Exhibit 10.1
EXECUTION COPY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of
January 29, 1998 (as amended, supplemented or modified from time to time, the
"Agreement") is entered into among THE XXXXX KARAN COMPANY, a New York general
partnership, THE XXXXX KARAN COMPANY STORE, G.P., a New York general
partnership, XXXXX KARAN STUDIO, a New York general partnership, and DK FOOTWEAR
PARTNERS, a New York general partnership (each, individually, a "Borrower" and
collectively, the "Borrowers"), the financial institutions from time to time
parties hereto as lenders, whether by execution of this Agreement or an
Assignment and Acceptance (the "Lenders"), the financial institutions from time
to time parties hereto as issuing banks, whether by execution of this Agreement
or an Assignment and Acceptance (the "Issuing Banks"), CITIBANK, N.A.
("Citibank"), in its capacity as administrative agent for the Lenders and the
Issuing Banks (in such capacity, the "Administrative Agent"), and THE CHASE
MANHATTAN BANK and NATIONSBANK, N.A., in their capacity as co-agents (the
"Co-Agents").
W I T N E S S E T H:
WHEREAS, the Borrowers entered into the Credit Agreement dated as of
September 18, 1996 (the "Original Credit Agreement") with the Administrative
Agent, the Co-Agents and certain financial institutions as the "Lenders". The
Original Credit Agreement was amended and restated in its entirety as evidenced
by the Amended and Restated Credit Agreement dated as of May 30, 1997 (the
"Amended Credit Agreement") among the Borrowers, such Lenders, the
Administrative Agent and the Co-Agents.
WHEREAS, the Borrowers have requested that the Amended Credit
Agreement be amended to extend the Commitment Termination Date and revise the
financial covenants, among other things.
WHEREAS, in view of the foregoing, the Borrowers, the Administrative
Agent, the Co-Agents and the Lenders which are signatories hereto have agreed to
enter into this Agreement in order to (i) amend and restate the Amended Credit
Agreement in its entirety and (ii) set forth the terms and conditions under
which such Lenders will hereafter extend Loans under this Agreement.
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings, applicable both to the singular and
the plural forms of the terms defined:
"Acceptable Documentary Letter of Credit" means a Commercial Letter of
Credit having an expiration date no later than 180 days after the date of
issuance thereof.
"Acceptance" has the meaning ascribed to such term in Section 2.04.
"Acceptance Agreements" means, with respect to an Acceptance, such
form of acceptance agreement or continuing agreement for banker's acceptances
(whether in a single document or several documents taken together) as the
Issuing Bank from which the Acceptance is requested may employ in the ordinary
course of business for its own account, with such modifications thereto as may
be agreed upon by the Issuing Bank and a Borrower; provided, however, that in
the event of any conflict between the terms of any Acceptance Agreement and this
Agreement, the terms of this Agreement shall control.
"Acceptance Commitment" means, with respect to an Issuing Bank, the
obligation of such Issuing Bank, pursuant to the terms and conditions of this
Agreement, to create Acceptances for the account of the Borrowers.
"Acceptance Obligations" has the meaning ascribed to such term in
Section 2.04(d).
"Acceptance Rate" means, for each Acceptance created by an Issuing
Bank, the bid acceptance commission rate (as a percentage per annum) as such
Issuing Bank shall have notified to the Administrative Agent prior to 11:00 a.m.
(New York City time) on the Business Day which occurs one Business Day prior to
the date of the creation of such Acceptance as being in effect on the date of
such creation.
"Acceptance Termination Date" means the day which is the earliest of
(i) October 30, 2000, (ii) the termination of the Commitments pursuant to
Section 11.02(a), (iii) the date of termination in whole of the Domestic
Commitments pursuant to Section 3.01(a) and (iv) the date of the termination of
the Acceptance Commitment pursuant to Section 2.04(l).
"Accommodation Obligation" means any Contractual Obligation,
contingent or otherwise, of any Person with respect to any Indebtedness,
obligation or liability of another, if the
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primary purpose or intent thereof by the Person incurring the Accommodation
Obligation is to provide assurance to the obligee of such Indebtedness,
obligation or liability of another Person that such Indebtedness, obligation or
liability will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders thereof will be protected (in whole
or in part) against loss in respect thereof including, without limitation,
direct and indirect guarantees, endorsements (except for collection or deposit
in the ordinary course of business), notes co-made or discounted, recourse
agreements, take-or-pay agreements, keep-well agreements, agreements to purchase
or repurchase such Indebtedness, obligation or liability or any security
therefor or to provide funds for the payment or discharge thereof, agreements to
maintain solvency, assets, level of income, or other financial condition, and
agreements to make payment other than for value received.
"Adjusted Net Worth" means, as of any date, the Net Worth of Xxxxx
Karan International and its Subsidiaries on a consolidated basis, adjusted to
exclude (a) any extraordinary gains, (b) noncash gains and losses relating to
deferred taxes, and (c) intangibles (including, without limitation, goodwill and
deferred financing costs).
"Administrative Agent" has the meaning ascribed to such term in the
preamble hereto.
"Administrative Agent's New York Account" means the Administrative
Agent's account number 00000000 (re: The Xxxxx Karan Company) maintained at the
office of Citibank at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
deposit account as the Administrative Agent may from time to time specify in
writing to the Borrowers and the Lenders.
"Administrative Agent's London Accounts" means those certain accounts
listed on Schedule 1.01(D) maintained at the office of Citibank, or such other
deposit account as the Administrative Agent may from time to time specify in
writing to the Borrowers and the Lenders.
"Affiliate" means, as applied to any specified Person, any other
Person that directly or indirectly controls, is controlled by, or is under
common control with, such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any specified
Person, means the possession, directly or indirectly, of the power to vote ten
percent (10%) or more of the Securities having voting power for the election of
directors of such specified Person or otherwise to direct or cause the direction
of the management and policies of such specified Person, whether through the
ownership of voting Securities or by contract or otherwise.
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"Agreement of Contribution" means the Agreement and Plan of
Contribution, dated as of June 10, 1996, among Xxxxx Karan International,
Gabrielle Studio, Inc., Takihyo Inc., Xxxxx Karan, Xxxxxxx Xxxxx, Trust under
Trust Agreement for the Benefit of Xxxx Xxxxx Xxxxx, Xxxxx Xxxxx and Xxxxxxxxx
Xxxxx, Trust under Trust Agreement for the Benefit of Xxxxx Karan, Xxxxx Xxxx,
Xxxxx Xxxx, Xxxxxxxxxxx Xxxx and Xxxxxxx Xxxx.
"Applicable Fixed Rate Margin" means initially a rate equal to 2.25%
per annum until the last day of the fourth fiscal quarter of 1998. Thereafter,
such rate will fluctuate quarterly on the first day of each fiscal quarter,
commencing with the first fiscal quarter of 1999, based upon the Fixed Charge
Coverage Ratio for the preceding twelve-month period, calculated as of the last
day of such preceding twelve-month period, as set forth below:
If the Fixed Charge Applicable Fixed
Coverage Ratio is: Rate Margin
Less than 2.00 2.75%
Greater than or equal to
2.00 but less than 3.00 2.50%
Greater than or equal to
3.00 but less than 4.00 2.25%.
Greater than or equal to
4.00 but less than 5.00 2.00%
Greater than or equal to
5.00 1.75%.
"Applicable Floating Rate Margin" means initially a rate equal to
1.25% per annum until the last day of the fourth fiscal quarter of 1998.
Thereafter, such rate will fluctuate quarterly on the first day of each fiscal
quarter, commencing with the first fiscal quarter of 1999, based upon the Fixed
Charge Coverage Ratio for the preceding twelve-month period, calculated as of
the last day of such preceding twelve-month period, as set forth below:
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If the Fixed Charge Applicable Floating
Coverage Ratio is: Rate Margin
Less than 2.00 1.75%
Greater than or equal to
2.00 but less than 3.00 1.50%
Greater than or equal to
3.00 but less than 4.00 1.25%.
Greater than or equal to
4.00 but less than 5.00 1.00%
Greater than or equal to
5.00 0.75%.
"Applicable Lending Office" means, with respect to a particular
Lender, its Fixed Rate Lending Office in respect of provisions relating to Fixed
Rate Loans and Multicurrency Loans and its Domestic Lending Office in respect of
provisions relating to Floating Rate Loans.
"Asset Sale" means any sale, conveyance, transfer, license, lease or
other disposition (other than sales of inventory in the ordinary course of
business) of Xxxxx Karan International or any of its Subsidiaries.
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto and made a part hereof
(with blanks appropriately completed) delivered to the Administrative Agent in
connection with an assignment of a Lender's interest under this Agreement in
accordance with the provisions of Section 13.01.
"Available Currency" means, with respect to any Loan, the currency in
which such Loan is denominated pursuant to the terms hereof.
"Availability" means, at any particular time, the amount by which the
Maximum Revolving Credit Amount at such time exceeds the sum of (i) the
Revolving Credit Obligations at such time plus (ii) the amount of the Foreign
Exchange Exposure at such time plus (iii) the amount of the Obligations at such
time attributable to corporate credit cards or cash management functions,
including Automated Clearing House (ACH) functions, performed by Citibank.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Sections 101 et seq.), as amended from time to time, and any successor statute.
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"Benefit Plan" means a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) which is subject to Title IV of
ERISA or Section 412 of the Internal Revenue Code in respect of which the
Borrower or any ERISA Affiliate is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"Blocked Account Bank" means Citibank, N.A. which is identified as a
Blocked Account Bank on Schedule 6.01(Y).
"Blocked Accounts" means, collectively, the accounts established by
the Borrowers at the Blocked Account Banks and "Blocked Account" means any one
of the Blocked Accounts.
"Borrowers' Domestic Deposit Account" means the commercial deposit
account at Citibank with respect to the Borrowers, or any other deposit account
established by the Borrowers at a financial institution acceptable to the
Administrative Agent as the Borrowers may from time to time specify in writing
to the Administrative Agent and the Lenders.
"Borrowers' Multicurrency Accounts" means those certain commercial
deposit accounts listed on Schedule 1.01(C), or any other deposit account(s)
established by the Borrowers at a financial institution acceptable to the
Administrative Agent as the Borrowers may from time to time specify in writing
to the Administrative Agent and the Lenders.
"Borrowing" means a borrowing consisting of Loans of the same Type
made on the same day by the Lenders.
"Borrowing Base" means, as of any date of determination, an amount
equal to the sum of (a) up to ninety percent (90%) of Eligible Receivables that
are Credit Insured Receivables or are backed by a letter of credit acceptable to
the Administrative Agent (which letter of credit has been assigned to the
Administrative Agent) less such reserves as the Administrative Agent, in its
sole discretion, deems appropriate plus (b) up to eighty-five percent (85%) of
Eligible Receivables (other than those Eligible Receivables described in clause
(a) of this definition) less such reserves as the Administrative Agent, in
its sole discretion, deems appropriate plus (c) up to fifty percent (50%) of
Eligible Inventory under Acceptable Documentary Letters of Credit less such
reserves as the Administrative Agent, in its sole discretion, deems appropriate
plus (d) up to sixty percent (60%) of Eligible Finished Goods Inventory,
provided that the amount of the Borrowing Base allocated to the Eligible
Finished Goods Inventory stored in the warehouses located in Amsterdam shall not
exceed $6,000,000 in the aggregate, less such reserves as the Administrative
Agent, in its sole discretion, deems appropriate plus (e) up to thirty percent
(30%) of Eligible Raw Materials less such reserves as the Administrative Agent,
in
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its sole discretion, deems appropriate. The Administrative Agent, in its
sole discretion, based on such credit and collateral considerations as the
Administrative Agent may deem appropriate, may change from time to time the
advance rates in clauses (a), (b), (c), (d) and (e) above, provided that such
advance rates do not at any time exceed the respective percentages set forth
above.
"Borrowing Base Certificate" means a certificate, substantially in the
form of Exhibit C attached hereto and made a part hereof.
"Borrowing Base Inventory Availability" means, as of any date of
determination, an amount equal to the sum of (a) up to sixty percent (60%) of
Eligible Finished Goods Inventory, provided that the amount of the Borrowing
Base allocated to the Eligible Finished Goods Inventory stored in the warehouses
located in Amsterdam shall not exceed $6,000,000 in the aggregate, less such
reserves as the Administrative Agent, in its sole discretion, deems appropriate
plus (b) up to thirty percent (30%) of Eligible Raw Materials less such reserves
as the Administrative Agent, in its sole discretion, deems appropriate.
"Business Day" means a day, in the applicable local time, which is not
a Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close (i) in New York, New
York, (ii) in the case of Fixed Rate Loans or Multicurrency Loans, in London,
England and the applicable country, or (iii) in the case of Letter of Credit
transactions for a particular Issuing Bank, in the place where its office for
issuance or administration of the pertinent Letter of Credit is located.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether paid in cash or other assets or accrued as a liability
(but without duplication)) during such period that, in conformity with GAAP,
are required to be included in or reflected by Xxxxx Karan International and
its Subsidiaries' fixed asset accounts as reflected in any of their
respective balance sheets; provided, however, that (i) Capital Expenditures
shall include, whether or not such a designation would be in conformity with
GAAP, (A) that portion of Capital Leases which is capitalized on the
consolidated balance sheet of Xxxxx Karan International and its Subsidiaries,
(B) expenditures for Equipment which is purchased simultaneously with the
trade-in of existing Equipment owned by Xxxxx Karan International or any of
its Subsidiaries to the extent that the gross purchase price of the purchased
Equipment exceeds the book value of the Equipment being traded in at such
time and (C) expenditures for improvements in third party stores including
cooperative payments made to such third party stores; and (ii) Capital
Expenditures shall exclude, whether or not such a designation would be in
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conformity with GAAP, expenditures made in connection with the replacement or
restoration of assets to the extent that such expenditures are reimbursed or
financed with insurance or condemnation proceeds.
"Capital Lease" means, as applied to any Person, 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.
"Capital Stock", with respect to any Person, means any capital stock
of such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Cash Capital Expenditures" means, for any period, that portion of
Capital Expenditures which is paid in cash.
"Cash Collateral" means cash or Cash Equivalents held by the
Administrative Agent, any of the Issuing Banks or any of the Lenders as security
for any or all of the Obligations.
"Cash Collateral Accounts" means, collectively, the accounts opened
and maintained at Citibank for Dollars and each Optional Currency which accounts
shall be governed by the terms of the Cash Collateral Pledge Agreement and shall
be under the sole dominion and control of the Administrative Agent.
"Cash Collateral Pledge Agreement" means the Cash Collateral Pledge
and Assignment Agreement dated as of September 18, 1996, made by the Borrowers
in favor of the Administrative Agent for the benefit of the Administrative
Agent, the Lenders, the Issuing Banks and the other Holders, as such Pledge
Agreement may be amended, supplemented or otherwise modified from time to time.
"Cash Equivalents" shall mean (i) marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by an
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year after the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within ninety (90) days after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Services, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Xxxxx'x Investors Services, Inc. shall be rating such
obligations, then from such other nationally recognized rating services
acceptable to the
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Administrative Agent) and not listed in Credit Watch published by Standard &
Poor's Corporation; (iii) commercial paper, other than commercial paper issued
by any Borrower or any of its Affiliates, maturing no more than ninety (90) days
after the date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 or P-1 from either Standard & Poor's Corporation or
Moody's Investor's Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Xxxxx'x Investors Service, Inc. shall be rating such
obligations, then the highest rating from such other nationally recognized
rating services acceptable to the Administrative Agent); (iv) domestic and
Eurodollar certificates of deposit or time deposits or bankers' acceptances
maturing within ninety (90) days after the date of acquisition thereof issued by
any commercial bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or Canada having combined capital
and surplus of not less than $500,000,000; and (v) marketable direct debt issued
by any corporation (other than debt issued by any Borrower or any of its
Affiliates), which at the time of acquisition, has one of the three highest
ratings obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Services, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Xxxxx'x Investors Services, Inc. shall be rating such
obligations, then from such other nationally recognized rating services
acceptable to the Administrative Agent) maturing within one (1) year after the
date of acquisition thereof.
"Cash Interest Expense" means, for any Financial Covenant Period,
total interest expense, whether paid or accrued (including the interest
component of Capital Leases) of Xxxxx Karan International and its Subsidiaries
on a consolidated basis, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of credit and
net costs under Interest Rate Contracts, but excluding, amortization of
financing fees, interest paid in property other than cash or any other interest
expense not payable in cash, all as determined in conformity with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq., any amendments
thereto, any successor statutes, and any regulations promulgated thereunder.
"Change of Control" means (i) the acquisition by any "person" (as such
term is used in Section 13(d) and 14(d) of the Securities Exchange Act) other
than a person who is a shareholder of Xxxxx Karan International on the effective
date of the registration statement filed under the Securities Act relating to
the Public Equity Offering (an "Initial DKI Shareholder") of 30% or more of the
voting power of Securities of Xxxxx Karan International, or the acquisition by
an Initial DKI Shareholder other than an affiliate of Xxxxx Karan International
of an
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additional 5% of the voting power of Securities of Xxxxx Karan International
over and above that owned immediately after the closing of the Public Equity
Offering; (ii) the acquisition of any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act) other than a person who, on the
effective date of the registration statement filed under the Securities Act
relating to the Public Equity Offering, is a holder of any ownership interest in
Xxxxx Karan Studio (an "Initial Licensee Interest Holder") of 30% or more of the
voting power of Xxxxx Karan Studio, or the acquisition by an Initial Licensee
Interest Holder other than an affiliate of Gabrielle Studio, Inc. (and excluding
any such acquisition resulting from a purchase, sale or transfer of Takihyo Inc.
stock by and between any of the current stockholders of Takihyo Inc.) of an
additional 5% of the voting power of Xxxxx Karan Studio over and above that
owned immediately after the closing of the Public Equity Offering; (iii) any
merger or sale of substantially all of the assets of Xxxxx Karan International
under circumstances where the holders of 20% or more of the equity securities of
the surviving entity of such transaction were not holders of the Common Stock of
Xxxxx Karan International immediately prior to consummation of such transaction;
(iv) any merger or sale of substantially all of the assets of Xxxxx Karan Studio
under circumstances where the holders of 20% or more of the ownership interests
of Xxxxx Karan Studio immediately prior to consummation of such transaction were
not holders of an ownership interest in Xxxxx Karan Studio immediately after
consummating such transaction; or (v) any change in the composition of the Board
of Directors of Xxxxx Karan International not approved by (a) a majority of the
Board of Directors of Xxxxx Karan International prior to such change and (b) not
less than two directors of Xxxxx Karan International who were directors prior to
the time any "person" who was not an Initial DKI Shareholder acquired 30% or
more of the voting power of Securities of Xxxxx Karan International.
"Citibank" means Citibank, N.A., a national banking association.
"Claim" means any claim or demand, by any Person, of whatsoever kind
or nature for any alleged Liabilities and Costs, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Clean-Down Amount" means, for any Clean-Down Period, $30,000,000,
subject to any reduction set forth in Section 3.01(b)(ii), 3.01(b)(iii) or
9.06(vi)(b) applicable to such Clean-Down Period.
"Clean-Down Forecast" means, at any particular time, a forecast of
Xxxxx Karan International and its Subsidiaries, giving effect to the Net Cash
Proceeds being received in
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connection with an Asset Sale pursuant to Section 3.01(b)(ii), or the Net Cash
Proceeds being received in connection with the issuance of Common Stock pursuant
to Section 3.01(b)(iii), or the dividends or repurchases being made pursuant to
Section 9.06(vi) and showing each succeeding fiscal month through the end of the
Clean-Down Period immediately following such time, demonstrating their ability
to make or cause to be made a mandatory prepayment of all outstanding Loans (and
not borrow any other Loan) for a period of forty-five (45) consecutive days
during such Clean-Down Period, certified by the chief financial officer of Xxxxx
Karan International and in form and substance satisfactory to the Requisite
Lenders.
"Clean-Down Period" means the period from November 1 of each Fiscal
Year to March 1 of the following Fiscal Year.
"Closing Date" means the initial Funding Date of the Loans.
"Co-Agents" has the meaning ascribed to such term in the preamble
hereto.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute and any regulations or guidance promulgated
thereunder.
"Collateral" means all property and interests in property now owned or
hereafter acquired by any Borrower or any other Loan Party in or upon which a
Lien is granted under any of the Loan Documents.
"Commercial Letter of Credit" means any documentary letter of credit
issued by an Issuing Bank pursuant to Section 2.03 for the account of any
Borrower which is drawable upon presentation of documents evidencing the sale or
shipment of goods purchased by such Borrower in the ordinary course of its
business.
"Commission" means the Securities and Exchange Commission and any
Person succeeding to the functions thereof.
"Commitment" means, with respect to any Lender, the obligation of such
Lender to make Revolving Loans pursuant to the terms and conditions of this
Agreement, and which shall not exceed the principal amount set forth opposite
such Lender's name under the heading "Revolving Loan Commitment" on the
signature pages hereof or the signature page of the Assignment and Acceptance by
which it became (or becomes) a Lender, as such may be modified from time to time
pursuant to the terms of this Agreement or to give effect to any applicable
Assignment and Acceptance, and "Commitments" means the aggregate principal
amount of the Commitments of all the Lenders (it being understood
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and agreed that the maximum aggregate principal amount of the Commitments shall
not exceed $150,000,000, as reduced from time to time pursuant to the terms
hereof).
"Commitment Termination Date" means the day which is the earliest of
(A) January 30, 2001, (B) the termination of the Commitments pursuant to Section
11.02(a) and (C) the date of termination in whole of the Commitments pursuant to
Section 3.01(a).
"Common Stock" means the common stock of Xxxxx Karan International.
"Compliance Certificate" has the meaning ascribed to such term in
Section 7.01(d).
"Contaminant" means any waste, pollutant (as that term is defined in
42 U.S.C. 9601(33) or in 33 U.S.C. 1362(13)), hazardous substance (as that term
is defined in 42 U.S.C. 9601(14)), hazardous chemical (as that term is defined
by 29 CFR Section 1910.1200(c)), toxic substance, hazardous waste (as that term
is defined in 42 U.S.C. 6901), radioactive material, special waste, petroleum,
including crude oil or any petroleum-derived substance, waste, or breakdown or
decomposition product thereof, or any constituent of any such substance or
waste, including, but not limited to polychlorinated biphenyls, and asbestos.
"Contractual Obligation" means, as applied to any Person, any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
"Cost" means the aggregate purchase price paid or to be paid by any
Borrower to the supplier for such goods, including transportation costs, if any,
as reflected in the invoices attached to the Request for Acceptance relating
thereto.
"Credit Insured Receivable" shall mean an account receivable of a
Borrower with respect to which the following statements are true: (i) such
Borrower has obtained credit insurance or other form of credit protection
covering such account receivable on terms and conditions and from a financial
institution satisfactory to the Administrative Agent and (ii) such credit
insurance or other form of credit protection is in full force and effect and not
in dispute.
"Current Assets" means, as at any date of determination, the total
assets of Xxxxx Karan International and its
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Subsidiaries on a consolidated basis which may properly be classified as current
assets in conformity with GAAP.
"Current Liabilities" means, as at any date of determination, the
current liabilities of Xxxxx Karan International and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, including for purposes of this definition, the Loans.
"Customary Permitted Liens" means
(i) Liens (other than Environmental Liens and Liens in favor of the
PBGC) with respect to the payment of taxes, assessments or governmental
charges or claims in all cases which are not yet due or are being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance
with GAAP;
(ii) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other Liens imposed by
law created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP;
(iii) Liens (other than any Lien in favor of the PBGC) incurred or
deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
leases, contracts (other than for the repayment of borrowed money), surety,
appeal and performance bonds;
(iv) Liens arising as a result of progress payments or otherwise under
government contracts; and
(v) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of Real Property which do not materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries and
which do not materially adversely affect the value of the Real Property.
"Debt" means, as applied to any Person at any time, all indebtedness,
obligations or other liabilities of such Person (i) for borrowed money or
evidenced by debt securities, debentures, acceptances, notes or other similar
instruments, and
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any accrued interest, fees and charges relating thereto, (ii) under profit
payment agreements or in respect of obligations to redeem, repurchase or
exchange any Securities of such Person or to pay dividends in respect of any
stock, (iii) reimbursement obligations with respect to letters of credit issued
for such Person's account, (iv) to pay the deferred purchase price of property
or services, except accounts payable and accrued expenses arising in the
ordinary course of business, or (v) in respect of Capital Leases.
"Default" means an event which, with the giving of notice or the lapse
of time, or both, would constitute an Event of Default.
"Disbursement Accounts" means, collectively, the bank accounts of the
Borrowers indicated as disbursement accounts on the Schedule 6.01(Y).
"Discount Rate" of any Issuing Bank means, with respect to an
Acceptance created by such Issuing Bank at any time, the bid rate in effect at
such Issuing Bank at such time for discount by such Issuing Bank of commercial
drafts or bills eligible for discount by Federal Reserve Banks in the same face
amount, with the same maturity, and of the same type, as such Acceptance.
"DK Divisions" means the following divisions of The Xxxxx Karan
Company:
Xxxxx Karan Collection Clothing
Xxxxx Karan Collection Menswear
Xxxxx Karan Mens Furnishings
DKNY Clothing
DKNY Jeans
Xxxxx Karan Collection Accessories
DKNY Petites
DKNY Accessories
DKNY Menswear
DK Essentials
DK Mens Essentials
DKNY Active
DKNY Clothing Essentials
DK Mens Accessories
DK Mens Essentials Accessories
DKNY Kids
DK Mens Sportswear
Xxxxx Karan Signature
DKNY Classic
DKNY
"D"
DKNY Clothing/Petite Cut-ups
DK Womens Signature Accessories
Xxxxx Karan Shoes
14
DKNY Womens/Mens Shoes
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Dollar Equivalent" means, with respect to any amount denominated in
an Available Currency (other than Dollars) on the date of determination thereof,
the equivalent of such amount in Dollars determined at the rate of exchange
equal to the Spot Rate on such date of determination.
"Domestic Base Rate" means, for any period, a fluctuating interest
rate per annum as shall be in effect from time to time which rate per annum
shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time (but at least annually), as Citibank's base
rate;
(b) the sum (adjusted to the nearest 1/4 of one percent or, if there
is no nearest 1/4 of one percent, to the next higher 1/4 of one percent) of
(i) 1/2 of one percent per annum, plus (ii) the rate per annum obtained by
dividing (A) the latest three-week moving average of secondary market
morning offering rates in the United States for three-month certificates of
deposit of major United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if any such date is not
a Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank
from three New York certificate of deposit dealers of recognized standing
selected by Citibank, by (B) a percentage equal to 100% minus the average
of the daily percentages specified during such three-week period by the
Federal Reserve Board (or any successor) for determining the maximum
reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for Citibank in respect
of liabilities consisting of or including (among other liabilities)
three-month U.S. dollar nonpersonal time deposits in the United States,
plus (iii) the average during such three-week period of the annual
assessment rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or
15
any successor) for insuring U.S. dollar deposits of Citibank in the United
States; and
(c) for any day, 1/2 of one percent per annum above 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 quotations for such day on such
transactions received by Citibank from three Federal funds brokers of
recognized standing selected by it.
"Domestic Concentration Account" means Account No. 4000-3664 at
Citibank, N.A. in New York, New York, or such other account as is acceptable to
the Administrative Agent as a concentration account.
"Domestic Lending Office" means, with respect to any Lender, such
Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time specify by written
notice to the Borrowers and the Administrative Agent.
"Domestic LIBO Rate" means, with respect to any Interest Period
applicable to a Borrowing of Fixed Rate Loans denominated in Dollars, the
interest rate per annum obtained by dividing (i) an interest rate per annum
determined by the Administrative Agent to be the average (rounded upward to the
nearest whole multiple of one-sixteenth of one percent (0.0625%) per annum if
such average is not such a multiple) of the rates per annum at which deposits in
Dollars are offered by the principal office of Citibank in London, England to
major banks in the London interbank market at approximately 11:00 a.m. (London
time) on the Fixed Rate Determination Date for such Interest Period for a period
equal to such Interest Period and in an amount substantially equal to the amount
of the Fixed Rate Loan to be made by Citibank for such Interest Period, by
(ii) a percentage equal to 100% minus the Domestic Reserve Percentage in effect
on the relevant Fixed Rate Determination Date. The Domestic LIBO Rate shall be
adjusted automatically on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Domestic Loan" means a Loan denominated in Dollars.
"Domestic Reserve Percentage" means, for any day, that percentage
which is in effect on such day, as prescribed by the Federal Reserve Board for
determining the maximum reserve
16
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York, New York with deposits exceeding five billion Dollars in respect of
"Eurocurrency Liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Fixed Rate
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any bank to United States
residents).
"Xxxxx Karan Group" means, collectively, Xxxxx Karan International and
its Subsidiaries.
"Xxxxx Karan International" means Xxxxx Karan International Inc., a
Delaware corporation.
"Drafts" has the meaning ascribed to such term in Section 2.04(b).
"EBITDA" means, for any Financial Covenant Period, for Xxxxx Karan
International and its Subsidiaries on a consolidated basis (i) the sum of the
amounts for such period of (A) Net Income, (B) depreciation and amortization
expense, (C) interest expense, (D) federal, state, local and foreign income
taxes and (E) unusual expense associated with the write-off of the capitalized
portion of financing costs; minus (ii) gains from Asset Sales (but including
expense reimbursements in connection with Asset Sales closing in 1996); plus
(iii) losses from Asset Sales; minus (iv) extraordinary gains; minus (v)
interest income; minus (vi) any gain relating to the accumulated effect of any
change in accounting method; plus (vii) any loss relating to the accumulated
effect of any change in accounting method; plus (viii) any extraordinary charges
incurred in the second quarter of Fiscal Year 1997 relating to the Borrowers'
restructuring (whether or not such charges are in conformity with GAAP) in an
amount not to exceed $5,700,000; plus (ix) any extraordinary charges incurred in
the fourth quarter of Fiscal Year 1997 relating to the Borrowers' restructuring
(whether or not such charges are in conformity with GAAP) in an amount not to
exceed $20,000,000, each item in clauses (i) through (ix) calculated in
conformity with GAAP for such period.
"Effective Date" means the date on which the conditions precedent set
forth in Sections 5.01 and 5.02 have been satisfied.
"Eligible Acceptance" means any Acceptance (i) against the liability
for which the Issuing Bank which created such Acceptance is not required to
maintain reserves under Regulation D of the Board of Governors of the Federal
Reserve System in effect from time to time, or under any other law or
regulation, and (ii) which is eligible for discount by Federal Reserve Banks.
17
"Eligible Assignee" means (i) a Lender or (ii) a commercial bank,
lending institution, finance company, insurance company, other financial
institution or fund reasonably acceptable to the Administrative Agent and the
Borrowers.
"Eligible Finished Goods Inventory" means Inventory consisting of
finished goods completed in accordance with style or customer order
specifications which is stored in one of the Borrowers' finished good warehouses
permitted under this Agreement and listed on Schedule 1.01(E), for which a
customer has not been billed, and which is otherwise Eligible Inventory;
provided, however, that with respect to the Inventory stored in the warehouses
located in Amsterdam such Inventory shall not be Eligible Finished Goods
Inventory unless and until such Inventory has been fully paid for and no amount
is owing by any Borrower with respect thereto. Eligible Finished Goods
Inventory shall be valued at the lower of cost on a FIFO basis or market.
"Eligible Inventory" means Inventory with respect to which, when
scheduled on a Borrowing Base Certificate and at all times thereafter, the
Administrative Agent has a valid and perfected first priority security interest,
there is no violation of the negative or affirmative covenants or other
provisions of this Agreement or any other Loan Document, and which is not, in
the reasonable opinion of the Administrative Agent, obsolete or unmerchantable
and which the Administrative Agent, in its reasonable credit judgment deems to
be Eligible Inventory, based on such credit and collateral considerations as the
Administrative Agent may deem appropriate. Eligible Inventory shall be valued
at the lower of cost on a FIFO basis or market. Other than Inventory that
consists of Eligible Finished Goods Inventory that is stored at a finished goods
warehouse as described in the definition of "Eligible Finished Goods Inventory",
no Inventory of a Borrower shall be Eligible Inventory if such Inventory is
located, stored, used or held at the premises of a third party unless either (i)
(A) the Administrative Agent shall have received a bailee's or similar letter
from such third party in form and substance satisfactory to the Administrative
Agent and (B) an appropriate UCC-1 financing statement shall have been executed
with respect to such location or (ii) the Administrative Agent shall have
otherwise consented in writing. The Administrative Agent reserves the right, in
its reasonable discretion, to create, from time to time, additional categories
of ineligible Inventory.
"Eligible Raw Materials" means Inventory which is classified,
consistent with past practice, on the Borrowers' accounting system as raw
materials, which is otherwise Eligible Inventory.
"Eligible Receivables" means those Receivables with respect to which,
when scheduled on a Borrowing Base Certificate
18
and at all times thereafter, the Administrative Agent has a valid and perfected
first priority security interest, there is no violation of the negative or
affirmative covenants or other provisions of this Agreement or any other Loan
Document and which the Administrative Agent, in its reasonable credit judgment,
deems to be Eligible Receivables, based on such credit and collateral
considerations as the Administrative Agent may deem appropriate. No Receivable
of a Borrower shall be an Eligible Receivable if:
(i) the Receivable is a non-dated Receivable which remains due or
unpaid more than ninety (90) days after the date of original invoice issued
by such Borrower with respect to the sale giving rise thereto; or the
Receivable is a dated Receivable which remains due or unpaid more than
ninety (90) days after the date of the original invoice issued by such
Borrower with respect to the sale giving rise thereto; or
(ii) the Receivable arises out of a sale not made in the ordinary
course of such Borrower's business or is to a Person which is an Affiliate
or Subsidiary of such Borrower or controlled by an Affiliate or Subsidiary
of such Borrower unless such sale is to Xxxxx Karan Japan K.K. or other
Affiliate of Xxxxx Karan International and gives rise to a Credit Insured
Receivable; or
(iii) any portion of the Receivable is in dispute, but only that
portion in dispute (if such disputed portion is less than 50% of such
Receivable) shall be ineligible ; or
(iv) any warranty contained in this Agreement or any Loan Document
with respect to Eligible Receivables or such Receivable has been breached;
or
(v) the Receivable is, or in the Administrative Agent's reasonable
judgment may become, subject to any claim of setoff which is formally or
informally asserted by the account debtor, and such account debtor has not
entered into an agreement which is acceptable to the Administrative Agent
with respect the waiver of rights of setoff; or
(vi) the account debtor has filed a petition for bankruptcy or any
other petition for relief under the Bankruptcy Code, made an assignment for
the benefit of creditors, or if any petition or other application for
relief under the Bankruptcy Code has been filed against the account debtor,
or if the account debtor has failed, suspended its business operations,
become insolvent, or suffered a receiver or a trustee to be appointed for
all or a material portion of its assets or affairs; or
19
(vii) the account debtor is also such Borrower's supplier or creditor,
and that account debtor has not entered into an agreement with the
Administrative Agent with respect to waiver of rights or setoff; or
(viii) the sale is to an account debtor located outside the continental
United States, unless such sale is on letter of credit or acceptance terms
acceptable to the Administrative Agent (which letter of credit or
acceptance has been assigned to the Administrative Agent in a manner
satisfactory to the Administrative Agent) or such sale gives rise to a
Credit Insured Receivable; or
(ix) the sale to such customer is on guaranteed sale, sale and return,
sale on approval, consignment or any other repurchase or return basis; or
(x) in the Administrative Agent's reasonable judgment that collection
of such Receivable is insecure or that such Receivable may not be paid by
reason of the account debtor's financial inability to pay; or
(xi) the goods giving rise to such Receivable have not been shipped
and delivered to and received by the account debtor or the services giving
rise to such Receivable have not been performed by such Borrower and
accepted by the account debtor; or
(xii) at the time of determination, the Receivable(s) of the respective
account debtor exceed twenty percent (20%) (or thirty percent (30%), in the
case of Federated Department Stores, Inc. or Receivables of Xxxxx Karan
Japan K.K. or any other Affiliate of Xxxxx Karan International, which are
Credit Insured Receivables) of the aggregate amount of such Borrower's
Eligible Receivables, but only to the extent of such excess; or
(xiii) except as otherwise agreed by the Administrative Agent, the
account debtor is the United States of America or any department, agency or
instrumentality thereof, unless the Borrower has assigned its right to
payment of such Receivable to Administrative Agent pursuant to the
Assignment of Claims Act of 1940, as amended, and such assignment has been
accepted and acknowledged by the appropriate government officers; or
(xiv) the Receivable is subject to any deduction, counterclaim or other
condition which the Administrative Agent determines, in its reasonable
discretion, has a material adverse effect on the collectability thereof; or
20
(xv) any document or agreement executed or delivered in connection
with any Receivable, or any procedure used in connection with any such
document or agreement, fails in any respect to comply with any requirements
of applicable law, and such failure would, in the reasonable determination
of the Administrative Agent, (a) have a material adverse effect upon the
collectability of such Receivable or (b) subject payments with respect to
such Receivable to any claim for recovery thereof after receipt by the
Administrative Agent or the Lenders.
In addition to the foregoing, no Receivables owing by a particular account
debtor shall be Eligible Receivables if fifty percent (50%) or more of the
Receivables owing from such account debtor are ineligible for any reason. The
Administrative Agent reserves the right, in its reasonable discretion, to
create, from time to time, additional categories of ineligible Receivables.
"Environmental, Health or Safety Requirements of Law" means all valid
and enforceable Requirements of Law derived from or relating to federal, state,
local and foreign laws, regulations, orders, ordinances, rules, permits,
licenses or other binding determination of any Governmental Authority relating
to or addressing the environment, health or safety, including but not limited to
any law, regulation, or order relating to the use, handling, or disposal of any
Contaminant, any law, regulation, or order relating to Remedial Action and any
law, regulation, or order relating to workplace or worker safety and health, and
such Requirements of Law as are promulgated by the specifically authorized agent
or agents responsible for administering such Requirements of Law.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (i) any liabilities under any Environmental, Health or Safety
Requirement of Law, or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"Environmental Property Transfer Acts" means any applicable
Requirement of Law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any Property or the
transfer, sale or lease of any Property or deed or title for any Property for
environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Act", "Responsible Transfer Act", or
"Industrial Site Recovery Act".
"Equipment" means all of each Borrower's present and future
(i) equipment and fixtures, including, without limitation, machinery,
manufacturing, distribution, selling, computer system, data processing and
office equipment, assembly systems, tools,
21
molds, dies, fixtures, appliances, furniture, furnishings, vehicles, vessels,
aircraft, aircraft engines, and trade fixtures, (ii) other tangible personal
property (other than such Borrower's Inventory), and (iii) any and all
accessions, parts and appurtenances attached to any of the foregoing or used in
connection therewith, and any substitutions therefor and replacements, products
and proceeds thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as a Borrower; (ii) a partnership, or other trade or business (whether
or not incorporated) which is under common control (within the meaning of
Section 414(c) of the Code) with a Borrower; (iii) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as a
Borrower, any corporation described in clause (i) above or any partnership or
trade or business described in clause (ii) above; and (iv) any other Person
which is required to be aggregated with a Borrower pursuant to regulations
promulgated under Section 414(o) of the Code.
"Event of Default" means any of the occurrences set forth in Section
11.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 11.01.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum 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 in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Administrative Agent from three federal funds brokers of
recognized standing selected by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"Financial Covenant Period" means with respect to each fiscal quarter,
the immediately preceding twelve fiscal month period.
22
"Financial Officer" means, with respect to Xxxxx Karan International
or any Borrower, the chief financial officer, treasurer or controller with
significant responsibility for the financial affairs of Xxxxx Karan
International or such Borrower.
"Fiscal Year" means the fiscal year of the Borrowers, which shall be
the 52- or 53-week period ending on the Sunday nearest to December 31 of each
calendar year.
"Fixed Charge Coverage Ratio" means, for any Financial Covenant
Period, the ratio of (i) EBITDA plus the Net Cash Proceeds of Asset Sales
received during such period minus Capital Expenditures made during such period
minus the Investments made pursuant to Section 9.04(iv) during such period minus
any dividends payments or stock repurchases with respect to the Common Stock
during such period minus any cash payment of taxes made during such period, to
(ii) Cash Interest Expense for such period plus any principal payment of Funded
Debt made during such period.
"Fixed Rate" means, with respect to any Interest Period applicable to
a Borrowing of Fixed Rate Loans denominated in any Available Currency, an
interest rate per annum equal to (i) the Domestic LIBO Rate with respect to
Fixed Rate Loans denominated in Dollars and (ii) the Multicurrency LIBO Rate
with respect to Fixed Rate Loans denominated in an Optional Currency, in each
case in effect on the relevant Fixed Rate Determination Date.
"Fixed Rate Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under the
heading "Fixed Rate Affiliate" on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such Affiliate of a
Lender as it may from time to time specify by written notice to the Borrowers
and the Administrative Agent.
"Fixed Rate Determination Date" means, with respect to a Borrowing of
Fixed Rate Loans, the second Business Day prior to the first day of the Interest
Period for any Borrowing.
"Fixed Rate Interest Payment Date" means (i) with respect to any Fixed
Rate Loan, the last day of each Interest Period applicable to such Loan and
(ii) with respect to any Fixed Rate Loan having a Interest Period in excess of
three (3) calendar months, the last day of each three (3) calendar month
interval during such Interest Period.
"Fixed Rate Lending Office" means, with respect to any Lender, the
office or offices of such Lender (if any) set forth below such Lender's name
under the heading "Fixed Rate Lending Office" on the signature pages hereof or
on the Assignment and Acceptance by which it became a Lender or such office or
offices
23
of such Lender as it may from time to time specify by written notice to the
Borrowers and the Administrative Agent.
"Fixed Rate Loans" means all Loans denominated in Dollars or an
Optional Currency outstanding which bear interest at a rate determined by
reference to the Fixed Rate applicable to such currency as provided in Section
4.01(a).
"Floating Rate" means, for any period applicable to any Floating Rate
Loan denominated in any Available Currency, an interest rate per annum equal to
the Domestic Base Rate in effect from time to time with respect to Floating Rate
Loans.
"Floating Rate Loans" means all Loans denominated in Dollars which
bear interest at a rate determined by reference to the Floating Rate applicable
to such currency as provided in Section 4.01(a).
"Footwear Divisions" means the following divisions of DK Footwear
Partners:
Xxxxx Karan Shoes
DKNY Womens/Mens Shoes
DKNY Jeans Shoes
"Foreign Exchange Exposure" means, at any time and from time to time,
the amount of the obligations and liabilities of a Person with respect to each
foreign exchange contract arising as a result of a determination of the amount
of Dollars required at such time to purchase such amount of the foreign currency
covered by such foreign exchange contract at the rate equal to the spot exchange
rate offered by Citibank for the purchase of such foreign currency with Dollars
at or about 11:00 a.m. (New York time), net of liabilities owed to such Person
by the counterparties thereon.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting any of the Borrowers before any court, governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
the receipt of notice by any such party that any of them is a suspect in or a
target of any governmental inquiry or investigation, which may result in an
indictment of any of them or the seizure or forfeiture of any of their property.
"Funded Debt" means Debt which matures more than one year from the
date of its creation or matures within one year from such date but is renewable
or extendible, at the option of the debtor, to a date more than one year from
such date or arises under a revolving credit or similar agreement which
obligates the lender or lenders to extend credit during a period of more than
one year from such date including, without limitation, all
24
amounts of Funded Debt required to be paid or prepaid within one year from the
date of determination and excluding the Loans.
"Funding Date" means, with respect to any Loan, the date of the
funding of such Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants Standards Board or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession as in effect on the date of the most recent audited
financial statements of the Borrowers delivered to the Lenders prior to the
Closing Date.
"General Intangibles" means all of each Borrower's present and future
choses in action, causes of action and all other intangible personal property of
every kind and nature (other than Receivables), including without limitation
general intangibles, contracts, corporate or other business records, designs,
patents, patent applications, trademarks, trademark applications, service marks,
service xxxx applications, trade names, tradestyles, trade secrets, operating
certificates, operating certificate applications, goodwill, registrations,
copyrights, licenses, franchises, permits, operating authorities, agent and
owner/operator contracts, certificates of public convenience, refunds or
reversions from any employee benefit plan or pension plan, covenants not to
compete, blueprints and other drawings, customer lists, tax refunds, tax refund
claims, rights and claims against carriers and shippers, and rights to
indemnification; provided, however, that the License Agreement and the rights of
Xxxxx Karan Studio under the License Agreement shall be excluded from the
definition of "General Intangibles".
"Governing Documents" means, (i) with respect to any corporation,
(A) the articles/certificate of incorporation (or the equivalent organizational
documents) of such entity, (B) the by-laws (or the equivalent governing
documents) of such entity and (C) any document setting forth the designation,
amount and/or relative rights, limitations and preferences of any class or
series of such entity's Capital Stock and (ii) with respect to any partnership
(whether limited or general), (A) the certificate of partnership (or equivalent
filings), (B) the partnership agreement (or equivalent organizational documents)
of such partnership and (C) any document setting forth the designation, amount
and/or rights, limitations and preferences of any of such partnership's
partnership interests.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legisla-
25
tive, judicial, regulatory or administrative functions of or pertaining to
government.
"Guaranties" means, collectively, the Guaranties, each dated as of
September 18, 1996, made by each of the Guarantors, each in favor of the
Administrative Agent, the Lenders and the Issuing Banks, pursuant to which such
Guarantor guarantees all of the Obligations, as such each such Guaranty may be
amended, supplemented or otherwise modified from time to time.
"Guarantors" means, collectively, the Borrowers, Xxxxx Karan
International, DK Shoe Corp., The Xxxxx Karan Store Corporation, Gabrielle
Japan, Inc., Gabby Apparel, Inc., DSTF Japan Company, Tolara Tetragon Inc., Full
Requirements Merchandising, Inc., TT DK Japan, Inc., FM DK Japan, Inc., Tomio
Tangents, Inc., Formal Reserve Management, Inc., Tangents Two, Inc., First Run
Management, Inc., and Xxxxx Karan (H.K.) Limited.
"Holder" means any Person entitled to enforce any of the Obligations,
whether or not such Person holds any evidence of Indebtedness, including,
without limitation, the Administrative Agent, each Co-Agent, each Lender and
each Issuing Bank.
"Indebtedness" means, as applied to any Person at any time, (a) all
indebtedness, obligations or other liabilities of such Person (i) for borrowed
money or evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, and any accrued interest, fees and charges relating
thereto, (ii) under profit payment agreements or in respect of obligations to
redeem, repurchase or exchange any Securities of such Person or to pay dividends
in respect of any stock, (iii) with respect to letters of credit issued for such
Person's account, (iv) to pay the deferred purchase price of property or
services, except accounts payable and accrued expenses arising in the ordinary
course of business, (v) in respect of Capital Leases or (vi) which are
Accommodation Obligations; (b) all indebtedness, obligations or other
liabilities of such Person or others secured by a Lien (other than a Customary
Permitted Lien) on any property of such Person, whether or not such
indebtedness, obligations or liabilities are assumed by such Person, all as of
such time; (c) all indebtedness, obligations or other liabilities of such Person
in respect of Interest Rate Contracts and foreign exchange contracts, net of
liabilities owed to such Person by the counterparties thereon; (d) all preferred
stock subject (upon the occurrence of any contingency or otherwise) to mandatory
redemption; and (e) all contingent Contractual Obligations with respect to any
of the foregoing.
"Interbank Rate" means, for any period, (i) in respect of Loans
denominated in Dollars, the Federal Funds Rate and (ii) in respect of Loans
denominated in an Optional Currency, the Multicurrency LIBO Rate in effect on
the relevant Fixed Rate
26
Determination Date for an Interest Period of seven (7) days plus the Applicable
Fixed Rate Margin.
"Interest Coverage Ratio" means, with respect to any Financial
Covenant Period, the ratio of (i) EBITDA to (ii) Cash Interest Expense.
"Interest Period" has the meaning set forth in Section 4.02(b).
"Interest Rate Contracts" means interest rate exchange, swap, collar,
cap, hedging or similar agreements.
"Interest Rate Determination Date" has the meaning ascribed to such
term in Section 4.02(c).
"Inventory" means all of each Borrower's present and future
(i) inventory, (ii) goods, merchandise and other personal property furnished or
to be furnished under any contract of service or intended for sale or lease, and
all consigned goods and all other items which have previously constituted
Equipment but are then currently being held for sale or lease in the ordinary
course of such Borrower's business, (iii) raw materials, work-in-process and
finished goods, (iv) materials and supplies of any kind, nature or description
used or consumed in such Borrower's business or in connection with the
manufacture, production, packing, shipping, advertising, finishing or sale of
any of the property described in clauses (i) through (iii) above, (v) goods in
which such Borrower has a joint or other interest or right of any kind
(including, without limitation, goods in which such Borrower has an interest or
right as consignee), and (vi) goods which are returned to or repossessed by such
Borrower; in each case whether in the possession of such Borrower, a bailee, a
consignee, or any other Person for sale, storage, transit, processing, use or
otherwise, and any and all documents for or relating to any of the foregoing.
"Investment" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (ii) any purchase by that Person of all
or substantially all of the assets of a business conducted by another Person,
and (iii) any direct or indirect loan, advance (other than prepaid expenses,
accounts receivable, advances to employees and similar items made or incurred in
the ordinary course of business as presently conducted) or capital contribution
by that Person to any other Person, including all Indebtedness to such Person
arising from a sale of property by such Person other than in the ordinary course
of its business. The amount of any Investment shall be the original cost of
such Investment, plus the cost of all additions thereto less the amount of any
return of capital or principal to the extent such return is in cash with respect
to
27
such Investment without any adjustments for increases or decreases in value or
write-ups, write-downs or write-offs with respect to such Investment.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Issue" means, with respect to any Letter of Credit, either issue, or
extend the expiry of, or renew, or increase the amount of, such Letter of
Credit, and the term "Issued" or "Issuance" shall have a corresponding meaning.
"Issuing Bank" means Citibank or any assignee of Citibank designated
as an "Issuing Bank" on the signature page of the Assignment and Acceptance by
which it became a Lender.
"Lender" has the meaning ascribed to such term in the preamble hereto.
"Letter Agreement" means the letter agreement addressed to the
Borrowers from the Administrative Agent dated January 30, 1998.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit Issued for the account of any Borrower pursuant to Section
2.03.
"Letter of Credit Fee" has the meaning ascribed to such term in
Section 4.03(b).
"Letter of Credit Obligations" means, at any particular time, the sum
of (i) all outstanding Reimbursement Obligations at such time, plus (ii) the
aggregate undrawn face amount of all outstanding Letters of Credit at such time,
plus (iii) the aggregate face amount of all Letters of Credit requested by each
Borrower at such time but not yet issued (unless the request for an unissued
Letter of Credit has been denied pursuant to Section 2.03(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with respect to a
Letter of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken together) as
the Issuing Bank from which the Letter of Credit is requested may employ in the
ordinary course of business for its own account, with such modifications thereto
as may be agreed upon by the Issuing Bank and a Borrower; provided, however,
that in the event of any conflict between the terms of any Letter of Credit
Reimbursement Agreement and this Agreement, the terms of this Agreement shall
control.
28
"Leverage Ratio" means, with respect to any Financial Covenant Period,
the ratio of (i) the average of the month-end outstandings of Debt for Xxxxx
Karan International and its Subsidiaries for such period, calculated on a
consolidated basis in conformity with GAAP, to (ii) EBITDA.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses and damages with respect to or arising out of any of
the following: personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton injury,
damage or threat to the environment, natural resources or public health or
welfare, costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of or associated with investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, voluntary
disclosures made to, or settlements with, any Government Authority, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, including interest, if any, thereon.
"License Agreement" means the License Agreement, dated July 3, 1996,
between Xxxxx Karan Studio and Gabrielle Studio, Inc.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority, title retention or
other security agreement or preferential arrangement (including, without
limitation, any negative pledge arrangement and any agreement to provide equal
and ratable security) of any kind or nature whatsoever in respect of any
property of a Person, whether granted voluntarily or imposed by law, and
includes the interest of a lessor under a Capital Lease or under any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement or similar notice (other than a financing
statement filed by a "true" lessor pursuant to Section 9-408 of the Uniform
Commercial Code or any similar statute of any relevant jurisdiction, or any
political subdivision thereof), naming the owner of such property as debtor,
under the Uniform Commercial Code or other comparable law of any jurisdiction.
"Limited Use License Agreement" means the Trademark License Agreement
(Limited Use License) dated as of September 18, 1996 between Xxxxx Karan Studio
and the Administrative Agent, as amended, supplemented or otherwise modified
from time to time.
"Loan Account" has the meaning ascribed to such term in
Section 2.06(c).
29
"Loan Documents" means this Agreement, the Notes, the Guaranties, the
Security Agreements, the Pledge Agreements, the Cash Collateral Pledge
Agreement, the Letter of Credit Reimbursement Agreements, the Acceptance
Agreements, the Limited Use License Agreement, the Letter Agreement, any
Interest Rate Contracts to which any Lender or any Affiliate of a Lender is a
party, any foreign exchange contracts to which any Lender or any Affiliate of a
Lender is a party, and all other instruments, agreements and written Contractual
Obligations between any Borrower and any of the Administrative Agent, any
Co-Agent, any Lender or any Issuing Bank delivered to either the Administrative
Agent, such Co-Agent, such Lender or such Issuing Bank pursuant to or in
connection with the transactions contemplated hereby.
"Loan Party" means each of the Borrowers and the Guarantors.
"Loans" means all Revolving Loans and Swing Loans.
"Lockboxes" means, collectively, the lockboxes established by the
Borrowers with the Blocked Account Bank for collection of payments in respect of
Receivables or other Collateral; and "Lockbox" means any one of the Lockboxes.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (i) the
condition (financial or otherwise), operations, assets, business, properties,
performance or prospects of Xxxxx Karan International and its Subsidiaries taken
as a whole, (ii) the ability of the Borrowers to perform their respective
obligations under the Loan Documents, or (iii) the ability of the Lenders, the
Issuing Banks or the Administrative Agent to enforce the Loan Documents.
"Material Asset Sale" has the meaning ascribed to such term in Section
3.01(b)(ii).
"Maximum Revolving Credit Amount" means, at any particular time, the
lesser of (i) the Commitments at such time and (ii) the Borrowing Base at such
time plus the Special Advance Amount, if any, added to the Borrowing Base at
such time.
"Multicurrency LIBO Rate" means, with respect to any Interest Period
applicable to a Borrowing of Fixed Rate Loans denominated in an Optional
Currency, the interest rate per annum equal to (A) the offered quotations for
deposits in the Optional Currency of the relevant Borrowing for a period
comparable to the relevant Interest Period which appears on the Telerate Page
3750 or Telerate Page 3740 (as appropriate) at or about 11:00 a.m. (London time)
on the applicable Fixed Rate Determination Date; or
30
(B) if no such interest rate determined under clause (A) is available, the
arithmetic mean (rounded upward to the nearest one-sixteenth of one percent
(0.0625%)) of the interest rates, as supplied to Citibank at its request, quoted
by the "London Reference Banks" to leading banks in the London interbank market
at or about 11:00 a.m. (London time) on the applicable Fixed Rate Determination
Date for the offering of deposits in the Optional Currency of the relevant
Borrowing for a period comparable to the relevant Interest Period. For the
purposes of this definition, "Telerate Page 3750" means the display designated
as "Page 3750", and "Telerate Page 3740" means the display designated as "Page
3740" in each case on the Telerate Service (or such other page as may replace
Page 3750 or Page 3740, as applicable, on the service as may be nominated by the
British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for deposits
in the Optional Currency concerned).
"Multicurrency Loan" means a Loan denominated in an Optional Currency.
"Multiemployer Plan" means an employee benefit plan as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either a Borrower or any ERISA Affiliate.
"Net Cash Proceeds" means (A) with respect to any Asset Sale, an
amount equal to the gross cash proceeds of such Asset Sale (other than royalty
fees received by a Borrower in the ordinary course of business pursuant to a
license agreement), net of (i) reasonable attorneys' fees, accountants' fees,
brokerage, consultant and other customary fees, underwriting commissions and
other reasonable fees and expenses actually incurred in connection therewith,
(ii) taxes paid or reasonably estimated to be payable as a result thereof, and
(iii) appropriate amounts to be provided by the selling Borrower as a reserve,
in accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by such Borrower after such Asset Sale, and (B) with respect to any
issuance of equity of Xxxxx Karan International, an amount equal to the gross
cash proceeds of such issuance, net of reasonable attorneys' fees, accountant's
fees, underwriting commissions and other reasonable fees and expenses actually
incurred in connection therewith.
"Net Income" means, for any Financial Covenant Period, the net
earnings (or loss) after taxes of Xxxxx Karan International and its Subsidiaries
on a consolidated basis, determined in conformity with GAAP.
"Net Worth" means, with respect to any Person, the total assets of
such Person less total liabilities of such Person, each determined in accordance
with GAAP.
31
"Non-Material Asset Sale" means an Asset Sale (other than a Material
Asset Sale).
"Notes" means, collectively, the Revolving Loan Notes and the Swing
Loan Notes, and all amendments thereto, replacements thereof and substitutions
therefor.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit D attached hereto and made a part hereof.
"Notice of Continuation/Conversion" means a notice substantially in
the form of Exhibit E attached hereto and made a part hereof.
"Obligations" means all Loans, advances, debts, liabilities,
obligations, Reimbursement Obligations, Acceptance Obligations, covenants and
duties owing by any Borrower to the Administrative Agent, any Co-Agent, any
Lender, any Issuing Bank, any Affiliate of the Administrative Agent, any
Co-Agent, any Lender or any Issuing Bank, or any Person entitled to
indemnification pursuant to Section 13.05 of this Agreement, of any kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under this Agreement, the Notes or any other Loan
Document, whether or not for the payment of money, whether arising by reason of
an extension of credit, creating an Acceptance, opening or amendment of a Letter
of Credit or payment of any draft drawn thereunder, loan, guaranty,
indemnification, Interest Rate Contract, foreign exchange contract or in any
other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to a Borrower under this Agreement, any Note or any other
Loan Document and the obligations of such Borrower to cash collateralize the
Letter of Credit Obligations and shall also include the obligations of any
Borrower, any Guarantor or any of their respective Subsidiaries to Citibank or
its Affiliates in respect of any liabilities such Borrower, such Guarantor or
such Subsidiary has in respect of cash management functions (including Automated
Clearing House (ACH) functions) and other related services (including corporate
credit cards) performed by Citibank or its Affiliates on behalf of any Borrower,
any Guarantor or any of their respective Subsidiaries.
"Officer's Certificate" means a certificate executed by (i) the
chairman or vice-chairman of its board of directors or (ii) its president, any
of its vice-presidents, its chief financial officer, controller or its
treasurer.
32
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"Optional Currency" means any of the lawful currencies of Germany,
Italy, the United Kingdom or the Economic Monetary Union ("EMU").
"Paid In Full", "Pay In Full" and "Payment In Full" means, with
respect to the Obligations of any Borrower or Guarantor, (i) with respect to
each Letter of Credit issued for the account of a Borrower, the termination and
surrender for cancellation of such Letter of Credit, (ii) with respect to (A)
each Letter of Credit (other than those referred to in clause (i) above,
including, without limitation, any Letter of Credit with respect to which,
notwithstanding the termination thereof pursuant to its terms, the beneficiary
thereunder has a right to make drawings thereunder in accordance with applicable
law) and (B) each Draft, the delivery of Cash Collateral in such form as
requested by the Administrative Agent (and, in the case of Letters of Credit,
the applicable Issuing Bank) for deposit in the appropriate Cash Collateral
Account, together with such endorsements, and execution and delivery of such
documents and instruments as the Administrative Agent may request in order to
perfect or protect the Administrative Agent's Lien with respect thereto, in an
aggregate principal amount equal to the then outstanding Letter of Credit
Obligations and Acceptance Obligations, respectively, with respect thereto and
(iii) with respect to all other Obligations (other than, as of any date of
payment, Obligations which are contingent and unliquidated and not then due and
owing and which survive the making and repayment of the Loans, the issuance and
discharge of Letters of Credit hereunder and the termination of the Commitments
hereunder), the payment in full in cash of such Obligations.
"Payment Accounts" means the Administrative Agent's New York Account
and the Administrative Agent's London Accounts.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to the functions thereof.
"Permits" means any permit, approval, authorization license, variance,
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Existing Liens" means the Liens on assets of any Borrower
identified as such on Schedule 1.01(A).
"Permitted Existing Indebtedness" means the Indebtedness identified as
such on Schedule 1.01(B).
33
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust, limited liability
company or other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA
(other than a Multiemployer Plan) in respect of which a Borrower or any ERISA
Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Pledge Agreements" means, collectively, the Stock Pledge Agreements,
the Pledge and Assignment Agreements and the Cash Collateral Pledge Agreement.
"Pledge and Assignment Agreements" means, collectively, Pledge and
Assignment Agreements, each dated as of September 18, 1996, made by each of
Xxxxx Karan International, DK Shoe Corp., The Xxxxx Karan Store Corporation,
Gabrielle Japan, Inc., Gabby Apparel, Inc., Tolara Tetragon Inc., Full
Requirements Merchandising, Inc., TT DK Japan, Inc., FM DK Japan, Inc., Tomio
Tangents, Inc., Formal Reserve Management, Inc., Tangents Two, Inc., and First
Run Management, Inc., in favor of the Administrative Agent for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks and the other Holders,
as such Pledge and Assignment Agreements may be amended, supplemented or
otherwise modified from time to time.
"Predecessor" means the collective reference to the Borrowers, Takihyo
Fashion Company, L.P., Takihyo Design Company, L.P., TFT Store Company, L.P.,
TFT Shoe Company, L.P., TFT Japan Company, L.P., DSTF Japan Company, Gabby
Apparel, Inc. Tolara Tetragon Inc., Full Requirements Merchandising, Inc., The
Xxxxx Karan Store Corporation, Tomio Tangents, Inc., Formal Reserve Management,
Inc., DK Shoe Corp., Tangents Two, Inc., First Run Management, Inc., Gabrielle
Japan, Inc., TT DK Japan, Inc., FM DK Japan, Inc. Xxxxx Karan Canada Inc., Xxxxx
Karan (H.K.) Limited, Xxxxx Karan Italy S.R.L. and Xxxxx Karan Japan, K.K. (for
the period it was a wholly-owned Subsidiary).
"Prepayment Discount" of any Issuing Bank means, for prepayment on any
date of an Acceptance Obligation with respect to any Acceptance created by such
Issuing Bank, an amount equal to (i) the face amount of such Acceptance times
(ii) such Issuing Bank's Discount Rate with respect to such Acceptance in effect
at the time of such prepayment minus 1/8 of 1% per annum times (iii) a fraction
the numerator of which is the number of days from such date to the maturity date
of such Acceptance and the denominator of which is 360.
34
"Process Agent" has the meaning ascribed to such term in
Section 13.20(a).
"Property" means any and all real property or personal property,
whether tangible or intangible, plant, building, facility, structure,
underground storage tank or unit, Equipment, Inventory, General Intangible,
Receivable, securities, account, deposit, claim, right or other asset owned,
leased or operated by the Borrower or its Subsidiaries, as applicable,
(including any surface water thereon and subsurface matrix (including but not
limited to soil and bedrock) thereunder).
"Pro Rata Share" means with respect to any Lender, the percentage
obtained by dividing (A) such Lender's Commitment at such time by (B) the
aggregate amount of all Commitments at such time; provided, however, if all of
the Commitments are terminated pursuant to the terms hereof, then "Pro Rata
Share" means the percentage obtained by dividing (x) the aggregate amount of
such Lender's Revolving Credit Obligations by (y) the aggregate amount of all
Revolving Credit Obligations.
"Public Equity Offering" means the issuance of common stock by Xxxxx
Karan International in a primary public offering which closed on July 3, 1996.
"RCRA" means the Resource Conservation and Recovery Act of 1986, 42
U.S.C. Sections 6901 et seq., any amendments thereto, any successor statutes,
and any regulations promulgated thereunder.
"Real Property" means all of each Borrower's present and future right,
title and interest (including, without limitation, any leasehold estate) in
(i) any plots, pieces or parcels of land, (ii) any improvements, buildings,
structures and fixtures now or hereafter located or erected thereon or attached
thereto of every nature whatsoever (the rights and interests described in
clauses (i) and (ii) above being the "Premises"), (iii) all easements, rights of
way, gores of land or any lands occupied by streets, ways, alleys, passages,
sewer rights, water courses, water rights and powers, and public places
adjoining such land, and any other interests in property constituting
appurtenances to the Premises, or which hereafter shall in any way belong,
relate or be appurtenant thereto, (iv) all hereditaments, gas, oil, minerals
(with the right to extract, sever and remove such gas, oil and minerals, and
easements, of every nature whatsoever, located in or on the Premises and (v) all
other rights and privileges thereunto belonging or appertaining and all
extensions, additions, improvements, betterments, renewals, substitutions and
replacements to or of any of the rights and interests described in clauses (iii)
and (iv) above.
"Receivables" means all of each Borrower's present and future
(i) accounts, (ii) contract rights, chattel paper,
35
instruments, documents, deposit accounts, and other rights to payment of any
kind, whether or not arising out of or in connection with the sale or lease of
goods or the rendering of services, and whether or not earned by performance,
(iii) any of the foregoing which are not evidenced by instruments or chattel
paper, (iv) intercompany receivables, and any security documents executed in
connection therewith, (v) proceeds of any letters of credit or insurance
policies on which such Borrower is named as beneficiary, (vi) claims against
third parties for advances and other financial accommodations and any other
obligations whatsoever owing to such Borrower, (vii) rights in and to all
security agreements, leases, guarantees, instruments, securities, documents of
title and other contracts securing, evidencing, supporting or otherwise relating
to any of the foregoing, together with all rights in any goods, merchandise or
Inventory which any of the foregoing may represent, and (viii) rights in
returned and repossessed goods, merchandise and Inventory which any of the same
may represent, including, without limitation, any right of stoppage in transit.
"Register" has the meaning ascribed to such term in Section 13.01(c).
"Registration Rights Agreement" means the Registration Rights
Agreement made as of June 10, 1996 among Xxxxx Karan International, Xxxxx X.
Xxxx, Xxxxxxxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxx Xxxx, Takihyo Inc., Xxxxx Karan,
Xxxxxxx Xxxxx, the trust under trust agreement for the benefit of Xxxx Xxxxx
Xxxxx, Xxxxx Xxxxx and Xxxxxxxxx Xxxxx, the trust under trust agreement for the
benefit of Xxxxx Karan and Gabrielle Studio, Inc.
"Regulation G" means Regulation G of the Federal Reserve Board as in
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Reimbursement Date" has the meaning ascribed to such term in Section
2.03(d)(i)(A).
"Reimbursement Obligations" means, as to any Borrower, the aggregate
non-contingent reimbursement or repayment obligations of such Borrower with
respect to amounts drawn under Letters of Credit.
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any Property, including the movement of
Con-
36
taminants through or in the air, soil, surface water, groundwater or Property.
"Remedial Action" means any action required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Rental Payments" means, for any period, the aggregate amount of all
rents paid or accrued under all Operating Leases for Equipment of any of the
Borrowers as lessee (net of sublease income), all as determined on a combined
basis in conformity with GAAP.
"Replacement Event" means, with respect to any Lender, the appointment
of, or the taking of possession by, a receiver, custodian, conservator, trustee
or liquidator of such Lender, or the declaration by the appropriate regulatory
authority that such Lender is insolvent.
"Replacement Lender" means a financial institution which is an
Eligible Assignee or is otherwise reasonably acceptable to the Administrative
Agent and the Borrowers and which is not a Loan Party or an Affiliate of a Loan
Party.
"Reportable Event" has the meaning ascribed to such term in Section
4043 of ERISA or regulations promulgated thereunder, other than an event which
is not subject to the thirty (30) day notice requirement of such regulations.
"Request for Acceptance" has the meaning ascribed to such term in
Section 2.04(c).
"Requirements of Law" means, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any similar
statute of any foreign government or any political subdivision thereof and any
certificate of occupancy, zoning ordinance, building, environmental or land use
requirement or Permit or labor, environmental, employment, occupational safety
or health law, rule or regulation, including, without limitation, Environmental,
Health or Safety Requirements of Law.
37
"Requisite Lenders" means, at any time, Lenders holding, in the
aggregate, at least fifty-one percent (51%) of the then aggregate amount of the
Commitments in effect at such time; provided, however, that, in the event any of
the Lenders shall have failed to fund its Pro Rata Share of any Revolving Loan
requested by any Borrower which such Lenders are obligated to fund under the
terms hereof and any such failure has not been cured, then for so long as such
failure continues, "Requisite Lenders" means at least those Lenders (excluding
Lenders whose failure to fund their respective Pro Rata Share of such Revolving
Loans have not been so cured) whose Pro Rata Shares represent at least fifty-one
percent (51%) of the aggregate Pro Rata Shares of such Lenders; provided,
further, that, in the event that the Commitments have been terminated pursuant
to the terms hereof, "Requisite Lenders" means Lenders whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding principal balance
of all Revolving Credit Obligations are at least fifty-one percent (51%).
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of, partnership interest of or other equity interest of, a
Borrower now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock or in any junior class of stock to the holders of
that class, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of capital stock of, partnership interest of or other equity interest
of, a Borrower now or hereafter outstanding, (iii) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to, any
subordinated indebtedness and (iv) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of capital stock of,
partnership interest of or other equity interest of, a Borrower now or hereafter
outstanding.
"Revolving Credit Obligations" means, at any particular time, the sum
of (i) the outstanding principal amount of the Swing Loans at such time, plus
(ii) the outstanding principal amount of the Revolving Loans at such time, plus
(iii) the Letter of Credit Obligations outstanding at such time, plus (iv) the
Acceptance Obligations outstanding at such time. For purposes of determining
the amount of Revolving Credit Obligations (or any component thereof) in respect
of any Loan which is denominated in any Optional Currency, such amount shall
equal the Dollar Equivalent of the amount of such currency at the time of
determination thereof.
38
"Revolving Loan" has the meaning ascribed to such term in Section
2.01(a).
"Revolving Loan Notes" means one or more notes made payable to the
Lenders evidencing the Borrowers' Obligation to repay the Revolving Loans.
"Securities" means any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or any certificates of
interest, shares, or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire
any of the foregoing, but shall not include any evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute.
"Security Agreements" means, collectively, the Security Agreements,
each dated as of September 18, 1996, made by each of the Borrowers and DSTF
Japan, in favor of the Administrative Agent for the benefit of the
Administrative Agent, the Lenders, the Issuing Banks and the other Holders, as
such Security Agreements may be amended, supplemented or otherwise modified from
time to time.
"Settlement Date" has the meaning ascribed to such term in Section
2.02.
"Solvent", when used with respect to any Person, means that at the
time of determination:
(i) the fair market value of its assets is in excess of the total
amount of its liabilities (including, without limitation, contingent
liabilities); and
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(iv) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
39
"Special Advance Amount" means the lesser of (a) the amount which
equals the product of ninety-five percent (95%) of Eligible Finished Goods
Inventory and Eligible Raw Materials minus the Borrowing Base Inventory
Availability and (b) $5,000,000 during any month of June; $20,000,000 during any
month of July; $30,000,000 during any month of August; and $10,000,000 during
any month of September; provided, however, (i) upon receipt of Net Cash Proceeds
from one or more Asset Sales in an amount of up to $10,000,000 in the aggregate
or (ii) if the Commitments are permanently reduced pursuant to Section 3.01,
each Special Advance Amount shall be reduced, on a dollar for dollar basis, at
such time and for all times thereafter, by the amount of such Net Cash Proceeds
or such permanent reduction, as the case may be.
"Spot Rate" means, as of any date of determination with respect to the
conversion of an amount in one currency (the "Original Currency") to another
currency (the "Other Currency"), the rate of exchange quoted by the
Administrative Agent (or its Affiliate) in New York, New York (if the Original
Currency is Dollars), or London, England (if the Original Currency is an
Optional Currency), at 11:00 a.m. (New York time or London time, as applicable)
on such date of determination to prime banks in New York, New York, or London,
England, as appropriate, for the spot purchase in the foreign exchange market of
such city of such amount of the Original Currency with such Other Currency.
"Standby Letter of Credit" means any letter of credit issued by an
Issuing Bank pursuant to Section 2.03 for the account of any Borrower, which is
not a Commercial Letter of Credit.
"Stock Pledge Agreements" means, collectively, the Pledge Agreements,
each dated as of September 18, 1996, made by each of The Xxxxx Karan Company,
Gabby Apparel, Inc., Xxxxx Karan (H.K.) Limited and The Xxxxx Karan Company, in
favor of the Administrative Agent for the benefit of the Administrative Agent,
the Lenders, the Issuing Banks and the other Holders, as such Pledge Agreements
may be amended, supplemented or otherwise modified from time to time.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned or controlled by such Person, one or more of
the other subsidiaries of such Person or any combination thereof.
"Swing Loan" has the meaning ascribed to such term in Section 2.02(a).
40
"Swing Loan Bank" means Citibank, in its individual capacity or, in
the event Citibank is not the Administrative Agent, the Administrative Agent (or
any Affiliate of the Administrative Agent designated by the Administrative
Agent), in its individual capacity.
"Swing Loan Notes" has the meaning ascribed to such term in Section
2.06(a)(ii).
"Swing Loan Obligations" means the aggregate principal amount of all
Swing Loans outstanding.
"Taxes" has the meaning ascribed to such term in Section 3.03(a).
"Termination Event" means (i) any Reportable Event with respect to any
Benefit Plan, (ii) the withdrawal of the Borrower, or an ERISA Affiliate from a
Benefit Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (iii) the occurrence of an obligation
arising under Section 4041 of ERISA of the Borrower or an ERISA Affiliate to
provide affected parties with a written notice of an intent to terminate a
Benefit Plan in a distress termination described in Section 4041(c) of ERISA,
(iv) the institution by the PBGC of proceedings to terminate any Benefit Plan,
(v) any event or condition which constitutes grounds under Section 4042 of ERISA
for the appointment of a Trustee to administer a Benefit Plan, or (vi) the
partial or complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan.
"Transaction Costs" means the fees, costs and expenses payable in
connection with the Public Equity Offering.
"Type" means, with respect to any Loan, its nature as a Fixed Rate
Loan or a Floating Rate Loan.
"Uniform Commercial Code" means the Uniform Commercial Code as enacted
in the State of New York, as it may be amended from time to time.
"Unused Commitment Fee" shall have the meaning ascribed to such term
in Section 4.03(c).
"Unused Commitment Rate" means, as of any date, a rate equal to 0.50%
per annum.
"Voting Stock" means securities of any class or classes of a
corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
41
"Working Capital" means, as at any date of determination, the excess,
if any, of Current Assets over Current Liabilities.
"Working Capital Ratio" means, at any time, the ratio of (a) Current
Assets to (b) Current Liabilities.
1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Agreement shall be
counted in calendar days unless Business Days are expressly prescribed. Any
period determined hereunder by reference to a month or months or year or years
shall end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
1.03. Accounting Terms. For purposes of this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. For purposes of calculating the financial
covenants herein, (i) the leases of the Borrowers with respect to their computer
equipment shall be treated as operating leases in accordance with Borrowers'
past practices.
1.04. Other Definitional Provisions. References to the "preamble",
"Articles", "Sections", "subsections", "Schedules" and "Exhibits" shall be to
the preamble, Articles, Sections, subsections, Schedules and Exhibits,
respectively, of this Agreement unless otherwise specifically provided. The
words "hereof", "herein", and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
1.05. Other Terms. All other terms contained herein shall, unless
the context indicates otherwise, have the meanings assigned to such terms by the
Uniform Commercial Code to the extent the same are defined therein.
1.06. Payments by the Borrowers. Except as expressly set forth
herein to the contrary, (a) all payments made by the Borrowers in respect of
principal of and interest on the Loans made shall be made (i) with respect to a
Domestic Loan, in Dollars and (ii) with respect to a Multicurrency Loan, in the
Optional Currency in which the such Multicurrency Loan was made,
42
and (b) all payments of Reimbursement Obligations shall be made in Dollars.
ARTICLE II
TERMS OF LOANS AND LETTERS OF CREDIT
2.01. The Revolving Credit Facility.
(a) Revolving Loans. Subject to the terms and conditions set forth
herein, (i) each Lender hereby severally and not jointly agrees to make
revolving loans (each a "Revolving Loan") to the Borrowers in Dollars or any
Optional Currency from time to time on any Business Day during the period from
the Closing Date to the Commitment Termination Date, in an aggregate amount not
to exceed at any time outstanding such Lender's Pro Rata Share of the
Availability; provided that the aggregate amount of all Multicurrency Loans
outstanding at any time shall not exceed the Dollar Equivalent of $30,000,000.
All Revolving Loans comprising the same Borrowing hereunder shall be made by the
Lenders simultaneously and proportionately to their then respective Pro Rata
Shares. Subject to the provisions hereof, any Borrower may repay any
outstanding Revolving Loan on any day which is a Business Day and any amounts so
repaid may be reborrowed, up to the amount available under this Section 2.01(a)
at the time of such Borrowing, until the Commitment Termination Date. Each
Borrowing shall be denominated in Dollars or a single Optional Currency.
(b) Notice of Borrowing in Respect of Loans under the Revolving
Credit Facility. When a Borrower desires to make a Borrowing under this Section
2.01, it shall deliver to the Administrative Agent a signed Notice of Borrowing
no later than (A) 11:00 a.m. (New York time) on the proposed Funding Date for
such Borrowing, in the case of a proposed Borrowing of Domestic Loans consisting
of Floating Rate Loans, (B) 11:00 a.m. (New York time) at least three (3)
Business Days in advance of the proposed Funding Date for such Borrowing, in the
case of a proposed Borrowing of Domestic Loans consisting of Fixed Rate Loans
and (C) 4:00 p.m. (New York Time) at least four (4) Business Days in advance of
the proposed Funding Date for such Borrowing, in the case of a proposed
Borrowing of Multicurrency Loans consisting of Fixed Rate Loans. In lieu of
delivering such a Notice of Borrowing, a Borrower may give the Administrative
Agent telephonic notice of any proposed Borrowing by the time required under
this Section 2.01(b) if it confirms such notice by delivery of the Notice of
Borrowing to the Administrative Agent promptly, but in no event later than 5:00
p.m. (New York time) on the same day. Any Notice of Borrowing (or telephonic
notice in lieu thereof) given pursuant to this Section 2.01(b) shall be
irrevocable. All Loans made under this Section 2.01 on the Closing Date shall
be made initially as Domestic Loans consisting
43
of Floating Rate Loans and may thereafter be continued as Floating Rate Loans or
converted into Fixed Rate Loans in the manner provided in Section 4.01(c).
(c) Making of Revolving Loans. (i) In the event any portion of the
Loans requested in any Notice of Borrowing delivered to the Administrative Agent
pursuant Section 2.01(b) will be made as Revolving Loans, the Administrative
Agent shall promptly notify each Lender of the amount of such Borrowing and
whether such Borrowing is to be denominated in Dollars or an Optional Currency.
Each such Lender shall deposit an amount equal to its Pro Rata Share of the
amount of such Borrowing with the Administrative Agent in the applicable Payment
Account in immediately available funds and in the appropriate currency, not
later than 3:00 p.m. (New York time), with respect to Revolving Loans
denominated in Dollars, or 12:00 noon (London time), with respect to Revolving
Loans denominated in an Optional Currency, on any Funding Date applicable
thereto (or, if the Funding Date is the Closing Date, such earlier time as the
Administrative Agent shall determine). Subject to the satisfaction of the
conditions precedent set forth in Section 5.01 (solely with respect to the
making of Revolving Loans on the Effective Date) and Section 5.02 (with respect
to the making of Revolving Loans on the Effective Date and on each Funding Date
thereafter), the Administrative Agent shall make the proceeds of such amounts
received by it available to the applicable Borrower at the Administrative
Agent's office in New York, New York, with respect to Revolving Loans
denominated in Dollars, or London, England, with respect to Revolving Loans
denominated in an Optional Currency, on such Funding Date (or as soon thereafter
as is customarily practicable) and shall disburse such proceeds to the
applicable Disbursement Account.
(ii) The failure of any Lender to deposit the amount described
in clause (i) above (or required to be paid pursuant to Section 2.02(c)) with
the Administrative Agent on the applicable Funding Date shall not relieve any
other Lender of its obligations hereunder to make its Revolving Loan on such
Funding Date. No Lender shall be responsible for any failure by any other
Lender to perform its obligation to make a Revolving Loan hereunder nor shall
the Commitment of any Lender be increased or decreased as a result of any such
failure.
(iii) Unless the Administrative Agent shall have been notified by
any Lender prior to 1:00 p.m. (New York time) or 10:00 a.m. (London time), as
applicable, on any applicable Funding Date in respect of any Borrowing of
Revolving Loans after the Closing Date that such Lender does not intend to fund
its Loan requested to be made on such Funding Date, the Administrative Agent may
assume that such Lender has funded its Revolving Loan and is depositing the
proceeds thereof in the applicable Payment Account on the Funding Date, and the
44
Administrative Agent in its sole discretion may, but shall not be obligated to,
disburse a corresponding amount to the applicable Borrower on the Funding Date.
If the Revolving Loan proceeds corresponding to that amount are advanced to such
Borrower by the Administrative Agent but are not in fact deposited with the
Administrative Agent by such Lender on or prior to the applicable Funding Date,
such Lender agrees to pay, and in addition such Borrower agrees to repay, to the
Administrative Agent forthwith on demand such corresponding amount, together
with interest thereon, for each day from the date such amount is disbursed to or
for the benefit of such Borrower until the date such amount is paid or repaid to
the Administrative Agent, (A) in the case of such Borrower, at the interest rate
applicable to such Borrowing and (B) in the case of such Lender, at the
Interbank Rate for the first Business Day, and thereafter at the interest rate
applicable to such Borrowing. If such Lender shall pay to the Administrative
Agent the corresponding amount, the amount so paid shall constitute such
Lender's Revolving Loan, and if both such Lender and such Borrower shall pay and
repay such corresponding amount, the Administrative Agent shall promptly pay to
such Borrower such corresponding amount (together with any interest included in
such payment). This Section 2.01(c)(iii) does not relieve any Lender of its
obligation to make its Revolving Loan on any Funding Date.
(iv) Anything hereinabove to the contrary notwithstanding, if
any Lender shall, not later than 1:00 p.m. (London time) two Business Days
before the date of any requested Borrowing of Multicurrency Loans, notify the
Administrative Agent that such Lender is not satisfied that deposits in the
relevant Optional Currency will be freely available to it in the relevant amount
and, if applicable, for the relevant Interest Period, the right of the Borrowers
to request Multicurrency Loans in such Optional Currency from such Lender as
part of such Borrowing or any subsequent Borrowing of Multicurrency Loans shall
be suspended until such Lender shall notify the Administrative Agent that the
circumstances causing such suspension no longer exist, and, at the option of the
Borrowers, the Multicurrency Loan to be made by such Lender as part of such
Borrowing (and the Multicurrency Loan to be made by such Lender as part of any
subsequent Borrowing of Multicurrency Loans in respect of which such Optional
Currency shall have been requested during such period of suspension) shall be
denominated in any other Available Currency requested on the same Business Day
which is available, and having an Interest Period coextensive with the Interest
Period in effect in respect of all other Multicurrency Loans comprising a part
of such Borrowing. The Administrative Agent shall, upon becoming aware that the
circumstances causing any such suspension no longer apply, promptly so notify
the Borrower, provided that the failure of the Administrative Agent to so notify
the Borrower shall not impair the rights of the Lenders
45
under this Section 2.01(c)(iv) or expose the Administrative Agent to any
liability.
(d) Use of Proceeds. Proceeds of Loans shall be used (i) on the
Closing Date to repay certain existing indebtedness of the Borrowers and to pay
Transaction Costs and (ii) thereafter to provide for ongoing working capital
needs in the ordinary course of the business of the Borrowers and for other
lawful general corporate purposes not prohibited hereunder.
(e) Commitment Termination Date. The Commitments shall terminate,
and all outstanding Revolving Credit Obligations shall be Paid In Full, on the
Commitment Termination Date in accordance with Section 3.02(a).
2.02. Swing Loans.
(a) Swing Loans. Upon receipt of a Notice of Borrowing, the Swing
Loan Bank may, in its sole discretion, make to the Borrower or Borrowers loans
(each a "Swing Loan" and collectively, the "Swing Loans") in Dollars or an
Optional Currency on any Business Day during the period from the Closing Date to
the Commitment Termination Date, in an aggregate amount not to exceed at any
time the Dollar Equivalent of Citibank's unused portion of its Commitment. All
Swing Loans denominated in Dollars shall be made as Floating Rate Loans. All
Swing Loans denominated in an Optional Currency shall bear interest at a rate
agreed upon by the Swing Loan Bank and the Borrower. Except as otherwise
provided herein, all Swing Loans shall be subject to all the terms and
conditions applicable to Revolving Loans. Swing Loans shall be repaid pursuant
to the terms of Section 2.06(a)(ii) and as otherwise provided in this Agreement.
(b) Making of Swing Loans. Promptly after (in the case of Swing
Loans which are Domestic Loans) or two Business Days after (in the case of Swing
Loans which are Multicurrency Loans) receipt of a Notice of Borrowing pursuant
to Section 2.01(b) (or telephonic notice in lieu thereof), the Swing Loan Bank
shall make the proceeds of the Swing Loans it intends to fund, if any, available
to the relevant Borrower at the Administrative Agent's office in New York, New
York, with respect to Swing Loans denominated in Dollars, or London, England,
with respect to Swing Loans denominated in an Optional Currency, on the Funding
Date of the proposed Borrowing and the Administrative Agent shall disburse such
proceeds to the Disbursement Account referred to in the applicable Notice of
Borrowing. The Swing Loan Bank shall have no duty to make or to continue to
make Swing Loans. The Swing Loan Bank shall not make any Swing Loan in the
period commencing on the first Business Day after it receives written notice
from any Lender that one or more of the conditions precedent contained in
Section 5.02 shall not on such date be satisfied, and ending when such
conditions are satisfied, and the
46
Swing Loan Bank shall not otherwise be required to determine that, or take
notice whether, the conditions precedent set forth in Section 5.02 hereof have
been satisfied in connection with the making of any Swing Loan.
(c) Settlement of Swing Loans. (i) The Administrative Agent shall
from time to time notify each Lender by 1:00 p.m. (New York time), in each case
on a date to be selected weekly or more frequently by the Administrative Agent,
in its sole discretion, of the aggregate principal amount of Swing Loans
outstanding as of the close of business on the Business Day immediately
preceding the date of such notice (each such Business Day being a "Settlement
Date"). Upon such notice, each Lender shall deposit in the applicable Payment
Account an amount equal to its Pro Rata Share of the principal amount of Swing
Loans outstanding in immediately available funds, not later than 3:00 p.m. (New
York time) on the date of such notice with respect to Swing Loans denominated in
Dollars and not later than 3:00 p.m. (London time) on the third Business Day
following such notice with respect to Swing Loans denominated in an Optional
Currency. Upon such payment, each Lender shall be deemed to have made a
Revolving Loan to the applicable Borrower or Borrowers in such amount
(irrespective of the satisfaction of the conditions in Section 5.02).
(ii) In the event that no Swing Loans are outstanding on any
Settlement Date in any currency, the Administrative Agent shall, before
3:00 p.m. (New York time or London time, as applicable) on such Settlement Date,
disburse to each Lender such Lender's Pro Rata Share of the funds in such
currency, if any, on deposit in the applicable Payment Account applicable to the
repayment of the Revolving Loans denominated in such currency.
(iii) If and to the extent any Lender shall not have made
available to the Administrative Agent on any Settlement Date any amount payable
by such Lender on such Settlement Date pursuant to this Section 2.02(c), such
Lender agrees to pay to the Administrative Agent forthwith on demand such amount
in the applicable currency together with interest thereon, for each day from
such Settlement Date until the date such amount is paid to the Administrative
Agent, for three (3) Business Days at the Interbank Rate and thereafter at the
interest rate applicable to the Loans denominated in such currency hereunder.
2.03. Letters of Credit. Subject to the terms and conditions set
forth in this Agreement, each Issuing Bank hereby severally agrees to Issue for
the account of any of the Borrowers one or more Letters of Credit during the
period from the Closing Date to the date which is the thirty-first calendar day
preceding the Commitment Termination Date, up to an aggregate face amount
47
at any one time outstanding for all Borrowers equal to $70,000,000, subject to
the following provisions:
(a) Types and Amounts. An Issuing Bank shall not have any obligation
to Issue, and shall not Issue, any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect
to such Issuing Bank, after giving effect to the Issuance of the
Letter of Credit requested hereunder, shall exceed any limit imposed
by law or regulation upon such Issuing Bank;
(ii) if the Issuing Bank receives notice (A) from the
Administrative Agent at or before 11:00 a.m. (New York time) on the
date of the proposed Issuance of such Letter of Credit that,
immediately after giving effect to the Issuance of such Letter of
Credit, (I) the Letter of Credit Obligations at such time would exceed
$70,000,000 or (II) the Revolving Credit Obligations at such time
would exceed the Maximum Revolving Credit Amount at such time, or
(B) from the Requisite Lenders at or before 11:00 a.m. (New York time)
on the date of the proposed Issuance of such Letter of Credit that one
or more of the conditions precedent contained in Section 5.01 (with
respect to an Issuance of a Letter of Credit on the Effective Date) or
Section 5.02 would not on such date be satisfied, unless such
conditions are thereafter satisfied and notice of such satisfaction is
given to the Issuing Bank by the Administrative Agent (and an Issuing
Bank shall not otherwise be required to determine that, or take notice
whether, the conditions precedent set forth in Sections 5.01 or 5.02,
as applicable, have been satisfied); or
(iii) which has an expiration date later than the earlier of (A)
the date which occurs 360 days following the date of Issuance with
respect to a Standby Letter of Credit or 180 days following the date
of Issuance with respect to a Commercial Letter of Credit or (B) the
day which is the 180th day following the Commitment Termination Date.
(b) Conditions. In addition to being subject to the satisfaction of
the conditions precedent contained in Sections 5.01 (with respect to an Issuance
of a Letter of Credit on the Effective Date) and 5.02, the obligation of an
Issuing Bank to Issue any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) if the Issuing Bank so requests, the applicable Borrower
shall have executed and delivered
48
to such Issuing Bank (with a copy to the Administrative Agent) a Letter of
Credit Reimbursement Agreement and such other documents and materials as
may be required pursuant to the terms thereof;
(ii) the terms of the proposed Letter of Credit shall be
satisfactory to the Issuing Bank in its sole discretion; and
(iii) no order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or
restrain the Issuing Bank from Issuing the Letter of Credit and no
law, rule or regulation applicable to the Issuing Bank and no request
or directive (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) from any
Governmental Authority with jurisdiction over the Issuing Bank shall
prohibit or request that the Issuing Bank refrain from the Issuance of
letters of credit generally or the Issuance of such Letter of Credit.
(c) Issuance of Letters of Credit. (i) A Borrower shall deliver to
an Issuing Bank and the Administrative Agent a signed Notice of Letter of Credit
Issuance not later than 11:00 a.m. (New York time) on the fifth Business Day
preceding the requested date for Issuance thereof under this Agreement, or such
shorter notice as may be acceptable to such Issuing Bank and the Administrative
Agent. Such notice shall be irrevocable.
(ii) The Issuing Bank shall give the Administrative Agent notice of
the Issuance of a Letter of Credit.
(iii) The Xxxxx Karan Company may request that an Issuing Bank Issue a
Letter of Credit on behalf of one of the DK Divisions. Any such Letter of
Credit that is Issued by an Issuing Bank for a DK Division will be Issued for
the account of The Xxxxx Karan Company and constitute an Obligation hereunder.
DK Footwear Partners may request that an Issuing Bank Issue a Letter of Credit
on behalf of one of the Footwear Divisions. Any such Letter of Credit that is
Issued by an Issuing Bank for a Footwear Division will be Issued for the account
of DK Footwear Partners and constitute an Obligation hereunder.
(d) Payment of Reimbursement Obligations; Duties of Issuing Banks.
(i) Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
(A) each Borrower shall reimburse the Issuing Bank for amounts
drawn under such Letter of Credit no later than the date (the
"Reimbursement Date") which is one (1) Business Day after such
Borrower receives
49
notice from the Issuing Bank that a draft has been presented under such
Letter of Credit by the beneficiary thereof; and
(B) all Reimbursement Obligations with respect to each Letter of
Credit shall bear interest at the Domestic Base Rate from the date of
the relevant drawing under such Letter of Credit until the
Reimbursement Date and thereafter at the rate applicable in accordance
with Section 4.01(d).
(ii) The Issuing Bank shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of all
drawings under a Letter of Credit and the payment (or the failure to pay when
due) by such Borrower on account of a Reimbursement Obligation.
(iii) No action taken or omitted in good faith by an Issuing Bank under
or in connection with any Letter of Credit shall put such Issuing Bank under any
resulting liability to any Lender, or, so long as such Letter of Credit was not
Issued in violation of Section 2.03(a)(ii), relieve any Lender of its
obligations hereunder to such Issuing Bank. In determining whether to pay under
any Letter of Credit, the respective Issuing Bank shall have no obligation to
the Lenders or any Borrower other than to confirm that any documents required to
be delivered under a respective Letter of Credit appear to have been delivered
and that they appear on their face to comply with the requirements of such
Letter of Credit.
(e) Participations. (i) Immediately upon Issuance by an Issuing
Bank of any Letter of Credit for the account of any Borrower in accordance with
the procedures set forth in this Section 2.03, each Lender shall be deemed to
have irrevocably and unconditionally purchased and received from such Issuing
Bank, and such Issuing Bank shall be deemed irrevocably and unconditionally to
have sold and transferred to each Lender, without recourse or warranty, an
undivided interest and participation in such Letter of Credit to the extent of
such Lender's Pro Rata Share thereof, including, without limitation, all
obligations of such Borrower with respect thereto (other than amounts owing to
the Issuing Bank under Section 2.03(f)) and any security therefor and guaranty
pertaining thereto.
(ii) If any Issuing Bank makes any payment under any Letter of Credit
for the account of any Borrower and such Borrower does not repay such amount to
the Issuing Bank on the Reimbursement Date, the Issuing Bank shall promptly
notify the Administrative Agent, which shall promptly notify each Lender, and
each Lender shall promptly and unconditionally pay to the Administrative Agent
for the account of such Issuing Bank, in immediately available funds, the amount
of such Lender's Pro Rata
50
Share of such Reimbursement Obligations, and the Administrative Agent shall
promptly pay to the Issuing Bank such amounts received by it for the Issuing
Bank's account. In the event such payments are made by such Lenders, such
payments shall constitute Domestic Loans made to the applicable Borrower
pursuant to Section 2.01 (irrespective of the satisfaction of the conditions in
Section 5.02). If a Lender does not make its Pro Rata Share of the amount of
any such payment available to the Administrative Agent, such Lender agrees to
pay to the Administrative Agent for the account of the Issuing Bank, forthwith
on demand, such amount together with interest thereon, for the first Business
Day after the date such payment was first due at the applicable Interbank Rate,
and thereafter at the interest rate then applicable in accordance with Section
4.01(a). The failure of any such Lender to make available to the Administrative
Agent for the account of an Issuing Bank its Pro Rata Share of any such payment
shall neither relieve any other Lender of its obligation hereunder to make
available to the Administrative Agent for the account of such Issuing Bank such
other Lender's Pro Rata Share of any payment on the date such payment is to be
made nor increase the obligation of any other Lender to make such payment to the
Administrative Agent. This Section does not relieve any Borrower of its
obligation to pay or repay any Lender funding its Pro Rata Share of such payment
pursuant to this Section interest on the amount of such payment from such date
such payment is to be made until the date on which payment is repaid in full.
(iii) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation (including any interest thereon) as to which any Lender
has made a Domestic Loan pursuant to Section 2.03(e)(ii), such Issuing Bank
shall promptly pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each Lender which has made a Domestic Loan, an amount
equal to such Lender's Pro Rata Share thereof.
(iv) Upon the request of any Lender, an Issuing Bank shall furnish
such Lender copies of any Letter of Credit or Letter of Credit Reimbursement
Agreement to which such Issuing Bank is a party and such other documentation as
reasonably may be requested by such Lender.
(v) In the event any payment by a Borrower received by an Issuing
Bank with respect to a Letter of Credit Issued for the account of such Borrower
and distributed by the Administrative Agent to the Lenders on account of their
participation therein is thereafter set aside, avoided or recovered from such
Issuing Bank in connection with any receivership, liquidation or bankruptcy
proceeding, each such Lender which received such distribution shall, upon demand
by such Issuing Bank, contribute such Lender's Pro Rata Share of the amount set
aside, avoided or recovered together with interest at the rate required to be
paid by such Issuing Bank upon the amount required to be repaid by it.
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(vi) The obligations of any Lender to make payments to the
Administrative Agent for the account of any Issuing Bank with respect to a
Letter of Credit shall be irrevocable, shall not be subject to any qualification
or exception whatsoever (except the Issuance of the Letter of Credit in
contravention of this Section 2.03) and shall be made in accordance with this
Agreement (irrespective of the satisfaction of the conditions described in
Sections 5.01 and 5.02) under all circumstances, including, without limitation,
any of the following circumstances:
(A) any lack of validity or enforceability hereof or of any of
the other Loan Documents;
(B) the existence of any claim, setoff, defense or other right
which any Borrower may have at any time against a beneficiary named in
a Letter of Credit or any transferee of a beneficiary named in a
Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, any Issuing Bank, any Lender, or
any other Person, whether in connection herewith, with any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the
account party and beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other document presented under
the Letter of Credit having been determined to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(E) any failure by such Issuing Bank to make any reports
required pursuant to Section 2.03(j) or the inaccuracy of any such
report; or
(F) the occurrence of any Event of Default or Default.
(f) Issuing Bank Charges. Each Borrower for whose account a Letter
of Credit has been Issued agrees to pay to each Issuing Bank, solely for its own
account, the standard charges assessed by such Issuing Bank in connection with
the issuance, administration, amendment and payment or cancellation of Letters
of Credit and such compensation as may be agreed upon by such Borrower and such
Issuing Bank from time to time.
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(g) Indemnification; Exoneration. (i) In addition to all other
amounts payable to an Issuing Bank, each of the Borrowers hereby agrees to
defend, protect, indemnify, and hold harmless the Administrative Agent, each
Issuing Bank and each Lender and each of their respective officers, directors,
employees, attorneys and agents from and against any and all claims, demands,
liabilities, penalties, damages, losses (other than loss of profits), costs,
charges and expenses (including reasonable attorneys' fees but excluding taxes)
which any of them may incur or be subject to as a consequence, direct or
indirect, of (A) the Issuance of any Letter of Credit or (B) the failure of the
Issuing Bank to honor a drawing under a Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure or
de facto government or Governmental Authority; provided, however, no Borrower
shall have an obligation to any indemnified party hereunder with respect to the
matters indemnified hereunder caused by or resulting from the willful misconduct
or gross negligence of such indemnified party, as determined by a court of
competent jurisdiction. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, each Borrower shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all such indemnified matters
incurred by the indemnified parties.
(ii) As between the Borrowers on the one hand and the Administrative
Agent, the Lenders and the Issuing Banks on the other hand, each of the
Borrowers assumes all risks of the acts and omissions of, or misuse of Letters
of Credit by, the respective beneficiaries of the Letters of Credit. In
furtherance and not in limitation of the foregoing, the Administrative Agent,
the Issuing Banks and the Lenders shall not be responsible for: (A) any lack of
validity or enforceability of any Letter of Credit or any agreement or
instrument relating thereto; (B) the existence of any claim, setoff, defense or
other right which such Borrower may have at any time against the beneficiary, or
the transferee, of any Letter of Credit, or the Issuing Bank, the Administrative
Agent, any Lender or any other Person; (C) any draft, certificate or other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (D) any lack of validity, legality or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part; (E) failure of the beneficiary of a Letter of Credit to
strictly comply with conditions required in order to draw upon such Letter of
Credit; (F) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (G) errors in interpretation of technical
53
terms; (H) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit or of the
proceeds thereof; (I) the misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit; and (J) any
consequences arising from causes beyond the control of the Administrative Agent,
the Issuing Banks or the Lenders; provided, however, the Administrative Agent,
the Issuing Banks and the Lenders shall be responsible for any of the above
actions caused by or resulting from their willful misconduct or gross
negligence, as determined by a court of competent jurisdiction.
(h) Transitional Provisions. Schedule 2.03(H) contains a schedule of
certain letters of credit Issued prior to the Closing Date by Citibank for the
account of one or more of the Borrowers. On the Closing Date (i) such letters
of credit, to the extent still outstanding, shall automatically and without
further action of the parties thereto be converted into Letters of Credit issued
pursuant to this Section 2.03 and subject to the provisions hereof, and for this
purpose the fees specified in Section 2.03(f) shall be payable (in substitution
for any fees set forth in the Letter of Credit Reimbursement Agreement relating
to such Letters of Credit) as if such letters of credit had been issued on the
Closing Date, (ii) the face amount of such letters of credit shall be included
in the calculation of Letter of Credit Obligations, and (iii) all liabilities of
such Borrowers with respect to such letters of credit shall constitute
Obligations. Letter of Credit Fees shall begin to accrue as of the Closing
Date.
(i) Payment of Reimbursement Obligations. Each of the Borrowers
unconditionally agrees to pay to each Issuing Bank the amount of all
Reimbursement Obligations, interest and other amounts payable to such Issuing
Bank under or in connection with any Letter of Credit Issued by such Issuing
Bank when such amounts are due and payable, irrespective of any claim, setoff,
defense or other right which such Borrower may have at any time against such
Issuing Bank or any other Person.
(j) Issuing Bank Reporting Requirements. Each Issuing Bank shall, on
the day it Issues such a Letter of Credit, provide to the Administrative Agent
separate schedules for Commercial Letters of Credit and Standby Letters of
Credit Issued by it, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth the aggregate Letter of Credit Obligations
of each Borrower outstanding to it as of such date and any information requested
by the Administrative Agent relating to the date of issue, account party,
amount, expiration date and reference number of each Letter of Credit Issued by
it.
(k) Obligations Several. The obligations of each Issuing Bank and
each Lender under this Section 2.03 are several
54
and not joint, and no Issuing Bank or Lender shall be responsible for the
obligation to Issue Letters of Credit or participation obligation hereunder,
respectively, of any other Issuing Bank or Lender.
2.04. Acceptances. Subject to the terms and conditions set forth in
this Agreement, each Issuing Bank hereby severally agrees to extend credit to
the Borrowers, during the period from the Closing Date to the Acceptance
Termination Date, by creating acceptances ("Acceptances") for the account of the
Borrowers from time to time up to an aggregate amount at any one time
outstanding for all Borrowers equal to $15,000,000, subject to the following
provisions:
(a) Types and Amounts. An Issuing Bank shall not have any obligation
to create any Acceptance, and shall not create any Acceptance, at any time:
(i) if the aggregate Acceptance Obligations with respect to such
Issuing Bank, after giving effect to the creation of the Acceptance
requested hereunder, shall exceed any limit imposed by law or
regulation upon such Issuing Bank;
(ii) if the Issuing Bank receives notice (A) from the
Administrative Agent at or before 11:00 a.m. (New York time) on the
date of the proposed creation of such Acceptance that, immediately
after giving effect to the creation of such Acceptance, (I) the
Acceptance Obligations at such time would exceed $15,000,000 or (II)
the Revolving Credit Obligations at such time would exceed the Maximum
Revolving Credit Amount at such time, or (B) from the Requisite
Lenders at or before 11:00 a.m. (New York time) on the date of the
proposed creation of such Acceptance that one or more of the
conditions precedent contained in Section 5.01 (with respect to an
Issuance of a Letter of Credit on the Effective Date) or Section 5.02
would not on such date be satisfied, unless such conditions are
thereafter satisfied and notice of such satisfaction is given to the
Issuing Bank by the Administrative Agent (and an Issuing Bank shall
not otherwise be required to determine that, or take notice whether,
the conditions precedent set forth in Sections 5.01 or 5.02, as
applicable, have been satisfied); or
(iii) which has a maturity date later than the earlier of (A) the
date which occurs 180 days following the date of creation of such
Acceptance or (B) the Acceptance Termination Date.
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(b) Conditions. In addition to being subject to the satisfaction of
the conditions precedent contained in Section 5.01 (with respect to a creation
of an Acceptance on the Effective Date) and 5.02, the obligation of an Issuing
Bank to create any Acceptance is subject to the satisfaction in full of the
following conditions:
(i) if the Issuing Bank so requests, the applicable Borrower
shall have executed and delivered to such Issuing Bank (with a copy to
the Administrative Agent) an Acceptance Agreement and such other
documents and materials as may be required pursuant to the terms
thereof; and
(ii) no order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or
restrain the Issuing Bank from creating the Acceptance and no law,
rule or regulation applicable to the Issuing Bank and no request or
directive (whether or not having the force of law and whether or not
the failure to comply therewith would be unlawful) from any
Governmental Authority with jurisdiction over the Issuing Bank shall
prohibit or request that the Issuing Bank refrain from the creating
the bankers acceptances generally or the creation of such Acceptance.
(c) Creation of Acceptances. (i) A Borrower shall deliver to an
Issuing Bank and the Administrative Agent a signed Request for Acceptance not
later than 11:00 a.m. (New York time) on the third Business Day preceding the
requested date for creation thereof under this Agreement, or such shorter notice
as may be acceptable to such Issuing Bank and the Administrative Agent. Such
notice shall be irrevocable.
(ii) The Issuing Bank shall give the Administrative Agent notice of
the creation of an Acceptance.
(iii) Each Acceptance created by an Issuing Bank hereunder shall be
created by such Issuing Bank accepting a draft, in substantially the form of
Exhibit F (a "Draft"), such Draft (A) being drawn by any Borrower on such
Issuing Bank in accordance with the terms hereof, (B) being dated the date of
acceptance of such Draft by such Issuing Bank, (C) maturing on a Business Day
not less than 30 days nor more than 180 days after the date of such Draft and
not more than 60 days after the anticipated date of the purchase of the goods
specified in the Request for Acceptance relating to such Draft, and (D) having a
face amount not less than $1,000,000 nor more than $2,500,000, payable in
Dollars.
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(d) Payment of Acceptance Obligations; Duties of Issuing Banks.
(i) Notwithstanding any provisions to the contrary in any Acceptance
Agreement:
(A) each Borrower is obligated, and hereby unconditionally
agrees, to pay to each Issuing Bank the face amount of each Acceptance
created by such Issuing Bank on the maturity date of such Acceptance
(the obligation of the Borrowers under this Section 2.04(d) with
respect to any Acceptance being the "Acceptance Obligation" with
respect to such Acceptance); and
(B) all Acceptance Obligations shall bear interest at the rate
applicable in accordance with Section 4.01(d).
(ii) The Issuing Bank shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of the
payment (or the failure to pay when due) by such Borrower on account of an
Acceptance Obligation.
(iii) No action taken or omitted in good faith by an Issuing Bank
under or in connection with any Acceptance shall put such Issuing Bank under
any resulting liability to any Lender, or, so long as such Acceptance was not
created in violation of Section 2.04(a)(ii), relieve any Lender of its
obligations hereunder to such Issuing Bank.
(e) Participations. (i) Immediately upon the creation by an
Issuing Bank of any Acceptance for the account of any Borrower in accordance
with the procedures set forth in this Section 2.04, each Lender shall be
deemed to have irrevocably and unconditionally purchased and received from
such Issuing Bank, and such Issuing Bank shall be deemed irrevocably and
unconditionally to have sold and transferred to each Lender, without recourse
or warranty, an undivided interest and participation in such Acceptance to
the extent of such Lender's Pro Rata Share thereof, including, without
limitation, all obligations of such Borrower with respect thereto (other than
amounts owing to the Issuing Bank under Section 2.04(f)) and any security
therefor and guaranty pertaining thereto.
(ii) If any Borrower does not repay any Acceptance Obligation on
the date when due, the Issuing Bank shall promptly notify the Administrative
Agent, which shall promptly notify each Lender, and each Lender shall
promptly and unconditionally pay to the Administrative Agent for the account
of such Issuing Bank, in immediately available funds, the amount of such
Lender's Pro Rata Share of such Acceptance Obligations, and the
Administrative Agent shall promptly pay to the Issuing Bank such amounts
received by it for the Issuing Bank's account. In the event such payments are
made by such Lenders, such payments shall constitute
57
Domestic Loans made to the applicable Borrower pursuant to Section 2.01
(irrespective of the satisfaction of the conditions in Section 5.02). If a
Lender does not make its Pro Rata Share of the amount of any such Acceptance
Obligations available to the Administrative Agent, such Lender agrees to pay
to the Administrative Agent for the account of the Issuing Bank, forthwith on
demand, such amount together with interest thereon, for the first Business
Day after the date such payment was first due at the applicable Interbank
Rate, and thereafter at the interest rate then applicable in accordance with
Section 4.01(a). The failure of any such Lender to make available to the
Administrative Agent for the account of an Issuing Bank its Pro Rata Share of
any such Acceptance Obligations shall neither relieve any other Lender of its
obligation hereunder to make available to the Administrative Agent for the
account of such Issuing Bank such other Lender's Pro Rata Share of any such
Acceptance Obligations on the date such payment is to be made nor increase
the obligation of any other Domestic to make such payment to the
Administrative Agent. This Section does not relieve any Borrower of its
obligation to pay or repay any Domestic funding its Pro Rata Share of such
Acceptance Obligations pursuant to this Section interest on the amount of
such payment from such date such payment is to be made until the date on
which payment is repaid in full.
(iii) Whenever an Issuing Bank receives a payment on account of an
Acceptance Obligation (including any interest thereon) as to which any Lender
has made a Domestic Loan pursuant to Section 2.04(e)(ii), such Issuing Bank
shall promptly pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each Lender which has made a Domestic Loan, an amount
equal to such Lender's Pro Rata Share thereof.
(iv) Upon the request of any Lender, an Issuing Bank shall furnish
such Lender copies of any Acceptance Agreement to which such Issuing Bank is
a party and such other documentation as reasonably may be requested by such
Lender.
(v) In the event any payment by a Borrower received by an Issuing
Bank with respect to an Acceptance created for the account of such Borrower
and distributed by the Administrative Agent to the Lenders on account of
their participation therein is thereafter set aside, avoided or recovered
from such Issuing Bank in connection with any receivership, liquidation or
bankruptcy proceeding, each such Lender which received such distribution
shall, upon demand by such Issuing Bank, contribute such Lender's Pro Rata
Share of the amount set aside, avoided or recovered together with interest at
the rate required to be paid by such Issuing Bank upon the amount required to
be repaid by it.
(vi) The obligations of any Lender to make payments to the
Administrative Agent for the account of any Issuing Bank with
58
respect to an Acceptance shall be irrevocable, shall not be subject to any
qualification or exception whatsoever (except the creation of the Acceptance
in contravention of this Section 2.04) and shall be made in accordance with
this Agreement (irrespective of the satisfaction of the conditions described
in Sections 5.01 and 5.02) under all circumstances, including, without
limitation, any of the following circumstances:
(A) any lack of validity or enforceability hereof or of any of
the other Loan Documents;
(B) the existence of any claim, setoff, defense or other right
which any Borrower may have at any time against a payee under a Draft
or any transferee thereof, the Administrative Agent, any Issuing Bank,
any Lender, or any other Person, whether in connection herewith, with
any Acceptance, the transactions contemplated herein or any unrelated
transactions;
(C) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(D) any failure by such Issuing Bank to make any reports
required pursuant to Section 2.04(j) or the inaccuracy of any such
report; or
(E) the occurrence of any Event of Default or Default.
(f) Issuing Bank Charges. Each Borrower for whose account an
Acceptance has been created agrees to pay to each Issuing Bank, solely for
its own account, the standard charges assessed by such Issuing Bank in
connection with the creation, negotiation, administration and payment or
cancellation of Acceptance and such compensation as may be agreed upon by
such Borrower and such Issuing Bank from time to time.
(g) Acceptance Commission. Each Borrower for whose account an
Acceptance has been created agrees to pay to each Issuing Bank an acceptance
commission, with respect to each Acceptance created by such Issuing Bank on
the face amount of such Acceptance, for the period from the date of such
Acceptance to the date of its maturity, at the Acceptance Rate in effect on
the date of the creation of such Acceptance. Payment of such acceptance
commission with respect to each Acceptance created by such Issuing Bank shall
be made for the account of such Borrower by such Issuing Bank's deducting the
amount of such acceptance commission from the proceeds of such Issuing Bank's
discount of such Acceptance pursuant to Section 2.04(h).
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(h) Discount. Each Issuing Bank agrees, on the terms and
conditions of this Agreement, that on the date of the creation by it of each
Acceptance such Issuing Bank will (i) discount such Acceptance at a rate
equal to the Applicable Fixed Rate Margin over such Issuing Bank's Discount
Rate in effect for such Acceptance at the time of creation of such
Acceptance, (ii) make available to the Administrative Agent for the ratable
benefit of the Lenders in same day funds that portion of the discount amount
applicable to the rate referred to in clause (i), (iii) make available to the
Administrative Agent at its address referred to in Section 13.10, in same day
funds, an amount equal to the proceeds of the discount referred to in clause
(i) less the acceptance commission payable to such Issuing Bank with respect
to such Acceptance under Section 2.04(g), and (iv) notify the Administrative
Agent, by telephone (confirmed in writing), of the amount of the funds made
available to the Administrative Agent pursuant to clause (iii). Each Issuing
Bank may at any time or from time to time sell, rediscount or otherwise
dispose of any Acceptance created and discounted by it hereunder. After the
Administrative Agent's receipt of the funds referred to in clause (iii), the
Administrative Agent will make such funds available to the Borrowers at the
Administrative Agent's office in New York, New York and shall disburse such
proceeds in Dollars and in same day funds by depositing such proceeds in the
Borrowers' Account.
(i) Payment of Acceptance Obligations. Each of the Borrowers
unconditionally agrees to pay to each Issuing Bank the amount of all
Acceptance Obligations, interest and other amounts payable to such Issuing
Bank under or in connection with any Acceptance created by such Issuing Bank
when such amounts are due and payable, irrespective of any claim, setoff,
defense or other right which such Borrower may have at any time against such
Issuing Bank or any other Person.
(j) Issuing Bank Reporting Requirements. Each Issuing Bank shall,
on the day it creates an Acceptance, provide to the Administrative Agent
separate a schedule for Acceptances created by it, in form and substance
reasonably satisfactory to the Administrative Agent, setting forth the
aggregate Acceptance Obligations of each Borrower outstanding to it as of
such date and any information requested by the Administrative Agent.
(k) Obligations Several. The obligations of each Issuing Bank and
each Lender under this Section 2.04 are several and not joint, and no Issuing
Bank or Lender shall be responsible for the obligation to create Acceptances
or participation obligation hereunder, respectively, of any other Issuing
Bank or Lender.
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(l) Termination of the Acceptance Commitments. Notwithstanding
anything to the contrary herein, if any of the following events shall occur:
(i) There is a determination made by any regulatory body (including,
without limitation, the staff of any Federal Reserve Bank), or there is a
change in, or change in interpretation of, any applicable rule or
regulation, to the effect, in the judgment of the Requisite Lenders, that
any Acceptance created hereunder is not, or would not be, an Eligible
Acceptance; or
(ii) Any restriction is imposed on any Issuing Bank (including,
without limitation, any change in acceptance limits imposed on any Issuing
Bank) which would prevent such Issuing Bank from creating Acceptances or
performing its Acceptance Commitment under this Section 2.04;
then the Administrative Agent shall at the request, or may with the consent,
of the Requisite Lenders or any Issuing Bank, by notice to the Borrowers in
writing or by telephone (confirmed in writing), terminate the Acceptance
Commitments of the Issuing Banks in whole, effective on the date on which the
Administrative Agent gives such notice; provided that such notice shall
describe in reasonable detail the nature of such event.
2.05. Authorized Officers and Administrative Agents. On the
Closing Date and from time to time thereafter, each Borrower shall deliver to
the Administrative Agent an Officer's Certificate setting forth the names of
the officers of the general partner and agents of such Borrower authorized to
request Loans, Letters of Credit and Acceptances on behalf of such Borrower
and containing a specimen signature of each such officer or agent. The
officers and agents so authorized shall also be authorized to act for such
Borrower in respect of all other matters relating to the Loan Documents. The
Administrative Agent shall be entitled to rely conclusively on such officer's
or agent's authority to request such Loan, Letter of Credit or Acceptance
until the Administrative Agent receives written notice to the contrary. In
addition, the Administrative Agent shall be entitled to rely conclusively on
any written notice sent to it by telecopy. The Administrative Agent shall
have no duty to verify the authenticity of the signature appearing on, or any
telecopy or facsimile of, any written Notice of Borrowing, Notice of Letter
of Credit Issuance, Request for Acceptance or any other document, and, with
respect to an oral request for such a Loan, Letter of Credit or Acceptance,
the Administrative Agent shall have no duty to verify the identity of any
person representing himself or herself as one of the officers or agents
authorized to make such request or otherwise to act on behalf of such
Borrower. None of the Administrative Agent, any Lender or any Issuing Bank
61
shall incur any liability to any of the Borrowers or any other Person in
acting upon any telecopy or facsimile or telephonic notice referred to above
which the Administrative Agent believes to have been given by a duly
authorized officer or other person authorized to borrow on behalf of such
Borrower.
2.06. Promise to Pay; Evidence of Debt.
(a) Promise to Pay. (i) Each of the Borrowers jointly and
severally agrees to pay on the Commitment Termination Date the principal
amount of each Revolving Loan which is made to any Borrower, and further
agrees to pay all unpaid interest accrued thereon, in accordance with the
terms of this Agreement and the promissory notes evidencing the Revolving
Loans owing to the Lenders, and the Borrowers shall execute and deliver to
each Lender such promissory notes as are necessary to evidence the Revolving
Loans owing to the Lenders after giving effect to any assignment thereof
pursuant to Section 13.01, each substantially in the form of Exhibit G-1
attached hereto and made a part hereof (all such promissory notes and all
amendments thereto, replacements thereof and substitutions therefor being
collectively referred to as the "Revolving Loan Notes"; and "Revolving Loan
Note" means any one of the Revolving Loan Notes).
(ii) Each of the Borrowers jointly and severally agrees to pay on
the seventh (7th) day following the making of each Swing Loan made to any
Borrower the principal amount of such Swing Loan, and further agrees to pay
all unpaid interest accrued thereon, in accordance with the terms of this
Agreement and the promissory note evidencing the Swing Loans owing to
Citibank, and the Borrowers shall execute and deliver to Citibank such
promissory note as is necessary to evidence the Swing Loans owing to
Citibank, substantially in the form of Exhibit G-2 (all such promissory notes
and all amendments thereto, replacements thereof and substitutions therefor
being collectively referred to as the "Swing Loan Notes"; and "Swing Loan
Note" means any one of the Notes).
(b) Loan Account. Each Lender shall maintain in accordance with
its usual practice an account or accounts (a "Loan Account") evidencing the
Indebtedness of the Borrowers to such Lender resulting from each Loan owing
to such Lender from time to time, including the amount of principal and
interest payable and paid to such Lender from time to time hereunder and
under the Notes.
(c) Control Account. The Register maintained by the
Administrative Agent pursuant to Section 13.01(c) shall include a control
account, and a subsidiary account for each Lender, in which accounts (taken
together) shall be recorded (i) the date and amount of each Borrowing made
hereunder, the type of Loan comprising such Borrowing and any Interest Period
applicable
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thereto, (ii) the effective date and amount of each Assignment and Acceptance
delivered to and accepted by it and the parties thereto (iii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrowers to each Lender hereunder or under the Notes, and (iv) the amount of
any sum received by the Administrative Agent from the Borrowers hereunder and
each Lender's share thereof.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Commitments.
(a) Voluntary Prepayments/Reductions.
(i) The Borrowers may, upon at least three (3) Business Days'
prior written notice to the Administrative Agent, at any time and from time
to time, prepay the Loans in whole or in part without premium or penalty
(except as provided in Section 4.02(f)) upon notice to the Administrative
Agent. Any notice of prepayment given to the Administrative Agent under this
Section 3.01(a)(i) shall specify the Loans to be prepaid, the date (which
shall be a Business Day) of prepayment, and the aggregate principal amount of
the prepayment. When notice of prepayment is delivered as provided herein,
the principal amount of the Loans specified in the notice shall become due
and payable on the prepayment date specified in such notice.
(ii) The Borrowers may, upon at least five (5) Business Days'
prior written notice to the Administrative Agent, at any time and from time
to time, terminate in whole, or permanently reduce in part, the Commitments.
Any partial reduction of the Commitments shall be in an aggregate minimum
amount of $5,000,000 and integral multiples of $1,000,000 in excess of that
amount and shall reduce the Commitment of each Lender proportionately in
accordance with its Pro Rata Share. Any notice of termination or reduction
given to the Administrative Agent under this Section 3.01(a) shall specify
the date (which shall be a Business Day) of such termination or reduction
and, with respect to a partial reduction, the aggregate principal amount
thereof. When notice of termination or reduction of the Commitments is
delivered as provided herein, the principal amount of the Loans so reduced
shall become due and payable on the date specified in such notice to the
extent the Revolving Credit Obligations exceed the Commitments after giving
effect to such reduction. The payments in respect of reductions and
terminations described in this Section 3.01(a) may be made without premium or
penalty (except as provided in Section 4.02(f)).
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(iii) The Borrowers may not prepay the Acceptance Obligation with
respect to any Acceptance except as required by Sections 3.01(b)(i) and 11.02.
(b) Mandatory Prepayments/Reductions.
(i) Subject to Section 3.05, on a daily basis from funds on
deposit in the Domestic Concentration Account, the Administrative Agent shall
transfer available funds therein and thereby cause the Borrowers to make a
mandatory repayment of the Obligations denominated in Dollars owing by the
Borrowers on such Business Day; provided, however, that if (A) all Floating
Rate Loans have been repaid, (B) only Fixed Rate Loans remain outstanding and
(C) no Event of Default exists, then funds may be deposited in the Cash
Collateral Account and applied to repay Fixed Rate Loans on the last day of
the earliest terminating Interest Periods until all such funds have been
applied to repay Fixed Loans.
(ii) Immediately after any Borrower's or any Guarantor's receipt
of any Net Cash Proceeds from an Asset Sale, each Borrower and each Guarantor
receiving such Net Cash Proceeds agrees to make or cause to be made a
mandatory prepayment of the Loans in an amount equal to one hundred percent
(100%) of such Net Cash Proceeds. If the Net Cash Proceeds from any Asset
Sale (in one transaction or a series of related transactions) are in excess
of $15,000,000 (a "Material Asset Sale") (other than the Net Cash Proceeds
from the sale of the beauty division, the sale of the rights to DKNY Jeans
and DKNY Active and the sale of the equity interest in Xxxxx Karan Japan K.K.
and the transactions related thereto), the Commitments shall be permanently
reduced by the amount of such Net Cash Proceeds; provided, however, if such
Asset Sale is permitted pursuant to Section 9.02 and the Borrowers deliver to
the Administrative Agent the Clean-Down Forecast, the Commitments shall not
be reduced. If the Net Cash Proceeds from all Asset Sales (other than
Material Asset Sales and the sale of the beauty division, the sale of the
rights to DKNY Jeans and DKNY Active and the sale of the equity interest in
Xxxxx Karan Japan K.K. and the transactions related thereto) are in excess of
$15,000,000 in the aggregate for any twelve month period, the Commitments
shall be permanently reduced by the amount of such Net Cash Proceeds that
exceeds $15,000,000; provided, however, if such Asset Sales are permitted
pursuant to Section 9.02 and the Borrowers deliver to the Administrative
Agent the Clean-Down Forecast, the Commitments shall not be reduced. If the
Borrowers deliver a Clean-Down Forecast pursuant to this Section 3.01(b)(ii),
the Clean-Down Amount for all Clean-Down Periods following the delivery of
such Clean-Down Forecast shall be reduced by the aggregate amount of such Net
Cash Proceeds from Material Asset Sales and Non-Material Asset Sales (but
shall in no event be less than $0).
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(iii) Immediately upon Xxxxx Karan International's receipt of any
Net Cash Proceeds from the issuance of Common Stock (other than the issuance
of Common Stock pursuant to, or upon the exercise of options or benefits
granted under, an employee or director benefit or incentive plan), the
Borrowers shall cause to be made a mandatory prepayment of the Loans in an
amount equal to 100% of such Net Cash Proceeds. If the Net Cash Proceeds
from any issuance of Common Stock are in excess of $15,000,000, the
Commitments shall be permanently reduced by the amount of such Net Cash
Proceeds; provided, however, if the Borrowers deliver to the Administrative
Agent a Clean-Down Forecast and an Officer's Certificate with calculations
showing that the Fixed Charge Coverage Ratio of Xxxxx Karan International and
its Subsidiaries on a consolidated basis as of the date of such issuance is
not less than 4.0 to 1.0, the Commitments shall not be reduced. If the
Borrowers deliver the Clean-Down Forecast pursuant to the preceding sentence,
the Clean-Down Amount for all Clean-Down Periods following the delivery of
such Clean-Down Forecast shall be reduced by the amount of such Net Cash
Proceeds (but in no event less than $0).
(iv) If the Borrowers deliver a Clean-Down Forecast pursuant to
Section 3.01(b)(ii), Section 3.01(b)(iii) or Section 9.06(vi), the Borrowers
shall make or cause to be made a mandatory prepayment of all outstanding
Loans, and shall not borrow any other Loans, in excess of the Clean-Down
Amount for a period of forty-five (45) consecutive days during each
Clean-Down Period following the delivery of such Clean-Down Forecast.
(v) Immediately when the sum of (A) the Revolving Credit
Obligations plus (B) the amount of the Foreign Exchange Exposure at such time
plus (C) the amount of the Obligations at such time attributable to corporate
credit cards or cash management functions, including Automated Clearing House
(ACH) functions, performed by Citibank exceeds the Maximum Revolving Credit
Amount, the Borrowers shall make or cause to be made a mandatory prepayment
of the Revolving Credit Obligations in an amount equal to such excess, such
amount to be applied in accordance with the provisions of Section 3.02(b).
(vi) The Borrowers shall, within one Business Day after their
receipt of a notice of termination of the Acceptance Commitment of any
Issuing Bank pursuant to Section 2.04(l), prepay the Acceptance Obligations
with respect to each Acceptance then outstanding by paying to such Issuing
Bank the face amount of such Acceptances created by such Issuing Bank less
such Issuing Bank's Prepayment Discount with respect to such Acceptance in
effect for such prepayment.
(vii) Nothing in this Section 3.01(b) shall be construed to
constitute the Lenders' consent to any transaction which is not expressly
permitted by Article IX.
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3.02. Payments. (a) Manner and Time of Payment. All payments of
principal of and interest on the Loans, Reimbursement Obligations, Acceptance
Obligations and other Obligations (including, without limitation, fees and
expenses) which are payable to the Administrative Agent, the Lenders or any
Issuing Bank shall be made without condition or reservation of right, in
immediately available funds, delivered to the Administrative Agent (or, in
the case of Reimbursement Obligations or Acceptance Obligations, to the
Issuing Bank) not later than 11:00 a.m. (New York time), with respect to
Loans denominated in Dollars, or 11:00 a.m. (London time), with respect to
Loans denominated in an Optional Currency, on the date and at the place due,
to the applicable Payment Account (or, in the case of Reimbursement
Obligations or Acceptance Obligations, such account of the Issuing Bank, as
it may designate). Thereafter, payments in respect of any Swing Loans
received by the Administrative Agent shall be distributed to the Swing Loan
Bank and payments in respect of any Revolving Loan received by the
Administrative Agent shall be distributed to each Lender in accordance with
its Pro Rata Share in accordance with the provisions of Section 3.02(b) on
the date received, if received prior to 11:00 a.m., and (except in the case
of repayment of Swing Loans) on the next succeeding Business Day if received
thereafter, by the Administrative Agent. All payments of principal of and
interest on the Multicurrency Loans, whether made directly or pursuant to
Section 3.05(c)(ii), shall be made upon at least two (2) Business Days' prior
notice to the Administrative Agent.
(b) Apportionment of Payments. (i) Subject to the provisions of
Section 3.02(b)(ii) and (iv), (A) all payments of principal and interest in
respect of outstanding Revolving Loans, and all payments in respect of
Reimbursement Obligations and Acceptance Obligations, shall be allocated
among such of the Lenders and Issuing Banks as are entitled thereto, in
proportion to their respective Pro Rata Shares and (B) all payments of fees
and all other payments in respect of any other Obligation shall be allocated
among such of the Lenders and Issuing Banks as are entitled thereto, in
proportion to their respective Pro Rata Shares. All such payments and any
other proceeds of Collateral or other amounts received by the Administrative
Agent from or for the benefit of a Borrower shall be promptly applied first,
to pay principal of and interest on any portion of the Loans made to such
Borrower which the Administrative Agent may have advanced pursuant to the
express provisions of this Agreement on behalf of any Lender, for which the
Administrative Agent has not then been reimbursed by such Lender or such
Borrower, second, to pay the outstanding Reimbursement Obligations and
Acceptance Obligations owing to any Issuing Bank for which such Issuing Bank
has not then been paid by such Borrower or reimbursed by the Lenders, third,
to pay all other Obligations of such Borrower then due and payable and
fourth, to the applicable Cash Collateral Account for such currency to be
held as Cash Collateral in accordance with
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this Agreement. Except as set forth in Sections 3.01(a) and (b) and unless
otherwise designated by the Borrowers, (A) all principal payments made by any
Borrower in respect of outstanding Swing Loans or Revolving Loans of such
Borrower, as the case may be, shall be promptly applied first, to the
outstanding Swing Loans of such Borrower and second, to the outstanding
Revolving Loans of such Borrower, in each case, first, to repay outstanding
Floating Rate Loans, and then to repay outstanding Fixed Rate Loans with
those Loans which have earlier expiring Interest Periods being repaid prior
to those which have later expiring Interest Periods (provided, that, so long
as no Default or Event of Default shall have occurred and be continuing, such
Borrower may, in lieu of having amounts applied to repay, in full or in part,
a Fixed Rate Loan on a date which is not the last day of the applicable
Interest Period, request that any amount to be so applied be deposited into
such Borrower's Cash Collateral Account (or, in the case of Fixed Rate Loans
denominated in an Optional Currency, a Cash Collateral Account for such
currency) as Cash Collateral for application by the Administrative Agent to
such Loan on the last day of such Interest Period).
(ii) After the occurrence and during the continuance of an Event of
Default, the Administrative Agent may, and shall upon the acceleration of the
Obligations pursuant to Section 11.02(a), apply all payments in respect of
any Obligations and all proceeds of Collateral (including, without
limitation, all amounts held as Cash Collateral) to the Obligations in the
following order (it being understood that the Administrative Agent shall have
the right to convert, at a rate of exchange equal to the Spot Rate as of such
conversion date and at the Borrowers' expense, any of such payments or
proceeds of Collateral into the currency in which such Obligations are
denominated):
(A) first, to pay interest on and the principal of any portion
of the Revolving Loans which the Administrative Agent may have
advanced on behalf of any Lender for which the Administrative Agent
has not then been reimbursed by such Lender or a Borrower;
(B) second, to pay interest on and then principal of any Swing
Loan;
(C) third, to pay Obligations in respect of any expense
reimbursements, indemnities or other liabilities then due to the
Administrative Agent ("Administrative Agent's Obligations"), including,
without limitation, liabilities in respect of foreign exchange services,
cash management services and other related services provided to the
Borrowers and its Affiliates by the Administrative Agent, in an aggregate
amount of up to $15,000,000;
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(D) fourth, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders and the Issuing
Banks;
(E) fifth, to pay Obligations in respect of any fees then due to
the Administrative Agent, the Lenders and the Issuing Banks;
(F) sixth, to pay interest due in respect of the Revolving
Loans, Reimbursement Obligations and Acceptance Obligations;
(G) seventh, to pay all outstanding Letter of Credit Obligations and
Acceptance Obligations;
(H) eighth, to pay or prepay principal outstanding on Revolving Loans
and the Administrative Agent's Obligations in excess of $15,000,000;
(I) ninth, to the extent such Obligations are contingent, provide
Cash Collateral pursuant to Section 11.02(b) in respect of Letter of Credit
Obligations and Acceptance Obligations; and
(J) tenth, to the ratable payment of all other Obligations;
provided, however, if sufficient funds are not available to fund all payments
to be made in respect of any of the Obligations described in any of the
foregoing clauses (A) through (J), the available funds being applied with
respect to any such Obligations referred to in any one of such clauses
(unless otherwise specified in such clause) shall be allocated to the payment
of such Obligations ratably, based on the proportion of the Administrative
Agent's and each Lender's or Issuing Bank's interest in the aggregate
outstanding Obligations described in such clauses.
(iii) The Administrative Agent, in its sole discretion subject
only to the terms of this Section 3.02(b)(iii), may pay from the proceeds of
Revolving Loans (which Loans may not have been requested by a Borrower
pursuant to a Notice of Borrowing) made to a Borrower hereunder, whether made
following a request by such Borrower pursuant to Section 2.01, 2.02, 2.03 or
2.04, all amounts then due and payable by any Borrower hereunder, including,
without limitation, amounts payable with respect to payments of principal,
interest, Reimbursement Obligations, Acceptance Obligations and fees and all
reimbursements for expenses pursuant to Section 13.04. Each Borrower hereby
irrevocably authorizes each Swing Loan Bank and the Lenders to make Swing
Loans or Revolving Loans in the appropriate currency, in each case, upon
notice from the Administrative Agent as
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described in the following sentence for the purpose of paying principal,
interest, Reimbursement Obligations and fees due from any Borrower,
reimbursing expenses pursuant to Section 13.04 and paying any and all other
amounts due and payable by any Borrower hereunder or under the Notes, and
agrees that all such Loans so made shall be deemed to have been requested by
it pursuant to Section 2.01 and 2.02 as of the date of the aforementioned
notice. The Administrative Agent shall request Swing Loans or Revolving
Loans on behalf of a Borrower as described in the preceding sentence by
notifying the Lenders by telex, telecopy, telegram or other similar form of
transmission (which notice the Administrative Agent shall thereafter promptly
transmit to such Borrower), of the amount and Funding Date of the proposed
Borrowing and that such Borrowing is being requested on such Borrower's
behalf pursuant to this Section 3.02(b)(iii). On the proposed Funding Date,
the relevant Swing Loan Bank or Lenders, as the case may be, shall make the
requested Loans in accordance with the procedures and subject to the
conditions specified in Section 2.01 or 2.02 (irrespective of the
satisfaction of the conditions described in Section 5.02 or the requirement
to deliver a Notice of Borrowing in Section 2.01(b), which conditions and
requirements, for the purposes of the payment of Swing Loans and Revolving
Loans at the request of the Administrative Agent as described in the
preceding sentence, the Lenders irrevocably waive).
(iv) If any Lender fails to fund its Pro Rata Share of any
Borrowing requested by a Borrower under which such Lender is obligated to
fund under the terms hereof (the funded portion of such Borrowing being
hereinafter referred to as a "Non Pro Rata Loan"), excluding any such Lender
who has delivered to the Administrative Agent written notice that one or more
of the conditions precedent contained in Section 5.02 shall not on the date
of such request be satisfied and until such conditions are satisfied, then
until the earlier of such Lender's cure of such failure and the termination
of the Commitments, the proceeds of all amounts thereafter repaid to the
Administrative Agent by any Borrower and otherwise required to be applied to
such Lender's share of all other Obligations pursuant to the terms hereof
shall be advanced to the Borrower requesting such Borrowing by the
Administrative Agent on behalf of such Lender to cure, in full or in part,
such failure by such Lender, but shall nevertheless be deemed to have been
paid to such Lender in satisfaction of such other Obligations.
Notwithstanding anything contained herein to the contrary:
(A) the foregoing provisions of this Section 3.02(b)(iv) shall
apply only with respect to the proceeds of payments of Obligations;
(B) a Lender shall be deemed to have cured its failure to fund
its Pro Rata Share of any Revolving
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Loan at such time as an amount equal to such Lender's original Pro Rata
Share of the requested principal portion of such Revolving Loan is fully
funded to the applicable Borrower, whether made by such Lender itself or by
operation of the terms of this Section 3.02(b)(iv), and whether or not the
Non Pro Rata Loan with respect thereto has been repaid;
(C) amounts advanced to a Borrower to cure, in full or in part,
any such Lender's failure to fund its Pro Rata Share of any Borrowing
("Cure Loans") shall bear interest from and after the date made
available to the applicable Borrower at the rate applicable to the
other Revolving Loans comprising such Borrowing and shall be treated
as Revolving Loans comprising such Borrowing for all purposes herein;
(D) regardless of whether or not an Event of Default has occurred or
is continuing, and notwithstanding the instructions of the Borrower as to
its desired application, all repayments of principal which, in accordance
with the other terms of this Section 3.02, would be applied to the
outstanding Revolving Loans shall be applied first, ratably to all
Revolving Loans constituting Non Pro Rata Loans, second, ratably to
Revolving Loans other than those constituting Non Pro Rata Loans or Cure
Loans and, third, ratably to Revolving Loans constituting Cure Loans; and
(E) no Lender shall be relieved of any obligation such Lender may
have to the Borrower under the terms of this Agreement as a result of the
provisions of this Section 3.02(b)(iv).
(c) Payments on Non-Business Days. Whenever any payment to be
made by a Borrower hereunder or under the Notes is stated to be due on a day
which is not a Business Day, the payment shall instead be due on the next
succeeding Business Day (or, as set forth in Section 4.02(b)(iv), the next
preceding Business Day), and any such extension of time shall be included in
the computation of the payment of interest and fees hereunder.
3.03. Taxes.
(a) Payment of Taxes. Any and all payments by the Borrowers
hereunder, under the Notes or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender, each
Issuing Bank and the Administrative Agent, taxes imposed on its income,
capital, profits or gains and franchise taxes imposed on it, in each case by
(i) the United States except withholding
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taxes contemplated pursuant to Section 3.03(e)(ii)(C), (ii) the Governmental
Authority of the jurisdiction in which such Lender's office is located or
(iii) the Governmental Authority in which such Person is organized, managed,
controlled or doing business, in each case including all political
subdivisions thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred
to as "Taxes"). If any Borrower shall be required by law to withhold or
deduct any Taxes from or in respect of any sum payable hereunder, under the
Notes or under any other Loan Document to any Lender, any Issuing Bank or the
Administrative Agent, (x) such sum payable shall be increased as may be
necessary so that after making all required withholdings or deductions
(including withholdings or deductions applicable to additional sums payable
under this Section 3.03) such Lender, such Issuing Bank or the Administrative
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such withholdings or deductions been made, (y) such Borrower
shall make such withholdings or deductions, and (z) such Borrower shall pay
the full amount withheld or deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) Other Taxes. In addition, the Borrowers agree to pay any
present or future stamp, value-added or documentary taxes or any other excise
or property taxes, charges or similar levies which arise from and which
relate directly to (i) any payment made under any Loan Document or (ii) the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the Notes or any other Loan Document (hereinafter referred to as
"Other Taxes").
(c) Indemnification. The Borrowers will indemnify each Lender,
each Issuing Bank and the Administrative Agent against, and reimburse each on
demand for, the full amount of all Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any Governmental Authority on
amounts payable under this Section 3.03 and any additional income or
franchise taxes resulting therefrom) incurred or paid by such Lender, such
Issuing Bank or the Administrative Agent (as the case may be) or any
Affiliate of such Lender or Issuing Bank and any liability (including
penalties, interest, and out-of-pocket expenses paid to third parties)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or lawfully payable. A certificate as to any amount
payable to any Person under this Section 3.03 submitted by such Person to the
Borrowers shall, absent manifest error, be final, conclusive and binding upon
all parties hereto. This indemnification shall be made within thirty (30)
days from the date such Person makes written demand therefor and within
thirty (30) days after the receipt of any refund of the Taxes or Other Taxes
following final determination that the Taxes or Other Taxes which gave rise
to
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the indemnification were not required to be paid, such Person shall repay the
amount of such paid indemnity to the Borrowers.
(d) Receipts. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes by any of the Borrowers, such Borrower will
furnish to the Administrative Agent, at its address referred to in Section
13.10, the original or a certified copy of a receipt or other documentation
reasonably satisfactory to the Administrative Agent evidencing payment
thereof. The Borrowers will furnish to the Administrative Agent upon the
Administrative Agent's request from time to time an Officer's Certificate
stating that all Taxes and Other Taxes of which it is aware that are due have
been paid and that no additional Taxes or Other Taxes of which it is aware
are due.
(e) Foreign Bank Certifications. (i) Each Lender that is not
created or organized under the laws of the United States or a political
subdivision thereof shall deliver to the Borrowers and the Administrative
Agent on or before the Closing Date or the date on which such Lender becomes
a Lender pursuant to Section 13.01 hereof a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender to the
effect that such Lender is eligible to receive payments hereunder and under
the Notes without deduction or withholding of United States federal income
tax (I) under the provisions of an applicable tax treaty concluded by the
United States (in which case the certificate shall be accompanied by two duly
completed copies of IRS Form 1001 (or any successor or substitute form or
forms)) or (II) under Sections 1442(c)(1) and 1442(a) of the Internal Revenue
Code (in which case the certificate shall be accompanied by two duly
completed copies of IRS Form 4224 (or any successor or substitute form or
forms)).
(ii) Each such Lender further agrees to deliver to the Borrowers
and the Administrative Agent from time to time, a true and accurate
certificate executed in duplicate by a duly authorized officer of such Lender
before or promptly upon the occurrence of any event requiring a change in the
most recent certificate previously delivered by it to the Borrowers and the
Administrative Agent pursuant to this Section 3.03(e). Each certificate
required to be delivered pursuant to this Section 3.03(e)(ii) shall certify
as to one of the following:
(A) that such Lender can receive payments hereunder and under
the Notes without deduction or withholding of United States federal
income tax;
(B) that such Lender cannot continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax as specified therein but does not
require additional payments pursuant to Section 3.03(a) because
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it is entitled to recover the full amount of any such deduction or
withholding from a source other than the Borrowers;
(C) that such Lender is no longer capable of receiving payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax as specified therein by reason of a
change in law (including the Code or applicable tax treaty) after the
later of the Closing Date or the date on which a Lender became a
Lender pursuant to Section 13.01 and that it is not capable of
recovering the full amount of the same from a source other than the
Borrowers; or
(D) that such Lender is no longer capable of receiving payments
hereunder without deduction or withholding of United States federal income
tax as specified therein other than by reason of a change in law (including
the Code or applicable tax treaty) after the later of the Closing Date or
the date on which a Lender became a Lender pursuant to Section 13.01.
3.04. Increased Capital. If after the date hereof any Lender or
Issuing Bank determines that (i) the adoption or implementation of or any
change in or in the interpretation or administration of any law or regulation
or any guideline or request from any central bank or other Governmental
Authority or quasi-governmental authority exercising jurisdiction, power or
control over any Lender, Issuing Bank or banks or financial institutions
generally (whether or not having the force of law), compliance with which
affects or would affect the amount of capital required or expected to be
maintained by such Lender or Issuing Bank or any corporation controlling such
Lender or Issuing Bank and (ii) the amount of such capital is increased by or
based upon (A) the making or maintenance by any Lender of its Loans, any
Lender's participation in or obligation to participate in the Loans, Letters
of Credit Acceptances or other advances made hereunder or the existence of
any Lender's obligation to make Loans or (B) the issuance or maintenance by
any Issuing Bank of, or the existence of any Issuing Bank's obligation to
Issue or create, Letters of Credit or Acceptances, then, in any such case,
upon written demand by such Lender or Issuing Bank (with a copy of such
demand to the Administrative Agent), the Borrowers jointly and severally
agree immediately to pay to the Administrative Agent for the account of such
Lender or Issuing Bank, from time to time as specified by such Lender or
Issuing Bank, additional amounts sufficient to compensate such Lender or
Issuing Bank or such corporation therefor. Such demand shall be accompanied
by a statement as to the amount of such compensation and include a brief
summary of the basis for such demand. Such
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statement shall be conclusive and binding for all purposes, in the absence of
manifest error.
3.05. Cash Management and Cash Collateral Accounts.
(a) Establishment of Accounts. On the Closing Date, the Borrowers
shall have established the Lockboxes, Blocked Accounts, Concentration
Accounts, Cash Collateral Accounts and Disbursement Accounts identified on
Schedule 6.01(Y).
(b) Collections. Each Borrower has directed, and in the future
will direct, all of its account debtors to remit all monies, checks, notes,
drafts or funds received by it, including, without limitation, all payments
in respect of Receivables and other proceeds of Collateral directly to a
Lockbox or Blocked Account. To the extent that the account debtors of such
Borrower, notwithstanding the instructions described in the preceding
sentence, remit such monies, checks, notes, drafts or funds directly to such
Borrower, such Borrower hereby agrees to deposit all such collections of
Receivables into a Blocked Account (or, in the case of collections of
Receivables denominated in an Optional Currency, into the applicable
Borrower's Multicurrency Account for such currency) promptly upon such
Person's receipt thereof and, pending deposit, to hold such collections in
trust for the benefit of the Administrative Agent, the Lenders, the Issuing
Banks and the other Holders. The contents of each Lockbox shall
automatically be deposited into a Blocked Account or be emptied and deposited
into a Blocked Account by a representative of the Blocked Account Bank at
which the applicable Blocked Account has been established. Only the
Administrative Agent and the Blocked Account Bank, if any, shall have power
of withdrawal from each Lockbox and the related Blocked Account. The
Borrowers and Xxxxx Karan International agree to cause all collections of
Receivables, all proceeds of Collateral and all Net Cash Proceeds now or
hereafter received directly or indirectly by any of them or their respective
Subsidiaries, to be held in trust for the Administrative Agent for the
benefit of the Lenders and, promptly upon receipt thereof, to be deposited
into a Blocked Account.
(c) Concentration Account; Cash Collateral Accounts. All
immediately available funds in any Blocked Account located in the United
States shall be automatically transferred into the Domestic Concentration
Account. The Domestic Concentration Account shall be under the sole dominion
and control of the Administrative Agent. With respect to the Domestic
Concentration Account and the Cash Collateral Account, the Administrative
Agent alone shall have power of withdrawal from such accounts. Each Borrower
hereby authorizes the Administrative Agent to apply all immediately available
funds on deposit in its Domestic Concentration Account and, if necessary, the
Cash Collateral Account to such Borrower's Obligations denominated in
Dollars.
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To the extent any such funds remain after such application, each Borrower
hereby authorizes the Administrative Agent to transfer such funds to the Cash
Collateral Account and invest the same in accordance with the Cash Collateral
Pledge Agreement. Notwithstanding anything to the contrary contained in this
Agreement, except as set forth in this subsection (c), none of the Borrowers
or any Person or entity claiming on behalf of or through a Borrower shall
have any right to withdraw any of the funds held in the Domestic
Concentration Account or any Cash Collateral Account.
(d) Fees and Expenses. The Borrowers jointly and severally agree
to pay to the Administrative Agent any and all reasonable fees, costs and
expenses which the Administrative Agent incurs in connection with opening and
maintaining the Blocked Accounts, the Concentration Accounts and the Cash
Collateral Accounts. The Borrowers jointly and severally agree to reimburse
the Administrative Agent for any amounts paid to the Blocked Account Bank
arising out of any required indemnification by the Administrative Agent of
such Blocked Account Bank against damages incurred by the Blocked Account
Bank in the operation of a Blocked Account.
3.06. Replacement of Lender in Event of Adverse Condition. If any
Borrower becomes obligated to pay additional amounts to any Lender pursuant
to Sections 3.03, 3.04 or 4.01(f) as a result of any condition described in
such Sections which is not generally applicable to all Lenders, then, unless
such Lender has theretofore taken steps to remove or cure, and has removed or
cured, the conditions creating the cause for such obligation to pay such
additional amounts, the Borrower may designate a Replacement Lender to assume
all of the obligations of such Lender hereunder and to purchase for cash all
of the Notes of such Lender and all of such Lender's rights hereunder,
without recourse to or warranty (other than title) by, or expense to, such
Lender for a purchase price equal to the outstanding principal amount of the
Notes payable to such Lender plus any accrued but unpaid interest on such
Notes and accrued but unpaid commitment and other fees, expense
reimbursements and indemnities in respect of that Lender's Commitment. Such
Lender shall consummate such sale in accordance with such terms (and, if such
Lender is an Issuing Bank, such other terms as may be reasonably necessary to
compensate fully such Lender) within a reasonable time not exceeding 15
Business Days from the date the Borrower designates a Replacement Lender, and
thereupon such Lender shall no longer be a party hereto or have any
obligations or rights hereunder (except rights which, pursuant to the
provisions of this Agreement, survive the termination of this Agreement and
the repayment of the Notes), and the Replacement Lender shall succeed to such
obligations and rights.
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ARTICLE IV
INTEREST AND FEES
4.01. Interest on the Loans and Other Obligations. (a) Rate of
Interest. All Loans and the outstanding principal balance of all other
Obligations shall bear interest on the unpaid principal amount thereof from
the date such Loans are made and such other Obligations are due and payable
until paid in full, except as otherwise provided in Section 4.01(d), as
follows:
(i) If a Floating Rate Loan or such other Obligation, at a rate
per annum equal to the sum of (A) the Floating Rate in effect from
time to time, plus (B) the Applicable Floating Rate Margin in effect
from time to time; and
(ii) If a Fixed Rate Loan, at a rate per annum equal to the sum
of (A) the Fixed Rate determined for the applicable Interest Period
and the applicable currency, plus (B) the Applicable Fixed Rate Margin
in effect from time to time during such Interest Period.
The applicable basis for determining the rate of interest on any Loan shall
be initially determined at the time a Notice of Borrowing is delivered by the
Borrowers to the Administrative Agent and in accordance with Section 2.01(b).
The applicable basis for determining the rate of interest on such Loan shall
be selected thereafter by the relevant Borrower at the time a Notice of
Conversion/Continuation is delivered by such Borrower to the Administrative
Agent. Notwithstanding the foregoing, such Borrower may not select the Fixed
Rate as the applicable basis for determining the rate of interest on such a
Loan if (x) such Loan is to be made on the Closing Date or (y) at the time of
such selection an Event of Default or Default would occur or has occurred and
is continuing. If on any day any Loan is outstanding with respect to which
notice has not been timely delivered to the Administrative Agent in
accordance with the terms hereof specifying the basis for determining the
rate of interest on that day, then for that day interest on that Loan shall
be determined by reference to the Floating Rate plus the Applicable Floating
Rate Margin with respect to Domestic Loans and to the Multicurrency LIBO Rate
in effect on the relevant Fixed Rate Determination Date for an Interest
Period of seven (7) days plus the Applicable Fixed Rate Margin with respect
to Multicurrency Loans.
(b) Interest Payments. (i) Interest accrued on each Floating
Rate Loan shall be payable in arrears in Dollars (A) on the first Business
Day of each calendar month for the preceding calendar month, commencing on
the first such day following the
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making of such Floating Rate Loan and (B) if not theretofore paid in full, on
the Commitment Termination Date.
(ii) Interest accrued on each Fixed Rate Loan shall be payable in
arrears in the currency in which such Loan is denominated (A) on the last day
of each Fixed Rate Interest Payment Date with respect to such Loan and (B) if
not theretofore paid in full, on the Commitment Termination Date.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears in the currency in which such
Obligation is denominated (A) on the first Business Day of each month,
commencing on the first such day following the incurrence of such Obligation
and (B) if not theretofore paid in full, at the time such other Obligation
becomes due and payable (whether by acceleration or otherwise).
(c) Conversion or Continuation. (i) Each Borrower shall have the
option (A) to convert at any time all or any part of its outstanding Floating
Rate Loans (other than Swing Loans) to Fixed Rate Loans; (B) to convert all
or any part of its outstanding Fixed Rate Loans denominated in Dollars and
having Interest Periods which expire on the same date to Floating Rate Loans
on such expiration date; or (C) to continue all or any part of its
outstanding Fixed Rate Loans having Interest Periods which expire on the same
date as Fixed Rate Loans denominated in the same currency, and the succeeding
Interest Period of such continued Loans shall commence on such expiration
date; provided, however, no such outstanding Loan may be continued as, or be
converted into, a Fixed Rate Loan (i) if the continuation of, or the
conversion into, would violate any of the provisions of Section 4.02 or (ii)
if an Event of Default or Default would occur or has occurred and is
continuing. Any conversion into or continuation of Fixed Rate Loans under
this Section 4.01(c) shall be in a minimum amount of $5,000,000 (or the
Dollar Equivalent of $1,500,000 for Fixed Rate Loans denominated in an
Optional Currency) and in integral Dollar Equivalent multiples of $1,000,000
(or approximately similar intervals in Optional Currencies) in excess of that
amount.
(ii) To convert or continue a Loan under Section 4.01(c)(i), the
applicable Borrower shall deliver a Notice of Conversion/Continuation to the
Administrative Agent no later than 11:00 a.m. (New York time or London time,
as applicable) at least (A) three (3) Business Days in advance of the
proposed conversion/continuation date in the case of Domestic Loans or (B)
four (4) Business Days in advance of the proposed conversion/continuation
date in the case of Multicurrency Loans. Promptly after receipt of a Notice
of Conversion/ Continuation under this Section 4.01(c)(ii), the
Administrative Agent shall notify each Lender by telex or telecopy, or other
similar form of transmission, of the proposed conversion/continuation. Any
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Notice of Conversion/Continuation for conversion to, or continuation of, a
Loan shall be irrevocable, and the applicable Borrower shall be bound to
convert or continue in accordance therewith.
(d) Default Interest. Notwithstanding the rates of interest
specified in Section 4.01(a) or elsewhere herein, and to the extent permitted
by applicable law, effective immediately upon the occurrence of any Event of
Default and for as long thereafter as such Event of Default shall be
continuing, the principal balance of all Loans and of all other Obligations
shall bear interest at a rate which is two percent (2.0%) per annum in excess
of the rate of interest applicable to such Loans and Obligations from time to
time.
(e) Computation of Interest. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the period
during which interest accrues and a year of 360 days (or the applicable
number of days in the relevant market). In computing interest on any Loan,
the date of the making of the Loan shall be included and the date of payment
shall be excluded; provided, however, if a Loan is repaid on the same day on
which it is made, one (1) day's interest shall be paid on such Loan.
(f) Changes; Legal Restrictions. If after the date hereof any
Lender or Issuing Bank determines that the adoption or implementation of or
any change in or in the interpretation or administration of any law or
regulation or any guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority exercising
jurisdiction, power or control over any Lender, Issuing Bank or over banks or
financial institutions generally (whether or not having the force of law),
compliance with which, in each case after the date hereof:
(i) subjects a Lender or an Issuing Bank (or its Applicable
Lending Office) to charges (other than Taxes) of any kind which is
applicable to the Commitments of the Lenders and/or the Issuing Banks
to make Fixed Rate Loans or to Issue or create and/or participate in
Letters of Credit or Acceptances; or
(ii) imposes, modifies or holds applicable, any reserve (other
than reserves taken into account in calculating any Fixed Rate),
special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities
(including those pertaining to Letters of Credit) in or for the
account of, advances or loans by, commitments made or other credit
extended by, or any other acquisition of funds by, a Lender or an
Issuing
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Bank or any Applicable Lending Office or Fixed Rate Affiliate of that
Lender or Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender
or Issuing Bank of making, renewing or maintaining the Loans or its
Commitments or issuing or participating in the Letters of Credit or creating
or participating in the Acceptances or to reduce any amount receivable
thereunder; then, in any such case, upon written demand by such Lender or
Issuing Bank (with a copy of such demand to the Administrative Agent), the
Borrowers jointly and severally agree promptly to pay to the Administrative
Agent for the account of such Lender or Issuing Bank, from time to time as
specified by such Lender or Issuing Bank, such amount or amounts as may be
necessary to compensate such Lender or Issuing Bank or its Fixed Rate
Affiliate for any such additional cost incurred or reduced amount received.
Such demand shall be accompanied by a statement as to the amount of such
compensation and include a summary of the basis for such demand. Such
statement shall be conclusive and binding for all purposes, absent manifest
error.
(g) Confirmation of Fixed Rate. Upon the reasonable request of
any Borrower from time to time, the Administrative Agent shall promptly
provide to such Borrower such information with respect to the applicable
Fixed Rate as may be so requested.
(h) Additional Costs. Without limitation of any other provision
hereof, if any Acceptance created by any Issuing Bank hereunder is not, for
any reason beyond the control of such Issuing Bank, an Eligible Acceptance at
the time of its creation, the Borrowers shall, upon demand by such Issuing
Bank, pay to such Issuing Bank additional amounts sufficient to indemnify
such Issuing Bank against any additional costs, as determined by such Issuing
Bank, incurred by such Issuing Bank (including, but not limited to, costs
resulting from reserve requirements, or premium liability to the Federal
Deposit Insurance Corporation, or a higher discount rate) in connection with
such Acceptance resulting from such Acceptance not being an Eligible
Acceptance.
4.02. Special Provisions Governing Fixed Rate Loans. With respect
to Fixed Rate Loans:
(a) Amount of Advance. Each Fixed Rate Loan shall be for a
minimum amount of $5,000,000 (or the Dollar Equivalent of $1,500,000 for
Fixed Rate Loans denominated in an Optional Currency) and in integral
$1,000,000 amounts (or approximately similar intervals in Optional
Currencies) in excess thereof.
(b) Determination of Interest Period. By giving notice as set
forth in Section 2.01(b) (with respect to a new Borrowing of Domestic Loans
or Multicurrency Loans) or Section 4.01(c) (with respect to a conversion into
or continuation of a
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Fixed Rate Loan), the applicable Borrower shall have the option, subject to
the other provisions of this Section 4.02, to select an interest period
(each, an "Interest Period") to apply to the Loans described in such notice,
subject to the following provisions:
(i) Such Borrower may only select, as to a particular Borrowing
of Fixed Rate Loans, a Interest Period of either one (1), two (2),
three (3) or six (6) months in duration;
(ii) In the case of immediately successive Interest Periods
applicable to a Borrowing of Fixed Rate Loans, each successive
Interest Period shall commence on the day on which the next preceding
Interest Period expires;
(iii) If any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall be extended to
expire on the next succeeding Business Day if the next succeeding
Business Day occurs in the same calendar month, and if there shall be
no succeeding Business Day in such calendar month, such Interest
Period shall expire on the immediately preceding Business Day;
(iv) Such Borrower may not select a Interest Period as to any
Loan if such Interest Period terminates later than the Commitment
Termination Date;
(v) There shall be no more than six (6) Interest Periods for
Fixed Rate Loans in effect at any one time; and
(vi) No Fixed Rate Loan may be borrowed on the Closing Date, and no
Notice of Conversion/Continuation may be delivered prior to the Closing
Date.
(c) Determination of Interest Rate. As soon as practicable on the
applicable Fixed Rate Determination Date, the Administrative Agent shall
determine (pursuant to the procedures set forth in the definition of "Fixed
Rate") the interest rate which shall apply to Fixed Rate Loans for which an
interest rate is then being determined for the applicable Interest Period and
currency and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to the Borrowers and to each Lender. The
Administrative Agent's determination shall be presumed to be correct, absent
manifest error, and shall be binding upon such Borrowers.
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(d) Interest Rate Unascertainable, Inadequate or Unfair. In the
event that at least one (1) Business Day before the Fixed Rate Determination
Date:
(i) the Administrative Agent determines that adequate and fair
means do not exist for ascertaining the applicable interest rates by
reference to which the applicable Fixed Rate for the applicable
Available Currency then being determined is to be fixed;
(ii) the Administrative Agent determines that deposits in such
currency and in the principal amounts of the Fixed Rate Loans
comprising such Borrowing are not generally available in the London
interbank market for a period equal to such Interest Period; or
(iii) the Requisite Lenders advise the Administrative Agent that the
applicable Fixed Rate for the applicable Available Currency, as determined
by the Administrative Agent, after taking into account the adjustments for
reserves and increased costs provided for in Section 4.01(f), will not
adequately and fairly reflect the cost to such Lenders of funding the
relevant Fixed Rate Loans in the currency in which such Loans are
denominated;
then the Administrative Agent shall forthwith give notice thereof to the
Borrowers, whereupon (until the Administrative Agent notifies the Borrowers
that the circumstances giving rise to such suspension no longer exist) the
right of the Borrowers to elect to have Loans bear interest based upon the
Fixed Rate shall be suspended and each outstanding Fixed Rate Loan which is
denominated in Dollars shall be converted into a Floating Rate Loan
denominated in Dollars on the last day of the then current Interest Period
therefor, and any Notice of Borrowing with respect to Loans denominated in
Dollars for which Revolving Loans have not then been made shall be deemed to
be a request for Floating Rate Loans in Dollars, notwithstanding any prior
election by a Borrower to the contrary.
(e) Illegality. (i) If at any time any Lender determines (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties) that the making or continuation of any Fixed Rate
Loan in any currency has become unlawful or impermissible by compliance by
that Lender with any law, governmental rule, regulation or order of any
Governmental Authority (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful or would result in costs or
penalties), then, and in any such event, such Lender may give notice of that
determination, in writing, to the Borrowers and the Administrative Agent, and
the Administrative Agent shall promptly transmit the notice to each other
Lender.
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(ii) When notice is given by a Lender under Section 4.02(e)(i), (A)
the Borrowers' right to request from such Lender and such Lender's
obligation, if any, to make Fixed Rate Loans in such currency shall be
immediately suspended, and such Lender shall make a Floating Rate Loan as
part of any requested Borrowing of Fixed Rate Loans in such currency and (B)
if the affected Fixed Rate Loan or Loans are then outstanding, the applicable
Borrower shall immediately, or if not permitted by applicable law to do so
immediately, then by no later than the date it is permitted to do so in
accordance with applicable law, upon at least one (1) Business Day's prior
written notice to the Administrative Agent and the affected Lender, convert
each such Loan into a Floating Rate Loan plus the Applicable Floating Rate
Margin with respect to Domestic Loans and to the Multicurrency LIBO Rate in
effect on the relevant Fixed Rate Determination Date for an Interest Period
of seven (7) days plus the Applicable Fixed Rate Margin with respect to
Multicurrency Loans.
(iii) If at any time after a Lender gives notice under Section
4.02(e)(i) in respect of a Fixed Rate Loan in any currency such Lender
determines that it may lawfully make Fixed Rate Loans in such currency, such
Lender shall promptly give notice of that determination, in writing, to the
Borrowers and the Administrative Agent, and the Administrative Agent shall
promptly transmit the notice to each other Lender. The Borrowers' right to
request, and such Lender's obligation, if any, to make Fixed Rate Loans shall
thereupon be restored.
(f) Compensation. In addition to all amounts required to be paid
by the Borrower pursuant to Section 4.01, each Borrower agrees to compensate
each Lender, upon demand, for all losses, expenses and liabilities
(including, without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain such Lender's Fixed Rate Loans made to such
Borrower but excluding any loss of the Applicable Fixed Rate Margin on the
relevant Loans) which that Lender may sustain (i) if for any reason a
Borrowing of, conversion into or continuation of, such Fixed Rate Loans does
not occur on a date specified therefor in a Notice of Borrowing or a Notice
of Conversion/Continuation given by such Borrower or a successive Interest
Period does not commence after notice therefor is given pursuant to Section
4.01(c), including, without limitation, pursuant to Section 4.02(d), (ii) if
for any reason any Fixed Rate Loan made to such Borrower is prepaid
(including, without limitation, mandatorily pursuant to Section 3.01) on a
date which is not the last day of the applicable Interest Period, (iii) as a
consequence of a required conversion of such Fixed Rate Loan to a Floating
Rate Loan as a result of any of the events indicated in Section 4.02(d) or
(e) or (iv) as a consequence of any failure by such Borrower to repay Fixed
Rate Loans when required by the terms hereof. The Lender making demand for
such compensation
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shall deliver to the applicable Borrower concurrently with such demand a
written statement in reasonable detail as to such losses, expenses and
liabilities, and this statement shall be conclusive as to the amount of
compensation due to that Lender, absent manifest error.
(g) Booking of Fixed Rate Loans. Any Lender may make, carry or
transfer Fixed Rate Loans at, to or for the account of its Fixed Rate Lending
Office or Fixed Rate Affiliate or its other offices or Affiliates. No Lender
shall be entitled, however, to receive any greater amount under Sections
3.03, 3.04, 4.01(f) or 4.02(f) as a result of the transfer of any such Fixed
Rate Loan to any office (other than such Fixed Rate Lending Office) or any
Affiliate (other than such Fixed Rate Affiliate) than such Lender would have
been entitled to receive immediately prior thereto, unless (i) the transfer
occurred at a time when circumstances giving rise to the claim for such
greater amount did not exist and (ii) such claim in the relevant amount would
have arisen even if such transfer had not occurred.
(h) Affiliates Not Obligated. No Fixed Rate Affiliate or other
Affiliate of any Lender shall be deemed a party hereto or shall have any
liability or obligation hereunder.
4.03. Fees. (a) Administrative Agent's Fee. The Borrowers
jointly and severally agree to pay to the Administrative Agent solely for its
own account such other fees as are set forth in the Letter Agreement in
accordance with the terms thereof.
(b) Letter of Credit Fee. In addition to any charges paid
pursuant to Section 2.03(f), the Borrowers jointly and severally agree to pay
to the Administrative Agent, for the account of the Lenders, a fee (the
"Letter of Credit Fee") equal to (i) seven eighths of one percent (0.875%)
per annum on the average undrawn face amount of each outstanding Commercial
Letter of Credit for the period of time such Commercial Letter of Credit is
outstanding, payable monthly in arrears on the first Business Day of each
month during such period and (ii) the Applicable Fixed Rate Margin then in
effect on the average undrawn face amount of each outstanding Standby Letter
of Credit for the period of time such Standby Letter of Credit is
outstanding, payable monthly in arrears on the first Business Day of each
month during such period; provided, however, immediately upon the occurrence
of an Event of Default, and for as long thereafter as such Event of Default
shall be continuing, the Letter of Credit Fee shall be equal to two percent
(2%) per annum in excess of the fee otherwise applicable hereunder.
(c) Unused Commitment Fee. The Borrowers jointly and severally
agree to pay to the Administrative Agent, for the account of the Lenders in
accordance with their respective Pro
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Rata Shares, a fee (the "Unused Commitment Fee"), accruing at the rate equal
to the Unused Commitment Rate on the average amount by which the Commitments
exceed the Revolving Credit Obligations for the period commencing on the
Closing Date and ending on the Commitment Termination Date, such fee being
payable monthly, in arrears, on the first Business Day of each calendar month
and on the Commitment Termination Date.
(d) Calculation and Payment of Fees. All of the above fees that
are based on a per annum rate shall be calculated on the basis of the actual
number of days elapsed in a 360-day year. All such fees shall be payable in
addition to, and not in lieu of, interest, expense reimbursements,
indemnification and other Obligations. Fees shall be payable to the
applicable Payment Account in accordance with Section 3.02. All fees payable
hereunder shall be fully earned and nonrefundable when paid. All fees
specified or referred to herein due to the Administrative Agent, any Issuing
Bank or any Lender, including, without limitation, those referred to in this
Section 4.03, shall bear interest, if not paid when due, at the interest rate
for Loans in accordance with Section 4.01(d), shall constitute Obligations
and shall be secured by the Collateral.
ARTICLE V
CONDITIONS TO LOANS, LETTERS OF CREDIT AND ACCEPTANCES
5.01. Conditions Precedent to the Initial Loans, Letters of Credit
and Acceptances. The obligation of each Lender on the Closing Date to make
its Loan requested to be made by it and the agreement of each Issuing Bank on
the Closing Date to Issue Letters of Credit or create Acceptances, shall be
subject to the satisfaction of all of the following conditions precedent:
(a) Documents. The Administrative Agent (on behalf of itself and
the Lenders) shall have received on or before the Closing Date all of the
following:
(i) this Agreement, the Notes and all other agreements, documents and
instruments described in the List of Closing Documents attached hereto and
made a part hereof as Exhibit H (the "Closing List"), each duly executed
where appropriate and in form and substance satisfactory to the Lenders and
in sufficient copies for each of the Lenders; and
(ii) such additional documentation as the Administrative Agent and
the Lenders may reasonably request.
(b) Collateral Information; Perfection of Liens. The
Administrative Agent shall have received complete and accurate
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information from the Borrowers with respect to the name and the location of the
principal place of business and chief executive office for each Borrower and
each Guarantor; all Uniform Commercial Code and other filing and recording fees
and taxes shall have been paid or duly provided for; and the Administrative
Agent be satisfied that all Liens granted to the Administrative Agent with
respect to all Collateral are valid and effective and, upon the filing of the
duly executed Uniform Commercial Code financing statements (or similar filings
required by the applicable statutes of any foreign jurisdiction in which the
Administrative Agent is being granted a Lien by the Borrowers) which shall have
been delivered to the Administrative Agent prior to the Closing Date in time to
have such statements filed with the relevant filing office at least two (2)
Business Days prior to the Closing Date, will be perfected and of first
priority, except as otherwise permitted under this Agreement. All certificates
representing Capital Stock included in the Collateral shall have been delivered
to the Administrative Agent (with duly executed stock powers, as appropriate)
and all instruments included in the Collateral shall have been delivered to the
Administrative Agent (duly endorsed to the Administrative Agent).
(c) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall exist, and the Administrative
Agent shall not have received any notice that any action, suit,
investigation, litigation or proceeding is pending or threatened in any court
or before any arbitrator or Governmental Authority which (i) purports to
enjoin, prohibit, restrain or otherwise affect (A) the making of the Loans or
the Issuance of the Letters of Credit or the Creation of the Acceptances. on
the Closing Date or (B) the consummation of the transactions contemplated
hereby or (ii) would be reasonably expected to impose or result in the
imposition of a Material Adverse Effect.
(d) No Change in Condition. No change deemed material by the
Lenders, in their opinion, in the condition (financial or otherwise),
business, performance, assets, operations or prospects of the Borrowers that
would (i) have a material adverse effect on the ability of the Borrowers to
perform their obligations under the Loan Documents or (ii) have a material
adverse effect on the ability of the Lenders, the Issuing Banks or the
Administrative Agent to enforce the Loan Documents.
(e) No Default. No Event of Default or Default shall have
occurred and be continuing or would result from the making of the Loans
requested to be made or the Issuance of the Letters of Credit requested to be
Issued or the creation of the Acceptances requested to be created, on the
Closing Date.
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(f) Representations and Warranties. All of the representations
and warranties contained in Section 6.01 and in any of the other Loan
Documents shall be true and correct in all material respects on and as of the
Closing Date, both before and immediately after giving effect to the making
of the Loans.
(h) Fees and Expenses Paid. There shall have been paid to the
Administrative Agent, for its account and the respective accounts of the
Lenders, all fees (including, without limitation, the reasonable legal fees
of counsel to the Administrative Agent and local counsel to the
Administrative Agent for the benefit of the Lenders) due and payable on or
before the Effective Date (including, without limitation, all such fees
described in the Letter Agreement), and all reasonable expenses (including,
without limitation, legal expenses) due and payable on or before the
Effective Date.
(i) Consents, Etc. Xxxxx Karan International, each Borrower, and
each of their respective Subsidiaries shall have received all material
consents and authorizations required pursuant to any material Contractual
Obligation with any other Person and shall have obtained all material Permits
of, and effected all notices to and filings with, any Governmental Authority
as may be necessary to allow Xxxxx Karan International, each Borrower and
each of their respective Subsidiaries lawfully (A) to execute, deliver and
perform, in all material respects, their respective obligations hereunder,
under the other Loan Documents to which each of them is, or shall be, a party
and each other agreement or instrument to be executed and delivered by each
of them pursuant thereto or in connection therewith, (B) to consummate the
transactions contemplated under the Loan Documents and (C) to create and
perfect the Liens on the Collateral to be owned by each of them in the manner
and for the purpose contemplated by the Loan Documents.
5.02. Conditions Precedent to All Loans, Letters of Credit and
Acceptances. The effectiveness of this Credit Agreement, and the obligation
of each Lender to make any Loan requested to be made by it on any Funding
Date on or after the Effective Date and the agreement of each Issuing Bank to
Issue any Letter of Credit or to create the Acceptances on any date on or
after the Effective Date is subject to the following conditions precedent as
of each such date:
(a) Representations and Warranties. As of such date, both before
and after giving effect to the Loans to be made or the Letter of Credit to be
Issued or the Acceptance to be created on such date, all of the
representations and warranties contained in Section 6.01 and in any of the
other Loan Documents shall be true in all material respects.
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(b) No Defaults. As of such date, no Event of Default or Default
shall have occurred and be continuing or would result from the making of the
requested Loan, the application of the proceeds therefrom, the Issuance of
the requested Letter of Credit, the creation of the requested Acceptance or
the application of the proceeds therefrom.
(c) No Change in Condition. As of such date, no material adverse
change shall have occurred in the condition (financial or otherwise),
performance, properties, operations or prospects of the Borrowers or Xxxxx
Karan International and its Subsidiaries, taken as a whole since December 29,
1996 except as publicly disclosed prior to the date hereof.
Each request by any Borrower for a Loan, each submission by any Borrower of a
Notice of Borrowing, each acceptance by any Borrower of the proceeds of each
Loan made hereunder, each submission by any Borrower to an Issuing Bank of a
Notice of Letter of Credit Issuance and each issuance of such Letter of
Credit, and each submission by any Borrower to an Issuing Bank of a Request
for Acceptance and each creation of an Acceptance, shall constitute a
representation and warranty by the Borrowers as of the Funding Date in
respect of such Loan or the date of issuance in respect of such Letter of
Credit or the date of creation in respect of such Acceptance that all the
conditions contained in this Section 5.02 have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Borrowers. In order
to induce the Lenders to enter into this Agreement and to make the Loans and
the other financial accommodations to the Borrowers and induce the Issuing
Banks to issue the Letters of Credit described herein, each Borrower hereby
represents and warrants to each Lender, each Issuing Bank and the
Administrative Agent that the following statements are true, correct and
complete:
(a) Organization; Powers. Each Borrower (i) is a general
partnership duly organized, validly existing and in good standing under the
laws of the State of New York and (ii) has all requisite power and authority
to own, operate and encumber its assets and to conduct its business as
presently conducted.
(b) Authority. (i) Each Borrower and each of its general
partners has the requisite power and authority to execute, deliver and
perform each of the Loan Documents to which such Borrower is a party.
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(ii) No other action or proceeding on the part of any Borrower or
any of its general partners is necessary to execute, deliver and perform each
of the Loan Documents to which such Borrower is a party thereto or to
consummate the transactions contemplated thereby.
(iii) Each of the Loan Documents to which any Borrower is a party
has been duly executed and delivered by such Borrower and one of its general
partners on such Borrower's behalf and constitutes the legal, valid and
binding obligation of such Borrower, enforceable against such Borrower in
accordance with its terms.
(c) Ownership. Schedule 6.01(C) sets forth the ownership of each
Borrower. Each of the Borrowers has delivered to the Lenders true and
complete copies of its respective Governing Documents. Except as set forth
on Schedule 6.01(C)(1), there exist no other agreement or understanding
(written or oral) affecting in any material respect the relative rights,
obligations or liabilities of the general partners of each of the Borrowers
other than said Governing Documents so delivered and each of the general
partners of each of the Borrowers are in compliance in all material respects
with all of the Governing Documents related to its respective general
partnership.
(d) No Conflict. The execution, delivery and performance by each
Borrower and each of its general partners on behalf of such Borrower of each
Loan Document to which such Borrower is a party and the consummation of the
transactions contemplated thereby do not and will not (i) conflict with the
Governing Documents of such Borrower or its general partners (except as may
be consented to by the general partners in accordance with the provisions of
the Governing Documents), (ii) violate any Requirements of Law or, to the
best knowledge of each Borrower, Contractual Obligation of such Borrower or
require the termination of such Contractual Obligation by such Borrower, the
consequences of which violation or termination, singly or in the aggregate,
will have or is reasonably likely to have a Material Adverse Effect or may
subject the Administrative Agent, any of the Lenders or any of the Issuing
Banks to any liability, (iii) constitute a tortious interference with any
Contractual Obligation of any Person, or (iv) result in or require the
creation or imposition of any Lien whatsoever upon any of the property or
assets of such Borrower, other than Liens contemplated by the Loan Documents.
(e) Governmental Consents. The execution, delivery and
performance by each Borrower of each Loan Document to which such Borrower is
a party and the consummation of the transactions contemplated thereby do not
and will not require any registration with, consent or approval of, or notice
to, or other action to,
88
with or by any Governmental Authority, except filings necessary to create or
perfect security interests in the Collateral.
(f) Governmental Regulation. None of the Borrowers is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or the Investment Company Act of
1940, or any other federal or state statute or regulation which limits its
ability to incur indebtedness or its ability to consummate the transactions
contemplated by the Loan Documents.
(g) Subsidiaries. None of the Borrowers has any Subsidiaries or
interests in any joint venture or partnership of any other Person other than
as set forth on Schedule 6.01(G).
(h) Financial Position. True and complete copies of the following
financial statements have been delivered to each of the Lenders: the audited
combined balance sheets of the Predecessor as at the end of fiscal year ended
December 31, 1995 and the related combined statements of income,
stockholders' equity and cash flow of the Predecessor for such fiscal year
then ended as set forth in the Prospectus of Xxxxx Karan International dated
June 27, 1996. The foregoing financial statements were prepared in
conformity with GAAP, except as otherwise noted therein, and fairly present
the financial positions and the results of operations and cash flows of the
Predecessor for each of the periods covered thereby as at the respective
dates thereof. The Predecessor has no Accommodation Obligation, contingent
liability or liability for any Taxes, long-term leases or commitments, not
reflected in the foregoing financial statements which will have or is
reasonably likely to have a Material Adverse Effect.
(i) Projections. The Borrowers have delivered to each Lender
certain projected financial statements of Xxxxx Karan International and its
Subsidiaries dated March 7, 1996 which have been prepared using accounting
principles consistently applied and on a basis consistent with the
Predecessor's past practices.
(j) Litigation; Adverse Effects. Except as set forth in Schedules
6.01(J) and 6.01(P), there is no action, suit, proceeding, investigation or
arbitration before or by any Governmental Authority or private arbitrator
pending or, to the knowledge of any Borrower, threatened against any Borrower
or any of its respective assets (i) challenging the validity or the
enforceability of any of the Loan Documents or transactions contemplated
thereby or (ii) which will or is reasonably likely to result in any Material
Adverse Effect. There is no material loss contingency within the meaning of
GAAP which has not been reflected in the combined financial statements of the
Xxxxx Karan Group. None of the Borrowers is (A) in violation of any
applicable Requirements of Law which violation will have or is
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reasonably likely to have a Material Adverse Effect or (B) subject to, or in
default with respect to, any final judgment, writ, injunction, restraining
order or order of any nature, decree, rule or regulation of any court or
Governmental Authority which will have or is reasonably likely to have a
Material Adverse Effect.
(k) No Material Adverse Effect. Except as publicly disclosed
prior to the date hereof, there has occurred no event which has had or is
reasonably likely to have a Material Adverse Effect since December 29, 1996.
(l) Payment of Taxes. All tax returns and reports to be filed by
Xxxxx Karan International and each of its Subsidiaries have been timely
filed, and all taxes, assessments, fees and other governmental charges shown
on such returns have been paid when due and payable, except such taxes, if
any, as are reserved against in accordance with GAAP, such taxes as are being
contested in good faith by appropriate proceedings or such taxes, the failure
to make payment of which when due and payable would not have, in the
aggregate, a Material Adverse Effect. None of the Borrowers has knowledge of
any proposed tax assessment against Xxxxx Karan International or any of its
Subsidiaries that is reasonably likely to have a Material Adverse Effect,
which is not being actively contested in good faith by such Person. All
deficiencies which have been asserted against Xxxxx Karan International or
any of its Subsidiaries as a result of any federal, state, local or foreign
tax examination for each taxable year in respect of which an examination has
been conducted by the IRS have been fully paid or finally settled or are
being contested in good faith, and no issue has been raised in any such
examination which, by application of similar principles, reasonably can be
expected to result in assertion of a material deficiency for any other year
not so examined which has not been reserved for in Xxxxx Karan International
and its Subsidiaries consolidated financial statements to the extent, if any,
required by GAAP.
(m) Performance. None of the Borrowers has received notice or has
actual knowledge that (i) it is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in
any Contractual Obligation applicable to it or (ii) any condition exists
which, with the giving of notice or the lapse of time or both, would
constitute a default with respect to any such Contractual Obligation, except,
in each case, where such default or defaults, singly or in the aggregate,
will not have or is not reasonably likely to have a Material Adverse Effect.
(n) Disclosure. The representations and warranties of each
Borrower contained in the Loan Documents and all certificates and other
documents delivered pursuant to the terms
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thereof, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. No Borrower has intentionally withheld any fact from the
Administrative Agent, the Issuing Banks or the Lenders in regard to any
matter which will have or is reasonably likely to have a Material Adverse
Effect.
(o) Requirements of Law. The Borrowers are in compliance with all
Requirements of Law applicable to them and their respective businesses, in
each case where the failure to so comply individually or in the aggregate
will have or is reasonably likely to have a Material Adverse Effect.
(p) Environmental Matters. To the best of each Borrower's
knowledge, upon inquiry and investigation completed by such Borrower as
diligently and as thoroughly as would reasonably be required to determine any
facts relevant to the representations set forth herein, and except as set
forth in Schedule 6.01(P) hereto, (i) the operations of each Borrower comply
in all material respects with all applicable environmental, health and safety
Requirements of Law; (ii) each Borrower has obtained all environmental,
health and safety Permits necessary for its operations, and all such Permits
are in good standing and each Borrower is in material compliance with all
terms and conditions of such Permits; (iii) none of the Borrowers nor any of
their operations are subject to any order from or agreement with any
Governmental Authority or private party or any judicial or administrative
proceeding or investigations respecting any environmental, health or safety
Requirements of Law; (iv) none of the Borrowers nor its past or present
Property or operations is subject to any Remedial Action or other Liabilities
and Costs greater than Five Hundred Thousand Dollars ($500,000) for any
single event or in the aggregate greater than One Million Dollars
($1,000,000) arising from the Release or threatened Release of a Contaminant
into the environment; (v) none of the Borrowers has filed any notice under
any Requirement of Law indicating past or present treatment, storage or
disposal of a hazardous waste, as that term is defined under 40 CFR Part 261
or any applicable state equivalent; (vi) none of the Borrowers has filed any
notice under applicable Requirement of Law reporting a Release of a
Contaminant into the environment; (vii) there is not now, nor has there ever
been, on or in the Property of any Borrower: (A) any generation, treatment,
recycling, storage or disposal of any hazardous waste, as that term is
defined under 40 CFR Part 261 or any applicable state equivalent, (B) any
underground storage tanks or surface impoundments, (C) any
asbestos-containing material, or (D) any polychlorinated biphenyls (PCB's)
used in hydraulic oils, electrical transformers or other equipment; (viii)
none of the Borrowers has received any notice or claim to the effect that it
is or may be liable to any Person as a result
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of the Release or threatened Release of a Contaminant into the environment;
and (ix) no Environmental Lien has attached to any Property of any Borrower.
(q) ERISA. Neither any Borrower nor any ERISA Affiliate maintains
or contributes to any Benefit Plan other than a Benefit Plan listed on
Schedule 6.01(Q). Each Plan which is maintained or contributed to by a
Borrower which is intended to be a qualified plan has been determined by the
IRS to be qualified under Section 401(a), and each trust related to any such
Plan has been so determined to be exempt from federal income tax under
Section 501(a) of the Internal Revenue Code prior to its amendment by the Tax
Reform Act of 1986, and such Plan and trust are being operated in all
material respects in compliance with and will be timely amended as necessary
in accordance with the Tax Reform Act of 1986 and the Omnibus Budget
Reconciliation Act of 1987 as interpreted by the regulations promulgated
thereunder, provided that certain operational defects in the Xxxxx Karan New
York 401(k) Retirement Plan have recently been discovered and have been the
subject of an application to the IRS under its Voluntary Compliance
Resolution ("VCR") program filed on or about June 18, 1996; and provided
further that in connection with such filing under the VCR program, the
audited financial report for such plan for 1994 was delayed pending such VCR
filing and whereas the annual report for such plan for 1994 was timely filed,
an amended annual report was filed on or about September 16, 1996 after the
audited financial report containing a reference to the VCR filing was
completed. Neither any Borrower nor any ERISA Affiliate, to the extent such
ERISA Affiliate at any time has joint and several liability with any Borrower
or any Subsidiary maintains or contributes to any employee welfare benefit
plan within the meaning of Section 3(1) of ERISA, other than a Multiemployer
Plan, which provides lifetime benefits to retirees other than as may be
required by the Consolidated Omnibus Reconciliation Act of 1985, as amended
and interpreted by regulations promulgated thereunder. Each Borrower is in
compliance in all material respects with the responsibilities, obligations or
duties imposed on it by ERISA or regulations promulgated thereunder with
respect to all Plans, except the operational defects in, and delay in the
1994 audited financial report for, the Xxxxx Karan New York 401(k) Retirement
Plan, as described in this Section 6.01(q). No material accumulated funding
deficiency (as defined in Section 302(a)(2) of ERISA and Section 412(a) of
the Internal Revenue Code) exists in respect to any Benefit Plan. Except as
set forth on Schedule 6.01(Q), neither any Borrower nor, to any Borrower's
knowledge, any ERISA Affiliate nor any fiduciary of any Plan has engaged in a
nonexempt "prohibited transaction" described in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code. Neither any Borrower nor any ERISA
Affiliate nor any fiduciary of any Plan has taken any action which would
constitute or result in a Termination Event with respect to any Plan such
that the actions
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described in the preceding sentence or this sentence, or both, would result
in a Material Adverse Effect. Neither any Borrower nor any ERISA Affiliate
has incurred any material liability to the PBGC which remains outstanding
other than the liability to pay the PBGC insurance premiums for the current
year. Schedule B to the most recent annual report filed with the IRS with
respect to each Benefit Plan and furnished to the Administrative Agent is
complete and accurate in all material respects. Since the date of each such
Schedule B, there has been no material adverse change in the funding status
or financial condition of the Benefit Plan relating to such Schedule B which
would result in a Material Adverse Effect. Neither any Borrower nor any
ERISA Affiliate has failed to make any required installment under subsection
(m) of Section 412 of the Internal Revenue Code and any other payment
required under Section 412 of the Internal Revenue Code on or before the due
date for such installment or other payment which would in the aggregate have
a Material Adverse Effect. Neither any Borrower nor any ERISA Affiliate is
required to provide security to a Benefit Plan under Section 401(a)(29) of
the Internal Revenue Code due to a Plan amendment that results in an increase
in current liability for the plan year. The Borrowers and its ERISA
Affiliates are current with respect to all obligations they may have relating
to any Multiemployer Plan to which they are or have been obligated to
contribute to. Neither any Borrower nor any ERISA Affiliate has or is likely
to incur any withdrawal liability with respect to any Multiemployer Plan
which would have a Material Adverse Effect.
(r) Labor Matters. Except as disclosed on Schedule 6.01(R), no
Borrower is a party to any labor contract. There are no strikes, lockouts or
other disputes relating to any collective bargaining or similar agreement to
which any Borrower is a party which would have or is reasonably likely to
have a Material Adverse Effect.
(s) Securities Activities. None of the Borrowers is engaged in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock.
(t) Solvency. After giving effect to the receipt and application
of the Loans in accordance with the terms of this Agreement, each Borrower is
Solvent.
(u) Patents, Trademarks, Permits, etc.; Government Approvals. (i)
Except as disclosed on Schedules 6.01(J) and 6.01(P), each Borrower owns, is
licensed or otherwise has the lawful right to use all permits and other
governmental approvals, patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or necessary for the conduct of
its business as currently conducted which are material to its condition
(financial or otherwise), operations, performance and
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prospects, taken as a whole. There are no claims pending or, to the best of
such Borrower's knowledge, threatened that such Borrower is infringing or
otherwise adversely affecting the rights of any Person with respect to such
permits and other governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how and processes, except for such claims and
infringements as do not, in the aggregate, give rise to any liability on the
part of such Borrower which has or is reasonably likely to have a Material
Adverse Effect.
(ii) Except for the Limited Use License Agreement, the consummation
of the transactions contemplated by the Loan Documents will not impair any
Borrower's ownership of or rights under (or the license or other right to
use, as the case may be) any permits and governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how or processes in any
manner which has or is reasonably likely to have a Material Adverse Effect.
(v) Assets and Properties. Each of the Borrowers has good and
marketable title to substantially all of its assets and property (tangible
and intangible), and all such assets and property are free and clear of all
Liens except Liens securing the Obligations and Liens permitted under Section
9.03. Substantially all of the assets and property owned by, leased to or
used by each of the Borrowers are in adequate operating condition and repair,
ordinary wear and tear excepted, are free and clear of any known defects
except such defects as do not substantially interfere with the continued use
thereof in the conduct of normal operations, and are able to serve the
function for which they are currently being used, except in each case where
the failure of such asset to meet such requirements would not have or is not
reasonably likely to have a Material Adverse Effect. Neither this Agreement
nor any other Loan Document, nor any transaction contemplated under any Loan
Document, will affect any right, title or interest of any Borrower in and to
any of such assets in a manner that would have or is reasonably likely to
have a Material Adverse Effect.
(w) Insurance. Schedule 6.01(W) accurately sets forth as of the
Closing Date all insurance policies and programs currently in effect with
respect to the respective property and assets and business of each Borrower,
specifying for each such policy and program, (i) the amount thereof, (ii) the
risks insured against thereby, (iii) the name of the insurer and each insured
party thereunder, (iv) the policy or other identification number thereof, (v)
the expiration date thereof, (vi) the annual premium with respect thereto and
(vii) the current rating of such insurer by an established rating agency.
Such insurance policies and programs are in amounts which are consistent with
past practices.
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(x) Material Adverse Agreements. After giving effect to this
Agreement, no Borrower is a party to or subject to any Contractual Obligation
or other restriction contained in its Governing Documents which has or is
reasonably likely to have a Material Adverse Effect.
(y) Bank Accounts. Schedule 6.01(Y) sets forth, as of the
Effective Date, all of the bank accounts of Xxxxx Karan International, each
Borrower and each of their respective Subsidiaries and the banks where funds
are from time to time deposited.
(z) Acceptances.
(i) Eligibility. Each Acceptance when created hereunder will
be an Eligible Acceptance.
(ii) Maturity of Drafts. The maturity of a Draft when drawn
hereunder as part of an Acceptance created hereunder will be reasonably
commensurate with the anticipated time required on usual credit terms of
the quantity of goods identified in the applicable Request for Acceptance
as being financed by such Draft.
(iii) Financing Amount. The aggregate face amount of the Draft
relating to the purchase of goods identified in each Request for Acceptance
will not exceed the Cost of such goods. No financing, acceptance or
otherwise, other than that provided under this Agreement has been or will
be outstanding for such goods; and no Acceptance created hereunder shall
finance the goods financed by an Acceptance created as part of another
Acceptance hereunder or by a Revolving Loan hereunder.
(iv) Approvals. All approvals required under applicable law and
regulations for the exportation or importation, as the case may be, and
payment of the purchase price and related costs of the goods identified in
each Request for Acceptance will have been obtained prior to delivery by
the Borrowers to the Issuing Bank of such Request for Acceptance.
ARTICLE VII
REPORTING COVENANTS
Each Borrower covenants and agrees that so long as any Commitments
are outstanding and thereafter until payment in full of all of the
Obligations unless the Requisite Lenders shall otherwise give prior written
consent thereto:
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7.01. Financial Statements. Xxxxx Karan International, each
Borrower and each of their respective Subsidiaries shall maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated financial statements in
conformity with GAAP, and each of the financial statements described below
shall be prepared from such system and records. The Borrowers shall deliver
or cause to be delivered to the Administrative Agent and the Lenders:
(a) Monthly Reports. As soon as practicable, and in any event by
March 19, 1997 with respect to the first fiscal month of 1997, and with
respect to each other fiscal month within twenty-five (25) days after the end
of each fiscal month in each fiscal year, the consolidated balance sheets of
Xxxxx Karan International and its Subsidiaries as at the end of such fiscal
month (and showing the same period from the previous fiscal year) and the
related consolidated statements of income and cash flow of Xxxxx Karan
International and its Subsidiaries for such fiscal month and the related
consolidating statements of income of each Borrower for such fiscal month and
for the period commencing on the first day of such fiscal year and ending the
last day of such fiscal month (and showing the same periods from the previous
fiscal year), certified by the chief financial officer, controller or other
designated executive officer (acceptable to the Administrative Agent) of
Xxxxx Karan International as fairly presenting the consolidated financial
position of Xxxxx Karan International and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the fiscal
months indicated in accordance with GAAP, subject to normal year end
adjustments.
(b) Quarterly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of each fiscal quarter in each
fiscal year, the consolidated balance sheets of Xxxxx Karan International and
its Subsidiaries as at the end of such period, the related consolidated
statements of income and cash flow of Xxxxx Karan International and its
Subsidiaries and the related consolidating statements of income of each
Borrower for such fiscal quarter, certified by the chief financial officer,
controller or other designated executive officer (acceptable to the
Administrative Agent) of Xxxxx Karan International as fairly presenting the
consolidated and consolidating financial position of Xxxxx Karan
International as at the dates indicated and the results of their operations
and cash flow for the fiscal quarters indicated in accordance with GAAP,
subject to normal year end adjustments.
(c) Annual Reports. As soon as practicable, and in any event
within ninety (90) days after the end of each fiscal year, (i) the audited
consolidated balance sheets of Xxxxx Karan International and its Subsidiaries
as of the end of such fiscal
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year, the related audited consolidated statements of income, stockholders'
equity and cash flow of Xxxxx Karan International and its Subsidiaries and
the related consolidating statements of income of each Borrower for such
fiscal year, and (ii) a report thereon of Ernst & Young or other independent
certified public accountants acceptable to the Administrative Agent, which
report shall be unqualified and shall state that such financial statements
fairly present the consolidated and consolidating financial position of Xxxxx
Karan International and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years and that
the examination by such accountants in connection with such consolidated and
consolidating financial statements has been made in accordance with generally
accepted auditing standards.
(d) Officer's Certificate. Together with each delivery of any
financial statement pursuant to paragraphs (a), (b) and (c) of this Section
7.01, (i) an Officer's Certificate substantially in the form of Exhibit I
attached hereto and made a part hereof, stating that the executive officer
signatory thereto has reviewed the terms of the Loan Documents, and has made,
or caused to be made under his supervision, a review in reasonable detail of
the transactions and consolidated and consolidating (where applicable)
financial condition of Xxxxx Karan International and its Subsidiaries during
the accounting period covered by such financial statements, that such review
has not disclosed the existence during or at the end of such accounting
period, and that such officer does not have knowledge of the existence as at
the date of such Officer's Certificate, of any condition or event which
constitutes an Event of Default or Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action the Borrowers have taken, are taking and propose to
take with respect thereto and (ii) a certificate substantially in the form of
Exhibit J attached hereto (the "Compliance Certificate"), signed by Xxxxx
Karan International's chief financial officer or controller, setting forth
calculations (with such specificity as the Lenders may reasonably request)
for the period then ended which demonstrate compliance, when applicable, with
the provisions of Article IX and Article X.
(e) Budgets; Business Plans; Financial Projections. As soon as
practicable and in any event not later than thirty (30) days after the
beginning of each Fiscal Year of Xxxxx Karan International (i) a monthly
budget for such Fiscal Year, (ii) an annual business plan for such Fiscal
Year, substantially in the form of the business plan heretofore delivered to
the Administrative Agent and the Lenders, accompanied by a report reconciling
all changes and departures from the business plan delivered to the
Administrative Agent and the Lenders for the preceding Fiscal Year and (iii)
a consolidated and consolidating
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plan and financial forecast, prepared in accordance with Xxxxx Karan
International's normal accounting procedures applied on a consistent basis,
for each succeeding Fiscal Year until the Commitment Termination Date,
including, without limitation, (A) a forecasted consolidated balance sheet,
and the related consolidated statements of income, stockholders' equity and
cash flows of Xxxxx Karan International and its Subsidiaries for and as of
the end of such Fiscal Year, and the forecasted consolidating statements of
income of each Borrower for such Fiscal Year, (B) forecasted consolidated
balance sheets, and the related consolidated statements of income,
stockholders' equity and cash flows of Xxxxx Karan International and its
Subsidiaries for and as of the end of each fiscal month of such Fiscal Year,
and the forecasted consolidating statements of income of each Borrower for
and as of the end of each fiscal month of such Fiscal Year, (C) the amount of
forecasted Capital Expenditures for such Fiscal Year and (D) forecasted
compliance with the provisions of Article X.
7.02. Borrowing Base Certificate. (a) The Borrowers shall provide
the Administrative Agent and each Lender with a Borrowing Base Certificate,
certified as being true and correct by the Borrowers' chief financial
officer, controller or any other officer acceptable to the Administrative
Agent, on the seventh Business Day following the last day of each fiscal
month, or more frequently if requested by the Administrative Agent. Each
subsequent Borrowing Base Certificate shall be based upon, with respect to
Receivables and Inventory, information as of the last day of the immediately
preceding fiscal month. Each such Borrowing Base Certificate shall set forth
Borrowing Base calculations since the date of the last prior Borrowing Base
Certificate and shall include a monthly summary aging of Receivables, a
monthly schedule of each category of Eligible Inventory and all Eligible
Inventory that has become ineligible, specifying the applicable category of
ineligibility and such other information as the Administrative Agent may
request from time to time.
(b) At least once each fiscal month (and more often if so
requested by the Administrative Agent), the Borrowers shall provide the
Administrative Agent and the Lenders with a report (a "Monthly Report"),
dated the last day of such fiscal month, and certified by the Borrowers'
chief financial officer, controller or any other officer acceptable to the
Administrative Agent, which Monthly Report shall include the following
information for the Borrowers, and shall cover the period since the last
prior Monthly Report delivered to the Administrative Agent:
(i) A summary aging of Receivables and Eligible Receivables
specifying the Receivables and Eligible Receivables created or acquired
during the prior month;
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(ii) A schedule of all Eligible Inventory that has become ineligible,
specifying the applicable category of ineligibility;
(iii) A list of all Receivables, Inventory, Equipment and Real Property
which do not satisfy any warranty, representation or covenant contained in
this Agreement or any other Loan Document and an explanation thereof;
(iv) A schedule listing all material disputes and claims arising, or
claims, offsets or counterclaims asserted with respect to, Receivables, any
material delays or expected delays in the Borrowers' performance of any of
its obligations to any account debtor, and all adverse information relating
to the financial condition of any account debtor which may reasonably be
expected to impair the collectability of a material portion of the
Receivables;
(v) An aging of accounts payable, if so requested by any Lender; and
(vi) A list of all new locations, offices, or places of business
opened by any Borrower or at which any Borrower has located any of the
Collateral, its operations, assets, property or books and records, or to
which it has relocated its headquarters, and a description of the
Collateral or other property located thereon, and a list of any locations,
offices or places of business closed or abandoned by any Borrower.
Each fiscal month's Monthly Report shall be delivered to the Administrative
Agent within twenty-five (25) days after the end of such month.
7.03. Other Financial Information. (a) Such other information,
reports, contracts, schedules, lists, documents, agreements and instruments with
respect to (i) the Collateral and (ii) each Borrower's business, condition
(financial or otherwise), operations, performance, properties or prospects as
the Administrative Agent or any Lender may, from time to time, reasonably
request. Each Borrower hereby authorizes the Administrative Agent, each Lender
and their respective representatives to communicate directly with the
accountants and authorizes the accountants to disclose to the Administrative
Agent, each Lender and their respective representatives any and all financial
statements and other information of any kind, including copies of any management
letter or the substance of any oral information, that such accountants may have
with respect to the Collateral or any Borrower's condition (financial or
otherwise), operations, properties, performance and prospects. The
Administrative Agent, the Lenders and such representatives shall treat any
non-public information so obtained as
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confidential. The Borrowers, on or before the Effective Date, shall deliver a
letter addressed to the accountants instructing them to disclose such
information in compliance with this Section 7.03(a).
(b) Copies of all financial statements, reports and notices, if any,
sent or made available generally by any Borrower to the holders of its
publicly-held Securities or to a trustee under any indenture or filed with the
Commission, and of all press releases made available generally by any Borrower
to the public concerning material developments in such Borrower's business.
(c) Copies of any management reports delivered to any Borrower or to
any officer or employee thereof by the accountants in connection with the
financial statements delivered pursuant to Section 7.01.
7.04. Events of Default. Promptly upon any Borrower obtaining
knowledge (i) of any condition or event which constitutes an Event of Default or
Default, or becoming aware that any Lender or the Administrative Agent has given
any notice with respect to a claimed Event of Default or Default under this
Agreement, (ii) that any Person has given any notice to any Borrower or taken
any other action with respect to a claimed default or event or condition of the
type referred to in Section 11.01(e) or (iii) of any condition or event which
has or is reasonably likely to have a Material Adverse Effect or affect the
value of, or the Administrative Agent's interest in, the Collateral in any
material respect, the Borrowers shall deliver to the Administrative Agent and
the Lenders an Officer's Certificate specifying (A) the nature and period of
existence of any such claimed default, Event of Default, Default, condition or
event, (B) the notice given or action taken by such Person in connection
therewith and (C) what action the Borrowers have taken, are taking and proposes
to take with respect thereto.
7.05. Lawsuits. (i) Promptly upon any Borrower obtaining knowledge
of the institution of, or written threat of, (A) any action, suit, proceeding or
arbitration against or affecting any Borrower or any asset of such Borrower not
previously disclosed pursuant to Schedule 6.01(J) or Schedule 6.01(P) involving
money or property valued in excess of One Million Dollars ($1,000,000) or any
actions, suits, proceedings or arbitration which in the aggregate involve money
or property valued in excess of Two Million Dollars ($2,000,000), (B) any
investigation or proceeding before or by any Governmental Authority, the effect
of which is reasonably likely to limit, prohibit or restrict materially the
manner in which any Borrower currently conducts its business or to declare any
substance contained in such products manufactured or distributed by it to be
dangerous, such Borrower shall give written notice thereof to
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the Administrative Agent and the Lenders and provide such other information as
may be reasonably available to enable the each Lender and the Administrative
Agent and its counsel to evaluate such matters except, in each case, where the
same is fully covered by insurance (other than applicable deductible) or (C) any
Forfeiture Proceeding; (ii) as soon as practicable and in any event within
forty-five (45) days after the end of each fiscal quarter of the Borrowers, the
Borrowers shall provide the Administrative Agent and the Lenders with a
litigation status report covering the institution of, or written threat of, any
action, suit, proceeding, governmental investigation or arbitration reported
pursuant to clause (i)(A) and (B) above and shall provide such other information
at such time as may be reasonably available to enable each Lender and the
Administrative Agent and its counsel to evaluate such matters; and (iii) in
addition to the requirements set forth in clauses (i) and (ii) of this
Section 7.05, the Borrowers upon request of the Administrative Agent or the
Requisite Lenders shall promptly give written notice of the status of any
action, suit, proceeding, governmental investigation or arbitration covered by a
report delivered pursuant to clause (i) or (ii) above and provide such other
information as may be reasonably available to it to enable each Lender and the
Administrative Agent and its counsel to evaluate such matters.
7.06. Insurance. As soon as practicable and in any event by the last
day of November in each fiscal year, the Borrowers shall deliver to the
Administrative Agent and the Lenders (i) an updated Schedule 6.01(W) in form and
substance reasonably satisfactory to the Administrative Agent and the Lenders
outlining all insurance policies and programs currently in effect with respect
to the respective property and assets and business of the Borrowers, insurance
coverage maintained as of the date of such report by the Borrowers and the loss
payment provisions of such coverage and (ii) evidence that all premiums with
respect to such coverage have been paid when due.
7.07. ERISA Notices. The Borrowers shall deliver to the
Administrative Agent and the Lenders:
(i) As soon as possible, and in any event within twenty (20)
days after either a Borrower or an ERISA Affiliate knows or has reason
to know that a Termination Event has occurred, a written statement of
the chief financial officer or controller of such Borrower describing
such Termination Event and the action, if any, which such Borrower or
such ERISA Affiliate has taken, is taking or proposes to take, with
respect thereto, and, when known, any action taken or threatened by
the IRS, the DOL or the PBGC with respect thereto;
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(ii) as soon as possible, and in any event within fifteen (15)
days, after either a Borrower or, to the knowledge of such Borrower,
an ERISA Affiliate knows or has reason to know that a non-exempt
prohibited transaction (defined in Section 406 of ERISA and Section
4975 of the Code) has occurred, a statement of the chief financial
officer or controller of such Borrower describing such transaction;
(iii) within ten (10) days after the filing thereof with the DOL,
the IRS or the PBGC, copies of each annual report, including
Schedule B thereto, filed with respect to each Benefit Plan;
(iv) within ten (10) days after the filing thereof with the IRS,
a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by either a Borrower or
an ERISA Affiliate with respect to such request;
(v) within ten (10) days after the first to occur of an
amendment of any existing Benefit Plan which will result in an
increase in the benefits under such Benefit Plan or a notification of
any such increase, or the establishment of any new Benefit Plan or the
commencement of contributions to any Benefit Plan to which either a
Borrower or an ERISA Affiliate was not previously contributing, a copy
of said amendment, notification or Benefit Plan;
(vi) promptly upon, and in any event within ten (10) days after,
receipt by a Borrower or an ERISA Affiliate of a notice of the PBGC's
intention to terminate a Benefit Plan or to have a trustee appointed
to administer a Benefit Plan, copies of each such notice;
(vii) promptly upon, and in any event within ten (10) days after,
receipt by either a Borrower or an ERISA Affiliate of an unfavorable
determination letter from the IRS regarding the qualification of a
Plan under Section 401(a) of the Code, a copy of said determination
letter, if such disqualification would have a Material Adverse Effect
on any Borrower or any Subsidiary;
(viii) promptly upon, and in any event within ten (10) days after
receipt by a Borrower of a notice from a Multiemployer Plan regarding
the imposition of withdrawal liability, a copy of said notice; and
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(ix) promptly upon, and in any event within fifteen (15) days
after, any Borrower fails to make a required installment under
subsection (m) of Section 412 of the Code or any other payment
required under Section 412 of the Code on or before the due date for
such installment or payment, a notification of such failure, if such
failure could result in either the imposition of a Lien under said
Section 412 or otherwise have a Material Adverse Effect on any
Borrower.
7.08. Environmental Notices. Each Borrower shall notify the
Administrative Agent and each Lender, in writing, promptly, and in any event
within twenty (20) days after such Borrower's learning thereof, of any: (i)
written notice or claim to the effect that a Borrower is or may be liable to any
Person as a result of the Release or threatened Release of any Contaminant into
the environment; (ii) written notice that any Borrower or any Subsidiary is
subject to investigation by any Governmental Authority evaluating whether any
Remedial Action is needed to respond to the Release or threatened Release of any
Contaminant into the environment; (iii) written notice that any Property of any
Borrower is subject to an Environmental Lien; (iv) written notice of violation
to any Borrower or awareness by any Borrower of a condition which might
reasonably result in a notice of violation of any environmental, health or
safety Requirement of Law, which could have a Material Adverse Effect on any
Borrower; (v) commencement or written threat of any judicial or administrative
proceeding alleging a violation of any environmental, health or safety
Requirement of Law; (vi) written notice from a Governmental Authority of any
changes to any existing environmental, health or safety Requirement of Law that
could have a Material Adverse Effect on the operations of any Borrower; or (vii)
any proposed acquisition of stock, assets, real estate or leasing of property,
or any other action by any Borrower that could subject such Borrower to
environmental, health or safety Liabilities and Costs that could have a Material
Adverse Effect. For purposes of clauses (i), (ii) and (iii), written notice
shall include other non-written communications given to an agent or employee of
a Borrower with direct or indirect supervisory responsibility with respect to
the activity, if any, which is the subject of such communication, if such
activity could have a Material Adverse Effect. With respect to clauses (i)
through (vii) above, such notice shall be required only if (A) the liability or
potential liability, or with respect to clause (vi), the cost or potential cost
of compliance, which is the subject matter of the notice is likely to exceed
Five Hundred Thousand Dollars ($500,000), or if (B) such liability or potential
liability or cost of compliance when added to other liabilities of the Borrowers
of the kind referred to in clauses (i) through (vii) above is likely to exceed
One Million Dollars ($1,000,000).
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7.09. Labor Matters. Each Borrower shall notify the Administrative
Agent and the Lenders in writing, promptly, but in any event with ten (10) days
after learning thereof, of (i) any material labor dispute to which any Borrower
may become a party, any strikes, lockouts or other disputes relating to such
Borrower's plants and other facilities and (ii) any material liability incurred
with respect to the closing of any plant or other facility of any Borrower.
7.10. Other Information. Promptly upon receiving a request therefor
from the Administrative Agent or the Requisite Lenders, the Borrowers shall
prepare and deliver to the Administrative Agent and the Lenders such other
information with respect to any Borrower or the Collateral, including, without
limitation, schedules identifying and describing the Collateral and any
dispositions thereof, as from time to time may be reasonably requested by the
Administrative Agent or the Requisite Lenders.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until payment in full of all of the Obligations
unless the Requisite Lenders shall otherwise give prior written consent:
8.01. Existence, etc. Each Borrower shall at all times maintain its
existence and preserve and keep, or cause to be preserved and kept, in full
force and effect its rights and franchises material to its businesses except
where the loss or termination of such rights and franchises does not have or is
not likely to have a Material Adverse Effect.
8.02. Powers; Conduct of Business. Each Borrower shall qualify and
remain qualified to do business in each jurisdiction in which the nature of its
business requires it to be so qualified except for those jurisdictions where
failure to so qualify does not have or is not reasonably likely to have a
Material Adverse Effect.
8.03. Compliance with Laws, etc. Each Borrower shall, (a) comply
with all Requirements of Law and all restrictive covenants affecting such Person
or the business, property, assets or operations of such Person, and (b) obtain
as needed all Permits necessary for its operations and maintain such Permits in
good standing except in the case where noncompliance with either clause (a) or
(b) above does not have or is not reasonably likely to have a Material Adverse
Effect.
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8.04. Payment of Taxes and Claims. Each Borrower shall pay (a) all
taxes, assessments and other governmental charges imposed upon it or on any of
its properties or assets or in respect of any of its franchises, business,
income or property before any penalty or interest accrues thereon, the failure
to make payment of which will have or is reasonably likely to have a Material
Adverse Effect, and (b) all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums, material in the aggregate to
such Borrower which have become due and payable and which by law have or may
become a Lien upon any of such Borrower's properties or assets, prior to the
time when any penalty or fine shall be incurred with respect thereto; provided,
however, that no such taxes, assessments, and governmental charges referred to
in clause (a) above or claims referred to in clause (b) above need be paid if
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if adequate reserves shall have been set aside therefor
in accordance with GAAP.
8.05. Insurance. (a) Each Borrower shall maintain for itself in full
force and effect the insurance policies and programs listed on Schedule 6.01(W)
or substantially similar policies and programs or other policies and programs in
accordance with past practices of the Borrowers. All such policies and programs
shall be maintained with insurers reasonably acceptable to the Administrative
Agent. Each certificate and policy relating to property damage, machinery
and/or business interruption coverage shall contain an endorsement, in form and
substance acceptable to the Administrative Agent, showing loss payable to the
Administrative Agent, for the ratable benefit of the Lenders, and, if required
by the Administrative Agent, naming the Administrative Agent as an additional
insured under such policy. Each certificate and policy relating to coverages
other than the foregoing shall, if required by the Administrative Agent, contain
an endorsement naming the Administrative Agent as an additional insured under
such policy. Such endorsement or an independent instrument furnished to the
Administrative Agent shall provide that the insurance companies will give the
Administrative Agent at least thirty (30) days' written notice before any such
policy or policies of insurance shall be altered adversely to the interests of
the Administrative Agent and the Lenders or cancelled and that no act, whether
willful or negligent, or default of any Borrower or any other Person shall
affect the right of the Administrative Agent to recover under such policy or
policies of insurance in case of loss or damage. In the event any Borrower, at
any time or times hereafter shall fail to obtain or maintain any of the policies
or insurance required herein or to pay any premium in whole or in part relating
thereto, then the Administrative Agent, without waiving or releasing any
obligations or resulting Event of Default hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and maintain such
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policies of insurance and pay such premiums and take any other action with
respect thereto which the Administrative Agent deems advisable. The
Administrative Agent agrees to provide the Borrowers with contemporaneous notice
of any action taken by the Administrative Agent pursuant to the immediately
preceding sentence. All sums so disbursed by the Administrative Agent shall be
part of the Obligations hereunder, payable on demand.
(b) Each Borrower hereby directs all insurers under policies of
property damage, machinery and business interruption insurance to pay all
proceeds payable thereunder directly to the Administrative Agent and in no case
to such Borrower and the Administrative Agent jointly. Each Borrower
irrevocably makes, constitutes and appoints the Administrative Agent and any
Person whom the Administrative Agent may from time to time designate as such
Borrower's true and lawful attorney (and agent-in-fact) for the purpose of
endorsing the name of such Borrower on any check, draft, instrument or other
item of payment for the proceeds of such policies of insurance and for making
all determinations and decisions with respect to such policies of insurance
subject to the provisions of the following sentence with respect to the making,
settling and adjusting of claims. Each Borrower will appoint or designate a
person, with the approval of the Administrative Agent, to settle or adjust such
claims individually not in excess of One Million Dollars ($1,000,000) per
occurrence or in the aggregate Two Million Dollars ($2,000,000) during any
fiscal year, and in the event such claims, individually or in the aggregate,
have or are likely to have a Material Adverse Effect, such settlements and
adjustments thereof which shall be made with the Administrative Agent's consent,
which consent shall not be unreasonably withheld. The Administrative Agent
shall apply the net proceeds of any such insurance claim or settlement received
by the Administrative Agent to the Obligations, after deducting any expenses and
fees incurred by the Administrative Agent in the settlement and collection
thereof, as follows: (i) if no Default or Event of Default then exists, the
Administrative Agent shall apply such net proceeds to the outstanding balance of
the Loans or (ii) if a Default or Event of Default then exists, the
Administrative Agent shall apply such net proceeds to the Obligations in
accordance with Section 3.02.
8.06. Inspection of Property; Books and Records; Discussions. Each
Borrower shall permit any authorized representative(s) designated by either the
Administrative Agent or any Lender to visit and inspect any of the assets of
such Borrower, to examine, audit, check and make copies of their respective
financial and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or the
transactions contemplated by the Loan Documents (including, without limitation,
in connection with environmental compliance, hazard or liability),
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and to discuss their affairs, finances and accounts with their officers and
independent certified public accountants, all upon reasonable notice and at such
reasonable times during normal business hours, as often as may be reasonably
requested. Each such visitation and inspection (i) by or on behalf of any
Lender shall be at such Lender's expense and (ii) by or on behalf of the
Administrative Agent shall be at the Borrowers' expense (it is anticipated that
Administrative Agent will require at least two such visitation and inspections
annually). The Administrative Agent shall cause its representatives to visit
and inspect certain assets of the Borrowers and to examine and audit the books
and records of the Borrowers at least twice in each Fiscal Year. The Borrowers
shall keep and maintain in all material respects proper books of record and
account in which entries in conformity with GAAP shall be made of all dealings
and transactions in relation to their respective businesses and activities,
including, without limitation, transactions and other dealings with respect to
the Collateral. If an Event of Default has occurred and is continuing, the
Borrowers, upon the Administrative Agent's request, shall turn over any such
records to the Administrative Agent or its representatives.
8.07. Tax Identification Numbers. Each Borrower shall provide the
Administrative Agent in writing the tax identification numbers of such Borrower
promptly upon the availability thereof.
8.08. ERISA Compliance. Each Borrower shall, and shall cause each of
its ERISA Affiliates to, establish, maintain and operate all Plans to comply in
all material respects with the provisions of ERISA, the Code, all other
applicable laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans.
8.09. Maintenance of Property. Each Borrower shall maintain in all
material respects all of its owned and leased property in good, safe and
insurable condition and repair, and not permit, commit or suffer any waste
(except in the ordinary course of business) or abandonment of any such property
and from time to time shall make or cause to be made all material repairs,
renewal and replacements thereof; provided, however, that such property may be
altered or renovated in the ordinary course of business.
8.10. Condemnation. Immediately upon learning of the institution of
any proceeding for the condemnation or other taking of any of the owned or
leased Real Property of any Borrower, a Borrower shall notify the Administrative
Agent of the pendency of such proceeding, and permit the Administrative Agent to
participate in any such proceeding, and from time to time will deliver to the
Administrative Agent all instruments reasonably
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requested by the Administrative Agent to permit such participation.
8.11. Maintenance of Licenses, Permits, etc. The Borrowers shall
maintain in full force and effect all licenses, permits, governmental approvals,
franchises, authorizations or other rights necessary for the operation of its
business, except where the failure to obtain any of the foregoing would not have
or is not reasonably likely to have a Material Adverse Effect; and notify the
Administrative Agent in writing, promptly after learning thereof, of the
suspension, cancellation, revocation or discontinuance of or of any pending or
threatened action or proceeding seeking to suspend, cancel, revoke or
discontinue any such license, permit, governmental approval, franchise
authorization or right.
ARTICLE IX
NEGATIVE COVENANTS
Each Borrower covenants and agrees that it shall comply with the
following covenants so long as any Commitments are outstanding and thereafter
until payment in full of all of the Obligations unless the Requisite Lenders
shall otherwise give prior written consent:
9.01. Indebtedness. No member of the Xxxxx Karan Group shall,
directly or indirectly, create, incur, assume or otherwise become or remain
liable with respect to any Indebtedness, except:
(i) the Obligations;
(ii) trade payables in the ordinary course of business;
(iii) Permitted Existing Indebtedness;
(iv) to the extent permitted by Section 9.14, Capital Leases and
purchase money Indebtedness incurred by any member of the Xxxxx Karan Group
to finance the acquisition of fixed assets, and Indebtedness incurred by
such member to refinance such Capital Leases and purchase money
Indebtedness, in an aggregate amount not to exceed $5,000,000 at any time,
provided that additional Capital Leases and purchase money Indebtedness may
be incurred by any member of the Xxxxx Karan Group to finance the
acquisition of fixed assets so long as the sum of the aggregate amount of
Capital Leases and such Indebtedness plus the aggregate amount of
Indebtedness permitted by Section 9.01(viii) plus the aggregate amount of
Accommodation Obligations permitted by Section 9.05(v) does not exceed
Twenty Million Dollars ($20,000,000) at any time;
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(v) subordinated indebtedness incurred by The Xxxxx Karan Company
owing to DSTF Japan Company and evidenced by subordinated notes,
substantially in the form of Exhibit B attached hereto, which notes shall
have been pledged to the Administrative Agent;
(vi) Letters of Credit issued on behalf of Xxxxx Karan Japan K.K.
for the account of The Xxxxx Karan Company in an aggregate face amount
not to exceed $5,000,000 at any one time outstanding;
(vii) Accommodation Obligations in respect of performance guaranties
made by Xxxxx Karan International (A) on behalf of any of its Subsidiaries
or Xxxxx Karan Japan K.K. in an aggregate amount not to exceed $10,000,000
at any one time outstanding, or (B) on behalf of Xxxxx Karan Studio and The
Xxxxx Karan Company in connection with the sale of the beauty division in
an aggregate amount not to exceed $21,000,000 plus the amount of the
indemnities owing by Xxxxx Karan Studio and The Xxxxx Karan Company
relating thereto;
(viii) in addition to the Indebtedness permitted by clauses (i) through
(vii) above, unsecured Indebtedness incurred in connection with reasonable
and appropriate corporate purposes, provided that the sum of the aggregate
amount of such Indebtedness plus the aggregate amount of additional Capital
Lease and purchase money Indebtedness permitted under the proviso in
Section 9.01(iv) plus the aggregate amount of Accommodation Obligations
permitted by Section 9.05(v) does not exceed Twenty Million Dollars
($20,000,000) at any time; and
(ix) subordinated indebtedness incurred by Xxxxx Karan Studio owing to
Xxxxx Karan, Gabrielle Studio, Inc., Xxxxxxx Xxxxx or any of their
respective affiliates, containing terms and conditions satisfactory to the
Administrative Agent.
9.02. Sales of Assets. No member of the Xxxxx Karan Group shall
sell, assign, transfer, lease, license, convey or otherwise dispose of any
assets, whether now owned or hereafter acquired, or any income or profits
therefrom, or enter into any agreement to do so, except:
(i) the sale of Inventory in the ordinary course of business;
(ii) the disposition of Equipment if such Equipment is obsolete
or no longer useful in the ordinary course of such Borrower's
business;
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(iii) sales of assets with an aggregate market value not in excess of
Two Million Dollars ($2,000,000) in any rolling twelve (12) month period
for all Borrowers;
(iv) sub-licensing of the trademarks pursuant to the terms of the
License Agreement in connection with any business in which a Borrower is
engaged at such time, together with the sale of any inventory in connection
with such sub-licensing, or the sale of a Subsidiary of Xxxxx Karan
International (other than Xxxxx Karan Studio); provided that (A) the
business in connection with such sub-licensing or such Subsidiary did not
generate revenues for the twelve month period ending on the last day of the
immediately preceding fiscal quarter greater than the lesser of (I) 10% of
the revenues for Xxxxx Karan International and its Subsidiaries on a
consolidated basis for such period and (II) $60,000,000 and (B) the
consideration for such sub-licensing and sale of inventory or for such sale
of a Subsidiary is equivalent to the fair market value thereof;
(v) the sub-licensing of the trademarks pursuant to the terms of the
License Agreement in connection with any business in which no Borrower
participates at such time, together with the sale of any inventory in
connection with such sub-licensing, provided that the consideration for
such sub-licensing and sale of inventory is equivalent to the fair market
value thereof; and
(vi) the sale of the thirty percent (30%) equity interest in Xxxxx
Karan Japan K.K. and the transactions relating thereto, all on terms and
conditions satisfactory to the Administrative Agent.
9.03. Liens. No member of the Xxxxx Karan Group shall, directly or
indirectly, create, incur, assume or permit to exist any Lien on or with respect
to any of their respective properties or assets, except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) purchase money Liens granted by any member of the Xxxxx
Karan Group (including the interest of a lessor under a Capital Lease)
securing Indebtedness permitted under Section 9.01(iv) and limited in
each case to the property purchased or subject to such lease;
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(v) Liens set forth in Section 2(c) of the Agreement dated as of
March 29, 1995, as amended to the date hereof, among Hotel Properties
Limited, Kendale Investments PTE LTD., The Xxxxx Karan Company, Xxxxx
Karan Japan K.K., DSTF Japan Company, and Xxxxx Karan Studio;
(vi) judgement Liens against any Loan Party or any of its assets
provided that the amount of any such judgement Lien is not in excess of Two
Million Dollars ($2,000,000) and such judgment Lien is discharged, vacated,
bonded or stayed within thirty (30) days of the entry thereof; and
(vii) the Lien of any financial institution on the computer hardware of
the Xxxxx Karan Group in connection with such financial institution's
refinancing of the Indebtedness secured by such property.
9.04. Investments. No member of the Xxxxx Karan Group shall,
directly or indirectly, make or own any Investment, except:
(i) Investments in Cash Equivalents;
(ii) subordinated loans made by DSTF Japan Company to The Xxxxx Karan
Company evidenced by subordinated notes, substantially in the form of
Exhibit B attached hereto, which notes shall have been pledged to the
Administrative Agent;
(iii) the thirty percent (30%) equity interest of The Xxxxx Karan
Company in Xxxxx Karan Japan K.K. and other cash Investments by The Xxxxx
Karan Company in Xxxxx Karan Japan K.K. so long as such cash Investments do
not exceed $1,000,000 in any Fiscal Year; and
(iv) other Investments, provided that the sum of the aggregate amount
of such other Investments and the aggregate amount of Capital Expenditures
made pursuant to Section 9.14 does not exceed the amount permitted pursuant
to Section 9.14.
9.05. Accommodation Obligations. No member of the Xxxxx Karan Group
shall, directly or indirectly, create or become or be liable with respect to any
Accommodation Obligation, except:
(i) 0 Guaranties and recourse Obligations resulting from endorsement
of negotiable instruments for collection in the ordinary course of
business;
(ii) Accommodation Obligations in respect of the Letters of Credit
issued on behalf of Xxxxx Karan Japan K.K.
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for the account of The Xxxxx Karan Company to the extent permitted under
Section 9.01(vi);
(iii) Accommodation Obligations in respect of performance guaranties
made by Xxxxx Karan International on behalf of any of its Subsidiaries or
Xxxxx Karan Japan K.K. to the extent permitted under Section 9.01(vii);
(iv) Accommodation Obligations in respect of a guaranty made by Xxxxx
Karan International on behalf of The Xxxxx Karan Company Stores G.P. with
respect to the real estate lease entered into in December 1997 for the
Madison Avenue store in New York, New York;
(v) In addition to the Accommodation Obligations permitted by
clauses (i) through (iv) and (vi), Accommodation Obligations incurred in
connection with reasonable and appropriate corporate purposes, provided
that the sum of the aggregate amount of such Accommodation Obligations plus
the aggregate amount of Indebtedness permitted by Section 9.01(viii) plus
the aggregate amount of additional Capital Lease and purchase money
Indebtedness permitted under the proviso in Section 9.01(iv) does not
exceed Twenty Million Dollars ($20,000,000) at any time; and
(vi) Accommodation Obligations in respect of a guaranty made by Xxxxx
Karan International on behalf of one or more Borrowers in connection with
the sale of the rights to DKNY Jeans and DKNY Active.
9.06. Restricted Junior Payments. None of the Borrowers shall
declare or make any Restricted Junior Payment, except:
(i) the amounts sufficient for Xxxxx Karan International and its
Subsidiaries to pay their Federal, foreign, state and local taxes (and
interest and penalties, if any, relating thereto) and estimates of such
amounts;
(ii) the costs and expenses incurred by Xxxxx Karan International
relating to the businesses of the Borrowers in the ordinary course of
business (including, without limitation, the costs and expenses of the
shareholders under the Registration Rights Agreement);
(iii) the costs and expenses incurred by Xxxxx Karan International;
(iv) the costs and expenses relating to the Public Equity Offering
which were previously disclosed to the Administrative Agent and not paid at
the time the Public Equity Offering was consummated;
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(v) the amount sufficient to pay the obligations of Xxxxx Karan
International under Section 4.4 of the Agreement of Contribution;
(vi) amounts sufficient to pay dividends declared by Xxxxx Karan
International on its Common Stock or repurchases by Xxxxx Karan
International of its Common Stock provided that:
(A) no Default or Event of Default has occurred and is
continuing at such time;
(B) the Borrowers have delivered to the Administrative Agent the
Clean-Down Forecast and the Clean-Down Amount shall permanently be
reduced to $0;
(C) during any rolling twelve month period, the aggregate amount
of such dividend payments does not exceed the lesser of (I) 25% of Net
Income as of the last day of the immediately preceding fiscal quarter
for the twelve month period then ended and (II) $10,000,000;
(D) at the end of the immediately preceding Financial Covenant
Period, the Fixed Charge Coverage Ratio of Xxxxx Karan International
and its Subsidiaries on a consolidated basis shall be greater than
3.00 to 1.00;
(E) the Special Advance Amount shall be $0; and
(F) the aggregate amount of such repurchases does not exceed
$40,000,000 in the aggregate for all such repurchases; and
(vii) the repayment of the Subordinated Promissory Note issued on
November 10, 1997 to Xxxxx Karan in the principal amount of $6,700,000.
9.07. Change in Nature of Business. No member of the Xxxxx Karan
Group shall make any material change in the nature or conduct of their
respective businesses, in each case as carried on at the date hereof.
9.08. Transactions with Affiliates. No member of the Xxxxx Karan
Group shall, directly or indirectly, enter into or permit to exist any
transaction with any Affiliate of any Borrower on terms that are less favorable
to such Borrower than those that might be obtained in an arm's length
transaction at the time from Persons who are not an Affiliate; provided,
however, the Borrower shall not be permitted to pay any
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management fee or consulting fee or transfer any assets to any Partner or an
Affiliate of any Partner, except:
(i) any transaction expressly permitted by Section 9.06;
(ii) employment contracts and increases in compensation and benefits
for officers and employees of any Borrower which are customary in the
industry or as approved by the Board of Directors of Xxxxx Karan
International;
(iii) transactions among the members of the Xxxxx Karan Group, provided
that such transactions are in the ordinary course of such members'
businesses;
(iv) the grant of a license and the payment of royalties by one
Borrower to another Borrower provided such grant is in the ordinary course
of such Borrower's business and in compliance with the terms of the License
Agreement;
(v) payments of taxes required to be paid to the appropriate Japanese
taxing authority under Japanese law by Xxxxx Karan Japan K.K. on behalf of
DSTF Japan Company;
(vi) the agreements and transactions set forth in the License
Agreement;
(vii) the on-going royalty fees payable to Gabrielle Studio, Inc.
pursuant to the terms of the License Agreement;
(viii) the transactions set forth in the Agreement dated as of March 29,
1995 among Hotel Properties Limited, Kendale Investments PTE LTD., The
Xxxxx Karan Company, Xxxxx Karan Japan K.K., DSTF Japan Company, and Xxxxx
Karan Studio;
(ix) any transaction between any Borrower or any Subsidiary thereof
and a retail store exclusively carrying Xxxxx Karan products pursuant to
the terms of any joint venture agreement, the form and substance of which
are satisfactory to the Administrative Agent; and
(x) the repayment of the Subordinated Promissory Note issued on
November 10, 1997 to Xxxxx Karan in the principal amount of $6,700,000.
9.09. Restriction on Fundamental Changes. (a) No member of the Xxxxx
Karan Group shall enter into any merger or consolidation, or liquidate, wind-up
or dissolve (or suffer any liquidation or dissolution), or convey, lease, sell,
transfer or otherwise dispose of, in one transaction or series of transactions,
all or substantially all of such member's business or assets, whether now or
hereafter acquired, provided, however,
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that a Subsidiary of Xxxxx Karan International (other than a Borrower) that is
not a Subsidiary of a Borrower may merge into Xxxxx Karan International or
another Subsidiary of Xxxxx Karan International (other than a Borrower) that is
not a Subsidiary of a Borrower if (i) no Event of Default shall then have
occurred and be continuing and (ii) all documentation required by the
Administrative Agent in connection with such merger (including, without
limitation, security agreements, guarantees, pledge agreements, UCC financing
statements, opinions of counsel, and appropriate requests for registration)
shall be in form and substance reasonably satisfactory to the Administrative
Agent and shall have been executed by the parties thereto and delivered to the
Administrative Agent.
(b) No member of the Xxxxx Karan Group shall (i) acquire by purchase
or otherwise all or substantially all of the business property or assets of, or
stock or other evidence of beneficial ownership of, any Person or (ii) create
any new Subsidiary, provided, however, that a member of the Xxxxx Karan Group
may create a new Subsidiary if (i) all the partnership interests and/or equity
interests and assets of such new Subsidiary are pledged to the Administrative
Agent, on terms and conditions satisfactory to the Administrative Agent; (ii)
such new Subsidiary guarantees the Obligations on terms and conditions
satisfactory to the Administrative Agent; (iii) no Event of Default shall then
have occurred and be continuing; and (iv) all documentation (including, without
limitation, security agreements, guarantees, pledge agreements, UCC financing
statements, opinions of counsel, and appropriate requests for registration) in
connection with such new Subsidiary shall be in form and substance reasonably
satisfactory to the Administrative Agent and the Requisite Lenders and shall
have been executed by the parties thereto and delivered to the Administrative
Agent.
(c) No member of the Xxxxx Karan Group shall change its partnership,
capital or legal structure.
9.10. Sales and Leasebacks. No member of the Xxxxx Karan Group shall
become liable, by assumption or by Accommodation Obligation, with respect to any
lease, whether an Operating Lease or a Capital Lease, of any property (whether
real or personal or mixed) (i) which it sold or transferred or is to sell or
transfer to any other Person or (ii) which it intends to use for substantially
the same purposes as any other asset which has been or is to be sold or
transferred by it to any other Person in connection with such lease.
9.11. Margin Regulations. None of the Borrowers shall use all or any
portion of the proceeds of any Loan made under this Agreement to purchase or
carry Margin Stock.
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9.12. ERISA. No member of the Xxxxx Karan Group shall, nor shall
they permit any of their respective ERISA Affiliates to, do any of the following
to the extent that such act or failure to act would result in the aggregate,
after taking into account any other such acts or failure to act, in a Material
Adverse Effect:
(i) engage, or knowingly permit an ERISA Affiliate to engage, in
any prohibited transaction described in Sections 406 of ERISA or 4975
of the Code for which a class exemption is not available or a private
exemption has not been previously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as
defined in Sections 302 of ERISA and 412 of the Code), with respect to
any Benefit Plan, which has not been waived;
(iii) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Plan if such failure could result in
the imposition of a Lien or otherwise could have a Material Adverse
Effect on any member of the Xxxxx Karan Group;
(iv) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of any member of the
Xxxxx Karan Group or any ERISA Affiliate under Title IV of ERISA; or
(v) fail, or permit any ERISA Affiliate to fail, to pay any
required installment under section (m) of Section 412 of the Code or
any other payment required under Section 412 of the Code on or before
the due date for such installment or other payment, if such failure
could result in the imposition of a Lien or otherwise could have a
Material Adverse Effect on any member of the Xxxxx Karan Group.
9.13. Operating Leases. No member of the Xxxxx Karan Group shall
become liable in any way, whether directly or by assignment or by Accommodation
Obligation, for the obligations of a lessee under any Operating Lease, except:
(i) the Operating Lease entered into in December 1997 by The Xxxxx
Karan Company Stores G.P.for the Madison Avenue store in New York, New
York; and
(ii) Operating Leases, if immediately after giving effect to the
incurrence of Rental Payments with respect thereto, the aggregate amount of
all Rental Payments with
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respect to such Operating Leases does not exceed in any fiscal year an
amount equal to $35,000,000 minus the amount of Rental Payments for such
fiscal year with respect to the Operating Lease permitted by Section
9.13(i).
9.14. Capital Expenditures. No member of the Xxxxx Karan Group shall
make or incur Capital Expenditures (a) during Fiscal Year 1998 if the aggregate
amount of Capital Expenditures for the Xxxxx Karan Group plus the aggregate
amount of the Investments made pursuant to Section 9.04(iv) would exceed
Twenty-Five Million Dollars ($25,000,000) for such Fiscal Year, (b) during
Fiscal Year 1999 if the aggregate amount of Capital Expenditures for the Xxxxx
Karan Group plus the aggregate amount of the Investments made pursuant to
Section 9.04(iv) would exceed Twenty-Six Million Dollars ($26,000,000) for such
Fiscal Year, and (c) during Fiscal Year 2000 if the aggregate amount of Capital
Expenditures for the Xxxxx Karan Group plus the aggregate amount of the
Investments made pursuant to Section 9.04(iv) would exceed Twenty-Seven Million
Dollars ($27,000,000) for such Fiscal Year; provided, however, that the Xxxxx
Karan Group may carry forward from one Fiscal Year to another Fiscal Year any
Capital Expenditures permitted hereunder, but not made or incurred in such
Fiscal Year, in an amount of up to Five Million Dollars ($5,000,000); provided,
further, that cost of Equipment purchased to replace Equipment damaged or
destroyed shall not be included in the calculations for Capital Expenditures
under this Section 9.14 to the extent of the amount of insurance proceeds
received and applied against the Obligations.
9.15. Amendment of Governing Documents. No member of the Xxxxx Karan
Group shall amend, supplement or otherwise change their respective Governing
Documents in any material respect.
9.16. Environmental Liabilities. Except as disclosed in Schedule
6.01(P), no member of the Xxxxx Karan Group shall become subject to any
Liabilities and Costs which exceed $500,000 in a particular instance or
$1,000,000 in the aggregate, arising out of or relating to (a) the Release or
threatened Release at any location of any Contaminant into the environment, or
any Remedial Action in response thereto or (b) any violation of any
environmental, health or safety Requirement of Law.
9.17. No Activities Leading to Forfeiture. No member of the Xxxxx
Karan Group shall engage in the conduct of any business or activity which could
result in a Forfeiture Proceeding.
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ARTICLE X
FINANCIAL COVENANTS
Each Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until payment in full of all of the Obligations:
10.01. Minimum Adjusted Net Worth. The Adjusted Net Worth of Xxxxx
Karan International and its Subsidiaries on a consolidated basis at the end of
each fiscal quarter set forth below shall not be less than the amount set forth
opposite such quarter:
Fiscal Quarter Minimum Amount
-------------- --------------
First Fiscal Quarter 1998 $100,000,000
Second Fiscal Quarter 1998 $ 95,000,000
Third Fiscal Quarter 1998 $100,000,000
Fourth Fiscal Quarter 1998 $115,000,000
First Fiscal Quarter 1999 $115,000,000
Second Fiscal Quarter 1999 $115,000,000
Third Fiscal Quarter 1999 $130,000,000
Fourth Fiscal Quarter 1999 $150,000,000
First Fiscal Quarter 2000 $150,000,000
Second Fiscal Quarter 2000 $150,000,000
Third Fiscal Quarter 2000 $165,000,000
Fourth Fiscal Quarter 2000 $180,000,000
10.02. Minimum Interest Coverage Ratio. The Interest Coverage Ratio of
Xxxxx Karan International and its Subsidiaries on a consolidated basis at the
end of each fiscal quarter set forth below shall not be less than the ratio set
forth opposite such quarter:
Fiscal Quarter Ratio
-------------- -----
Fourth Fiscal Quarter 1998 8.00 to 1.0
First Fiscal Quarter 1999 8.00 to 1.0
Second Fiscal Quarter 1999 7.50 to 1.0
Third Fiscal Quarter 1999 8.50 to 1.0
Fourth Fiscal Quarter 1999 9.00 to 1.0
First Fiscal Quarter 2000 9.00 to 1.0
Second Fiscal Quarter 2000 9.00 to 1.0
Third Fiscal Quarter 2000 10.00 to 1.0
Fourth Fiscal Quarter 2000 11.00 to 1.0
10.03. Minimum Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio of Xxxxx Karan International and its Subsidiaries on a consolidated basis
at the end of each fiscal quarter set forth below shall not be less than the
ratio set forth opposite such quarter:
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Fiscal Quarter Ratio
-------------- -----
First Fiscal Quarter 1998 5.25 to 1.0
Second Fiscal Quarter 1998 7.00 to 1.0
Third Fiscal Quarter 1998 10.75 to 1.0
Fourth Fiscal Quarter 1998 8.00 to 1.0
First Fiscal Quarter 1999 2.00 to 1.0
Second Fiscal Quarter 1999 2.00 to 1.0
Third Fiscal Quarter 1999 3.75 to 1.0
Fourth Fiscal Quarter 1999 4.25 to 1.0
First Fiscal Quarter 2000 3.00 to 1.0
Second Fiscal Quarter 2000 3.00 to 1.0
Third Fiscal Quarter 2000 4.50 to 1.0
Fourth Fiscal Quarter 2000 5.00 to 1.0
10.04. Minimum Working Capital Ratio. The Working Capital Ratio of Xxxxx
Karan International and its Subsidiaries on a consolidated basis at the end of
each fiscal quarter set forth below shall not be less than the ratio set forth
opposite such quarter:
Fiscal Quarter Ratio
-------------- -----
First Fiscal Quarter 1998 1.40 to 1.0
Second Fiscal Quarter 1998 1.40 to 1.0
Third Fiscal Quarter 1998 1.40 to 1.0
Fourth Fiscal Quarter 1998 1.40 to 1.0
First Fiscal Quarter 1999 1.40 to 1.0
Second Fiscal Quarter 1999 1.40 to 1.0
Third Fiscal Quarter 1999 1.40 to 1.0
Fourth Fiscal Quarter 1999 1.75 to 1.0
First Fiscal Quarter 2000 1.75 to 1.0
Second Fiscal Quarter 2000 1.75 to 1.0
Third Fiscal Quarter 2000 1.75 to 1.0
Fourth Fiscal Quarter 2000 1.75 to 1.0
10.05. Maximum Leverage Ratio. The Leverage Ratio of Xxxxx Karan
International and its Subsidiaries on a consolidated basis at the end of each
fiscal quarter set forth below shall not be greater than the ratio set forth
opposite such quarter:
Fiscal Quarter Ratio
-------------- -----
Fourth Fiscal Quarter 1998 1.25 to 1.0
First Fiscal Quarter 1999 1.25 to 1.0
Second Fiscal Quarter 1999 1.25 to 1.0
Third Fiscal Quarter 1999 1.25 to 1.0
Fourth Fiscal Quarter 1999 1.50 to 1.0
First Fiscal Quarter 2000 1.50 to 1.0
Second Fiscal Quarter 2000 1.50 to 1.0
Third Fiscal Quarter 2000 1.75 to 1.0
Fourth Fiscal Quarter 2000 2.00 to 1.0
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ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. The Borrowers shall fail to
pay any principal of any Note when due, or shall fail to pay any interest on any
Note or any other Obligation within one (1) Business Day after such interest or
Obligation shall become due; or
(b) Breach of Representation or Warranty. Any representation or
warranty made or deemed to have been made by any Loan Party under, relating to
or in connection with this Agreement, the Notes or any of the other Loan
Documents shall be false or misleading in any material respect when made or
deemed to have been made; or
(c) Breach of Certain Covenants. Any Loan Party shall fail duly and
punctually to perform or observe any agreement, covenant or obligation binding
on such Person under Section 7.04, Section 8.05, Article IX or Article X of this
Agreement or under any section of any of the other Loan Documents; or
(d) Other Defaults. Any Loan Party shall fail duly and punctually to
perform or observe any term, covenant or obligation binding on such Person (i)
under Section 7.01 or Section 7.02 of this Agreement and such failure shall
continue for ten (10) Business Days after such failure or (ii) under Section
8.06 of this Agreement and such failure shall continue for two (2) Business Days
after such failure or (iii) under this Agreement or under any of the other Loan
Documents (other than as described in Sections 11.01(a), (c) or (d)(i) or (ii)),
and such failure shall continue for thirty (30) days after the Loan Party knew,
or, in the exercise of due care, should have known, of such failure (or such
lesser period of time as is mandated by applicable Requirements of Law); or
(e) Default as to Other Indebtedness. Any Loan Party shall fail to
make any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) with respect to any Indebtedness (other than
an Obligation) if the aggregate amount of such other Indebtedness is Three
Million Dollars ($3,000,000) or more; or any breach, default or event of default
shall occur, or any other condition shall exist under any instrument, agreement
or indenture pertaining to any such Indebtedness, if the effect thereof (with or
without the giving of notice or lapse of time or both) is to cause an
acceleration, mandatory redemption or other required repurchase of such
120
Indebtedness or permit the holder or holders of such Indebtedness to accelerate
the maturity of any such Indebtedness or require a redemption or other
repurchase of such Indebtedness; or any such Indebtedness shall be otherwise
declared to be due and payable (by acceleration or otherwise) or required to be
prepaid, redeemed or otherwise repurchased by such Loan Party (other than by a
regularly scheduled required prepayment) prior to the stated maturity thereof;
or the holder or holders of any Lien, in any amount, shall commence foreclosure
of such Lien upon property of any Loan Party having an aggregate value in excess
of Three Million Dollars ($3,000,000); or
(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) An
involuntary case shall be commenced against any Loan Party and the petition
shall not be dismissed, stayed, bonded or discharged within sixty (60) days
after commencement of the case; or a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of any Loan Party in an
involuntary case, under any applicable bankruptcy, insolvency or other similar
law now or hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law; or the board of
directors of any Loan Party or partner of any Loan Party (or any committee
thereof) adopts any resolution or otherwise authorizes any action to approve any
of the foregoing; or
(ii) A decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee, custodian
or other officer having similar powers over any Loan Party or over all or a
substantial part of the assets of such Loan Party shall be entered; or an
interim receiver, trustee or other custodian of any Loan Party or of all or a
substantial part of the assets of such Loan Party shall be appointed or a
warrant of attachment, execution or similar process against any substantial part
of the assets of such Loan Party shall be issued and any such event shall not be
stayed, dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance; or the board of directors of any Loan Party or partner
of any Loan Party (or any committee thereof) adopts any resolution or otherwise
authorizes any action to approve any of the foregoing; or
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Any Loan
Party shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its assets; or any Loan Party shall
make any assignment for the benefit of creditors or shall be unable or fail, or
admit
121
in writing its inability, to pay its debts as such debts become due, or the
board of directors of any Loan Party or partner of any Loan Party (or any
committee thereof) adopts any resolution or otherwise authorizes any action to
approve any of the foregoing; or
(h) Judgments and Attachments. Any money judgment (other than a
money judgment covered by insurance as to which the insurance company has
acknowledged coverage), writ or warrant of attachment, or similar process
against any Loan Party or any of its assets involving in any case an amount in
excess of Two Million Dollars ($2,000,000) is entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days;
or
(i) Dissolution. Any order, judgment or decree shall be entered
against any Loan Party decreeing its involuntary dissolution or split up and
such order shall remain undischarged and unstayed for a period in excess of
thirty (30) days; or any Loan Party shall otherwise dissolve or cease to exist;
or
(j) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect or any Loan
Party thereto seeks to repudiate its obligations thereunder and the Liens
intended to be created thereby are, or any Loan Party seeks to render such
Liens, invalid and unperfected, or (ii) Liens in favor of the Administrative
Agent and/or the Lenders contemplated by the Loan Documents shall, at any time,
for any reason, be invalidated or otherwise cease to be in full force and
effect, or such Liens shall be subordinated or shall not have the priority
contemplated by this Agreement or the Loan Documents, or (iii) the Limited Use
License Agreement is terminated or ceases to be in full force and effect; or
(k) ERISA Liabilities. Any Termination Event occurs which will or is
reasonably likely to subject either a Borrower or an ERISA Affiliate to a
liability which the Administrative Agent determines will, or is reasonably
likely to have, a Material Adverse Effect on any Borrower or any Subsidiary; or
(l) Waiver Application. The plan administrator of any Benefit Plan
applies under Section 412(d) of the Code for a waiver of the minimum funding
standards of Section 412(a) of the Code and the Administrative Agent believes
that the substantial business hardship upon which the application for the waiver
is based could subject either any Borrower or any ERISA Affiliate to liability
which the Administrative Agent determines will or is reasonably likely to have a
Material Adverse Effect; or
(m) Material Adverse Change. There shall have occurred any condition
or event which the Requisite Lenders
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determine has or reasonably could be expected to have a Material Adverse Effect
since December 29, 1996 except as publicly disclosed prior to the date hereof;
or
(n) Forfeiture Proceeding. Any Forfeiture Proceeding shall have been
commenced or any of the Borrowers shall have given the Administrative Agent
written notice of the commencement of any Forfeiture Proceeding as provided
herein and the Administrative Agent has, or Requisite Lenders have, declared
such event to be an Event of Default hereunder; or
(o) Change of Control. A Change of Control shall have occurred; or
(p) Termination of License Agreement. The License Agreement shall
have expired or be terminated for any reason.
An Event of Default shall be deemed "continuing" until cured or waived
in writing in accordance with Section 13.09.
11.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event
of Default described in Sections 11.01(f) or 11.01(g), the Commitments, the
Acceptance Commitment and the commitment of each Issuing Bank to Issue Letters
of Credit shall automatically and immediately terminate and the unpaid principal
amount of, and any and all accrued interest on, the Obligations and all accrued
fees shall automatically become immediately due and payable, without
presentment, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all of which are hereby
expressly waived by each Borrower, and the obligations of the Lenders to make
Loans hereunder, and the Issuing Banks to issue any Letter of Credit or create
any Acceptance, shall thereupon terminate; and upon the occurrence and during
the continuance of any other Event of Default, the Administrative Agent shall at
the request, or may with the consent, of the Requisite Lenders, (i) upon three
(3) days' prior written notice to the Borrowers (unless an Event of Default
specified in Section 11.01(a) has occurred and is continuing or Indebtedness
referred to in Section 11.01(e) has been accelerated, in which events no prior
notice is required), declare that the Commitments, the Acceptance Commitment and
the commitment of each Issuing Bank to Issue Letters of Credit are terminated,
whereupon the Commitments and the commitment of each Issuing Bank to Issue
Letters of Credit and the obligation of each Lender to make any Loan hereunder
and of each Issuing Bank to issue any Letter of Credit not then issued or create
any Acceptance not then created shall immediately terminate, and/or (ii) upon
three (3) days' prior written notice to the Borrowers (unless an Event of
Default
123
specified in Section 11.01(a) has occurred and is continuing or Indebtedness
referred to in Section 11.01(e) has been accelerated, in which events no
prior notice is required), declare the unpaid principal amount of and any and
all accrued and unpaid interest on the Obligations to be, and the same shall
thereupon be, immediately due and payable, without presentment, demand, or
protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to
demand or accelerate and of acceleration), all of which are hereby expressly
waived by each Borrower.
(b) Deposit for Letters of Credit and Acceptances. In addition, on
the Commitment Termination Date or after the occurrence and during the
continuance of an Event of Default, each Borrower shall, promptly upon demand by
the Administrative Agent, deliver to the Administrative Agent, Cash Collateral
in such form as requested by the Administrative Agent for deposit in the Cash
Collateral Account, together with such endorsements, and execution and delivery
of such documents and instruments as the Administrative Agent may request in
order to perfect or protect the Administrative Agent's Lien with respect
thereto, in an aggregate principal amount equal to the greatest amount for which
the outstanding Letters of Credit can be drawn and the Acceptances can be
presented. Such deposit shall be held by the Administrative Agent as security
for, and to provide for the payment of, the Reimbursement Obligations and the
Acceptance Obligations.
(c) Enforcement. Each Borrower acknowledges that in the event any
Loan Party fails to perform, observe or discharge any of its respective
obligations or liabilities under this Agreement or any other Loan Document, any
remedy of law may prove to be inadequate relief to the Administrative Agent and
the Lenders; therefore, each Borrower agrees that the Administrative Agent and
the Lenders shall be entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages.
ARTICLE XII
THE ADMINISTRATIVE AGENT
12.01. Appointment. (a) Each Lender hereby designates and appoints
Citibank as the Administrative Agent of such Lender under this Agreement, and
each Lender hereby irrevocably authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement, the Notes and the
Loan Documents and to exercise such powers as are set forth herein or therein
together with such other powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement (including, without
limitation,
124
enforcement or collection of any amount payable under any provision of Article
III when due) or the other Loan Documents, the Administrative Agent shall not be
required to exercise any discretion or take any action. Notwithstanding the
foregoing, the Administrative Agent shall be required to act or refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Requisite Lenders (unless the instructions or
consent of all of the Lenders is required hereunder or thereunder) and such
instructions shall be binding upon all Lenders, Issuing Banks and Holders of
Notes; provided, however, the Administrative Agent shall not be required to take
any action which (i) the Administrative Agent reasonably believes will expose it
to personal liability unless the Administrative Agent receives an
indemnification satisfactory to it from the Lenders with respect to such action
or (ii) is contrary to this Agreement, the Notes, the other Loan Documents or
applicable law. The Administrative Agent agrees to act as such on the express
conditions contained in this Article XII.
(b) The provisions of this Article XII are solely for the benefit of
the Administrative Agent, the Lenders and Issuing Banks, and none of the Loan
Parties shall have any rights to rely on or enforce any of the provisions hereof
(other than as expressly set forth in Section 12.07). In performing its
functions and duties under this Agreement, the Administrative Agent shall act
solely as agent of the Lenders and the Issuing Banks and does not assume and
shall not be deemed to have assumed any obligation or relationship of agency,
trustee or fiduciary with or for any Loan Party. The Administrative Agent may
perform any of its duties hereunder, or under the Loan Documents, by or through
its agents or employees.
12.02. Nature of Duties. The Administrative Agent shall not have any
duties or responsibilities except those expressly set forth in this Agreement or
in the Loan Documents. The duties of the Administrative Agent shall be
mechanical and administrative in nature. The Administrative Agent shall not
have by reason of this Agreement a fiduciary relationship in respect of any
Holder. Nothing in this Agreement or any of the Loan Documents, expressed or
implied, is intended to or shall be construed to impose upon the Administrative
Agent any obligations in respect of this Agreement or any of the Loan Documents
except as expressly set forth herein or therein. Each Lender and each Issuing
Bank shall make its own independent investigation of the financial condition and
affairs of the Borrowers and other Loan Parties in connection with the making
and the continuance of the Loans hereunder and with the issuance of the Letters
of Credit and shall make its own appraisal of the credit worthiness of the
Borrowers and the other Loan Parties initially and on a continuing basis, and
the Administrative Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to provide any Holder with any credit or
other information
125
with respect thereto (except for reports required to be delivered by the
Administrative Agent under the terms of this Agreement). If the Administrative
Agent seeks the consent or approval of the Lenders to the taking or refraining
from taking of any action hereunder, the Administrative Agent shall send notice
thereof to each Lender. The Administrative Agent shall promptly notify each
Lender at any time that the Lenders so required hereunder have instructed the
Administrative Agent to act or refrain from acting pursuant hereto.
12.03. Rights, Exculpation, etc. (a) Liabilities; Responsibilities.
None of the Administrative Agent, any Affiliate of the Administrative Agent, or
any of their respective officers, directors, employees, agents, attorneys or
consultants shall be liable to any Holder for any action taken or omitted by
them hereunder, under the Notes or under any of the Loan Documents, or in
connection therewith, except that no Person shall be relieved of any liability
for gross negligence or willful misconduct, as determined by a court of
competent jurisdiction. The Administrative Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith pursuant to
Section 3.02(b), and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Holder to whom
payment was due, but not made, shall be to recover from other Holders any
payment in excess of the amount to which they are determined to have been
entitled. The Administrative Agent shall not be responsible to any Holder for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, legality, enforceability,
collectability, or sufficiency of this Agreement, the Notes or any of the other
Loan Documents or the transactions contemplated thereby, or for the financial
condition of the Borrowers or any of the other Loan Parties. The Administrative
Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement, the Notes or any of the Loan Documents or the financial condition of
the Borrowers or any of the other Loan Parties, or the existence or possible
existence of any Default or Event of Default.
(b) Right to Request Instructions. The Administrative Agent may at
any time request instructions from the Lenders with respect to any actions or
approvals which by the terms of any of the Loan Documents the Administrative
Agent is permitted or required to take or to grant, and the Administrative Agent
shall be absolutely entitled to refrain from taking any action or to withhold
any approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from those Lenders from
whom the Administrative Agent is required to obtain such instructions for the
pertinent matter in accordance with the Loan
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Documents. Without limiting the generality of the foregoing, no Holder shall
have any right of action whatsoever against the Administrative Agent as a result
of the Administrative Agent acting or refraining from acting under the Loan
Documents in accordance with the instructions of the Requisite Lenders or, where
required by the express terms of this Agreement, a greater proportion of the
Lenders.
12.04. Reliance. The Administrative Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or other documents or
any telephone message believed by it in good faith to be genuine and correct and
to have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent public
accountants and other experts selected by it.
12.05. Indemnification. To the extent that the Administrative Agent
is not reimbursed and indemnified by the Borrowers, the Lenders will reimburse
and indemnify the Administrative Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
costs, reasonable expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against it in any way relating
to or arising out of the Loan Documents or any action taken or omitted by the
Administrative Agent under the Loan Documents, in proportion to each Lender's
Pro Rata Share; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. The obligations of the Lenders under this
Section 12.05 shall survive the payment in full of the Loans, the Reimbursement
Obligations, the Acceptance Obligations and all other Obligations and the
termination of this Agreement. In the event that after payment and distribution
of any amount by the Administrative Agent to Lenders, any Lender or third party,
including the Borrowers, any creditor of any Borrower or a trustee in
bankruptcy, recovers from the Administrative Agent any amount found to have been
wrongfully paid to the Administrative Agent or disbursed by the Administrative
Agent to Lenders, then Lenders, in proportion to their respective Pro Rata
Shares, shall reimburse the Administrative Agent for all such amounts.
12.06. The Administrative Agent Individually. With respect to its
Pro Rata Share of the Commitments hereunder, if any, and the Loans made by it,
if any, Citibank shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "Lenders" or "Requisite
Lenders" or any similar terms shall, unless the
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context clearly otherwise indicates, include Citibank in its individual capacity
as a Lender or one of the Requisite Lenders. Citibank and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with any Borrower or any of its Subsidiaries as
if it were not acting as the Administrative Agent pursuant hereto.
12.07. Successor Administrative Agents. (a) Resignation. The
Administrative Agent may resign from the performance of all its functions and
duties hereunder at any time by giving at least thirty (30) days' prior written
notice to the Borrowers and the Lenders. Such resignation shall take effect
upon the acceptance by a successor Administrative Agent of appointment pursuant
to this Section 12.07.
(b) Appointment by Requisite Lenders. Upon any such notice of
resignation, the Requisite Lenders shall have the right to appoint a successor
Administrative Agent selected from among the Lenders, which appointment shall be
subject to the prior written approval of the Borrowers (which may not be
unreasonably withheld, and shall not be required upon the occurrence and during
the continuance of an Event of Default or Default).
(c) Appointment by Retiring Administrative Agent. If a successor
Administrative Agent shall not have been appointed within the thirty (30) day
period provided in paragraph (a) of this Section 12.07, the retiring
Administrative Agent, with the consent of the Borrowers (which may not be
unreasonably withheld, and shall not be required upon the occurrence and during
the continuance of an Event of Default or Default), shall then appoint a
successor Administrative Agent who shall serve as the Administrative Agent until
such time, if any, as the Requisite Lenders appoint a successor Administrative
Agent as provided above.
(d) Rights of the Successor and Retiring Administrative Agents. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article XII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement.
12.08. Relations Among Lenders. Each Lender and each Issuing Bank
agrees that it will not take any legal action, nor institute any actions or
proceedings, against the Borrowers or any other obligor hereunder or with
respect to any Collateral,
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without the prior written consent of the Requisite Lenders. Without limiting
the generality of the foregoing, no Lender may accelerate or otherwise enforce
its portion of the Obligations, or unilaterally terminate its Commitments,
except in accordance with Section 11.02(a).
12.09. Concerning the Collateral and the Loan Documents. (a)
Authority. Each Lender and each Issuing Bank authorizes and directs the
Administrative Agent to enter into the Loan Documents relating to the Collateral
for the benefit of the Lenders and the Issuing Banks. Each Lender and each
Issuing Bank agrees that any action taken by the Administrative Agent or the
Requisite Lenders (or, where required by the express terms of this Agreement, a
greater proportion of the Lenders) in accordance with the provisions of this
Agreement or the other Loan Documents, and the exercise by the Administrative
Agent or the Requisite Lenders (or, where so required, such greater proportion)
of the powers set forth herein or therein, together with such other powers as
are reasonably incidental thereto, shall be authorized and binding upon all of
the Lenders and Issuing Banks. Without limiting the generality of the
foregoing, the Administrative Agent shall have the sole and exclusive right and
authority to (i) act as the disbursing and collecting agent for the Lenders and
the Issuing Banks with respect to all payments and collections arising in
connection with this Agreement and the Loan Documents relating to the
Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by any Loan
Party; (iii) act as collateral agent for the Lenders and the Issuing Banks for
purposes of the perfection of all security interests and Liens created by such
agreements and all other purposes stated therein, provided, however, the
Administrative Agent hereby appoints, authorizes and directs the Lenders and the
Issuing Banks to act as collateral sub-agents for the Administrative Agent, the
Lenders and the Issuing Banks for purposes of the perfection of all security
interests and Liens with respect to any Borrower's deposit accounts maintained
with, and cash and Cash Equivalents held by, such Lender or such Issuing Bank;
(iv) manage, supervise and otherwise deal with the Collateral; (v) take such
action as is necessary or desirable to maintain the perfection and priority of
the security interests and Liens created or purported to be created by the Loan
Documents; and (vi) except as may be otherwise specifically restricted by the
terms of this Agreement or any other Loan Document, exercise all remedies given
to the Administrative Agent, the Lenders or the Issuing Banks with respect to
the Collateral under the Loan Documents, applicable law or otherwise.
(b) Release of Collateral. (i) Each Lender hereby directs, in
accordance with the terms of this Agreement, the Administrative Agent to release
or to subordinate any Lien held
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by the Administrative Agent for the benefit of the Lenders and the Issuing
Banks:
(A) against all of the Collateral, upon payment in full of the
Obligations and termination of this Agreement;
(B) against that portion of the collateral being sold, assigned,
transferred, leased, licensed, conveyed, or otherwise disposed of in
accordance with Section 9.02; or
(C) against collateral of any holder of a Lien permitted under
Section 9.03.
(ii) Each Lender and each Issuing Bank hereby directs the
Administrative Agent to execute and deliver or file such termination and partial
release statements and do such other things as are necessary to release Liens to
be released pursuant to this Section 12.09(b) promptly upon the effectiveness of
any such release. Upon request by the Administrative Agent at any time, the
Lenders will confirm in writing the Administrative Agent's authority to release
particular types or items as Collateral pursuant to this Section 12.09.
(iii) Without in any manner limiting the Administrative Agent's
authority to act without any specific or further authorization or consent by
Requisite Lenders (as set forth in Section 12.09(b)), each Lender agrees to
confirm in writing, upon request by the Borrowers, the authority to release
Collateral conferred upon the Administrative Agent under clauses (A) through (C)
of Section 12.09(b). So long as no Event of Default or Default is then
continuing, upon receipt by the Administrative Agent of any such written
confirmation from Requisite Lenders of its authority to release any particular
items or types of Collateral, and upon at least five (5) Business Days prior
written request by the Borrowers, the Administrative Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the Liens granted to the Administrative Agent for the
benefit of Lenders herein or pursuant hereto upon such Collateral; provided,
that (i) the Administrative Agent shall not be required to execute any such
document on terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Borrowers in respect of)
all interests retained by the Borrowers all of which shall continue to
constitute part of the Collateral.
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(iv) The Administrative Agent shall have no obligation whatsoever to
the Lenders or to any other Person to assure that the Collateral exists or is
owned by any Loan Party or is cared for, protected or insured or has been
encumbered or that the Liens granted to the Administrative Agent pursuant to the
Security Agreements have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Administrative Agent in this
Section 12.09 or in any of the Loan Documents, it being understood and agreed
that in respect of the Collateral, or in any act, omission or event related
thereto, the Administrative Agent may act in any manner it may deem appropriate,
in its sole discretion, given its own interest in the Collateral as one of the
Lenders and that the Administrative Agent shall have no duty or liability
whatsoever to any Lender unless required to act or refrain from acting upon the
instructions of the Requisite Lenders and then only in accordance with Section
12.01.
12.10. Co-Agents. The parties hereto agree that the Co-Agents do not
have any special rights or powers under this Agreement but are entitled, in
their capacity as Co-Agents hereunder, to the same protections afforded to the
Administrative Agent under this Article XII.
ARTICLE XIII
MISCELLANEOUS
13.01. Assignments and Participations. (a) Assignments. No
assignments or participations of any Lender's rights or obligations under this
Agreement and the Notes shall be made except in accordance with this
Section 13.01. Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement and the Notes
(including all of its rights and obligations with respect to the Revolving Loans
and the Letters of Credit) in accordance with the provisions of this Section
13.01.
(b) Limitations on Assignments. Each assignment shall be subject to
the following conditions: (i) each assignment shall be of a constant, and not a
varying, ratable percentage of all of the assigning Lender's rights and
obligations in respect of its interest being assigned under this Agreement and
its Note and, in the case of a partial assignment, shall be in a minimum
principal amount of Ten Million Dollars ($10,000,000) and shall be an integral
multiple of One Million Dollars ($1,000,000) except that such limitations shall
not apply to an assignment by any Lender of any portion of its rights and
obligations to another Lender or an assignment by any Lender of all of its
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rights or obligations to another Person, (ii) each such assignment shall be to
an Eligible Assignee, and (iii) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of Three Thousand Dollars ($3,000); provided,
however, any Lender may assign any or all of its rights and obligations under
this Agreement to any of its Affiliates without notice to or consent of any
Borrower or the Administrative Agent and without being subject to the foregoing
conditions (including the payment of the processing and recordation fee). Upon
such execution, delivery, acceptance and recording in the Register, from and
after the effective date specified in each Assignment and Acceptance and
accepted by the Administrative Agent (which effective date shall not be any
earlier than the date on which the Administrative Agent so accepts and records
the Assignment and Acceptance in the Register), (x) the assignee thereunder
shall, in addition to any rights and obligations hereunder held by it
immediately prior to such effective date, if any, have the rights and
obligations hereunder that have been assigned to it pursuant to such Assignment
and Acceptance and shall, to the fullest extent permitted by law, have the same
rights and benefits hereunder as if it were an original Lender hereunder and (y)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, the
assigning Lender shall cease to be a party hereto).
(c) The Register. The Administrative Agent, acting for this purpose
as agent for the Borrowers, shall maintain at its address referred to in Section
13.09 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register (the "Register") for the recordation of the names and addresses
of the Lenders and the Commitment of each Lender from time to time and whether
such Lender is an original Lender or the assignee of another Lender pursuant to
an Assignment and Acceptance. The Administrative Agent shall incur no liability
of any kind to the Borrowers, any Lender or any other Person with respect to its
maintenance of the Register or the recordation of information therein. The
Register shall include a control account and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent from the Borrowers hereunder and each Lender's share thereof. The
Administrative Agent will render a monthly statement of such
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accounts to the Borrowers. Each such statement shall be deemed final, binding
and conclusive upon the Borrowers in all respects as to all matters reflected
therein (absent manifest error) unless the Borrowers, within thirty (30) days
after the date such statement is rendered, delivers to the Administrative Agent
written notice of any objections which the Borrowers may have to any such
statement. In that event, only those items expressly objected to in such notice
shall be deemed to be disputed by the Borrowers. The entries in the Register
shall be final, conclusive and binding upon the Borrowers for all purposes,
absent manifest error, and each Borrower and each other Loan Party, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrowers or
any Lender at any reasonable time and from time to time upon reasonable prior
notice. No assignment shall be effective unless and until the Assignment and
Acceptance has been accepted by the Administrative Agent and registered in the
Register.
(d) Fee. Upon its receipt of an Assignment and Acceptance executed
by the assigning Lender and an Eligible Assignee and a processing and
recordation fee of $3,000 (payable by the assigning Lender or the assignee, as
shall be agreed between them), the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in compliance with this
Agreement and in substantially the form of Exhibit A hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrowers and the other
Lenders.
(e) Participations. Each Lender may sell participations to one or
more commercial banks, lending institutions, finance companies, insurance
companies, other financial institutions or funds in or to all or a portion of
its rights and obligations under and in respect of any and all facilities under
this Agreement (including, without limitation, all or a portion of any or all of
its Commitments hereunder and the Loans owing to it and its undivided interest
in the Letters of Credit); provided, however, that (i) such Lender's obligations
under this Agreement (including, without limitation, its Commitments hereunder)
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
Borrowers, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (iv) such participant's rights to agree or
to restrict such Lender's ability to agree to the modification, waiver or
release of any of the terms of the Loan Documents or to the release of any
Collateral covered by the Loan Documents, to consent to any action or failure to
act by any party to any of the Loan
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Documents or any of their respective Affiliates, or to exercise or refrain from
exercising any powers or rights which any Lender may have under or in respect of
the Loan Documents or any Collateral, shall be limited to the right to consent
to (A) the increase in the Commitment of the Lender from whom such participant
purchased a participation, (B) the reduction of the principal of, or rate or
amount of interest on, the Loans subject to such participation (other than by
the payment or prepayment thereof), (C) the postponement of any date fixed for
any payment of principal of, or interest on, the Loan(s) subject to such
participation (except with respect to any modifications of the provisions
relating to prepayments of Loans and other Obligations) and (D) the release of
any guarantor of the Obligations or all or a substantial portion of the
Collateral except as provided in Section 12.09(b).
(f) Information Regarding the Borrowers. Subject to the provisions
of Section 9.06(d), any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
13.01, disclose to the assignee or participant or proposed assignee or
participant, any information relating to any of the Borrowers or any other Loan
Party furnished to such Lender by the Administrative Agent or by or on behalf of
such Borrower or such Loan Party; provided that, prior to any such disclosure,
such assignee or participant, or proposed assignee or participant, shall agree
to preserve in accordance with Section 13.23 the confidentiality of any
confidential information described therein.
(g) Payment to Participants. Anything in this Agreement to the
contrary notwithstanding, in the case of any participation, all amounts payable
by the Borrowers under the Loan Documents shall be calculated and made in the
manner and to the parties required hereby as if no such participation had been
sold.
(h) Lenders' Creation of Security Interests. Notwithstanding any
other provision set forth in this Agreement, any Lender may at any time create a
security interest in all or any portion of its rights under this Agreement and
its Note (including, without limitation, Obligations owing to it and the Note
held by it) in favor of any Federal Reserve Bank of the Federal Reserve Board
without notice to or consent of any of the Borrowers or the Administrative
Agent.
13.02. Relations Among Lenders.
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Each Lender agrees that it will not take any action, nor institute
any actions or proceedings, against any Borrower or any other obligor
hereunder or with respect to any Collateral, without the prior written
consent of Requisite Lenders.
13.03. Replacement of Lender. In the event that a Replacement Event
occurs and is continuing with respect to any Lender, the Borrowers may designate
a Replacement Lender to assume such Lender's Commitment hereunder, to purchase
the Loans and participations of such Lender and such Lender's rights hereunder
and (if such Lender is an Issuing Bank) to issue Letters of Credit in
substitution for all outstanding Letters of Credit issued by such Lender,
without recourse to or representation or warranty by, or expense to, such Lender
for a purchase price equal to the outstanding principal amount of the Loans
payable to such Lender plus any accrued but unpaid interest on such Loans and
accrued but unpaid commitment fees and letter of credit fees owing to such
Lender, and upon such assumption, purchase and substitution, and subject to the
execution and delivery to the Administrative Agent by the Replacement Lender of
documentation satisfactory to the Administrative Agent (pursuant to which such
Replacement Lender shall assume the obligations of such original Lender under
this Agreement), the Replacement Lender shall succeed to the rights and
obligations of such Lender hereunder and such Lender shall no longer be a party
hereto or have any rights hereunder provided that the obligations of the
Borrowers to such Lender under Section 13.05 hereof with respect to events
occurring or obligations arising before such replacement shall survive such
replacement.
13.04. Expenses.
(a) Generally. The Borrowers agree upon demand to pay, or reimburse
the Administrative Agent for, all of the Administrative Agent's reasonable
internal and external audit, legal, syndication, appraisal, valuation, filing,
document duplication and reproduction and investigation expenses and for all
other out-of-pocket costs and expenses of every type and nature (including,
without limitation, the reasonable fees, expenses and disbursements of Sidley &
Austin, local legal counsel, auditors, accountants, appraisers, printers,
insurance and environmental advisers, and other consultants and agents) incurred
by the Administrative Agent in connection with (i) the preparation, negotiation,
and execution of this Agreement, the other Loan Documents and the syndication of
the financing hereunder; (ii) the interpretation of this Agreement (including,
without limitation, the satisfaction or attempted satisfaction of any of the
conditions set forth in Article V), the other Loan Documents and the making of
the Loans hereunder; (iii) the creation, perfection or protection of the Liens
under the Loan Documents (including, without limitation, any reasonable fees and
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expenses for local counsel in various jurisdictions); (iv) the ongoing
administration of this Agreement and the Loans, including consultation with
attorneys in connection therewith and with respect to the Administrative Agent's
rights and responsibilities under this Agreement and the other Loan Documents
and the Administrative Agent's periodic audits of the Borrowers; (v) the
protection, collection or enforcement of any of the Obligations or the
enforcement of any of the Loan Documents; (vi) the commencement, defense or
intervention in any court proceeding relating in any way to the Obligations, the
assets of any Borrower, any Borrower, any of the other Loan Parties, this
Agreement or any of the other Loan Documents; (vii) the response to, and
preparation for, any subpoena or request for document production with which the
Administrative Agent is served or deposition or other proceeding in which the
Administrative Agent is called to testify, in each case, relating in any way to
the Obligations, the assets of any Borrower, any Borrower, any of the other Loan
Parties, this Agreement or any of the other Loan Documents; and (viii) any
amendments, consents, waivers, assignments, restatements, or supplements to any
of the Loan Documents and the preparation, negotiation, and execution of the
same.
(b) After Default. The Borrowers further agree to pay or reimburse
the Administrative Agent and each Lender upon demand for all out-of-pocket costs
and expenses, including, without limitation, reasonable attorneys' fees incurred
by the Administrative Agent or such Lender after the occurrence of an Event of
Default (i) in enforcing any Loan Document or Obligation or any security
therefor or exercising or enforcing any other right or remedy available by
reason of such Event of Default; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleadings in any legal proceeding relating to
the Obligations, the Property, any Borrower and related to or arising out of the
transactions contemplated hereby or by any of the other Loan Documents; and (iv)
in taking any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise) described in clauses (i) through (iii) above.
13.05. Indemnity. The Borrowers further agree to defend, protect,
indemnify, and hold harmless the Administrative Agent and each and all of the
Lenders and Issuing Banks and each of their respective Affiliates, and their
respective officers, directors, employees, attorneys and agents (including,
without limitation, those retained in connection with the satisfaction or
attempted satisfaction of any of the conditions set forth in Article V)
(collectively, the "Indemnitees") from and against any and all liabilities,
obligations, losses (other than loss of
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profits), damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (excluding any taxes and
including, without limitation, the fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a party
thereto), imposed on, incurred by, or asserted against such Indemnitees in any
manner relating to or arising out of (a) this Agreement, the Notes, the other
Loan Documents, or any act, event or transaction related or attendant thereto,
the making of the Loans, the issuance of and participation in Letters of Credit
hereunder, the creation of and participation in Acceptances, the management of
such Loans, Letters of Credit or Acceptances, the use or intended use of the
proceeds of the Loans, Letters of Credit or Acceptances hereunder, or any of the
other transactions contemplated by the Loan Documents, or (b) any Liabilities
and Costs under federal, state or local environmental, health or safety laws,
regulations or common law principles arising from or in connection with the
past, present or future operations of any Borrower or any of its predecessors
in interest, or, the past, present or future environmental condition of any
respective Property of any Borrower, the presence of asbestos-containing
materials at any respective Property of any Borrower or the Release or
threatened Release of any Contaminant into the environment from any respective
Property of any Borrower (collectively, the "Indemnified Matters"); provided,
however, the Borrowers shall have no obligation to an Indemnitee hereunder with
respect to Indemnified Matters caused by or resulting from the willful
misconduct or gross negligence of such Indemnitee, as determined by a court of
competent jurisdiction. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Borrowers shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees.
13.06. Change in Accounting Principles. If any change in the
accounting principles used in the preparation of the most recent financial
statements referred to in Section 7.01 are required in connection with the
issuance of shares of common stock by a newly formed corporation pursuant to an
initial public offering or are hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and are adopted by the Borrowers
with the agreement of its independent certified public accountants and such
changes result in a change in the method of calculation of any of the covenants,
standards or terms found in Article IX and Article X, the parties hereto agree
to enter into negotiations in order to amend such provisions so as to equitably
reflect such
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changes with the desired result that the criteria for evaluating compliance with
such covenants, standards and terms by the Borrowers shall be the same after
such changes as if such changes had not been made; provided, however, no change
in GAAP that would affect the method of calculation of any of the covenants,
standards or terms shall be given effect in such calculations until such
provisions are amended, in a manner satisfactory to the Requisite Lenders and
the Borrowers, to so reflect such change in accounting principles.
13.07. Setoff. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, each Lender, each
Issuing Bank and any Affiliate of any Lender or Issuing Bank is hereby
authorized by each Borrower at any time or from time to time, without notice to
any Person (any such notice being hereby expressly waived) to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured (but not including trust accounts)) and any other
Indebtedness at any time held or owing by such Lender, Issuing Bank or any of
their Affiliates to or for the credit or the account of any Borrower against and
on account of the Obligations of the Borrowers to such Lender, Issuing Bank or
any of their Affiliates, including, but not limited to, all Loans, Letters of
Credit, Acceptances and all claims of any nature or description arising out of
or in connection with this Agreement or the Notes, irrespective of whether or
not (i) such Lender or Issuing Bank shall have made any demand hereunder or (ii)
the Administrative Agent, at the request or with the consent of the Requisite
Lenders, shall have declared the principal of and interest on the Loans and
other amounts due hereunder and under the Notes to be due and payable as
permitted by Article XI and even though such Obligations may be contingent or
unmatured. Each Lender and each Issuing Bank agrees that it shall not, without
the express consent of the Requisite Lenders, and that it shall, to the extent
it is lawfully entitled to do so, upon the request of the Requisite Lenders,
exercise its setoff rights hereunder against any accounts of any Borrower now or
hereafter maintained with such Lender, Issuing Bank or any Affiliate of either
of them.
13.08. Ratable Sharing. The Lenders agree among themselves that (i)
with respect to all amounts received by them which are applicable to the payment
of the Obligations (excluding the fees described in Sections 2.03(f), 3.03,
3.04, 4.01(e) and 4.02(a)) equitable adjustment will be made so that, in effect,
all such amounts will be shared among them ratably in accordance with their Pro
Rata Shares, whether received by voluntary payment, by the exercise of the right
of setoff or banker's lien, by counterclaim or cross-action or by the
enforcement of any or all of the Obligations (excluding the fees and amounts
described
138
in Sections 2.03(f), 3.03, 3.04, 4.01(e) and 4.02(a)) or the Collateral, (ii) if
any of them shall by voluntary payment or by the exercise of any right of
counterclaim, setoff, banker's lien or otherwise, receive payment of a
proportion of the aggregate amount of the Obligations held by it, which is
greater than the amount which such Lender is entitled to receive hereunder, the
Lender receiving such excess payment shall purchase, without recourse or
warranty, an undivided interest and participation (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in such Obligations
owed to the others so that all such recoveries with respect to such Obligations
shall be applied ratably in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such party
to the extent necessary to adjust for such recovery, but without interest except
to the extent the purchasing party is required to pay interest in connection
with such recovery. Each Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 13.08 may, to the
fullest extent permitted by law, exercise all its rights of payment (including,
subject to Section 13.07, the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation.
13.09. Amendments and Waivers. (a) Unless otherwise provided in
this Agreement, no amendment or modification of any provision of this
Agreement or the Notes shall be effective without the written agreement of
the Administrative Agent, the Requisite Lenders and the Borrowers, and no
termination or waiver of any provision of this Agreement or the Notes, or
consent to any departure by the Borrowers therefrom, shall be effective
without the written concurrence of the Requisite Lenders, which the Requisite
Lenders shall have the right to grant or withhold in their sole discretion.
Notwithstanding the foregoing, any amendment, modification, termination,
waiver or consent with respect to any of the following provisions of this
Agreement and the Notes shall be effective only by a written agreement,
signed by each Lender: (a) waiver of any of the conditions specified in
Sections 5.01 and 5.02 (except with respect to a condition based upon another
provision of this Agreement, the waiver of which requires only the
concurrence of the Requisite Lenders), (b) increase in the aggregate amount
of the Commitments or the Commitment of any Lender, (c) reduction of the
principal of, rate or amount of interest on the Loans, the Reimbursement
Obligations, the Acceptance Obligations or any fees or other amounts payable to
such Lender (other than by the payment or prepayment thereof), (d) postponement
of the Commitment Termination Date or any other date fixed for any payment of
principal of, or interest on, the Loans, the Reimbursement
139
Obligations, the Acceptance Obligations or any fees or other amounts payable
to such Lender (except with respect to any modifications of the provisions
relating to prepayments of Loans and other Obligations), (e) increase in the
advance rates set forth in the definition of "Borrowing Base" (except as
provided within such definition), (f) release of all or a portion of the
Collateral with a market value greater than $5,000,000 (except as provided in
Section 12.09(b)), (g) amendment of the definition of "Requisite Lenders", or
(h) amendment of Section 13.08 or this Section 13.09. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given. No notice to or demand on the Borrowers in any case
shall entitle the Borrowers to any other or further notice or demand in
similar or other circumstances. Notwithstanding anything to the contrary
contained in this Section 13.09, no amendment, modification, waiver or
consent shall affect the rights or duties of the Administrative Agent under
this Agreement or the other Loan Documents, unless made in writing and signed
by the Administrative Agent in addition to the Lenders required above to take
such action.
(b) If any Lender fails to agree in writing to any amendment,
modification, consent or waiver that requires the written agreement of each
Lender, such Lender agrees to sell, assign and transfer to any Replacement
Lender or Replacement Lenders designated by the Administrative Agent all of its
Notes and all of its rights hereunder for a purchase price in cash equal to the
outstanding principal amount of the Notes payable to such Lender plus any
accrued but unpaid interest on such Notes and accrued but unpaid commitment and
other fees, expense reimbursements and indemnities in respect of that Lender's
Commitment and the assumption by the Replacement Lender or Replacement Lenders
of all of the obligations of such Lender hereunder. Such Lender shall
consummate such sale in accordance with such terms (and, if such Lender is an
Issuing Bank, such other terms as may be reasonably necessary to compensate
fully such Lender) within a reasonable time not exceeding 15 Business Days from
the date the Administrative Agent designated a Replacement Lender, and thereupon
such Lender shall no longer be a party hereto or have any obligations or rights
hereunder (except rights which, pursuant to the provisions of this Agreement,
survive the termination of this Agreement and the repayment of the Notes), and
the Replacement Lender shall succeed to such obligations and rights.
13.10. Notices. (a) Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be given shall
be in writing and may be personally served, telecopied, telexed or sent by
courier service or United States certified mail and shall be deemed to have been
given when delivered in person or by courier service, upon receipt of a telecopy
or telex or four (4) Business Days after
140
deposit in the United States mail with postage prepaid and properly addressed.
Notices to the Administrative Agent pursuant to Articles II, III or XII shall
not be effective until received by the Administrative Agent. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section 13.10) shall be as set forth below each
party's name on the signature pages hereof or the signature page of any
applicable Assignment and Acceptance, or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties to this Agreement.
(b) Each Borrower agrees to indemnify and hold harmless each
Indemnitee from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, reasonable
fees and disbursements of counsel to any such Indemnitee) which may be imposed
on, incurred by or asserted against any such Indemnitee in any manner relating
to or arising out of any action taken or omitted by such Indemnitee in good
faith in reliance on any notice or other written communication in the form of a
telecopy or facsimile purporting to be from any Borrower; provided that no
Borrower shall have any obligation under this Section 13.10(b) to an Indemnitee
with respect to any indemnified matter caused by or resulting from the gross
negligence or willful misconduct of that Indemnitee, as determined by a court of
competent jurisdiction in a final non-appealable judgment or order.
13.11. Survival of Warranties and Agreements. All representations
and warranties made herein and all obligations of the Borrowers in respect of
taxes, indemnification and expense reimbursement shall survive the execution and
delivery of this Agreement and the other Loan Documents, the making and
repayment of the Loans, the issuance and discharge of Letters of Credit
hereunder and the termination of this Agreement and shall not be limited in any
way by the passage of time or occurrence of any event and shall expressly cover
time periods when the Administrative Agent, any of the Issuing Banks or any of
the Lenders may have come into possession or control of any assets of any
Borrower.
13.12. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of the Administrative Agent, any Lender or any
Issuing Bank in the exercise of any power, right or privilege under this
Agreement, the Notes or any of the other Loan Documents shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under this Agreement, the
Notes and
141
the other Loan Documents are cumulative to and not exclusive of any rights or
remedies otherwise available.
13.13. Marshalling; Payments Set Aside. None of the Administrative
Agents, any Lender or any Issuing Bank shall be under any obligation to xxxxxxxx
any assets in favor of any Borrower, any Loan Party or any other party or
against or in payment of any or all of the Obligations. To the extent that any
Borrower makes a payment or payments to the Administrative Agent, the Lenders or
the Issuing Banks or any of such Persons receives payment from the proceeds of
the Collateral or exercise their rights of setoff, and such payment or payments
or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, right and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
13.14. Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Default if such action is
taken or condition exists.
13.15. Severability. In case any provision in or obligation under
this Agreement, the Notes or the other Loan Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
13.16. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement or be given any substantive effect.
13.17. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
13.18. Limitation of Liability. No claim may be made by any
Borrower, any Loan Party, any Lender, any Issuing Bank, any Co-Agent, the
Administrative Agent or any other Person against the Administrative Agent, any
other Co-Agent, any other Issuing Bank or any other Lender or the Affiliates,
directors, officers, employees, attorneys or agents of any of them for any
142
special, consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or the Notes, or any act, omission
or event occurring in connection therewith; and each Borrower, each Loan Party,
each Lender, each Issuing Bank, each Co-Agent and the Administrative Agent
hereby waive, release and agree not to xxx upon any such claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
13.19. Successors and Assigns. This Agreement, the Notes and the
other Loan Documents shall be binding upon the parties thereto and their
respective successors and assigns and shall inure to the benefit of the parties
thereto and the successors and permitted assigns of the Lenders and the Issuing
Banks. The rights hereunder of the Borrowers, or any interest therein, may not
be assigned without the written consent of all Lenders.
13.20. Certain Consents and Waivers of the Borrowers.
(a) Personal Jurisdiction. (i) EACH OF THE ADMINISTRATIVE AGENT, THE
LENDERS, THE ISSUING BANKS AND THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY
COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY
ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT,
WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWERS IRREVOCABLY
DESIGNATES AND APPOINTS CT CORPORATION, 0000 XXXXXXXX, XXX XXXX, XXX XXXX 00000,
AS ITS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE ADMINISTRATIVE
AGENT, THE CO-AGENTS, THE LENDERS, THE ISSUING BANKS AND THE BORROWERS AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. EACH OF THE BORROWERS WAIVES IN ALL DISPUTES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) EACH BORROWER AGREES THAT THE ADMINISTRATIVE AGENT SHALL HAVE
THE RIGHT TO PROCEED AGAINST SUCH BORROWER OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND THE LENDERS
TO
143
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE
AGENT, ANY ISSUING BANK OR ANY LENDER. EACH BORROWER AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE
ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY
ISSUING BANK; PROVIDED, HOWEVER, ANY BORROWER MAY BRING IN AN ACTION IN A COURT
OF THE STATE OF NEW YORK ANY COUNTERCLAIM THAT WOULD BE A COMPULSORY
COUNTERCLAIM IF THE ACTION HAD BEEN BROUGHT IN FEDERAL DISTRICT COURT. EACH
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH THE ADMINISTRATIVE AGENT, ANY ISSUING BANK OR ANY LENDER MAY COMMENCE A
PROCEEDING DESCRIBED IN THIS SECTION.
(b) Service of Process. EACH BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS 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 THE PROCESS AGENT OR SUCH BORROWER'S NOTICE ADDRESS
SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH
MAILING. EACH BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER
LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST ANY BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE ADMINISTRATIVE AGENT, THE
LENDERS AND THE BORROWERS IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT.
13.21. Counterparts; Effectiveness; Inconsistencies. This Agreement
and any amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement shall become effective against each Borrower,
each Lender, each Issuing Bank and the Administrative Agent on the date hereof
when each such party hereto executes and delivers this Agreement. This
Agreement and each of the other Loan Documents shall be construed to the extent
reasonable to be consistent one with the other, but to the extent that the terms
and conditions hereof are actually inconsistent with the terms
144
and conditions of any other Loan Document, this Agreement shall govern.
13.22. Limitation on Agreements. All agreements between each
Borrower, the Administrative Agent, each Lender and each Issuing Bank in the
Loan Documents are hereby expressly limited so that in no event shall any of the
Loans or other amounts payable by the Borrowers under any of the Loan Documents
be directly or indirectly secured (within the meaning of Regulation U) by Margin
Stock.
13.23. Confidentiality. Subject to Section 13.01(f), the Lenders and
the Issuing Banks shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement and identified as such by the Borrowers in
accordance with such Lender's or such Issuing Bank's customary procedures 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 a bona fide offeree, transferee or participant in connection with the
contemplated transfer or participation or as required or requested by any
Governmental Authority or representative thereof or pursuant to legal process
and shall require any such offeree, transferee or participant to agree (and
require any of its offerees, transferees or participants to agree) to comply
with this Section 13.23. In no event shall any Lender or any Issuing Bank be
obligated or required to return any materials furnished by any Borrower;
provided, however, each offeree shall be required to agree that if it does not
become a transferee or participant it shall return all materials furnished to it
by such Borrower in connection with this Agreement.
13.24. Entire Agreement. This Agreement, taken together with all of
the other Loan Documents, embodies the entire agreement and understanding among
the parties hereto and supersedes all prior agreements and understandings,
written and oral, relating to the subject matter hereof.
145
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
THE XXXXX KARAN COMPANY
By: Xxxxx Karan International Inc.,
a general partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Title:___________________________
Notice address:
The Xxxxx Karan Company
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
With a copy to:
The Xxxxx Karan Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXX KARAN STUDIO
By: Xxxxx Karan International Inc.,
a general partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Title:___________________________
Notice address:
The Xxxxx Karan Company
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
With a copy to:
The Xxxxx Karan Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
THE XXXXX KARAN COMPANY STORE, G.P.
By: Xxxxx Karan International Inc.,
a general partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Title:___________________________
Notice address:
The Xxxxx Karan Company
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
With a copy to:
The Xxxxx Karan Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
DK FOOTWEAR PARTNERS
By: Xxxxx Karan International Inc.,
a general partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Title:___________________________
Notice address:
The Xxxxx Karan Company
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
With a copy to:
The Xxxxx Karan Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
CITIBANK, N.A., as Administrative Agent
By: /s/
---------------------------------
Vice President
Notice address:
Citibank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
With a copy to:
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
LENDERS
Revolving Loan
Commitment
$41,500,000 CITIBANK, N.A.
By: /s/
---------------------------------
Title:
Notice address:
Citibank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
With a copy to:
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Revolving Loan
Commitment
$28,500,000 THE CHASE MANHATTAN BANK
By: /s/
---------------------------------
Title:
Notice address:
The Chase Manhattan Bank
0000 Xxxxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Revolving Loan
Commitment
$25,000,000 NATIONSBANK N.A.
By: /s/
---------------------------------
Title:
Notice address:
Nationsbank, N.A.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Vice President
Telecopy: (000) 000-0000
Revolving Loan
Commitment
$20,000,000 PNC BANK N.A.
By: /s/
---------------------------------
Title:
Notice address:
PNC Bank N.A.
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Revolving Loan
Commitment
$20,000,000 THE CIT GROUP
By: /s/
---------------------------------
Title:
Notice address:
The CIT Group
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Revolving Loan
Commitment
$15,000,000 NATIONAL CITY COMMERCIAL FINANCE, INC.
By: /s/
---------------------------------
Title:
Notice address:
National City Commercial Finance, Inc.
Suite 400, MO-3049
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
