assignor shall defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any interest therein
adverse to the Collateral Agent.
2.3 Other Financing Statements. There is no financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction) covering or purporting to cover any interest of any kind in the
Collateral except as disclosed in Annex A hereto and so long as the Total
Commitment has not been terminated or any Letter of Credit remains outstanding
or any of the Obligations remain unpaid or any Secured Interest Rate Agreement
remains in effect, the Assignor will not execute or authorize to be filed in any
public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by the Assignor or as permitted
by the Credit Agreement.
2.4 Chief Executive Office; Records. The chief executive office of
the Assignor is located at 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000.
The Assignor will not move its chief executive office except to such new
location as the Assignor may establish in accordance with the last sentence of
this Section 2.4. The originals of all documents evidencing all
3
Receivables and Contract Rights and Trade Secrets of the Assignor and the only
original books of account and records of the Assignor relating thereto are, and
will continue to be, kept at such chief executive office and/or one or more of
the locations shown on Annex B, or at such new locations as the Assignor may
establish in accordance with the last sentence of this Section 2.4. All
Receivables and Contract Rights and Trade Secrets of the Assignor are, and will
continue to be, maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from, the office locations
described above, or such new locations as the Assignor may establish in
accordance with the last sentence of this Section 2.4. The Assignor shall not
establish new locations for such offices until (i) it shall have given to the
Collateral Agent not less than 30 days' prior written notice (or such lesser
notice as shall be acceptable to the Collateral Agent in the case of a new
record location to be established in connection with newly acquired Contracts)
of its intention so to do, clearly describing such new location and providing
such other information in connection therewith as the Collateral Agent may
reasonably request, and (ii) with respect to such new location, it shall have
taken all action, satisfactory to the Collateral Agent, to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
2.5 Location of Inventory and Equipment. All Inventory and Equipment
held on the date hereof by the Assignor is located at one of the locations shown
on Annex C attached hereto. The Assignor agrees that all Inventory and Equipment
now held or subsequently acquired by it shall be kept at (or shall be in
transport to or from) any one of the locations shown on Annex C hereto, or such
new location as the Assignor may establish in accordance with the last sentence
of this Section 2.5, provided that Equipment may be removed from any such
location so long as (x) such Equipment is returned to such location within 30
days after such removal and (y) the replacement value of all of the Assignor's
Equipment which has been removed from one of the locations shown on Annex C, or
from a new location established in accordance with the last sentence of this
Section 2.5, and has not been returned to any such location, does not exceed
$100,000 in the aggregate at any one time. The Assignor may establish a new
location for Inventory and Equipment only if (i) it shall have given to the
Collateral Agent not less than 30 days prior written notice of its intention so
to do, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may reasonably request, and (ii)
with respect to such new location, it shall have taken all action reasonably
satisfactory to the Collateral Agent to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby at all times
fully perfected and in full force and effect.
2.6 Trade Names; Change of Name. The Assignor does not have or
operate in any jurisdiction under, or in the preceding 12 months has not had or
has not operated in any jurisdiction under, any trade names, fictitious names or
other names (including, without
4
limitation, any names of divisions or operations) except its legal name and such
other trade, fictitious or other names as are listed on Annex D hereto. The
Assignor has only operated under each name set forth in Annex D in the
jurisdiction or jurisdictions set forth opposite each such name on Annex D. The
Assignor shall not change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names listed
on Annex D hereto in the jurisdictions listed with respect to such names and new
names (including, without limitation, any names of divisions or operations)
and/or jurisdictions established in accordance with the last sentence of this
Section 2.6. The Assignor shall not assume or operate in any jurisdiction under
any new trade, fictitious or other name or operate under any existing name in
any additional jurisdiction until (i) it shall have given to the Collateral
Agent not less than 30 days' prior written notice of its intention so to do,
clearly describing such new name and/or jurisdiction and, in the case of a new
name, the jurisdictions in which such new name shall be used and providing such
other information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new name and/or new jurisdiction, it
shall have taken all action to maintain the security interest of the Collateral
Agent in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect.
2.7 Recourse. This Agreement is made with full recourse to the
Assignor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of the Assignor contained herein, in the
Secured Interest Rate Agreements and otherwise in writing in connection herewith
or therewith.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1 Additional Representations and Warranties. As of the time when
each of its accounts receivable arises, the Assignor shall be deemed to have
represented and warranted that such receivable, and all records, papers and
documents relating thereto (if any) are genuine and in all respects what they
purport to be, and that all papers and documents (if any) relating thereto (i)
will represent the genuine, legal, valid and binding obligation of the account
debtor, subject to adjustments customary in the business of the Assignor, and
evidencing indebtedness unpaid and owed by the respective account debtor arising
out of the performance of labor or services or the sale or lease and delivery of
the merchandise listed therein, or both, (ii) will be the only original writings
evidencing and embodying such obligation of the account debtor named therein
(other than copies created for general accounting purposes), (iii) will evidence
true and valid obligations, enforceable in accordance with their respective
terms, subject to adjustments customary in the business of the Assignor, and
(iv) will be in compliance and will conform with all applicable federal, state
and local laws and applicable laws of any relevant foreign jurisdiction.
5
3.2 Maintenance of Records. The Assignor will keep and maintain at
its own cost and expense satisfactory and complete records of its Receivables
and Contracts, including, but not limited to, the originals of all documentation
(including each Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and the Assignor will make the same available to the
Collateral Agent for inspection, at the Assignor's own cost and expense, at any
and all reasonable times upon demand. The Assignor shall, at its own cost and
expense, deliver all tangible evidence of its Receivables and Contract Rights
(including, without limitation, copies of all documents evidencing the
Receivables and all Contracts, such copies, if requested by the Collateral Agent
while an Event of Default is in existence, to be certified as true and complete
by an appropriate officer of the Assignor) and such books and records to the
Collateral Agent or to its representatives (copies of which evidence and books
and records may be retained by the Assignor) at any time upon its demand. If the
Collateral Agent so directs, the Assignor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, the Receivables and Contracts,
as well as books, records and documents of the Assignor evidencing or pertaining
to the Receivables with an appropriate reference to the fact that the
Receivables and Contracts have been assigned to the Collateral Agent and that
the Collateral Agent has a security interest therein.
3.3 Modification of Terms; etc. The Assignor shall not rescind or
cancel any indebtedness evidenced by any Receivable or under any Contract, or
modify any term thereof or make any adjustment with respect thereto, or extend
or renew the same, or compromise or settle any material dispute, claim, suit or
legal proceeding relating thereto, or sell any Receivable or Contract, or
interest therein, without the prior written consent of the Collateral Agent,
except (i) as permitted by Section 3.4 hereof and (ii) so long as no Event of
Default is then in existence in respect of which the Collateral Agent has given
notice that this exception is no longer applicable, the Assignor may modify,
make adjustments with respect to, extend or renew any Contracts in the ordinary
course of business. The Assignor will duly fulfill all obligations on its part
to be fulfilled under or in connection with the Receivables and Contracts and
will do nothing to impair the rights of the Collateral Agent in the Receivables
or Contracts.
3.4 Collection. The Assignor shall endeavor to cause to be collected
from the account debtor named in each of its Receivables or obligor under any
Contract, as and when due (including, without limitation, amounts which are
delinquent, such amounts to be collected in accordance with generally accepted
lawful collection procedures) any and all amounts owing under or on account of
such Receivable or Contract, and apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such Receivable or
under such Contract, except that, so long as no Event of Default is then in
existence in respect of which the Collateral Agent has given notice that this
exception is no longer applicable, the Assignor may
6
allow in the ordinary course of business as adjustments to amounts owing under
its Receivables and Contracts (i) an extension or renewal of the time or times
of payment, or settlement for less than the total unpaid balance, which the
Assignor finds appropriate in accordance with sound business judgment and (ii) a
refund or credit due as a result of returned or damaged merchandise or
improperly performed services. The costs and expenses (including, without
limitation, attorneys' fees) of collection, whether incurred by the Assignor or
the Collateral Agent, shall be borne by the Assignor.
3.5 Direction to Account Debtors; etc. Upon the occurrence and
during the continuance of an Event of Default, and if the Collateral Agent so
directs the Assignor, to the extent permitted by applicable law, the Assignor
agrees (x) to cause all payments on account of the Receivables and Contracts to
be made directly to the Cash Collateral Account, (y) that the Collateral Agent
may, at its option, directly notify the obligors with respect to any Receivables
and/or any Contracts to make payments with respect thereto as provided in
preceding clause (x) and (z) that the Collateral Agent may enforce collection of
any such Receivables and/or any Contracts and may adjust, settle or compromise
the amount of payment thereof. The Collateral Agent may apply any or all amounts
then in, or thereafter deposited in, the Cash Collateral Account in the manner
provided in Section 7.4 of this Agreement. The costs and expenses (including
attorneys' fees) of collection, whether incurred by the Assignor or the
Collateral Agent, shall be borne by the Assignor.
3.6 Instruments. If the Assignor owns or acquires any Instrument,
the Assignor will within 10 days notify the Collateral Agent thereof, and upon
request by the Collateral Agent promptly deliver such Instrument to the
Collateral Agent appropriately endorsed to the order of the Collateral Agent as
further security hereunder.
3.7 Futher Actions. The Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require to give effect to the purposes of this Agreement.
7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1 Additional Representations and Warranties. The Assignor
represents and warrants that it is the true and lawful owner or licensee of the
Marks listed in Annex E attached hereto and that said listed Marks constitute
all the marks registered in the United States Patent and Trademark Office that
the Assignor now owns or uses in connection with its business. The Assignor
represents and warrants that it owns or is licensed to use all Marks that it
uses. The Assignor further warrants that it is aware of no third party claim
that any aspect of the Assignor's present or contemplated business operations
infringes or will infringe any trademark or service xxxx in a manner which could
have a material effect on the financial condition, business or property of the
Assignor.
4.2 Licenses and Assignments. The Assignor hereby agrees not to
divest itself of any right under a Xxxx other than in the ordinary course of
business absent prior written approval of the Collateral Agent.
4.3 Infringements. The Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who may be infringing or otherwise violating any of the Assignor's
rights in and to any significant Xxxx, or with respect to any party claiming
that the Assignor's use of any significant Xxxx violates any property right of
that party, to the extent that such infringement or violation could have a
material effect on the financial condition, business or property of the
Assignor. The Assignor further agrees, unless otherwise directed by the
Collateral Agent, diligently to prosecute any person infringing any significant
Xxxx in a manner consistent with its past practice and in the ordinary course of
business.
4.4 Preservation of Marks. The Assignor agrees to use its
significant Marks in interstate commerce during the time in which this Agreement
is in effect, sufficiently to preserve such Marks as trademarks or service marks
registered under the laws of the United States.
4.5 Maintenance of Registration. The Assignor shall, at its own
expense, diligently process all documents required by the Trademark Act of 1946,
15 U.S.C. xx.xx. 1051 et seq. to maintain trademark registration which could
have a material effect on the financial condition, business or property of the
Assignor, including but not limited to affidavits of use and applications for
renewals of registration in the United States Patent and Trademark Office for
all of its Marks pursuant to 15 U.S.C. xx.xx. 1058(a), 1059 and 1065, and shall
pay all fees and disbursements in connection therewith, and shall not abandon
any such filing of affidavit of use
8
or any such application of renewal prior to the exhaustion of all administrative
and judicial remedies without prior written consent of the Collateral Agent. The
Assignor agrees to notify the Collateral Agent one (1) month prior to the dates
on which the affidavits of use or the applications for renewal registration are
due that the affidavit of use or the renewal is being processed.
4.6 Future Registered Marks. If any xxxx registration issues
hereafter to the Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within thirty (30)
days of receipt of such certificate the Assignor shall deliver a copy of such
certificate, and a grant of security in such xxxx to the Collateral Agent,
confirming the grant thereof hereunder, the form of such confirmatory grant to
be substantially the same as the form hereof.
4.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the Assignor, take any or all of
the following actions: (i) declare the entire right, title and interest of the
Assignor in and to each of the Marks, together with all trademark rights and
rights of protection to the same, vested, in which event such rights, title and
interest shall immediately vest, in the Collateral Agent for the benefit of the
Secured Creditors, in which case the Assignor agrees to execute an assignment in
form and substance satisfactory to the Collateral Agent, of all its rights,
title and interest in and to the Marks to the Collateral Agent for the benefit
of the Secured Creditors; (ii) take and use or sell the Marks and the goodwill
of the Assignor's business symbolized by the Marks and the right to carry on the
business and use the assets of the Assignor in connection with which the Marks
have been used; and (iii) direct the Assignor to refrain, in which event the
Assignor shall refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, change the Assignor's
corporate name to eliminate therefrom any use of any Xxxx and execute such other
and further documents that the Collateral Agent may request to further confirm
this and to transfer ownership of the Marks and registrations and any pending
trademark application in the United States Patent and Trademark Office to the
Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS
5.1 Additional Representations and Warranties. The Assignor
represents and warrants that it is the true and lawful owner or licensee of all
rights in the Patents listed in Annex F attached hereto and in the Copyrights
listed in Annex G attached hereto, that said Patents constitute all the United
States patents and applications for United States patents that the Assignor now
owns and that said Copyrights constitute all the registered United States
copyrights that the Assignor now owns. The Assignor represents and warrants that
it owns or is licensed to
9
practice under all Patents and Copyrights that it now owns, uses or practices
under. The Assignor further warrants that it is aware of no third party claim
that any aspect of the Assignor's present or contemplated business operations
infringes or will infringe any patent or any copyright in a manner which could
have a material effect on the financial condition, business or property of the
Assignor.
5.2 Licenses and Assignments. The Assignor hereby agrees not to
divest itself of any right under a Patent or Copyright other than in the
ordinary course of business absent prior written approval of the Collateral
Agent.
5.3 Infringements. The Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to the Assignor with respect to any infringement or other
violation of the Assignor's rights in any significant Patent or Copyright, or
with respect to any claim that practice of any significant Patent or Copyright
violates any property right of that party, to the extent that such infringement
or violation could have a material effect on the financial condition, business
or property of the Assignor. The Assignor further agrees, absent direction of
the Collateral Agent to the contrary, diligently to prosecute any person
infringing any significant Patent or Copyright in a manner consistent with its
past practice and in the ordinary course of business.
5.4 Maintenance of Patents. At its own expense, the Assignor shall
make timely payment of all post-issuance fees required pursuant to 35 U.S.C. ss.
41 to maintain in force rights under each Patent.
5.5 Prosecution of Patent Application. At its own expense, the
Assignor shall diligently prosecute all applications for United States patents
listed on Annex F hereto, and shall not abandon any such application prior to
exhaustion of all administrative and judicial remedies, absent written consent
of the Collateral Agent.
5.6 Other Patents and Copyrights. Within thirty (30) days of
acquisition of a United States Patent or Copyright, or of filing of an
application for a United States Patent or Copyright, the Assignor shall deliver
to the Collateral Agent a copy of said Patent or Copyright, as the case may be,
with a grant of security as to such Patent or Copyright, as the case may be,
confirming the grant thereof hereunder, the form of such confirmatory grant to
be substantially the same as the form hereof.
5.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the Assignor take any or all of
the following actions: (i) declare the entire right, title and interest of the
Assignor in each of the Patents and Copyrights vested, in which event such
right, title and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Assignor agrees to execute
an assignment in form and substance satisfactory to the Collateral Agent of all
its right, title, and
10
interest to such Patents and Copyrights to the Collateral Agent for the benefit
of the Secured Creditors; (ii) take and practice or sell the Patents and
Copyrights; (iii) direct the Assignor to refrain, in which event the Assignor
shall refrain, from practicing the Patents and Copyrights directly or
indirectly, and the Assignor shall execute such other and further documents as
the Collateral Agent may request further to confirm this and to transfer
ownership of the Patents and Copyrights to the Collateral Agent for the benefit
of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Collateral Agent's Security. The Assignor will do
nothing to impair the rights of the Collateral Agent in the Collateral. The
Assignor will at all times keep its Inventory and Equipment insured in favor of
the Collateral Agent, at its own expense, to the extent required by the Credit
Agreement against fire, theft and all other risks to which such Collateral may
be subject; all policies or certificates with respect to such insurance shall be
endorsed to the Collateral Agent's satisfaction for the benefit of the
Collateral Agent (including, without limitation, by naming the Collateral Agent
as loss payee) and deposited with the Collateral Agent. If the Assignor shall
fail to insure such Inventory to the extent required by the Credit Agreement, or
if the Assignor shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Collateral Agent shall have the right
(but shall be under no obligation) to procure such insurance and the Assignor
agrees to reimburse the Collateral Agent for all costs and expenses of procuring
such insurance. The Collateral Agent may apply any proceeds of such insurance in
accordance with Section 7.4. The Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of the Assignor to pay its Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to the Assignor.
6.2 Warehouse Receipts Non-negotiable. The Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law).
6.3 Further Actions. The Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps
11
relating to the Collateral and other property or rights covered by the security
interest hereby granted, which the Collateral Agent deems reasonably appropriate
or advisable to perfect, preserve or protect its security interest in the
Collateral.
6.4 Financing Statements. The Assignor agrees to sign and deliver to
the Collateral Agent such financing statements, in form acceptable to the
Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are necessary or desirable in the opinion of the Collateral Agent
to establish and maintain a valid, enforceable, first priority security interest
in the Collateral as provided herein and the other rights and security
contemplated hereby all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law. The
Assignor will pay any applicable filing fees and related expenses. The Assignor
authorizes the Collateral Agent to file any such financing statements without
the signature of the Assignor.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default. The Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, subject to any mandatory requirements of applicable law
then in effect, the Collateral Agent, in addition to any rights now or hereafter
existing under applicable law, shall have all rights as a secured creditor under
the Uniform Commercial Code in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from the Assignor or any
other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon the
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of the Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables)
constituting the Collateral to make any payment required by the terms of
such instrument or agreement directly to the Collateral Agent;
12
(iii) withdraw all moneys, securities and other instruments in the
Cash Collateral Account for application to the Obligations in accordance
with Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate, or direct the Assignor to
sell, assign or otherwise liquidate, any or all of the Collateral or any
part thereof in accordance with Section 7.2 hereof, and take possession of
the proceeds of any such sale or liquidation; and
(v) take possession of the Collateral or any part thereof, by
directing the Assignor in writing to deliver the same to the Collateral
Agent at any place or places designated by the Collateral Agent, in which
event the Assignor shall at its own expense:
(A) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered to
the Collateral Agent,
(B) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by
the Collateral Agent as provided in Section 7.2, and
(C) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good
condition;
(vi) license or sublicense whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for
such term and on such conditions and in such manner as the Collateral
Agent shall in its sole judgment determine.
it being understood that the Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by the Assignor of said obligation.
7.2 Remedies; Disposition of the Collateral. Upon the occurrence and
continuance of an Event of Default, any Collateral repossessed by the Collateral
Agent under or pursuant to Section 7.1 and any other Collateral whether or not
so repossessed by the Collateral Agent, may be sold, assigned, leased or
otherwise disposed of under one or more contracts or as an entirety, and without
the necessity of gathering at the place of sale the property to be sold, and in
general in such manner, at such time or times, at such place or places and on
such terms as the
13
Collateral Agent may, in compliance with any mandatory requirements of
applicable law, determine to be commercially reasonable. Any of the Collateral
may be sold, leased or otherwise disposed of, in the condition in which the same
existed when taken by the Collateral Agent or after any overhaul or repair which
the Collateral Agent shall determine to be commercially reasonable. Any such
disposition which shall be a private sale or other private proceedings permitted
by such requirements shall be made upon not less than ten (10) days' written
notice to the Assignor specifying the time at which such disposition is to be
made and the intended sale price or other consideration therefor, and shall be
subject, for the ten (10) days after the giving of such notice, to the right of
the Assignor or any nominee of the Assignor to acquire the Collateral involved
at a price or for such other consideration at least equal to the intended sale
price or other consideration so specified. Any such disposition which shall be a
public sale permitted by such requirements shall be made upon not less than ten
(10) days' written notice to the Assignor specifying the time and place of such
sale and, in the absence of applicable requirements of law, shall be by public
auction (which may, at the Collateral Agent's option, be subject to reserve),
after publication of notice of such auction not less than 10 days prior thereto
in two newspapers in general circulation in the City of New York. To the extent
permitted by any such requirement of law, the Collateral Agent on behalf of the
Secured Creditors (or certain of them) may bid for and become the purchaser (by
bidding on Obligations or otherwise) of the Collateral or any item thereof,
offered for sale in accordance with this Section without accountability to the
Assignor (except to the extent of surplus money received as provided in Section
7.4). If, under mandatory requirements of applicable law, the Collateral Agent
shall be required to make disposition of the Collateral within a period of time
which does not permit the giving of notice to the Assignor as hereinabove
specified, the Collateral Agent need give the Assignor only such notice of
disposition as shall be reasonably practicable in view of such mandatory
requirements of applicable law. The Assignor agrees to do or cause to be done
all such other acts and things as may be reasonably necessary to make such sale
or sales of all or any portion of the Collateral valid and binding and in
compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrations or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Assignor's expense.
7.3 Waiver of Claims. Except as otherwise provided in this
Agreement, THE ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and the Assignor hereby further waives, to the extent permitted
by law:
14
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and the Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Assignor therein and thereto, and
shall be a perpetual bar both at law and in equity against the Assignor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Assignor.
7.4 Application of Proceeds. (a) The proceeds of any Collateral
obtained pursuant to Section 7.1 or disposed of pursuant to Section 7.2 shall be
applied as follows:
(i) first, to the payment of all Obligations to the Collateral Agent
of the type described in clauses (iii) and (iv) of the definition of
"Obligation" contained in Article IX hereof;
(ii) second, to the extent proceeds remain after the application
pursuant to preceding clause (i), an amount equal to the outstanding
Obligations to the Secured Creditors shall be paid to the Secured
Creditors as provided in Section 7.4(c) with each Secured Creditor
receiving an amount equal to its outstanding Obligations or, if the
proceeds are insufficient to pay in full all such Obligations, its Pro
Rata Share of the amount remaining to be distributed to be applied, with
respect to the Credit Document Obligations, firstly to the payment of
interest in respect of the unpaid principal amount of Loans outstanding,
secondly to the payment of principal of Loans outstanding, then to the
other Credit Document Obligations; and
(iii) third, to the extent remaining after the application pursuant
to the preceding clauses (i) and (ii) and following the
termination of this Agreement pursuant to Section 10.9 hereof,
to the Assignor or to whomever may be lawfully entitled to
receive such payment.
15
(b) For purposes of this Agreement, "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount, the
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then outstanding amount of the relevant Obligations owed such Secured
Creditor and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the (i) Bank Creditors
hereunder shall be made to the Agent for the account of the respective Bank
Creditors and (ii) Interest Rate Creditors hereunder shall be made to the paying
agent under the applicable Secured Interest Rate Agreement or, in the case of
Secured Interest Rate Agreements without a paying agent, directly to the
applicable Interest Rate Creditor.
(d) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Agent for a determination (which the Agent agrees to provide upon request to the
Collateral Agent) of the outstanding Credit Document Obligations and (ii) upon
any Interest Rate Creditor for a determination (which each Interest Rate
Creditor agrees to provide upon request to the Collateral Agent) of the
outstanding Interest Rate Obligations owed to such Interest Rate Creditor.
Unless it has actual knowledge (including by way of written notice from a
Secured Creditor) to the contrary, the Agent under the Credit Agreement, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that (x) no Credit
Agreement Obligations other than principal, interest and regularly accruing fees
are owing to any Bank Creditor and (y) no Secured Interest Rate Agreements or
Interest Rate Obligations with respect thereto are in existence.
(e) It is understood that the Assignor shall remain liable to the
extent of any deficiency between the amount of the proceeds of the Collateral
and the amount of the sum referred to in clause (a) of this Section with respect
to the Assignor.
7.5 Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, any
Secured Interest Rate Agreement or the other Credit Documents or now or
hereafter existing at law or in equity, or by statute and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time or simultaneously and as often and in such order as
may be deemed expedient by the Collateral Agent. All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of exercise of
one shall not be deemed a waiver of the right to exercise of any other or
others. No delay or omission of the Collateral Agent in the exercise of
16
any such right, power or remedy and no renewal or extension of any of the
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein. In
the event that the Collateral Agent shall bring any suit to enforce any of its
rights hereunder and shall be entitled to judgment, then in such suit the
Collateral Agent may recover reasonable expenses, including attorneys' fees, and
the amounts thereof shall be included in such judgment.
7.6 Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
Assignor, the Collateral Agent and each holder of any of the Obligations shall
be restored to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Agreement, and
all rights, remedies and powers of the Collateral Agent shall continue as if no
such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1 Indemnity. (a) The Assignor agrees to indemnify, reimburse and
hold the Collateral Agent, each Secured Creditor and its respective successors,
assigns, employees, agents and servants (hereinafter in this Section 8.1
referred to individually as "Indemnitee," and collectively as "Indemnitees")
harmless from any and all liabilities, obligations, losses, damages, penalties,
claims, demands, actions, suits, judgments and any and all costs and expenses
(including reasonable attorneys' fees and expenses) (for the purposes of this
Section 8.1 the foregoing are collectively called "expenses") of whatsoever kind
and nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of this Agreement, any Secured Interest Rate
Agreement, any other Credit Document or the documents executed in connection
herewith and therewith or in any other way connected with the enforcement of any
of the terms of, or the preservation of any rights under any thereof, or in any
way relating to or arising out of the manufacture, ownership, ordering,
purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including, without limitation, latent or other defects, whether or
not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee),
17
or property damage), or contract claim; provided that no Indemnitee shall be
indemnified pursuant to this Section 8.1(a) for losses, damages or liabilities
to the extent caused by the gross negligence or wilful misconduct of such
Indemnitee. The Assignor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, loss, damage, penalty, claim,
demand, action, judgment or suit, the Assignor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify the Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 8.1(a), Assignor
agrees to pay, or reimburse the Collateral Agent for (if the Collateral Agent
shall have incurred fees, costs or expenses because the Assignor shall have
failed to comply with its obligations under this Agreement or any Credit
Document), any and all fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b), the
Assignor agrees to pay, indemnify and hold each Indemnitee harmless from and
against any loss, costs, damages and expenses which such Indemnitee may suffer,
expend or incur in consequence of or growing out of any misrepresentation by the
Assignor in this Agreement, any Secured Interest Rate Agreement or any other
Credit Document or in any statement or writing contemplated by or made or
delivered pursuant to or in connection with this Agreement, any Secured Interest
Rate Agreement or any other Credit Document.
(d) If and to the extent that the obligations of the Assignor under
this Section 8.1 are unenforceable for any reason, the Assignor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Loans made under the Credit Agreement and all of the other Obligations and
notwithstanding the discharge thereof.
18
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified unless the context
otherwise requires. Such definitions shall be equally applicable to the singular
and plural forms of the terms defined.
"Agent" shall have the meaning provided in the first WHEREAS clause
of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning specified in the first paragraph
of this Agreement.
"Bank Creditor" shall have the meaning provided in the first WHEREAS
clause of this Agreement.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Collateral" shall have the meaning provided in Section 1.1(a).
"Collateral Agent" shall have the meaning specified in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of the Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between the Assignor and one or
more additional parties.
"Copyrights" shall mean any U.S. copyright to which Assignor now or
hereafter has title, as well as any application for a U.S. copyright hereafter
made by the Assignor.
19
"Credit Agreement" shall have the meaning provided in the first WHEREAS
clause of this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Documents" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean any "equipment," as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by the Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures and
vehicles now or hereafter owned by the Assignor and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement, or any payment default, after any applicable
grace period, under any Secured Interest Rate Agreement.
"General Intangibles" shall have the meaning assigned that term
under the Uniform Commercial Code as in effect on the date hereof in the State
of New York.
"Goods" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1.
"Instrument" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Interest Rate Creditors" shall have the meaning provided in the
second WHEREAS clause of this Agreement.
"Interest Rate Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw
20
materials through work-in-process to finished goods -- and all products and
proceeds of whatever sort and wherever located and any portion thereof which may
be returned, rejected, reclaimed or repossessed by the Collateral Agent from the
Assignor's customers, and shall specifically include all "inventory" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York, now or hereafter owned by the Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on the Assignor's property.
"Marks" shall mean any trademarks and service marks now held or
hereafter acquired by the Assignor, which are registered in the United States
Patent and Trademark Office, as well as any unregistered marks used by the
Assignor in the United States and trade dress including logos and/or designs in
connection with which any of these registered or unregistered marks are used.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at stated maturity, by acceleration or otherwise) of all obligations
and liabilities of the Assignor, now existing or hereafter incurred under,
arising out of or in connection with any Credit Document to which it is a party
and the due performance and compliance by each Assignor with the terms of each
such Credit Document (all such obligations and liabilities under this clause
(i), except to the extent consisting of obligations or indebtedness with respect
to Interest Rate Agreements, being herein collectively called the "Credit
Document Obligations"); (ii) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations and
liabilities of the Assignor now existing or hereafter incurred under, arising
out of or in connection with any Secured Interest Rate Agreement (all such
obligations and indebtedness under this clause (ii) being herein collectively
called the "Interest Rate Obligations"); (iii) any and all sums advanced by the
Collateral Agent in order to preserve the Collateral or preserve its security
interest in the Collateral; (iv) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
each Assignor referred to in clauses (i), (ii) and (iii), after an Event of
Default shall have occurred and be continuing, the reasonable expenses of
re-taking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral,or of any exercise by the Collateral Agent of
its rights hereunder, together with reasonable attorneys' fees and court costs;
and (v) all amounts paid by any Indemnitee as to which such Indemnitee has the
right to reimbursement under Section 8.1 of this Agreement.
"Patents" shall mean any U.S. patent to which the Assignor now or
hereafter has title, as well as any application for a U.S. patent now or
hereafter made by the Assignor.
21
"Proceeds" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect in the State of New York on the date hereof
or under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or the Assignor from time to time with respect
to any of the Collateral, (ii) any and all payments (in any form whatsoever)
made or due and payable to the Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by the Assignor and, in any event, shall include,
but shall not be limited to, all of the Assignor's rights to payment for goods
sold or leased or services performed by the Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by the Assignor to secure
the foregoing, (b) all of the Assignor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all notices to other creditors or secured parties, and
certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto, and (h) all other writings
related in any way to the foregoing.
"Secured Creditors" shall have the meaning provided in the second
WHEREAS clause of this Agreement.
"Secured Interest Rate Agreements" shall have the meaning provided
in the second WHEREAS clause of this Agreement.
"Trade Secrets" means any secretly held existing engineering and
other data, information, production procedures and other know-how relating to
the design, manufacture, assembly, installation, use, operation, marketing, sale
and servicing of any products or business of the Assignor worldwide whether
written or not written.
22
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed to such party
at its address set forth opposite its signature below, or at such other address
as any of the parties hereto may hereafter notify the others in writing.
10.2 Waiver; Amendment. (a) None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Assignor and the Collateral Agent (with the
consent of the Required Banks or, to the extent required by Section 12.12 of the
Credit Agreement, all of the Banks), provided, however that no such change,
waiver, modification or variance shall be made to Section 7.4 hereof or this
Section 10 without the consent of each Secured Creditor adversely affected
thereby, provided further that any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Secured Creditors. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
Document Obligations or (y) the Interest Rate Creditors as holders of the
Interest Rate Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (x) with respect to the
Credit Document Obligations, the Required Banks and (y) with respect to the
Interest Rate Obligations, the holders of 51% of all obligations outstanding
from time to time under the Secured Interest Rate Agreements.
(b) No delay on the part of the Collateral Agent in exercising any of its
rights, remedies, powers and privileges hereunder or partial or single exercise
thereof, shall constitute a waiver thereof. No notice to or demand on the
Assignor in any case shall entitle it to any other or further notice or demand
in similar or other circumstances or constitute a waiver of any of the rights of
the Collateral Agent to any other or further action in any circumstances without
notice or demand.
10.3 Obligations Absolute. The obligations of the Assignor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Credit Document or
any Secured Interest Rate Agreement except as specifically set forth in a waiver
granted pursuant to the restrictions of Section 10.2 hereof; or (c) any
amendment to or modification of any Credit
23
Document or any Secured Interest Rate Agreement or any security for any of the
Obligations; whether or not the Assignor shall have notice or knowledge of any
of the foregoing. The rights and remedies of the Collateral Agent herein
provided are cumulative and not exclusive of any rights or remedies which the
Collateral Agent would otherwise have.
10.4 Successors and Assigns. This Agreement shall be binding upon
the Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and its successors and assigns, provided that the Assignor
may not transfer or assign any or all of its rights or obligations hereunder
without the written consent of the Collateral Agent. All agreements, statements,
representations and warranties made by the Assignor herein or in any certificate
or other instrument delivered by the Assignor or on its behalf under this
Agreement shall be considered to have been relied upon by the Secured Creditors
and shall survive the execution and delivery of this Agreement and the other
Credit Documents regardless of any investigation made by the Secured Creditors
on their behalf.
10.5 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6 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.
10.7 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
10.8 Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that the Assignor shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of the Assignor under or with
respect to any Collateral.
10.9 Termination; Release. (a) After the termination of the Total
Commitment and all Secured Interest Rate Agreements, when no Note or Letter of
Credit is outstanding and when all Loans and other Obligations have been paid in
full, this Agreement shall terminate, and the Collateral Agent, at the request
and expense of the Assignor, will execute and deliver to the Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement,
24
and will duly assign, transfer and deliver to the Assignor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Collateral Agent and as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement.
(b) So long as no payment default on any of the Obligations is in
existence or would exist after the application of proceeds as provided below,
the Pledgee shall, at the request of the Borrower and the Pledgor, release any
or all of the Collateral, provided that (x) such release is permitted by the
terms of the Credit Agreement (it being agreed for such purposes that a release
will be deemed "permitted by the terms of the Credit Agreement" if the proposed
transaction constitutes an exception to Section 8.02 of the Credit Agreement) or
otherwise has been approved in writing by the Required Banks and (y) the
proceeds of such Collateral are applied as required pursuant to the Credit
Agreement or any consent or waiver with respect thereto.
(c) At any time that the Assignor desires that the Collateral Agent
take any action to give effect to any release of Collateral pursuant to the
foregoing Section 10.9(a) or (b), it shall deliver to the Collateral Agent a
certificate signed by a principal executive officer stating that the release of
the respective Collateral is permitted pursuant to Section 10.9(a) or (b). In
the event that any part of the Collateral is released as provided in the
preceding paragraph (b), the Collateral Agent, at the request and expense of the
Assignor, will duly assign, transfer and deliver to the Assignor (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold and as may be in the possession of the
Collateral Agent and has not theretofore been released pursuant to this
Agreement. The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as permitted
by this Section 10.9. Upon any release of Collateral pursuant to Section 10.9(a)
or (b), none of the Secured Creditors shall have any continuing right or
interest in such Collateral, or the proceeds thereof.
10.10 Collateral Agent. By accepting the benefits of this Agreement,
each Secured Creditor acknowledges and agrees that the rights and obligations of
the Collateral Agent shall be as set forth in Section 11 of the Credit
Agreement. Notwithstanding anything to the contrary contained in Section 10.2 of
this Agreement or Section 12.12 of the Credit Agreement, this Section 10.10, and
the duties and obligations of the Collateral Agent set forth in this Section
10.10, may not be amended or modified without the consent of the Agent.
* * *
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
Addresses: HOSIERY CORPORATION OF AMERICA, INC.,
0000 Xxxxxxxx Xxxxx as Assignor
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx /s/ Xxxxxx Xxxxxx
By________________________________
with a copy to: Title: Vice President, CFO
HCA Holdings, Inc.
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
One Bankers Trust Plaza BANKERS TRUST COMPANY,
000 Xxxxxxx Xxxxxx as Collateral Agent
Xxx Xxxx,Xxx Xxxx 00000
Attention: Xxxx Xxx Xxxxx /s/ Xxxx Xxx Xxxxx
By_______________________________
Title: Managing Director
ANNEX A
SCHEDULE OF EXISTING FINANCING STATEMENTS
None (except for Permitted Liens)
ANNEX B
SCHEDULE OF RECORD LOCATIONS
1. Hosiery Corporation of America, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
2. Hosiery Corporation of America, Inc.
000-00 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
3. Hosiery Corporation of America, Inc.
Road SC 903, A/K/A 0000 Xxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
ANNEX C
SCHEDULE OF EQUIPMENT AND INVENTORY LOCATIONS
1. 0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
2. 000-00 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
3. Chesterfield Avenue
Road SC 903, A/K/A 0000 Xxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
4. 000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
5. Market Incentives Corporation
00 Xxxxxx Xxxx Xxxx
Xxxxxx, XX 00000
6. 000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
ANNEX D
SCHEDULE OF TRADE AND FICTICIOUS NAMES
None.
ANNEX E
HOSIERY CORPORATION OF AMERICA
SCHEDULE OF TRADEMARK REGISTRATIONS AND APPLICATIONS
HOSIERY CORPORAITON OF AMERICA, INC.
REGISTERED TADEMARKS
XXXX REG. NO. REG. DATE COUNTRY OWNER
---- -------- --------- ------- -----
Always There (Stylized 1406850 8/26/86 US HCA
Letters)
BBH (Stylized Letters) 0748833 4/30/83 US HCA
Bear (Design Only) 0747900 4/9/83 US HCA
Bear with Top Hat (Design 0405491 2/1/84 US HCA
Only)
D and Crown Design 0765540 2/25/84 US HCA
Durawear 0765539 2/25/84 US HCA
Enchantress (Stylized Letters) 0248742 10/30/88 US HCA
Fiberlock 0765150 2/18/84 US HCA
Lavco (Stylized Letters) 1471167 1/5/88 US HCA
Lola (Stylized Letters) 0749155 5/7/83 US HCA
Maximizer 2,061,770 5/13/97 US HCA
Neumode (Stylized Letters) 0550108 10/30/71 US HCA
Paramount 0116449 1/5/77 US HCA
Paraqueens (Stylized Letters) 0154652 4/18/82 US HCA
Shapely Perfection 2,074,436 6/24/97 US HCA
Sheer Charm 844,619 2/20/68 US HCA
Silkies 1,503,070 8/3/84 US HCA
Silkies 648505 10/18/93 TAIWAN HCA
Sophisticated Intimates (Mail 1944588 12/26/95 US HCA
Order)
The Video Store that Comes to 1824756 3/1/94 US HCA
You!
HOSIERY CORPORATION OF AMERICA, INC.
TRADEMARK APPLICATIONS
XXXX APP. NO. DATE FILED COUNTRY OWNER
---- -------- ---------- ------- -----
Beautiful Visions 74/705,950 7/25/95 US HCA
Xxxxxx Xxxxxxx 74/716,376 8/16/95 US HCA
Xxxxxx Xxxxxx & Design 74/587,828 10/20/94 US HCA
(Cosmetics/Parent)
Xxxxxx Xxxxxx 74/802,812 10/20/94 US HCA
(Cosmetics/Child)
Shades of Silk 74/705,949 7/25/95 US HCA
Silkies Ultra 75/322,036 7/10/97 US HCA
Sophisticated Intimates 75/146,245 8/6/96 US HCA
(Clothing)
The Most Beautiful Legs in
the World 75/094,866 4/26/96 US HCA
Wear Silkies
TLC 74/530,481 5/27/94 US HCA
ANNEX F
PATENTS AND APPLICATIONS
A. Patents
1. U.S. Patent No.: D277,299
Title: Taxicab Advertising Sign
Inventor: Xxxxxx Xxxxxx
Issued: January 22, 1984 (14 year term)
Assignee: Hosiery Corporation of America, Inc.
2. U.S. Patent No.: 4,385,478
Title: Folding and Packing machine for Pantyhose
Inventor: Xxxxxxx X. Xxxxxxxx
Issued: May 31, 1983 (17 year term)
Assignee: Hosiery Corporation of America, Inc.
ANNEX G
SCHEDULE OF COPYRIGHTS
HOSIERY CORPORATION OF AMERICA, INC.
TITLE OF WORK REG. NO. REG. DATE
------------- --------- ---------
"GRUMPY TO GORGEOUS" LETTER TX 2,724,062 89/12/19
"LEG LOTTO" CARD TX 2,713,798 89/12/19
"LOOK LIKE A FRUMP" LETTER TX 2,713,802 89/12/19
"NEW" LOOK BUCKSLIP - PCT.M0994 TX 4,016,434 00/00/00
"XX XXXX" XXXXXXXX TX 2,713,803 89/12/19
"SEE FOR YOURSELF" ANNOUNCEMENT TX 2,713,804 89/12/19
"SHOW ME"" ORDER TX 2,713,806 89/12/19
"WE-WANT-YOU-BACK" CERTIFICATE-RTD.004.01-FT80-D TX 4,124,957 95/09/21
"WHY STAY WITH HCA" PAMPLET TX 2,713,801 89/12/19
00 XXXX XXXXX XXXXXX XXXXXXXX - XX00000-0 TX 3,926,226 94/08/l7
00 XXXX XXXXX XXXXXX XXXXXXXX - XXX0000-0 TX 3,987,817 94/08/17
10 CENT SWEEPS ANNOUMCEMENT - HCF1293-1 TX 3,926,153 94/08/17
1987 SPRING/SUMMER CATALOG TX 2,052,633 87/04/07
1989 FALL/WINTER ADD-ON BROCHURE NO. 0753
("DAY" VERSION) TX 2,651,728 89/09/22
1989 FALL/WINTER ADD-ON BROCHURE NO. 0755
("NIGHT" VERSION) TX 2,655,121 89/09/22
1990 SPRING/SUMMER ADD-ON BROCHURE
CELEBRATE ROMANCE TX 2,789,520 90/03/27
1990 SPRING/SUMMER ADD-ON BROCHURE ELEGANT
ESSENTIALS TX 2,789,521 90/03/27
1995 REDEMPTION CATALOG - MCG.007.37 TX 4,117,929 95/09/21
2ND WINNER LETTER TX 4,060,525 95/05/19
3-PART REFERRAL CARD TX 4,117,944 95/09/21
3RD EARLY BIRD WINNER ANNOUNCEMENT - 1324AN TX 4,024,860 95/09/21
6 PAIR DOGGIE BAG W/SWEEPS - MOE.700.01 TX 3,895,792 94/08/17
ADD -ON INVOICE W/ QUESTIONAIRE - ADC.100.01 TX 4,016,481 95/05/19
ADD-ON INVOICE W/REFERRALS - ADC.100.02 TX 4,124,989 95/09/21
BIRTHDAY GIFT CARD TX 2,713,796 89/12/19
BODY BEAUTIFUL COLLECTION BROCHURE TX 4,117,935 95/09/21
Page 1
SCHEDULE OF COPYRIGHTS CONTINUED
HOSIERY CORPORATION OF AMERICA, INC.
TITLE OF WORK REG. NO. REG. DATE
------------- -------- ---------
BROCHURE TX 2,052,635 87/04/07
BROCHURE - LACEY DANCER - KBD.OO1.O1 TX 3,931,412 94/08/23
BUSINESS REPLY CARD 900269 TX 2,052,632 87/04/07
BUSINESS REPLY CARD RDF287 TX 2,052,638 87/04/07
BUSINESS REPLY CARD RDI287 TX 2,052,639 87/04/07
BUSINESS REPLY CARD RDJ287 TX 2,052,637 87/04/07
BUSINESS REPLY XXXX XXX000 TX 2,052,636 87/04/07
CATALOG INSERT TX 2,052,634 87/04/07
DIGITAL WRISTWATCH BUCKSLIP TX 2,713,781 89/12/19
DISASTER RECOVERY PLAN TXU 380-040 89/09/07
DOORWAY TO FORTUNE ENTRY CARD - HCD1293-7 TX 3,926,228 94/08/17
EARLY BIRD CASH COMBO ENTRY - HLC1293-2 TX 3,926,230 94/08/17
FALL/WINTER '93 ADD-ON BROCHURE VERSION "A" TX 3,931,408 94/08/23
FALL/WINTER '93 ADD-ON BROCHURE VERSION "B" TX 3,931,409 94/08/23
FALL/WINTER '93 ADD-ON BROCHURE VERSION "C" TX 3,931,406 94/08/23
FAMILY & FRIENDS ANNOUNCEMENT
W/INVOICE-CRF.100.01 TX 4,060,529 95/05/19
FAMILY & FRIENDS COUPON - BPR94 TX 4,016,432 95/05/19
FAMILY & FRIENDS GIVAWAY LETTER TX 4,060,527 95/05/19
FAMILY & FRIENDS OUTERWRAP - R05 TX 4,060,528 95/05/19
FREE GIFT SLIPSHEET TX 4,117,938 95/09/21
FRONT END DOGGIE BAG - MDB.001.01 TX 3,895,796 94/08/17
FRONT END NOTICE W/INVOICE & ORDER ICF.001.01 TX 4,124,992 95/09/21
GENERIC DOGGIE BAG - MOF.020.01 TX 3,895,797 94/08/17
GENERIC DOGGIE BAG - MTG.9OO.O1 TX 3,895,791 94/08/17
GIFT REDEMPTION CATALOG TX 2,276,573 88/02/23
GRUMPY TO GORGEOUS ENVELOPE TX 2,940,550 89/12/19
Page 2
SCHEDULE OF COPYRIGHTS CONTINUED
HOSIERY CORPORATION OF AMERICA, INC.
TITLE OF WORK REG. NO. REG. DATE
------------- -------- ---------
HANDI LIGHT SLIP SHEET - HCS1293-9 TX 3,926,225 94/08/17
HANDI LIGHT SLIP SHEET - HLI1293-3 TX 3,926,220 94/08/17
HAPPY FAMILY SWEEPSTAKES CARD (TIC TAC TOE) TX 2,713,783 89/12/19
HAPPY FAMILY SWEEPSTAKES CARD CARNIVAL TX 2,713,799 89/12/19
HAPPY FAMILY SWEEPSTAKES CARD COMBINATION CASH TX 2,713,785 89/12/19
HAPPY FAMILY SWEEPSTAKES CARD SUPER SLOTS TX 2,713,784 89/12/19
HAPPY FAMILY SWEEPSTAKES CARD-DIVE FOR DOLLARS TX 2,970,403 89/12/19
HAPPY FAMILY SWEEPSTAKES CARD-STRIKE IT RICH TX 3,124,052 89/12/19
HOSIERY SLIPSHEET HSP-2 TX 2,713,787 89/12/19
INDEPENDENCE MAIL CARD TX 2,713,788 89/12/19
INVOICE LACEY DANCER - KLD.001.O1 TX 3,927,073 94/08/23
INVOICE W/SWEEP, HOSE CHART & SPONSOR
LABELS CCD.O4O.O1 TX 4,049,404 94/08/23
LETTER LACEY DANCER - KLL.001.01 TX 3,878,412 94/08/17
LOTTO GAME RETURN ENVELOPE - HLB1293-5 TX 3,987,818 94/08/17
LOTTO GAMESWEEPSANNa!NCE@lENT-HlF1293-1 TX 3,926,152 94/08/17
LUCKY KEY CASE SLIPSHEET - HCK1293-8 TX 3,926,227 94/08/17
MAXIMIZER BRA SLIPSHEET - 1289AD TX 4,060,531 95/05/19
MONEY SAVING CERTIFICATE-RTE.005.01-FT8I-E TX 4,124,958 95/09/21
MYSTERY GIFT INSERT TX 4,117,936 95/09/21
NOTICE & REACTIVATION FORM TX 3,124,046 89/12/19
NOTICE OF INTENT CARD WITH GIFT TX 2,713,791 89/12/19
OFF-WHITE REACTIVATION SLIPSHEET - FKHOI TX 4,016,429 94/05/l9
OFF-WHITE SLIPSHEET - ACWO1 TX 4,016,433 95/05/19
OUTERWRAP MAILER - OWI.001.01 TX 3,869,481 94/08/17
PERFUME ATOMIZER BUCKSLIP TX 2,713,786 89/12/19
PLASTIC DOGGIE BAG - MPT.042.01 TX 4,016,479 95/05/19
Page 3
SCHEDULE OF COPYRIGHTS CONTINUED
HOSIERY CORPORATION OF AMERICA, INC.
TITLE OF WORK REG. NO. REG. DATE
------------- -------- ---------
QUEEN AND X-8UEEN INSERT - LN8695 TX 4,117,933 95/09/21
QUICK WIN SWEEPS CARD - HEARTS OF GOLD SW-29 TX 3,856,281 94/08/23
RE-ENROLLMENT PRIVILEGE
CERTIFICATE-RTF.OO6.Ol-FT82-F TX 4,124,988 95/09/21
REACTIVATION ENVELOPE TX 2,713,778 89/12/19
REACTIVATION ENVELOPE TX 2,713,797 89/12/19
REACTIVATION FORM TX 2,713,779 89/12/19
REACTIVATION MAILED TX 2,713,780 89/12/19
REACTIVATION MAILER TX 2,713,794 89/12/19
REACTIVATION PAMPHLET TX 2,724,055 89/12/19
REFERRAL CARD - RFCB 93 TX 0-000-000 94/08/23
RESOLICITATION MAILER TX 2,713,793 89/12/19
SHEER CHARM BROCHURE - HCR1293-10 TX 3,926,224 94/08/17
SHEER CHARM BROCHURE - HLS1293-4 TX 3,926,221 94/08/17
SILKIES SLIPSHEET - MLP.009.05 TX 2,783,050 89/12/19
SILKIES SLIPSHEET - MLP.010.05 TX 2,783,051 89/12/19
SLIP SHEET - BEOI TX 4,060,532 95/05/19
SLIP SHEET - FEOI TX 4,016,431 95/05/19
SNAP-OUT THREE PANEL CARD W/STAMP SHEETS TX 2,713,792 95/05/19
SOLO CARD "COME BACK" - ST-10, TEXT J TX 4,060,539 95/05/l9
SOLO CARD - BULK AND UPGRADE CONTROL TX 4,117,945 95/09/21
SOLO CARD - CONTROL A TX 4,117,946 95/09/21
SOLO CARD - SC-A, TEXT G TX 4,060,535 95/05/19
SOLO CARD - ST-11, TEXT L
(RE8UEST FOR CORRECT SIZE) TX 4,065,484 95/05/19
SOLO CARD - ST-7, TEXT H TX 4,060,537 95/05/19
SOLO CARD - ST-9, TEXT A1 TX 4,065,486 95/05/19
SOLO CARD ST-11, TEXT K
(REQUEST FOR CORRECT SIZE) TX 4,065,485 95/05/19
Page 4
SCHEDULE OF COPYRIGHTS CONTINUED
HOSIERY CORPORATION OF AMERICA, INC.
TITLE OF WORK REG. NO. REG. DATE
------------- -------- ---------
SOLO CARD w/SlO,OOO EARLY BIRD
SWEEPSTAKES ENTRY - ST-3 TEXT D TX 4,065,487 95/05/19
SOLO CARD W/800 NUMBER TO CALL IN HOSE
ORDER-ST-8, TEXT I TX 4,060,536 95/05/19
SOLO CARD W/TESTIHONIALS - ST-5 TEXT F TX 4,060,538 95/05/19
SOLO CARD W/TRAPEZE TWINS - ST-1 TEXT B TX 4,016,435 95/05/19
SOLO CARD W/VERTICAL GRAPHIC TX 4,117,934 95/09/21
SOLO CARD/CONTROL BULK & TIMING TEST-SCA/TEXT Al TX 4,016,430 95/05/19
SOLO REPSONSE CARD W/LAUNDRY BAG GIFT TX 2,713,809 89/12/19
SOLO RESPONSE CARD TX 3,689,480 94/08/18
SOLO RESPONSE CARD TX 3,882,447 94/08/17
SOLO RESPONSE CARD TX 3,926,223 94/08/17
SOLO RESPONSE CARD TX 3,926,229 94/08/17
SOLO RESPONSE CARD - FREE GIFT BOX TX 3,987,356 94/08/17
SOLO RESPONSE CARD - FREE SAMPLE TX 3,987,358 94/08/17
SOLO RESPONSE CARD - MCA TX 3,926,350 94/08/17
SOLO RESPONSE CARD - MT1 TX 3,926,351 94/08/17
SOLO RESPONSE CARD - MTIO TX 3,888-124 94/08/17
SOLO RESPONSE CARD - MT2 TX 3,926,348 94/08/17
SOLO RESPONSE CARD - MT3 TX 3,926,352 94/08/17
SOLO RESPONSE CARD - MT5 TX 3,926,349 94/08/17
SOLO RESPONSE CARD - HO COMMITMENT!
NO OBLIGATION! NO KIDDING! TX 3,987,357 94/08/17
SOLO RESPONSE CARD - NON-SWEEPS TX 3,987,355 94/08/17
SOLO RESPONSE CARD - PNH ONLIES TX 3,926,222 94/08/17
SOLO RESPONSE CARD - STW ONLIES TX 3,869,477 94/08/17
SOLO RESPONSE CARD - SWEEPS TX 3,987,354 94/08/17
SOLO RESPONSE CARD W/BATH CUSHION GIFT TX 2,789,517 90/03/27
SOLO RESPONSE CARD W/CALCULATOR/ORGANIZER GIFT TX 2,789,516 90/03/27
Page 5
SCHEDULE OF COPYRIGHTS CONTINUED
HOSIERY CORPORATION OF AMERICA, INC.
TITLE OF WORK REG. NO. REG. DATE
------------- -------- ---------
SOLO RESPONSE CARD W/COSMETIC KIT GIFT TX 2,713,811 89/12/19
SOLO RESPONSE CARD W/FREE GIFT STICKER TX 3,869,379 94/08/17
SOLO RESPONSE CARD W/FREE SAMPLES TX 2,713,790 89/12/19
SOLO RESPONSE CARD W/HANDI LIGHT GIFT TX 2,789,519 90/03/27
SOLO RESPONSE CARD W/LIPSTICK HOLDER &
PURSE HANGER GIFT TX 2,789,518 90/03/27
SOLO RESPONSE CARD W/LUCKY PICK GAME TX 3,869,478 94/08/17
SOLO RESPONSE CARD W/LUCKY PICK GAME TX 3,882,446 94/08/17
SOLO RESPONSE CARD W/MINI ORGANIZER GIFT TX 2,713,805 89/12/19
SOLO RESPONSE CARD W/MINI TRAVEL MAKEUP KIT GIFT TX 2,789,515 90/03/27
SOLO RESPONSE CARD W/SEWING KIT GIFT TX 2,714,808 89/12/19
SOLO RESPONSE CARD W/TRAVEL ALARM GIFT TX 2,173,807 89/12/19
SOLO RESPONSE CARD W/WATCH GIFT TX 2,173,810 89/12/19
SOPHISTICATED INTlMATES SLIPSHEET W/ORDER FORMS TX 4,060,526 95/05/19
SPECIAL PRODUCT OFFER LETTER - MLD.002.01 TX 2,724,064 89/12/19
SPECIAL PRODUCT OFFER LETTER - MLH.007.01 TX 2,724,058 89/12/19
SPECIAL PRODUCT OFFER LETTER - MLP.006.01 TX 2,724,057 89/12/19
SPECIAL PRODUCT OFFER LETTER - HLS.010.OI TX 2,724,063 89/12/19
SPECIAL PRODUCTS BROCHURE - SPRING/SUMMER 1992
W/SATIN BRA COVER TX 4,117,943 95/09/21
SPECIAL PRODUCTS BROCHURE - SPRlNG/SUMMER '95
W/PUSH-UP BRA COVER TX 4,117,942 95/09/21
SPECIAL PRODUCTS BROCHURE-FALL/WINTER '94
W/MAXIMIZER BRA COVER TX 4,016,427 95/05/19
SPECIAL PRODUCTS BROCHURE-FALL/WINTER
'94 W/RADIANCE COLLECTION TX 4,016,428 95/05/19
SPRING/SUMMER 93 ADD ON BROCHURE VERSION "A" TX 3,879,216 94/08/23
SPRING/SUMMER 93 ADD ON BROCHURE VERSION "B" TX 3,879,215 94/08/23
SPRING/SUMMER 93 ADD ON BROCHURE VERSION "C" TX 3,879,214 94/08/23
STEAK KNIFE BUCKSLIP TX 2,713,800 89/12/19
Page 6
SCHEDULE OF COPYRIGHTS CONTINUED
HOSIERY CORPORATION OF AMERICA, INC.
TITLE OF WORK REG. NO. REG. DATE
------------- -------- ---------
SWEEPS NOTICE LTR W/CHANGE OF ORDER &
BENEFIT CARD - INB.002.01 TX 4,028,817 94/08/17
SWEEPS NOTICE LTR W/CHANGE ORDER & GIFT
RESERVATION-INE.005.01 TX 4,028,814 94/08/17
SWEEPSTAKES INVOICE - IRT.002.01 TX 4,124,991 95/09/21
SWEEPSTAKES INVOICE W/BENEFIT CARD IRD.OO1.O1 TX 4,124,990 95/09/21
SWEEPSTAKES NOTICE LTR W/CHANGE OF
ORDER-IFT.OOI.OI TX 3,758,369 94/08/17
SWEEPSTAKES NOTICE LTR W/CHANGE OF
ORDER-INF.OO6.Ol TX 4,028,816 94/08/17
SWEEPSTAKES NOTICE LTR W/CHANGE OF
ORDER-INH.OO8.Ol TX 4,028,813 94/08/17
SWEEPSTAKES NOTICE LTR W/ORDER &
MYSTERY GIFT TAG -IND.OO4.Ol TX 4,028,815 94/08/17
SWEEPSTAKES NOTICE LTR W/ORDER-INC.OO3.Ol TX 3,758,371 94/08/17
T2 DOGGIE BAG - MDT.OO2.Ol TX 3,895,795 94/08/17
T3 DOGGIE BAG - MDH.OO3.O1 TX 3,895,794 94/08/17
T4 DOGGIE BAG - MDF.OO4.O1 TX 3,895,793 94/08/17
THANK YOU NOTE-MG.0994 TX 4,060,530 95/05/19
TOURNAMENT OF CASH PAMPHLET - SW-28 TX 3,879,217 94/08/23
TRAVEL ALARM BUCKSLIP TX 2,713,789 89/12/19
TURN 2 - UPGRADE SLIPSHEET & HEAT
SEALER GIFT - MCP.OOl.O2 TX 4,060,534 95/05/19
TURN 2 INVOICE - INY.005.01/SF87-7 TX 4,016,478 95/05/19
TURN 2 NOTICE W/INVOICE & ORDER ICF.002.01 TX 4,124,993 95/09/21
TURN 2 TEST NOTICE W/INVOICE & ORDER ICU.OIO.OI TX 4,124,994 95/09/21
TURN 3 - 6 PA!R INVOICE W/SHEER WAIST
GRID - ING.007.02 TX 3,926,154 94/08/17
TURN 3 - UPGRADE SLIPSHEET & MINI ORGANIZER
GIFT - MCM.002.03 TX 4,060,533 95/05/19
TURN 3 NOTICE W/INVOICE & ORDER ICF.003.01 TX 4,117,931 95/09/21
TURN 4 NOTICE W/INVOICE & ORDER - ICR.004.01 TX 4,117,930 95/09/21
TURN 4+ INVOICE - INZ.004.01/$F86-9 TX 4,016,480 95/05/19
UPGRADE SOLO CARD TEST TX 4,117,937 95/09/21
WINNER ANNOUNCEMENT W/CALCULATOR 1161AN TX 3,933,579 94/08/23
Page 7
[EXHIBIT I-2 Conformed
as Executed]
SUBSIDIARY GUARANTOR
SECURITY AGREEMENT
between
SUBSIDIARIES OF HOSIERY CORPORATION
OF AMERICA, INC.
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of November 20, 1997
TABLE OF CONTENTS
Page
ARTICLE I SECURITY INTERESTS................................... 2
1.1 Grant of Security Interests.................... 2
1.2 Power of Attorney.............................. 3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND
COVENANTS............................................ 3
2.1 Necessary Filings........................................ 3
2.2 No Liens................................................. 3
2.3 Other Financing Statements............................... 4
2.4 Chief Executive Office; Records.......................... 4
2.5 Location of Inventory and Equipment...................... 4
2.6 Trade Names; Change of Name.............................. 5
2.7 Recourse................................................. 6
ARTICLE III SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS............ 6
3.1 Additional Representations and Warranties................ 6
3.2 Maintenance of Records................................... 6
3.3 Modification of Terms; etc............................... 7
3.4 Collection............................................... 7
3.5 Direction to Account Debtors; etc........................ 7
3.6 Instruments.............................................. 8
3.7 Further Actions.......................................... 8
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS............. 8
4.1 Additional Representations and Warranties................ 8
4.2 Licenses and Assignments................................. 9
4.3 Infringements............................................ 9
4.4 Preservation of Marks.................................... 9
4.5 Maintenance of Registration.............................. 9
4.6 Future Registered Marks.................................. 9
4.7 Remedies................................................. 10
ARTICLE V SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS............................... 10
5.1 Additional Representations and Warranties................ 10
5.2 Licenses and Assignments................................. 11
(i)
5.3 Infringements............................................ 11
5.4 Maintenance of Patents................................... 11
5.5 Prosecution of Patent Application........................ 11
5.6 Other Patents and Copyrights............................. 11
5.7 Remedies................................................. 11
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL................. 12
6.1 Protection of Collateral Agent's Security................ 12
6.2 Warehouse Receipts Non-negotiable........................ 12
6.3 Further Actions.......................................... 13
6.4 Financing Statements..................................... 13
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF
DEFAULT.............................................. 13
7.1 Remedies; Obtaining the Collateral Upon Default.......... 13
7.2 Remedies; Disposition of the Collateral.................. 15
7.3 Waiver of Claims......................................... 16
7.4 Application of Proceeds.................................. 16
7.5 Remedies Cumulative...................................... 18
7.6 Discontinuance of Proceedings............................ 18
ARTICLE VIII INDEMNITY............................................ 19
8.1 Indemnity................................................ 19
8.2 Indemnity Obligations Secured by Collateral; Survival.... 20
ARTICLE IX DEFINITIONS.......................................... 20
ARTICLE X MISCELLANEOUS........................................ 25
10.1 Notices................................................. 25
10.2 Waiver; Amendment....................................... 25
10.3 Obligations Absolute.................................... 25
10.4 Successors and Assigns.................................. 26
10.5 Headings Descriptive.................................... 26
10.6 Severability............................................ 26
10.7 GOVERNING LAW........................................... 26
10.8 Assignors' Duties....................................... 26
10.9 Termination; Release.................................... 27
10.10 Collateral Agent........................................ 28
(ii)
ANNEX A Schedule of Existing Financing Statements
ANNEX B Addresses and Schedule of Record Locations
ANNEX C Schedule of Equipment and Inventory Locations
ANNEX D Schedule of Trade and Fictitious Names
ANNEX E Schedule of Marks
ANNEX F Schedule of Patents and Applications
ANNEX G Schedule of Copyrights and Applications
(iii)
SUBSIDIARY SECURITY AGREEMENT
AMENDMENT AND RESTATEMENT, dated as of November 20, 1997 to Security
Agreement dated as of October 17, 1994 (as amended, modified or supplemented
from time to time, the "Security Agreement"), among each Subsidiary of HOSIERY
CORPORATION OF AMERICA, INC. (the "Borrower) (each an "Assignor", and together,
the "Assignors") and BANKERS TRUST COMPANY, as Collateral Agent (the "Collateral
Agent") for the Secured Creditors (as defined below). Capitalized terms used
herein shall have the meaning specified in Article IX herein or, if not defined
therein, as specified in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, Hosiery Corporation of America, Inc. (the "Borrower"), the
financial institutions from time to time party thereto (the "Banks") and Bankers
Trust Company, as Agent (the "Agent"), have entered into an Amendment and
Restatement, dated as of November 20, 1997, amending and restating the Credit
Agreement dated as of October 17, 1994 (as amended, modified or supplemented
from time to time, the "Credit Agreement"), providing inter alia for the making
of Loans, and the issuance of, and participation in, Letters of Credit as
contemplated therein (the Banks from time to time party to the Credit Agreement
and the Agent being herein called the "Bank Creditors");
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Agreements (each such Interest Rate Agreement with an Interest
Rate Creditor (as defined below), a "Secured Interest Rate Agreement") with
Bankers Trust Company, in its individual capacity ("BTCo"), any Bank or a
syndicate of financial institutions organized by BTCo or an affiliate of BTCo
(even if BTCo or any such Bank ceases to be a Bank under the Credit Agreement
for any reason), and any institution that participates, and in each case their
subsequent assigns, (collectively, the "Interest Rate Creditors", and the
Interest Rate Creditors together with the Bank Creditors, collectively the
"Secured Creditors");
WHEREAS, each Assignor is a wholly-owned direct Subsidiary of the
Borrower;
WHEREAS, pursuant to the Amendment and Restatement, dated as of
November 20, 1997, to the Subsidiary Guaranty, dated as of October 17, 1994 (as
amended, modified or supplemented from time to time, the "Subsidiary Guaranty"),
each Assignor has jointly and severally guaranteed to the Secured Creditors the
payment when due of the Guaranteed Obligations (as defined in the Subsidiary
Guaranty);
WHEREAS, it is a condition precedent to the making of Loans and the
issuance of, and participation in, Letters of Credit under the Credit Agreement
that each Assignor shall have executed and delivered to the Collateral Agent
this Agreement;
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefit accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties and hereby
covenants and agrees as follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of the Obligations, each
Assignor does hereby sell, assign and transfer unto the Collateral Agent, and
does hereby grant to the Collateral Agent for the benefit of the Secured
Creditors a continuing security interest of first priority in, all of the right,
title and interest of each Assignor in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) each and every
Receivable, (ii) all Contracts, together with all Contract Rights arising
thereunder, (iii) all Inventory, (iv) all Equipment, (v) all Marks, together
with the registrations and right to all renewals thereof, and the goodwill of
the business of such Assignor symbolized by the Marks, (vi) the Cash Collateral
Account established for such Assignor and all monies, securities and instruments
deposited or required to be deposited in such Cash Collateral Account, (vii) all
Patents and Copyrights, and all reissues, renewals or extensions thereof, (viii)
all computer programs of such Assignor and all intellectual property rights
therein and all other proprietary information of such Assignor, including, but
not limited to, Trade Secrets, (ix) all other Goods, General Intangibles,
Chattel Paper, Documents and Instruments (other than the Pledged Securities),
and (x) all Proceeds and products of any and all of the foregoing (all of the
above collectively, the "Collateral").
(b) The security interest of the Collateral Agent under this Agreement
extends to all Collateral of the kind which is the subject of this Agreement
which each Assignor may acquire at any time during the continuation of this
Agreement.
2
1.2 Power of Attorney. Each Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all monies and claims for monies due
or to become due to each Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable in the premises, which
appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1 Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by such Assignor to the Collateral Agent hereby in respect of
the Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral constitutes
a perfected security interest therein superior and prior to the rights of all
other Persons therein (except that the Collateral may be subject to the security
interests evidenced by the financing statements disclosed on Annex A hereto (the
"Permitted Filings")) and subject to no other Liens (except Permitted Liens) and
is entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests.
2.2 No Liens. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof each Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than Liens created hereby, permitted
under Sections 8.03 (a), (b) and (d) of the Credit Agreement or evidenced by the
Permitted Filings), and such Assignor shall defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to the Collateral Agent.
2.3 Other Financing Statements. There is no financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction) covering or purporting to cover any interest of any kind in the
Collateral except as disclosed in Annex A hereto and so long as the Total
Commitment has not been terminated or any Letter of Credit remains outstanding
or any of the Obligations remain unpaid or any Secured Interest Rate Agreement
remains in effect, such Assignor will not execute or authorize to be filed in
any public office any
3
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by each Assignor or as permitted by the Credit
Agreement.
2.4 Chief Executive Office; Records. The chief executive office of
such Assignor is located at the address set forth for each such Assignor on
Annex B, Part I hereto. Such Assignor will not move its chief executive office
except to such new location as such Assignor may establish in accordance with
the last sentence of this Section 2.4. The originals of all documents evidencing
all Receivables and Contract Rights and Trade Secrets of such Assignor and the
only original books of account and records of such Assignor relating thereto
are, and will continue to be, kept at such chief executive office and/or one or
more of the locations shown on Annex B, Part II, or at such new locations as
such Assignor may establish in accordance with the last sentence of this Section
2.4. All Receivables and Contract Rights and Trade Secrets of such Assignor are,
and will continue to be, maintained at, and controlled and directed (including,
without limitation, for general accounting purposes) from, the office locations
described above, or such new locations as such Assignor may establish in
accordance with the last sentence of this Section 2.4. Such Assignor shall not
establish new locations for such offices until (i) it shall have given to the
Collateral Agent not less than 30 days' prior written notice (or such lesser
notice as shall be acceptable to the Collateral Agent in the case of a new
record location to be established in connection with newly acquired Contracts)
of its intention to do so, clearly describing such new location and providing
such other information in connection therewith as the Collateral Agent may
reasonably request, and (ii) with respect to such new location, it shall have
taken all action, satisfactory to the Collateral Agent, to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
2.5 Location of Inventory and Equipment. All Inventory and Equipment
held on the date hereof by such Assignor is located at one of the locations
shown on Annex C attached hereto. Such Assignor agrees that all Inventory and
Equipment now held or subsequently acquired by it shall be kept at (or shall be
in transport to or from) any one of the locations shown on Annex C hereto, or
such new location as such Assignor may establish in accordance with the last
sentence of this Section 2.5, provided that Equipment may be removed from any
such location so long as (x) such Equipment is returned to such location within
30 days after such removal and (y) the replacement value of all of such
Assignors' Equipment which has been removed from one of the locations shown on
Annex C, or from a new location established in accordance with the last sentence
of this Section 2.5, and has not been returned to any such location, does not
exceed $100,000 in the aggregate at any one time. Each Assignor may
4
establish a new location for Inventory and Equipment only if (i) it shall have
given to the Collateral Agent not less than 30 days prior written notice of its
intention to do so, clearly describing such new location and providing such
other information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new location, it shall have taken all
action reasonably satisfactory to the Collateral Agent to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
2.6 Trade Names; Change of Name. Such Assignor does not have or
operate in any jurisdiction under, or in the preceding 12 months has not had or
has not operated in any jurisdiction under, any trade names, fictitious names or
other names (including, without limitation, any names of divisions or
operations) except its legal name and such other trade, fictitious or other
names as are listed on Annex D hereto. Each Assignor has only operated under
each name set forth in Annex D in the jurisdiction or jurisdictions set forth
opposite each such name on Annex D. Such Assignor shall not change its legal
name or assume or operate in any jurisdiction under any trade, fictitious or
other name except those names listed on Annex D hereto in the jurisdictions
listed with respect to such names and new names (including, without limitation,
any names of divisions or operations) and/or jurisdictions established in
accordance with the last sentence of this Section 2.6. Such Assignor shall not
assume or operate in any jurisdiction under any new trade, fictitious or other
name or operate under any existing name in any additional jurisdiction until (i)
it shall have given to the Collateral Agent not less than 30 days' prior written
notice of its intention to do so, clearly describing such new name and/or
jurisdiction and, in the case of a new name, the jurisdictions in which such new
name shall be used and providing such other information in connection therewith
as the Collateral Agent may reasonably request, and (ii) with respect to such
new name and/or new jurisdiction, it shall have taken all action to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
2.7 Recourse. This Agreement is made with full recourse to such
Assignor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of such Assignor contained herein, in the
Secured Interest Rate Agreements and otherwise in writing in connection herewith
or therewith.
5
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1 Additional Representations and Warranties. As of the time when
each of its accounts receivable arises, each Assignor shall be deemed to have
represented and warranted that such receivable, and all records, papers and
documents relating thereto (if any) are genuine and in all respects what they
purport to be, and that all papers and documents (if any) relating thereto (i)
will represent the genuine, legal, valid and binding obligation of the account
debtor, subject to adjustments customary in the business of each Assignor, and
evidencing indebtedness unpaid and owed by the respective account debtor arising
out of the performance of labor or services or the sale or lease and delivery of
the merchandise listed therein, or both, (ii) will be the only original writings
evidencing and embodying such obligation of the account debtor named therein
(other than copies created for general accounting purposes), (iii) will evidence
true and valid obligations, enforceable in accordance with their respective
terms, subject to adjustments customary in the business of each Assignor, and
(iv) will be in compliance and will conform with all applicable federal, state
and local laws and applicable laws of any relevant foreign jurisdiction.
3.2 Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense satisfactory and complete records of its Receivables
and Contracts, including, but not limited to, the originals of all documentation
(including each Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and each Assignor will make the same available to the
Collateral Agent for inspection, at such Assignor's own cost and expense, at any
and all reasonable times upon demand. Each Assignor shall, at its own cost and
expense, deliver all tangible evidence of its Receivables and Contract Rights
(including, without limitation, copies of all documents evidencing the
Receivables and all Contracts, such copies, if requested by the Collateral Agent
while an Event of Default is in existence, to be certified as true and complete
by an appropriate officer of such Assignor) and such books and records to the
Collateral Agent or to its representatives (copies of which evidence and books
and records may be retained by such Assignor) at any time upon its demand. If
the Collateral Agent so directs, such Assignor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, the Receivables and Contracts,
as well as books, records and documents of such Assignor evidencing or
pertaining to the Receivables with an appropriate reference to the fact that the
Receivables and Contracts have been assigned to the Collateral Agent and that
the Collateral Agent has a security interest therein.
3.3 Modification of Terms; etc. No Assignor shall not rescind or
cancel any indebtedness evidenced by any Receivable or under any Contract, or
modify any term thereof or make any adjustment with respect thereto, or extend
or renew the same, or compromise or settle
6
any material dispute, claim, suit or legal proceeding relating thereto, or sell
any Receivable or Contract, or interest therein, without the prior written
consent of the Collateral Agent, except (i) as permitted by Section 3.4 hereof
and (ii) so long as no Event of Default is then in existence in respect of which
the Collateral Agent has given notice that this exception is no longer
applicable, each Assignor may modify, make adjustments with respect to, extend
or renew any Contracts in the ordinary course of business. Each Assignor will
duly fulfill all obligations on its part to be fulfilled under or in connection
with the Receivables and Contracts and will do nothing to impair the rights of
the Collateral Agent in the Receivables or Contracts.
3.4 Collection. Each Assignor shall endeavor to cause to be
collected from the account debtor named in each of its Receivables or obligor
under any Contract, as and when due (including, without limitation, amounts
which are delinquent, such amounts to be collected in accordance with generally
accepted lawful collection procedures) any and all amounts owing under or on
account of such Receivable or Contract, and apply forthwith upon receipt thereof
all such amounts as are so collected to the outstanding balance of such
Receivable or under such Contract, except that, so long as no Event of Default
is then in existence in respect of which the Collateral Agent has given notice
that this exception is no longer applicable, such Assignor may allow in the
ordinary course of business as adjustments to amounts owing under its
Receivables and Contracts (i) an extension or renewal of the time or times of
payment, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with sound business judgment and (ii) a
refund or credit due as a result of returned or damaged merchandise or
improperly performed services. The costs and expenses (including, without
limitation, attorneys' fees) of collection, whether incurred by any Assignor or
the Collateral Agent, shall be borne by such Assignor.
3.5 Direction to Account Debtors; etc. Upon the occurrence and
during the continuance of an Event of Default, and if the Collateral Agent so
directs any Assignor, to the extent permitted by applicable law, such Assignor
agrees (x) to cause all payments on account of the Receivables and Contracts to
be made directly to the Cash Collateral Account established for such Assignor,
(y) that the Collateral Agent may, at its option, directly notify the obligors
with respect to any Receivables and/or any Contracts to make payments with
respect thereto as provided in the preceding clause (x) and (z) that the
Collateral Agent may enforce collection of any such Receivables and Contracts
and may adjust, settle or compromise the amount of payment thereof. The
Collateral Agent may apply any or all amounts then in, or thereafter deposited
in, the Cash Collateral Account in the manner provided in Section 7.4 of this
Agreement. The costs and expenses (including attorneys' fees) of collection,
whether incurred by any Assignor or the Collateral Agent, shall be borne by such
Assignor.
7
3.6 Instruments. If any Assignor owns or acquires any Instrument,
such Assignor will within 10 days notify the Collateral Agent thereof, and upon
request by the Collateral Agent promptly deliver such Instrument to the
Collateral Agent appropriately endorsed to the order of the Collateral Agent as
further security hereunder.
3.7 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require to give effect to the purposes of this Agreement.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1 Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner or licensee of the
Marks listed in Annex E hereto opposite its name and that said listed Marks
constitute all the marks registered in the United States Patent and Trademark
Office that such Assignor now owns or uses in connection with its business. Each
Assignor represents and warrants that it owns or is licensed to use all Marks
that it uses. Each Assignor further warrants that it is aware of no third party
claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any trademark or service xxxx in a manner
which could have a material effect on the financial condition, business or
property of each Assignor.
4.2 Licenses and Assignments. Each Assignor hereby agrees not to
divest itself of any right under a Xxxx other than in the ordinary course of
business absent prior written approval of the Collateral Agent.
4.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who may be infringing or otherwise violating any of such Assignor's
rights in and to any significant Xxxx, or with respect to any party claiming
that such Assignor's use of any significant Xxxx violates any property right of
that party, to the extent that such infringement or violation could have a
material effect on the financial condition, business or property of such
Assignor. Each Assignor further agrees, unless otherwise directed by the
Collateral Agent, diligently to prosecute any person infringing any significant
Xxxx in a manner consistent with its past practice and in the ordinary course of
business.
8
4.4 Preservation of Marks. Each Assignor agrees to use its
significant Marks in interstate commerce during the time in which this Agreement
is in effect, sufficiently to preserve such Marks as trademarks or service marks
registered under the laws of the United States.
4.5 Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required by the Trademark Act of 1946,
15 U.S.C. xx.xx. 1051 et seq. to maintain trademark registration which could
have a material effect on the financial condition, business or property of such
Assignor, including but not limited to affidavits of use and applications for
renewals of registration in the United States Patent and Trademark Office for
all of its Marks pursuant to 15 U.S.C. xx.xx. 1058(a), 1059 and 1065, and shall
pay all fees and disbursements in connection therewith, and shall not abandon
any such filing of affidavit of use or any such application of renewal prior to
the exhaustion of all administrative and judicial remedies without prior written
consent of the Collateral Agent. Each Assignor agrees to notify the Collateral
Agent one (1) month prior to the dates on which the affidavits of use or the
applications for renewal registration are due that the affidavit of use or the
renewal is being processed.
4.6 Future Registered Marks. If any xxxx registration issues
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within thirty (30)
days of receipt of such certificate such Assignor shall deliver a copy of such
certificate, and a grant of security in such xxxx to the Collateral Agent,
confirming the grant thereof hereunder, the form of such confirmatory grant to
be substantially the same as the form hereof.
4.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to any Assignor, take any or all of
the following actions: (i) declare the entire right, title and interest of such
Assignor in and to each of the Marks, together with all trademark rights and
rights of protection to the same, vested, in which event such rights, title and
interest shall immediately vest, in the Collateral Agent for the benefit of the
Secured Creditors, in which case each Assignor agrees to execute an assignment
in form and substance satisfactory to the Collateral Agent, of all its rights,
title and interest in and to the Marks to the Collateral Agent for the benefit
of the Secured Creditors; (ii) take and use or sell the Marks and the goodwill
of such Assignor's business symbolized by the Marks and the right to carry on
the business and use the assets of such Assignor in connection with which the
Marks have been used; and (iii) direct such Assignor to refrain, in which event
such Assignor shall refrain, from using the Marks in any manner whatsoever,
directly or indirectly, and, if requested by the Collateral Agent, change such
Assignor's corporate name to eliminate therefrom any use of
9
any Xxxx and execute such other and further documents that the Collateral Agent
may request to further confirm this and to transfer ownership of the Marks and
registrations and any pending trademark application in the United States Patent
and Trademark Office to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS
5.1 Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner or licensee of all
rights in the Patents listed in Annex F hereto opposite its name and in the
Copyrights listed in Annex G hereto opposite its name, that said Patents
constitute all the United States patents and applications for United States
patents that each Assignor now owns and that said Copyrights constitute all the
registered United States copyrights that such Assignor now owns. Each Assignor
represents and warrants that it owns or is licensed to practice under all
Patents and Copyrights that it now owns, uses or practices under. Each Assignor
further warrants that it is aware of no third party claim that any aspect of
such Assignor's present or contemplated business operations infringes or will
infringe any patent or any copyright in a manner which could have a material
effect on the financial condition, business or property of such Assignor.
5.2 Licenses and Assignments. Each Assignor hereby agrees not to
divest itself of any right under a Patent or Copyright other than in the
ordinary course of business absent prior written approval of the Collateral
Agent.
5.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement or other
violation of such Assignor's rights in any significant Patent or Copyright, or
with respect to any claim that practice of any significant Patent or Copyright
violates any property right of that party, to the extent that such infringement
or violation could have a material effect on the financial condition, business
or property of such Assignor. Each Assignor further agrees, absent direction of
the Collateral Agent to the contrary, diligently to prosecute any person
infringing any significant Patent or Copyright in a manner consistent with its
past practice and in the ordinary course of business.
5.4 Maintenance of Patents. At its own expense, each Assignor shall
make timely payment of all post-issuance fees required pursuant to 35 U.S.C. ss.
41 to maintain in force rights under each Patent.
10
5.5 Prosecution of Patent Application. At its own expense, each
Assignor shall diligently prosecute all applications for United States patents
listed on Annex F hereto, and shall not abandon any such application prior to
exhaustion of all administrative and judicial remedies, absent written consent
of the Collateral Agent.
5.6 Other Patents and Copyrights. Within thirty (30) days of
acquisition of a United States Patent or Copyright, or of filing of an
application for a United States Patent or Copyright, each Assignor shall deliver
to the Collateral Agent a copy of said Patent or Copyright, as the case may be,
with a grant of security as to such Patent or Copyright, as the case may be,
confirming the grant thereof hereunder, the form of such confirmatory grant to
be substantially the same as the form hereof.
5.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to any Assignor take any or all of
the following actions: (i) declare the entire right, title and interest of such
Assignor in each of the Patents and Copyrights vested, in which event such
right, title and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case each Assignor agrees to execute
an assignment in form and substance satisfactory to the Collateral Agent of all
its right, title, and interest to such Patents and Copyrights to the Collateral
Agent for the benefit of the Secured Creditors; (ii) take and practice or sell
the Patents and Copyrights; (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and Copyrights
directly or indirectly, and such Assignor shall execute such other and further
documents as the Collateral Agent may request further to confirm this and to
transfer ownership of the Patents and Copyrights to the Collateral Agent for the
benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Collateral Agent's Security. No Assignor will do
anything to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep its Inventory and Equipment insured in favor of
the Collateral Agent, at such Assignor's own expense, to the extent required by
the Credit Agreement against fire, theft and all other risks to which such
Collateral may be subject; all policies or certificates with respect to such
insurance shall be endorsed to the Collateral Agent's satisfaction for the
benefit of the Collateral Agent (including, without limitation, by naming the
Collateral Agent as loss payee) and deposited with the Collateral Agent. If any
Assignor shall fail to insure such Inventory to the extent required by the
Credit Agreement, or if any Assignor shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Collateral Agent shall have
the right (but shall be under no
11
obligation) to procure such insurance and such Assignor agrees to reimburse the
Collateral Agent for all costs and expenses of procuring such insurance. The
Collateral Agent may apply any proceeds of such insurance in accordance with
Section 7.4. Each Assignor assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of such Assignor
to pay its Obligations shall in no way be affected or diminished by reason of
the fact that such Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to such Assignor.
6.2 Warehouse Receipts Non-negotiable. Each Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law).
6.3 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
6.4 Financing Statements. Each Assignor agrees to sign and deliver
to the Collateral Agent such financing statements, in form acceptable to the
Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are necessary or desirable in the opinion of the Collateral Agent
to establish and maintain a valid, enforceable, first priority security interest
in the Collateral as provided herein and the other rights and security
contemplated hereby all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law. Each
Assignor will pay any applicable filing fees and related expenses. Each Assignor
authorizes the Collateral Agent to file any such financing statements without
the signature of such Assignor.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, subject to any mandatory requirements of applicable law
then in effect, the Collateral Agent, in addition to any rights now or hereafter
existing under applicable law, shall have all rights as a secured creditor under
the Uniform Commercial Code in all relevant jurisdictions and may:
12
(i) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the
terms of such instrument or agreement directly to the Collateral Agent;
(iii) withdraw all moneys, securities and other instruments in the
Cash Collateral Account for application to the Obligations in accordance
with Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate, or direct such Assignor to
sell, assign or otherwise liquidate, any or all of the Collateral or any
part thereof in accordance with Section 7.2 hereof, and take possession of
the proceeds of any such sale or liquidation; and
(v) take possession of the Collateral or any part thereof, by
directing such Assignor in writing to deliver the same to the Collateral
Agent at any place or places designated by the Collateral Agent, in which
event such Assignor shall at its own expense:
(A) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered to
the Collateral Agent,
(B) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by
the Collateral Agent as provided in Section 7.2, and
(C) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good
condition;
13
(vi) license or sublicense whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for
such term and on such conditions and in such manner as the Collateral
Agent shall in its sole judgment determine.
it being understood that such Assignor's obligation to so deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation.
7.2 Remedies; Disposition of the Collateral. Upon the occurrence and
continuance of an Event of Default, any Collateral repossessed by the Collateral
Agent under or pursuant to Section 7.1 and any other Collateral whether or not
so repossessed by the Collateral Agent, may be sold, assigned, leased or
otherwise disposed of under one or more contracts or as an entirety, and without
the necessity of gathering at the place of sale the property to be sold, and in
general in such manner, at such time or times, at such place or places and on
such terms as the Collateral Agent may, in compliance with any mandatory
requirements of applicable law, determine to be commercially reasonable. Any of
the Collateral may be sold, leased or otherwise disposed of, in the condition in
which the same existed when taken by the Collateral Agent or after any overhaul
or repair which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than ten
(10) days' written notice to the applicable Assignor specifying the time at
which such disposition is to be made and the intended sale price or other
consideration therefor, and shall be subject, for the ten (10) days after the
giving of such notice, to the right of such Assignor or any nominee of such
Assignor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified. Any such disposition which shall be a public sale permitted by
such requirements shall be made upon not less than ten (10) days' written notice
to such Assignor specifying the time and place of such sale and, in the absence
of applicable requirements of law, shall be by public auction (which may, at the
Collateral Agent's option, be subject to reserve), after publication of notice
of such auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York. To the extent permitted by any such
requirement of law, the Collateral Agent on behalf of the Secured Creditors (or
certain of them) may bid for and become the purchaser (by bidding on Obligations
or otherwise) of the Collateral or any item thereof, offered for sale in
accordance with this Section without accountability to such Assignor (except to
the extent of surplus money received as provided in Section 7.4). If, under
mandatory requirements of applicable law, the Collateral Agent shall be required
to make disposition of the Collateral within a period of time which does not
permit the giving of notice to such Assignor as hereinabove specified, the
Collateral Agent need give such Assignor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law. Each Assignor agrees to do or cause to be done all such other
acts and things as may be reasonably necessary to make such sale or sales of
14
all or any portion of the Collateral valid and binding and in compliance with
any and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrations or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at
such Assignor's expense.
7.3 Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and such Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and such Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of such Assignor therein and thereto, and
shall be a perpetual bar both at law and in equity against such Assignor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
such Assignor.
7.4 Application of Proceeds. (a) The proceeds of any Collateral
obtained pursuant to Section 7.1 or disposed of pursuant to Section 7.2 shall be
applied as follows:
(i) first, to the payment of all Obligations to the Collateral Agent
of the type described in clauses (iii) and (iv) of the definition of
"Obligation" contained in Article IX hereof;
15
(ii) second, to the extent proceeds remain after the application
pursuant to the preceeding clause (i), an amount equal to the outstanding
Obligations to the Secured Creditors shall be paid to the Secured
Creditors as provided in Section 7.4(c) with each Secured Creditor
receiving an amount equal to its outstanding Obligations or, if the
proceeds are insufficient to pay in full all such Obligations, its Pro
Rata Share of the amount remaining to be distributed to be applied, with
respect to Credit Document Obligations, firstly to the payment of interest
in respect of the unpaid principal amount of Loans outstanding, secondly
to the payment of principal of Loans outstanding, then to the other Credit
Document Obligations; and
(iii) third, to the extent remaining after the application pursuant
to the preceding clauses (i) and (ii) and following the termination of
this Agreement pursuant to Section 10.9 hereof, to respective Assignor or
to whomever may be lawfully entitled to receive such payment.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount, the
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then outstanding amount of the relevant Obligations owed such Secured
Creditor and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the (i) Bank Creditors
hereunder shall be made to the Agent for the account of the respective Bank
Creditors and (ii) Interest Rate Creditors hereunder shall be made to the paying
agent under the applicable Secured Interest Rate Agreement or, in the case of
Secured Interest Rate Agreements without a paying agent, directly to the
applicable Interest Rate Creditor.
(d) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Agent for a determination (which the Agent agrees to provide upon request to the
Collateral Agent) of the outstanding Credit Document Obligations and (ii) upon
any Interest Rate Creditor for a determination (which each Interest Rate
Creditor agrees to provide upon request to the Collateral Agent) of the
outstanding Interest Rate Obligations owed to such Interest Rate Creditor.
Unless it has actual knowledge (including by way of written notice from a
Secured Creditor) to the contrary, the Agent under the Credit Agreement, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that (x) no Credit
Document Obligations other than principal, interest and regularly accruing fees
are owing to any Bank Creditor and (y) no Secured Interest Rate Agreements or
Interest Rate Obligations with respect thereto are in existence.
16
(e) It is understood that each Assignor shall remain liable to the
extent of any deficiency between the amount of the proceeds of the Collateral
and the amount of the sum referred to in clause (a) of this Section with respect
to such Assignor.
7.5 Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, any
Secured Interest Rate Agreement or the other Credit Documents or now or
hereafter existing at law or in equity, or by statute and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time or simultaneously and as often and in such order as
may be deemed expedient by the Collateral Agent. All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of exercise of
one shall not be deemed a waiver of the right to exercise of any other or
others. No delay or omission of the Collateral Agent in the exercise of any such
right, power or remedy and no renewal or extension of any of the Obligations
shall impair any such right, power or remedy or shall be construed to be a
waiver of any Default or Event of Default or an acquiescence therein. In the
event that the Collateral Agent shall bring any suit to enforce any of its
rights hereunder and shall be entitled to judgment, then in such suit the
Collateral Agent may recover reasonable expenses, including attorneys' fees, and
the amounts thereof shall be included in such judgment.
7.6 Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case each
Assignor, the Collateral Agent and each holder of any of the Obligations shall
be restored to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Agreement, and
all rights, remedies and powers of the Collateral Agent shall continue as if no
such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1 Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each Secured Creditor and
its respective successors, assigns, employees, agents and servants (hereinafter
in this Section 8.1 referred to individually as "Indemnitee," and collectively
as "Indemnitees") harmless from any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, suits, judgments and any and all
costs and expenses (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 8.1 the foregoing are collectively called "expenses")
of whatsoever kind and nature imposed on,
17
asserted against or incurred by any of the Indemnitees in any way relating to or
arising out of this Agreement, any Secured Interest Rate Agreement, any other
Credit Document or the documents executed in connection herewith and therewith
or in any other way connected with the enforcement of any of the terms of, or
the preservation of any rights under any thereof, or in any way relating to or
arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition, or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws of any country, state or other governmental body or unit, any tort
(including, without limitation, claims arising or imposed under the doctrine of
strict liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage), or contract claim; provided
that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for
losses, damages or liabilities to the extent caused by the gross negligence or
wilful misconduct of such Indemnitee. Each Assignor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation, loss,
damage, penalty, claim, demand, action, judgment or suit, such Assignor shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
use its best efforts to promptly notify such Assignor of any such assertion of
which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a), each
Assignor jointly and severally agrees to pay, or reimburse the Collateral Agent
for (if the Collateral Agent shall have incurred fees, costs or expenses because
each Assignor shall have failed to comply with its obligations under this
Agreement or any Credit Document), any and all fees, costs and expenses of
whatever kind or nature incurred in connection with the creation, preservation
or protection of the Collateral Agent's Liens on, and security interest in, the
Collateral, including, without limitation, all fees and taxes in connection with
the recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Collateral,
premiums for insurance with respect to the Collateral and all other fees, costs
and expenses in connection with protecting, maintaining or preserving the
Collateral and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b), each
Assignor jointly and severally agrees to pay, indemnify and hold each Indemnitee
harmless from and against any loss, costs, damages and expenses which such
Indemnitee may suffer, expend or incur in consequence of or growing out of any
misrepresentation by such Assignor in this Agreement, any Secured Interest Rate
Agreement or any other Credit Document or in any statement or writing
contemplated by or made or delivered pursuant to or in connection with this
Agreement, any Secured Interest Rate Agreement or any other Credit Document.
18
(d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Loans made under the Credit Agreement and all of the other Obligations and
notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified unless
the context otherwise requires. Such definitions shall be equally applicable to
the singular and plural forms of the terms defined.
"Agent" shall have the meaning provided in the first WHEREAS clause
of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning specified in the first paragraph
of this Agreement.
"Bank Creditor" shall have the meaning provided in the first WHEREAS
clause of this Agreement.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Collateral" shall have the meaning provided in Section 1.1(a).
19
"Collateral Agent" shall have the meaning specified in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and one or
more additional parties.
"Copyrights" shall mean any U.S. copyright to which any Assignor now
or hereafter has title, as well as any application for a U.S. copyright
hereafter made by each Assignor.
"Credit Agreement" shall have the meaning provided in the first
WHEREAS clause of this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Documents" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean any "equipment," as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures and
vehicles now or hereafter owned by such Assignor and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement, or any payment default, after any applicable
grace period, under any Secured Interest Rate Agreement.
"General Intangibles" shall have the meaning assigned that term
under the Uniform Commercial Code as in effect on the date hereof in the State
of New York.
"Goods" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1.
20
"Instrument" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Interest Rate Creditors" shall have the meaning provided in the
second WHEREAS clause of this Agreement.
"Interest Rate Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through
work-in-process to finished goods -- and all products and proceeds of whatever
sort and wherever located and any portion thereof which may be returned,
rejected, reclaimed or repossessed by the Collateral Agent from any Assignor's
customers, and shall specifically include all "inventory" as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by such Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean any trademarks and service marks now held or
hereafter acquired by any Assignor, which are registered in the United States
Patent and Trademark Office, as well as any unregistered marks used by any
Assignor in the United States and trade dress including logos and/or designs in
connection with which any of these registered or unregistered marks are used.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at stated maturity, by acceleration or otherwise) of all obligations
and liabilities of the Assignor, now existing or hereafter incurred under,
arising out of or in connection with any Credit Document to which it is a party
and the due performance and compliance by each Assignor with the terms of each
such Credit Document (all such obligations and liabilities under this clause
(i), except to the extent consisting of obligations or indebtedness with respect
to Interest Rate Agreements, being herein collectively called the "Credit
Document Obligations"); (ii) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations and
liabilities of the Assignor now existing or hereafter incurred under, arising
out of or in connection with any Secured Interest Rate Agreement (all such
obligations and indebtedness under this clause (ii) being herein collectively
called the "Interest Rate
21
Obligations"); (iii) any and all sums advanced by the Collateral Agent in order
to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of each Assignor referred to in
clauses (i), (ii) and (iii), after an Event of Default shall have occurred and
be continuing, the reasonable expenses of re-taking, holding, preparing for sale
or lease, selling or otherwise disposing of or realizing on the Collateral,or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (v) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement.
"Patents" shall mean any U.S. patent to which any Assignor now or
hereafter has title, as well as any application for a U.S. patent now or
hereafter made by such Assignor.
"Proceeds" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect in the State of New York on the date hereof
or under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or any Assignor from time to time with respect
to any of the Collateral, (ii) any and all payments (in any form whatsoever)
made or due and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of such Assignor's right, title and interest in and to
any goods, the sale of which gave rise thereto, (c) all guarantees, endorsements
and indemnifications on, or of, any of the foregoing, (d) all powers of attorney
for the execution of any evidence of indebtedness or security or other writing
in connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all notices to other creditors or secured parties, and
certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto, and (h) all other writings
related in any way to the foregoing.
22
"Secured Creditors" shall have the meaning provided in the second
WHEREAS clause of this Agreement.
"Secured Interest Rate Agreements" shall have the meaning provided
in the second WHEREAS clause of this Agreement.
"Trade Secrets" means any secretly held existing engineering and
other data, information, production procedures and other know-how relating to
the design, manufacture, assembly, installation, use, operation, marketing, sale
and servicing of any products or business of an Assignor worldwide whether
written or not written.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed to such party
at its address set forth opposite its signature below, or at such other address
as any of the parties hereto may hereafter notify the others in writing.
10.2 Waiver; Amendment. (a) None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor and the Collateral Agent (with
the consent of the Required Banks or, to the extent required by Section 12.12 of
the Credit Agreement, all of the Banks), provided, however, that no such change,
waiver, modification or variance shall be made to Section 7.4 hereof or this
Section 10 without the consent of each Secured Creditor adversely affected
thereby, provided further that any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Secured Creditors. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
Document Obligations, or (y) the Interest Rate Creditors as holders of the
Interest Rate Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (x) with respect to the
Credit Document Obligations, the Required Banks and (y) with respect to the
Interest Rate Obligations, the holders of 51% of all obligations outstanding
from time to time under the Secured Interest Rate Agreements.
(b) No delay on the part of the Collateral Agent in exercising any
of its rights, remedies, powers and privileges hereunder or partial or single
exercise thereof, shall constitute a
23
waiver thereof. No notice to or demand on each Assignor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Collateral
Agent to any other or further action in any circumstances without notice or
demand.
10.3 Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of each Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Credit Document or
any Secured Interest Rate Agreement except as specifically set forth in a waiver
granted pursuant to the restrictions of Section 10.2 hereof; or (c) any
amendment to or modification of any Credit Document or any Secured Interest Rate
Agreement or any security for any of the Obligations; whether or not any
Assignor shall have notice or knowledge of any of the foregoing. The rights and
remedies of the Collateral Agent herein provided are cumulative and not
exclusive of any rights or remedies which the Collateral Agent would otherwise
have.
10.4 Successors and Assigns. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and its successors and assigns, provided that no Assignor
may transfer or assign any or all of its rights or obligations hereunder without
the written consent of the Collateral Agent. All agreements, statements,
representations and warranties made by any Assignor herein or in any certificate
or other instrument delivered by such Assignor or on its behalf under this
Agreement shall be considered to have been relied upon by the Secured Creditors
and shall survive the execution and delivery of this Agreement and the other
Credit Documents regardless of any investigation made by the Secured Creditors
on their behalf.
10.5 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6 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.
10.7 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
24
10.8 Assignors' Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of any Assignor under or with
respect to any Collateral.
10.9 Termination; Release. After the termination of the Total
Commitment and all Secured Interest Rate Agreements, when no Note or Letter of
Credit is outstanding and when all Loans and other Obligations have been paid in
full, this Agreement shall terminate, and the Collateral Agent, at the request
and expense of the Assignors, will execute and deliver to each Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to the respective
Assignors (without recourse and without any representation or warranty) such of
the Collateral of such Assignor as may be in the possession of the Collateral
Agent and as has not theretofore been sold or otherwise applied or released
pursuant to this Agreement.
(b) So long as no payment default on any of the Obligations is in
existence or would exist after the application of proceeds as provided below,
the Pledgee shall, at the request of the Borrower and the Pledgor, release any
or all of the Collateral, provided that (x) such release is permitted by the
terms of the Credit Agreement (it being agreed for such purposes that a release
will be deemed "permitted by the terms of the Credit Agreement" if the proposed
transaction constitutes an exception to Section 8.02 of the Credit Agreement) or
otherwise has been approved in writing by the Required Banks and (y) the
proceeds of such Collateral are applied as required pursuant to the Credit
Agreement or any consent or waiver with respect thereto.
(c) At any time that any Assignor desires that the Collateral Agent
take any action to give effect to any release of Collateral pursuant to the
foregoing Section 10.9(a) or (b), it shall deliver to the Collateral Agent a
certificate signed by a principal executive officer stating that the release of
the respective Collateral is permitted pursuant to Section 10.9(a) or (b). In
the event that any part of the Collateral is released as provided in the
preceding paragraph (b), the Collateral Agent, at the request and expense of
such Assignor, will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold and as may be in the possession of the
Collateral Agent and has not theretofore been released pursuant to this
Agreement. The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as permitted
by this Section 10.9. Upon any release of Collateral pursuant to Section 10.9(a)
or (b), none of the Secured Creditors shall have any continuing right or
interest in such Collateral, or the proceeds thereof.
25
10.10 Collateral Agent. By accepting the benefits of this Agreement,
each Secured Creditor acknowledges and agrees that the rights and obligations of
the Collateral Agent shall be as set forth in Section 11 of the Credit
Agreement. Notwithstanding anything to the contrary contained in Section 10.2 of
this Agreement or Section 12.12 of the Credit Agreement, this Section 10.10, and
the duties and obligations of the Collateral Agent set forth in this Section
10.10, may not be amended or modified without the consent of the Agent.
* * *
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
Addresses:
0000 Xxxx Xxxxxx THE STONEBURY GROUP INCORPORATED,
Suite 214 as Assignor
Xxxx, Xxxxxx 00000
Attention: President /s/Xxxxxx Xxxxxx
By_______________________________
Name: Xxxxxx Xxxxxx
with a copy to: Title: Assistant Secretary
HCA Holdings, Inc.
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
Chesterfield Avenue U.S. TEXTILE CORP.,
RD SC903 as Assignor
a/k/a 0000 Xxxxxxx Xxxx.
Xxxxxxxxx, XX 00000 /s/ X. Xxxxxxx
Attention: President By______________________________
Name: X. Xxxxxxx
with a copy to: Title: President
HCA Holdings, Inc.
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
0000 Xxxxxxxx Xxxxx HOSIERY CORPORATION INTERNATIONAL
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President /s/ Xxxx Xxxxxxx
By_______________________________
with a copy to: Name: Xxxx Xxxxxxx
Title: President
HCA Holdings, Inc.
c/o Kelso & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
000 Xxxxxxx Xxxxxx BANKERS TRUST COMPANY,
Xxx Xxxx, Xxx Xxxx 00000 as Collateral Agent
Attention: Xxxx Xxx Xxxxx
/s/ Xxxx Xxx Xxxxx
By_______________________________
Name: Xxxx Xxx Xxxxx
Title: Managing Director
ANNEX A
SCHEDULE OF EXISTING FINANCING STATEMENTS
None (except for Permitted Liens)
ANNEX B
SCHEDULE OF RECORD LOCATIONS
1. U.S. Textile Corp.
Chesterfield Avenue
Road SC 903, A/K/A 0000 Xxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
2. The Stonebury Group
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxx, XX 00000
3. Hosiery Corporation International
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
4. Xxxxxxx Xxxxxxxxxxx Xxxxxxxxxxxxx
Xxxxx 0, Xxxxx Xxxxxxxxxx Xxxx.
000 Xxxxxx Xx.
Xxxxxxxxx, XX X0 0XX
5. Hosiery Corporation International
MVS; Xxxxxxxxxxxx Xxxxxxx 000
00000 Xxxxxxxxx, Xxxxxxx
ANNEX C
SCHEDULE OF EQUIPMENT AND INVENTORY LOCATIONS
1. U.S. Textile Corp.
Chesterfield Avenue
Road SC 903, A/K/A 0000 Xxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
2. U.S. Textile Corp.
Xxxxx Xxxxxx
Xxxxxxx, XX 00000
3. The Stonebury Group
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxx, XX 00000
4. U.S. Textile Corp.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
5. Hosiery Corporation International
XxXxxxxx & Xxxx
Commercial Road
Liverpool, EN L57 RD
6. Hosiery Corporation International
MVS Fulfillment Center
Zone Industrielle Sud.
Xxx Xx X'Xxxxxxxxx
00000 Xxxxxxxxxxx, Xxxxxx
ANNEX D
LIST OF TRADE AND FICTITIOUS NAMES
None.
ANNEX E
SCHEDULE OF TRADEMARK REGISTRATIONS AND APPLICATION
U.S. TEXTILE CORP. REGISTERED TRADEMARKS
XXXX REG. NO. REG. DATE COUNTRY OWNER
---- -------- --------- ------- -----
L'AMERA 1470720 12/29/87 US UST
HOSIERY CORPORATION INTERNATIONAL REGISTERED TRADEMARKS
XXXX REG. NO. REG. DATE COUNTRY OWNER
---- -------- --------- ------- -----
HCI SHEER CHARM 2070410 5/3/96 UK HCI
L'AMERA 1105285 4/23/87 GERMANY HCI
L'AMERA 11604 5/14/87 AUSTRIA HCI
L'AMERA 132762 7/14/88 NORWAY HCI
L'AMERA 1380487 11/19/86 FRANCE HCI
L'AMERA 2063565 3/22/96 UK HCI
L'AMERA 24991 7/28/89 CANADA HCI
L'AMERA 353609 11/26/86 SWITZERLAND HCI
L'AMERA 4241000 11/25/86 BENELUX HCI
L'AMERA VR94.293-1989 7/28/89 DENMARK HCI
SHEER CHARM 2069031 4/17/96 UK HCI
SILKIES 1588554 10/10/94 UK HCI
SILKIES 168952 3/26/97 AUSTRIA HCI
SILKIES 596232 3/28/96 BENELUX HCI
SILKIES 94/548642 12/12/94 FRANCE HCI
SILKIES SHAPELY PERFECTION 2070412 5/3/96 UK HCI
SILKIES SHEER CHARM 2070411 4/1/97 UK HCI
THE MOST BEAUTIFUL LEGS IN THE AUSTRIA/
WORLD WEAR SILKIES 169535 5/14/97 GERMAN HCI
THE MOST BEAUTIFUL LEGS IN THE UK/
WORLD WEAR SILKIES 2069030 4/17/96 ENGLISH HCI
THE MOST BEAUTIFUL LEGS IN THE FRANCE/
WORLD WEAR SILKIES 97662189 2/4/97 FRENCH HCI
TLC 2069032 4/17/96 UK HCI
HOSIERY CORPORATION INTERNATIONAL TRADEMARK APPLICATIONS
XXXX APP. NO. DATE FILED COUNTRY OWNER
---- -------- ---------- ------- -----
HCI SHAPELY PERFECTION 2070409 5/3/96 UK HCI
SHEER CHARM 323212 8/9/96 EC HCI
SILKIES 000335562 4/1/96 EC HCI
SILKIES 39403037.0 11/23/94 GERMANY HCI
SILKIES 7935/1994 11/10/94 SWITZERLAND HCI
SILKIES 9-9958 1/31/97 JAPAN HCI
SILKIES MI96C008205 9/23/96 ITALY HCI
SILKIES (PLAIN LETTER FORM) 213719 6/27/97 UK HCI
SILKIES ULTRA N/A GERMANY HCI
HOSIERY CORPORATION INTERNATIONAL TRADEMARK APPLICATIONS CONTINUED
XXXX APP. NO. DATE FILED COUNTRY OWNER
---- -------- ---------- ------- -----
SILKIES ULTRA 2140779 7/28/97 UK HCI
SILKIES ULTRA 97/689413 7/29/97 FRANCE HCI
SOPHISTICATED INTIMATES
(CLOTHING,MAIL ORDER) 2111351 9/27/96 UK HCI
THE MOST BEAUTIFUL LEGS IN THE
WORLD WEAR SILKIES N/A 7/16/97 EC/FRENCH HCI
THE MOST BEAUTIFUL LEGS IN THE
WORLD WEAR SILKIES 000487512 1/27/97 EC/GERMAN HCI
THE MOST BEAUTIFUL LEGS IN THE
WORLD WEAR SILKIES 281287 6/26/96 EC/ENGLISH HCI
THE MOST BEAUTIFUL LEGS IN THE GERMANY/
WORLKD WEAR SILKIES 39703334.6 1/27/97 GERMAN HCI
TLC 602003 7/4/97 EC/ENGLISH HCI
ANNEX F
SCHEDULE OF PATENTS AND APPLICATIONS
A. Patents
1. U.S. Patent No.: 4,797,967
Title: Padded General Purpose Mitten and Method of Fabricating
Same
Inventor: Hans. X. Xxxxxxx
Issued: January 17, 1989
Assignee: U.S. Textile Corp.
2. U.S. Patent No.: 5,573,851
Title: Ultraviolet-Detectable Marking Yarn and a Textile
Fabric Product Therewith
Inventor: Xxxx X. Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx XxXxxxxxx,
Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxx
Issued: November 12, 1996
Assignee: U.S. Textile Corp.
ANNEX G
SCHEDULE OF COPYRIGHTS
None.
EXHIBIT J
FORM OF SOLVENCY CERTIFICATE
To the Agent and each of the Banks party to the Credit Agreement referred to
below:
I, the undersigned, the Chief Financial Officer of Hosiery
Corporation of America, Inc., a Delaware corporation (the "Company"), do hereby
certify on behalf of the Company that:
1. This Certificate is furnished to pursuant to Section 5.01(h) of
the Amendment and Restatement, dated as of November 20, 1997, amending and
restating the Credit Agreement dated as of October 17, 1994, among the Company,
the Banks from time to time party thereto (each, a "Bank" and, collectively, the
"Banks") and Bankers Trust Company as Agent (the "Agent")(such Credit Agreement,
as in effect on the date of this Certificate, being herein called the "Credit
Agreement"). Unless otherwise defined herein, capitalized terms used in this
Certificate shall have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms below shall have the
following definitions:
(a) "Fair Value"
The amount at which the assets, in their entirety, of each of the
Company, individually, and the Company and its Subsidiaries taken as
whole would change hands between a willing buyer and a willing
seller, within a commercially reasonable period of time, each having
reasonable knowledge of the relevant facts, with neither being under
any compulsion to act.
(b) "Present Fair Salable Value"
The amount that could be obtained by an independent willing seller
from an independent willing buyer if the assets of each of the
Company, individually, and the Company and its Subsidiaries taken as
a whole are sold with reasonable promptness in an arm's-length
transaction under present conditions for the sale of comparable
business enterprises.
(c) "New Financing"
The Indebtedness incurred or to be incurred by the Company and its
Subsidiaries under the Credit Documents (assuming the full
utilization by the Company of the Commitments under the Credit
Agreement) and all other financings contemplated by the Credit
Documents, in each case after giving effect to the refinancing of
the Loans under, and as defined in, the Original Credit Agreement
and the incurrence of all financings in connection therewith.
(d) "Stated Liabilities"
The recorded liabilities (including contingent liabilities that
would be recorded in accordance with generally accepted accounting
principles ("GAAP")) of each of the Company, individually, and the
Company and its Subsidiaries taken as a whole as of the date hereof
after giving effect to the refinancing of the Loans under, and as
defined in, the Original Credit Agreement, determined in accordance
with GAAP consistently applied, together with the amount of all New
Financing.
(e) "Identified Contingent Liabilities"
The maximum estimated amount of liabilities reasonably likely to
result from pending litigation, asserted claims and assessments,
guaranties, uninsured risks and other contingent liabilities of each
of the Company, individually, and the Company and its Subsidiaries
taken as a whole after giving effect to the refinancing of the Loans
under, and as defined in, the Original Credit Agreement (including
all fees and expenses related thereto but exclusive of such
contingent liabilities to the extent reflected in Stated
Liabilities), as identified and explained in terms of their nature
and estimated magnitude by responsible officers of the Company or
that have been identified as such by an officer of the Company.
(f) "Will be able to pay its Stated Liabilities, including Identified
Contingent Liabilities, as they mature"
For the period from the date hereof through the stated maturity of
all New Financing, each of the Company, individually, and the
Company and its Subsidiaries taken as a whole will have sufficient
assets and cash flow to pay their respective Stated Liabilities and
Identified Contingent Liabilities as those liabilities mature or
otherwise become payable.
2
(g) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the stated maturity of
all New Financing, each of the Company, individually, and the
Company and its Subsidiaries taken as a whole after the refinancing
of all Loans under, and as defined in, the Original Credit Agreement
and all Indebtedness (including the Loans) being incurred or assumed
and Liens created by the Company and its Subsidiaries in connection
therewith, is a going concern and has sufficient capital to ensure
that it will continue to be a going concern for such period and to
remain a going concern.
3. For purposes of this Certificate, I, or officers of the Company
under my direction and supervision, have performed the following procedures as
of and for the periods set forth below.
(a) I have reviewed the financial statements (including the pro forma
financial statements) referred to in Section 6.10 of the Credit
Agreement.
(b) I have made inquiries of certain officials of the Company and its
Subsidiaries who have responsibility for financial and accounting
matters regarding (i) the existence and amount of Identified
Contingent Liabilities associated with the business of the Company
and its Subsidiaries and (ii) whether the unaudited pro forma
consolidated financial statements referred to in paragraph (a) above
are in conformity with GAAP applied on a basis consistent with that
of the audited financial statements as of December 31, 1996.
(c) I have knowledge of and have reviewed to my satisfaction the Credit
Documents, and the respective Annexes, Schedules and Exhibits
thereto.
(d) With respect to Identified Contingent Liabilities, I:
1. inquired of certain officials of the Company and its
Subsidiaries who have responsibility for legal, financial and
accounting matters as to the existence and estimated liability
with respect to all contingent liabilities associated with the
business of the Company and its Subsidiaries; and
3
2. confirmed with officers of the Company and its Subsidiaries
that, to the best of such officers' knowledge, (i) all
appropriate items were included in Stated Liabilities or
Identified Contingent Liabilities and that (ii) the amounts
relating thereto were the maximum estimated amount of
liabilities reasonably likely to result therefrom as of the
date hereof.
(e) I have made inquiries of certain officers of the Company and its
Subsidiaries who have responsibility for financial reporting and accounting
matters regarding whether they were aware of any events or conditions that,
as of the date hereof, would cause the Company, individually, or the
Company and its Subsidiaries taken as a whole, after giving effect to the
refinancing of the Loans under, and as defined in, the Original Credit
Agreement and the related financing transactions (including the incurrence
of the New Financing), to (i) have assets with a Fair Value or Present Fair
Salable Value that are less than the sum of Stated Liabilities and
Identified Contingent Liabilities; (ii) have Unreasonably Small Capital; or
(iii) not be able to pay their respective Stated Liabilities and Identified
Contingent Liabilities as they mature or otherwise become payable.
4. Based on and subject to the foregoing, I hereby certify on behalf
of the Company that, after giving effect to the refinancing of the Loans under,
and as defined in, the Original Credit Agreement and the related financing
transactions (including the incurrence of the New Financing), it is my opinion
that (i) the Fair Value and Present Fair Salable Value of the assets of each of
the Company, individually, and the Company and its Subsidiaries taken as a whole
exceed its respective Stated Liabilities and Identified Contingent Liabilities;
(ii) each of the Company, individually, and the Company and its Subsidiaries
taken as a whole does not have Unreasonably Small Capital; and (iii) each of the
Company, individually, and the Company and its Subsidiaries taken as a whole
will be able to pay their respective Stated Liabilities and Identified
Contingent Liabilities as they mature or otherwise become payable.
4
IN WITNESS WHEREOF, I have hereto set my hand this day of November,
1997.
HOSIERY CORPORATION OF AMERICA, INC.
________________________________
Name:
Title:
5
EXHIBIT K
[Letterhead of Agent for Service of Process]
[Date]
To the Agent and the
Banks party to the
Credit Agreement referred to below:
Ladies and Gentlemen:
Reference is made to the Amendment and Restatement, dated as of
November 20, 1997, amending and restating the Credit Agreement, dated as of
October 17, 1994, among Hosiery Corporation of America, Inc. (the "Borrower"),
the Banks (the "Banks") party thereto from time to time and Bankers Trust
Company, as Agent (the "Agent") (as such Credit Agreement may be modified,
supplemented or amended from time to time, the "Credit Agreement"). Unless
otherwise defined herein, all capitalized terms used herein and defined in the
Credit Agreement are used herein as so defined.
Each of the Borrower pursuant to Section 12.08 of the Credit
Agreement, and each Subsidiary Guarantor pursuant to Section 20 of the
Subsidiary Guaranty, has irrevocably designated, appointed and empowered the
undersigned, CT Corporation System, with offices currently located at 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its authorized designee, appointee and
agent to receive, accept and acknowledge for and on its behalf, and in respect
of its property, service of any and all legal process, summons, notices and
documents which may be served in any such action or proceeding with respect to
the Credit Agreement or any other Credit Document (as defined in the Credit
Agreement) brought in the courts of the State of New York or of the United
States of America for the Southern District of New York.
The undersigned hereby informs you that it irrevocably accepts such
appointment as agent as set forth in Section 12.08 of the Credit Agreement and
Section 20 of the Subsidiary Guaranty, as applicable, and agrees with you that
the undersigned (i) shall inform the Agent promptly in writing of any change of
its address in New York City, (ii) shall perform its obligations as such process
agent in accordance with the provisions of Section 12.08 of the Credit Agreement
and Section 20 of the Subsidiary Guaranty, as applicable, and (iii) shall
forward promptly to the Borrower, as the case may be, any legal process,
summons, notices and documents received by the undersigned in its capacity as
process agent.
As process agent, the undersigned, and its successor or successors,
agree to discharge the above-mentioned obligations and will not refuse
fulfillment of such obligations under Section 12.08 and Section 20 of the
Subsidiary Guaranty, as applicable, of the Credit Agreement.
Very truly yours,
CT CORPORATION SYSTEM
By____________________________
Name:
Title:
2
EXHIBIT L
FORM OF ASSIGNMENT AGREEMENT
DATE: ________, ____
Reference is made to the Credit Agreement described in Item 2 of
Annex I annexed hereto (as such Credit Agreement may hereafter be amended,
modified or supplemented from time to time, the "Credit Agreement"). Unless
defined in Annex I attached hereto, terms defined in the Credit Agreement are
used herein as therein defined. _____________ (the "Assignor") and
______________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I (the "Assigned Share") of all of
Assignor's outstanding rights and obligations under the Credit Agreement
indicated in Item 4 of Annex I, including, without limitation, (x) in the case
of any assignment of all or any portion of the outstanding Term Loans, all
rights and obligations with respect to the Assigned Share of such outstanding
Term Loans, and (y) in the case of any assignment of all or any portion of the
Total Revolving Commitment, all rights and obligations with respect to the
Assigned Share of the Total Revolving Commitment and of any outstanding
Revolving Loans and Letters of Credit.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any liens or security interests; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the Subsidiary Guarantors or the performance or observance by the
Borrower or the Subsidiary Guarantors of any of its obligations under the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto.
3. The Assignee (i) represents and warrants that it is duly
authorized to enter into and perform the terms of this Assignment Agreement;
(ii) confirms that it has received a copy of the Credit Agreement and the other
Credit Documents, together with copies of the
EXHIBIT L
Page 2
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement; (iii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iv) appoints and authorizes the Agent and
the Collateral Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit Documents as are
delegated to the Agent and the Collateral Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; [and] (v) agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Bank[; and
(v) attaches the forms prescribed by the Internal Revenue Service of the United
States, as described in Section 4.04 of the Credit Agreement, certifying as to
the Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement or such other documents as are necessary to indicate that
all such payments are subject to such rates at a rate reduced by an applicable
tax treaty].11/
4. Following the execution of this Assignment Agreement by the
Assignor and the Assignee, an executed original hereof (together with all
attachments) will be delivered to the Agent specified in Item 5 of Annex I
hereto, the effective date of this Assignment Agreement shall be the later of
(x) the date specified in Item 5 of Annex I hereto and (y) the date of execution
hereof by the Assignor, the Assignee and the consent hereof by the Agent, the
registration of the assignment (and the resulting effects thereof on the Loans
and Commitments of the Assignor and the Assignee) on the Register, and to the
extent relevant, the receipt by the Agent of the administrative fee referred to
in Section 12.04(b) of the Credit Agreement (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Agent, as of the Settlement Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment Agreement, have
the rights and obligations of a Bank thereunder and under the other Credit
Documents and (ii) the Assignor shall, to the extent provided in this Assignment
Agreement, relinquish its rights and be released from its obligations under the
Credit Agreement and the other Credit Documents.
EXHIBIT L
Page 3
6. It is agreed that upon the effectiveness hereof, the Assignee
shall be entitled to (x) all interest on the Assigned Share of the Term Loans
and/or Revolving Loans at the rates specified in Item 6 of Annex I, (y) all
Commitment Commission (if applicable) on the Assigned Share of the Revolving
Commitment at the rate specified in Item 7 of Annex I, and (z) all Letter of
Credit Fees (if applicable) on the Assignee's participation in all Letters of
Credit at the rate specified in Item 8 of Annex I hereto, which, in each case,
accrue on and after the Settlement Date, such interest and, if applicable,
Commitment Commission and Letter of Credit Fees, to be paid by the Agent, upon
receipt thereof from the Borrower, directly to the Assignee. It is further
agreed that all payments of principal made by the Borrower on the Assigned Share
of the Term Loans and/or Revolving Loans which occur on and after the Settlement
Date will be paid directly by the Agent to the Assignee. Upon the Settlement
Date, the Assignee shall pay to the Assignor an amount specified by the Assignor
in writing which represents the Assigned Share of the principal amount of the
respective Term Loans and/or Revolving Loans made by the Assignor pursuant to
the Credit Agreement which are outstanding on the Settlement Date, net of any
closing costs, and which are being assigned hereunder. The Assignor and the
Assignee shall make all appropriate adjustments in payments under the Credit
Agreement for periods prior to the Settlement Date directly between themselves
on the Settlement Date.
7. THIS ASSIGNMENT AND ASSUMPTION 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 Assignment
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
[NAME OF ASSIGNOR],
as Assignor
By ____________________________
Name:
Title:
[NAME OF ASSIGNEE],
as Assignee
By ____________________________
Name:
Title:
[Acknowledged and Agreed:
BANKERS TRUST COMPANY,
as Agent
By ____________________________
Name:
Title:]12/
ANNEX I
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. The Borrower: Hosiery Corporation of America, Inc.
2. Name and Date of Credit Agreement:
Amendment and Restatement, dated as of November 20, 1997, amending
and restating the Credit Agreement, dated as of October 17, 1994,
among Hosiery Corporation of America, Inc., the Banks from time to
time party thereto and Bankers Trust Company, as Agent.
3. Date of Assignment Agreement:
--------- ---, ---
4. Amounts (as of date of item #3 above):
Outstanding
Principal of Revolving
Term Loans Commitment
------------ ----------
a. Aggregate Amount
for all Banks $__________ $_________
b. Assigned Share __________% _________%
c. Amount of Assigned
Share $__________ $_________
5. Settlement Date:
--------- ---, ----
6. Rate of Interest As set forth in Section 1.08 of the Credit Agreement
to the Assignee: (unless otherwise agreed to by the Assignor and the
Assignee).13/
7. Commitment As set forth in Section 3.01(a) of the Credit Agreement
Commission to (unless otherwise agreed to by the Assignor and the
the Assignee: Assignee).14/
8. Letter of Credit As set forth in Section 3.01(b) of the Credit Agreement
Fees to the (unless otherwise agreed to by the Assignor and the
Assignee: Assignee).15/
9. Notices:
ASSIGNOR:
-------------------------
-------------------------
-------------------------
-------------------------
Attention:
Telephone No.:
Facsimile No.:
ASSIGNEE:
-------------------------
-------------------------
-------------------------
-------------------------
Attention:
Telephone No.:
Facsimile No.:
10. Payment Instructions:
ASSIGNOR:
-------------------------
-------------------------
-------------------------
-------------------------
ABA No.:
Account No.:
Reference:
Attention:
ASSIGNEE:
-------------------------
-------------------------
-------------------------
-------------------------
ABA No.:
Account No.:
Reference:
Attention:
--------
* Continuation Statement.
1/ Shall be a Business Day at least (x) one Business Day after the date hereof
in the case of Base Rate Loans and (y) three Business Days after the date hereof
in the case of Eurodollar Loans.
2/ To be included for a Proposed Borrowing of Eurodollar Loans.
3/ Letter of Credit Request Number.
4/ Shall be a Business Day at least three Business Days prior to the proposed
Date of Issuance (or such shorter period as may be acceptable to the Letter of
Credit Issuer).
5/ Initial Stated Amount of Letter of Credit should not be less than $150,000
(or such lesser amount acceptable to the Letter of Credit Issuer).
6/ Insert name and address of beneficiary.
7/ Insert description of the supported obligations, name of agreement and/or
the commercial transaction to which this Letter of Credit Request relates.
8/ Insert last date upon which drafts may be presented, which date may not
be later than (i) in the case of Standby Letters of Credit, the earlier of
x) 12 months after the Date of Issuance and (y) the fifth Business Day
preceding the Final Maturity Date and (ii) in the case of Trade Letters of
Credit, the earlier of (x) 180 days after the Date of Issuance and (y) 30 days
prior to the Final Maturity Date.
9/ Insert a date prior to the time of any corporate action relating to
the Credit Documents.
10/ Include name, office and signature of each officer who will sign
any Credit Document on behalf of the Company or any other Credit Party,
including the officer who will sign the certification at the end of this
Certificate.
11/ Insert bracketed language if the Assignee is organized under the laws of a
jurisdiction outside the United States.
12/ Insert bracketed language in the case of an assignment pursuant to Section
12.04(b)(y).
13/ The Borrower and the Agent shall direct the entire amount of the interest to
the Assignee at the rate set forth in Section 1.08 of the Credit Agreement,
with the Assignor and Assignee effecting any agreed upon sharing of interest
through payments by the Assignee to the Assignor.
14/ The Borrower and the Agent shall direct the entire amount of the Commitment
Commission to the Assignee at the rate set forth in Section 3.01(a) of the
Credit Agreement, with the Assignor and the Assignee effecting any agreed
upon sharing of Commitment Commission through payment by the Assignee to the
Assignor.
15/ The Borrower and the Agent shall direct the entire amount of the Letter of
Credit Fees to the Assignee at the rate set forth in Section 3.01(b) of the
Credit Agreement, with the Assignor and the Assignee
effecting any agreed upon sharing of the Letter of Credit Fees through payment
by the Assignee to the Assignor.
