EXHIBIT 10.5
EXECUTION COPY
PARENT UNDERTAKING
PARENT UNDERTAKING (this "Agreement"), dated as of July 31,
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2001, made by Levi Xxxxxxx & Co., a Delaware corporation (the "Parent"), in
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favor of Levi Xxxxxxx Receivables Funding, LLC (the "Issuer").
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PRELIMINARY STATEMENTS
1. The Parent is (a) the direct owner of all of the issued and
outstanding shares of common stock of Levi Xxxxxxx Financial Center Corporation,
a California corporation (the "Seller") and (b) the indirect owner of all of the
issued and outstanding membership interests of Levi Xxxxxxx Funding LLC, a
Delaware limited liability company (the "Transferor").
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2. The Parent and the Seller have entered into that certain
Third Amended and Fully Restated Receivables Purchase and Sale Agreement dated
as of January 28, 2000 (as amended, restated, supplemented or otherwise modified
from time to time, the "Receivables Purchase and Sale Agreement") pursuant to
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which the Parent transfers certain accounts receivable and related assets to the
Seller. The Parent, the Seller, Levi Xxxxxxx Funding Corp., a Delaware
corporation ("Funding") and the Transferor have entered into that certain
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Receivables Purchase and Sale Agreement dated as of January 28, 2000 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Receivables Sale Agreement") pursuant to which the Parent, the Seller and
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Funding transfer certain accounts receivable and related assets to the
Transferor. The Parent, Seller, Funding and Transferor have entered into that
certain Master Amendment and Consent to the Receivables Purchase and Sale
Agreement and the Receivables Sale Agreement dated as of July 31, 2001 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Master Amendment") to consent to the Transferor's assignment of certain
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accounts receivable and related assets to the Issuer and make conforming changes
to such agreements. The Issuer, the Transferor and Levi Xxxxxxx Financial Center
Corporation, in its dual capacities as the Seller and as servicer (the
"Servicer") have entered into that certain Receivables Purchase Agreement dated
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as of July 31, 2001 (as amended, restated, supplemented or otherwise modified
from time to time, the "Receivables Purchase Agreement") pursuant to which the
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Seller and the Transferor will transfer certain accounts receivable and related
assets to the Issuer and the Servicer will agree to service such assets.
Collectively, the Receivables Purchase and Sale Agreement and the Receivables
Sale Agreement, as amended by the Master Amendment, are referred to as the
"Parent Transfer Agreements". Collectively, the Parent Transfer Agreements and
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the Receivables Purchase Agreement are referred to as the "Transfer Agreements".
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3. Capitalized terms used herein and not herein defined are
used herein as defined in the Receivables Purchase Agreement and, if not defined
therein, in that certain Master Indenture dated as of July 31, 2001 (the "Master
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Indenture") among the Issuer and Citibank, N.A., as the indenture trustee (the
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"Indenture Trustee") and "Paying Agent," "Authentication Agent" and "Transfer
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Agent and Registrar."
4. It is a condition precedent to the effectiveness of the
Receivables Purchase Agreement that the Parent shall have executed and delivered
this Agreement.
NOW, THEREFORE, in consideration of the premises, and the
substantial direct and indirect benefits to the Parent from the financing
arrangements contemplated by the Transaction Documents and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent hereby agrees as follows:
SECTION 1. Unconditional Undertaking. The Parent hereby
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unconditionally and irrevocably (a) undertakes and agrees with and for the
benefit of the Issuer and its successors and assigns (collectively the
"Indemnified Parties"), to cause the due and punctual performance and observance
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by each of the Transferor, the Seller (in both its individual capacity and in
its separate capacity as Servicer) and any of the Seller's successors and
assigns acting as Servicer (each such person, an "Applicable Party") of all of
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the terms, covenants, conditions, agreements and undertakings on the part of any
such Applicable Party, as applicable, to be performed or observed under any of
the Transfer Agreements and the other Transaction Documents and the other
documents delivered in connection therewith in accordance with the terms
thereof, including, without limitation, the punctual payment when due of all
obligations of each such Applicable Party now or hereafter existing under any of
the Transfer Agreements and the Transaction Documents and the other documents
delivered in connection therewith, including (without limitation) any
Adjustments, deemed Collections, interest, obligations to pay Indemnified
Losses, fees, costs, expenses or otherwise (such terms, covenants, conditions,
agreements, undertakings and other obligations being the "Obligations") and (b)
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undertakes and agrees to pay any and all expenses (including reasonable counsel
fees and expenses) incurred by the Indemnified Parties, or any of them, in
enforcing any rights under this Agreement. In the event that any Applicable
Party shall fail in any manner whatsoever to perform or observe any of its
Obligations when the same shall be required to be performed or observed, then
the Parent shall itself duly and punctually perform or observe, or cause to be
duly and punctually performed and observed, such Obligation, and it shall not be
a condition to the accrual of the obligation of the Parent hereunder to perform
or observe any Obligation (or to cause the same to be performed or observed)
that any Indemnified Party shall have first made any request of or demand upon
or given any notice to any Applicable Party, or have instituted any action or
proceeding against any such Applicable Party or its successors or assigns in
respect thereof. For purposes of clarity only, the Obligations which the Parent
undertakes and agrees to cause the performance of hereunder are solely those
Obligations of the Applicable Parties under the Transfer Agreements and the
Transaction Documents and nothing herein shall impose on the Parent any
obligation under clause (a) of this Section 1 in excess of or greater in scope
than such Obligations of the Applicable Parties
SECTION 2. Obligations Absolute. The Parent undertakes and
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agrees that the Obligations will be paid and performed strictly in accordance
with the terms of the Transaction Documents and each other document delivered in
connection therewith, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Indemnified Party with respect thereto. The obligations of the
Parent under this Agreement are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Parent to enforce
this Agreement, irrespective of whether any action is brought against any
Applicable Party or whether any such Person is joined in any such action
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or actions. The liability of the Parent under this Agreement shall be
irrevocable, absolute and unconditional irrespective of, and the Parent hereby
irrevocably waives any defenses it may now or hereafter have in any way relating
to, any or all of the following:
(i) any lack of validity or enforceability of any Transaction
Document or any other document relating
thereof;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations under the
Transaction Documents or any other document relating thereto, or any
other amendment or waiver of or any consent to departure from any
Transaction Document or any other document relating thereto;
(iii) any taking, exchange, release or nonperfection of or
failure to transfer title to any asset or collateral, or any taking,
release, amendment or waiver of or consent to departure from any
guaranty, for all or any of the Obligations;
(iv) any manner of application of any asset or collateral, or
proceeds thereof, to all or any of the Obligations, or any manner of
sale or other disposition of any asset or collateral for all or any of
the Obligations or any other obligations of any Applicable Party under
the Transaction Documents or any other document relating thereto;
(v) any change, restructuring or termination of the corporate
structure or existence of the Parent, or any Applicable Party;
(vi) any failure of any Indemnified Party to disclose to the
Parent any information relating to the financial condition, operations,
properties or prospects of any Applicable Party now or in the future
known to such Indemnified Party (the Parent hereby waiving any duty on
the part of such Indemnified Party to disclose such information);
(vii) any impossibility or impracticality of performance,
illegality, force majeure, any act of any government, or any other
circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by
an Indemnified Party that might constitute a defense available to, or a
discharge of, any Applicable Party or a guarantor of the Obligations;
or
(viii) any other circumstance, event or happening whatsoever,
whether foreseen or unforeseen and whether similar or dissimilar to
anything referred to above in this Section 2;
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provided, however, notwithstanding the foregoing, the Parent reserves the right
to assert defenses which the Transferor, the Seller or any other Applicable
Party may have to the performance or observance of the terms, covenants,
conditions, agreements and undertakings under the Transfer Agreements and the
other Transaction Documents.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time (x) any payment in connection with any of the Obligations is
rescinded or must otherwise be returned by any Indemnified Party, or (y) any
performance or observance of any Obligation is rescinded or otherwise
invalidated, upon the insolvency, bankruptcy or reorganization of any
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Applicable Party, all as though payment had not been made or as though such
Obligation had not been performed or observed.
SECTION 3. Waivers and Acknowledgments.
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(a) The Parent hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and this
Agreement and any other document related thereto, and any requirement that any
Indemnified Party protest, secure, perfect or insure any lien or any property
subject thereto or exhaust any right or take any action against any Applicable
Party or any other Person or any asset or collateral.
(b) The Parent hereby waives any right to revoke this Agreement,
and acknowledges that this Agreement is continuing in nature and applies to all
Obligations, whether existing now or in the future.
SECTION 4. Subrogation. The Parent shall not exercise or
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assert any rights that it may now have or hereafter acquire against any
Applicable Party that arise from the existence, payment, performance or
enforcement of the Parent's obligations under this Agreement or any other
Transaction Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Indemnified Party against any
Applicable Party or any asset or collateral, whether or not such claim, remedy
or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any Applicable Party,
directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim, remedy or right, unless
and until all amounts in connection with the Obligations and all amounts payable
under this Agreement shall have been paid in full and all other amounts payable
by each Applicable Party to the Indemnified Parties under the Transaction
Documents shall have been paid in full. If any amount shall be paid to the
Parent in violation of the preceding sentence at any time prior to the later of
(i) the payment in full of the Obligations and all other amounts payable under
this Agreement and all amounts payable to the Indemnified Parties under the
Transaction Documents and (ii) the Final Payout Date, such amount shall be held
in trust for the benefit of the Indemnified Parties and shall forthwith be paid
to the Issuer or its successors and assigns to be credited and applied to the
Obligations, whether matured or unmatured, in accordance with the terms of the
Transaction Documents or to be held by the Issuer or its successors and assigns
as collateral security for any Obligations payable under this Agreement
thereafter arising. Nothing in this Section 4 shall be construed as affecting or
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prohibiting any intercompany transactions between the Parent and any Applicable
Party, such as the incurrence of debt by any Applicable Party to the Parent for
the purchase of goods on credit, the repayment of any intercompany loan or the
performance of the transactions contemplated by the Receivables Purchase and
Sale Agreement or the Receivables Sale Agreement, unless and until the Purchase
Termination Date shall have occurred.
SECTION 5. Representations and Warranties. The Parent hereby
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represents and warrants as follows:
(a) The Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority to conduct its
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business as such business is currently conducted. The Parent had all relevant
times, and now has, all necessary power, authority and legal right to enter into
the transactions contemplated by the Transfer Agreements. All of the issued and
outstanding shares of common stock of the Seller and all of the issued and
outstanding membership interests of the Transferor, are owned, directly or
indirectly, by the Parent, free and clear of any Lien except for Liens granted
to secure the Indebtedness under the Credit Agreement.
(b) The Parent is duly qualified to do business, is in good
standing as a foreign corporation, and has obtained all necessary licenses and
approvals in all jurisdiction in which the conduct of its business requires such
qualification, licenses or approvals and in which the failure to so qualify or
to obtain such licenses and approvals or to preserve and maintain such
qualification, licenses or approvals could reasonably be expected to give rise
to a Material Adverse Effect.
(c) The execution, delivery and performance by the Parent of
this Agreement and the Parent Transfer Agreements, the transactions contemplated
hereby and thereby, are within the Parent's corporate powers, have been duly
authorized by all necessary corporate action, do not contravene (i) the Parent's
Certificate of Incorporation or other constitutive documents, (ii) any law
applicable to the Parent or any of its Affiliates, (iii) any contractual
restriction binding on or affecting the Parent or the Parent's properties or
(iv) any order, writ, judgment, award, injunction or decree binding on or
affecting the Parent or the Parent's properties, and do not result in or require
the creation of any Lien (other than pursuant hereto and to the Transaction
Documents) upon or with respect to any of the Parent's properties except to the
extent that any of the foregoing would not have a Material Adverse Effect on any
Transaction Party. This Agreement and each of the Parent Transfer Agreements has
been duly executed and delivered by the Parent.
(d) No authorization or approval (including, without limitation,
any exchange control agreement) or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other Person is required
for the due execution, delivery and performance by the Parent of this Agreement
or any Parent Transfer Agreement.
(e) Each of this Agreement and the Parent Transfer Agreements
are the legal, valid and binding obligation of the Parent, enforceable against
the Parent in accordance with its terms.
(f) The consolidated balance sheet of the Parent and its
subsidiaries as of May 27, 2001, and the related consolidated statement of
income and cash flows of the Parent and its subsidiaries for the fiscal quarter
then ended, fairly present the consolidated financial condition of the Parent
and its subsidiaries as at such date and the consolidated results of the
operations of the Parent and its subsidiaries for the period ended on such date,
all in accordance with GAAP, and, as of the date hereof, since the fiscal
quarter ended May 27, 2001, there has been no material adverse change in such
condition or operations, except as disclosed in writing prior to the date hereto
to the Issuer and its successors and assigns.
(g) There is no pending or threatened action, suit or proceeding
affecting the Parent or any of its subsidiaries, or its property or the property
of any of its subsidiaries, before
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any court, governmental agency or arbitrator that materially adversely affect
the ability of the Parent to perform its obligations under this Agreement or any
Parent Transfer Agreement, or that purports to affect the legality, validity or
enforceability of this Agreement or any Parent Transfer Agreement.
(h) There are no conditions precedent to the effectiveness of
this Agreement that have not been satisfied or waived.
(i) The obligations of the Parent under this Agreement do rank
and will rank at least pari passu in priority of payment and in all other
respects with all other unsecured Indebtedness of the Parent.
(j) There is no federal, state or local tax, levy, impost,
deduction, charge or withholding incurred by virtue of the execution or delivery
of this Agreement or the Parent Transfer Agreements.
(k) The purchase price paid by the Seller under the Receivables
Purchase and Sale Agreement and the purchase price paid by the Transferor under
the Receivables Sale Agreement each constitutes reasonably equivalent value in
consideration for the transfer thereunder to the Seller or the Transferor, as
applicable of the Receivables and Related Security transferred thereunder and no
such transfer has been made and shall not hereafter have been made for or on
account of an antecedent Indebtedness owed by the Parent to either the Seller or
the Transferor and no such transfer is or may be voidable under any section of
the Bankruptcy Code.
(l) As of the date hereof, the Parent (i) is not "insolvent"
(as such term is defined in ss.101(32)(A) of the Bankruptcy Code), (ii) is
Solvent (it being understood that, notwithstanding the foregoing representations
in this clause (l), the Parent's financial statements described under clause (f)
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above disclose a negative net worth and no representation is made herein that
Parent has a positive net worth in accordance with GAAP). For purposes of this
paragraph, "Solvent" shall mean, with respect to the Parent on the date of
determination, that on such date (A) the fair value of the property of the
Parent is greater than the total amount of liabilities, including without
limitation, contingent liabilities of the Parent, (b) the present, fair, salable
value of the assets of the Parent is not less than the amount that will be
required to pay the probable liability of the Parent in its debts as they become
absolute and matured, (c) the Parent does not intend to, and does not believe
that it will, incur debts or liabilities beyond the Parent's ability to pay such
debts and liabilities as they mature, and (d) the Parent is not engaged in a
business or transaction, and is not about to engage in a business or
transaction, for which its property would constitute unreasonably small capital.
The amount of contingent liabilities at any time shall be computed as the amount
that, in light of all the facts and circumstances existing at that time,
represents the amount that can reasonably be expected to become as actual or
matured liability.
(m) (i) Except as would not have a Material Adverse Effect on
the Parent, each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the
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IRS and to the best knowledge of the Parent, nothing has occurred which
would cause the loss of such qualification. The Parent and each ERISA
Affiliate have made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or
an extension of any amortization period pursuant to Section 412 of the
Code has been made with respect to any Plan.
(ii) There are no pending or, to the best knowledge of the
Parent, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or
could reasonably result in a Material Adverse Effect on the Parent.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect on
the Parent.
(iii) (A) No ERISA Event that requires notice to be given to the
PBGC has occurred or is reasonably expected to occur; (B) no Plan has a
Funded Current Liability Percentage of less than 90% as of the most
recent valuation date; (C) neither the Parent nor any ERISA Affiliate
has incurred or reasonably expects to incur, any liability under Title
IV of ERISA with respect to any Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); and (D) neither the Parent nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan.
(n) The Parent is neither (i) an "investment company" within the
meaning of the Investment Company Act of 1940, as amended from time to time, or
any successor statute, nor (ii) a "holding company," or a "subsidiary company"
or an "affiliate" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended from time to time, or any
successor statute.
(o) No proceeds of any purchase under the Receivables Purchase
and Sale Agreements will be used by the Parent to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended.
(p) None of the Parent's inventory, the sale of which would give
rise to a Receivable, is subject to any Lien other than (i) Permitted Liens and
(ii) the Lien of Bank of America, N.A., as administrative agent under the Credit
Agreement, to the extent set forth in that certain Consent and Release Agreement
dated as of July 31, 2001 between the Transferor, the Seller, the Parent, the
Issuer, the Indenture Trustee and Bank of America, N.A., as administrative
agent.
(q) The Parent has advised its independent certified public
accountants that the Issuer, together with its successors and assigns, has been
authorized to review and discuss with such accountants, upon the written request
of the Issuer or its successors and assigns, as it may reasonably request to
protect its interests under the Receivables Purchase Agreement, any and all
financial statements and other information of any kind that such accountants may
have which directly relate to the Receivables, Related Security and Collections
with respect thereto,
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and the Parent has directed such accountants to comply with any reasonable
request of the Issuer and its successors and assigns for such information.
It is expressly understood that, except for representations and warranties
expressly made as of the date hereof, the foregoing representations and
warranties shall be deemed re-made on each date that the Parent sells
Receivables to the Seller under the Receivables Purchase and Sale Agreement.
SECTION 6. Covenants. The Parent covenants and agrees that,
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until the latest of (i) the Final Payout Date, (ii) the date on which no
Obligations or other amounts shall be payable under this Agreement, and (iii) no
amounts shall be payable to the Indemnified Parties under any Transaction
Document, the Parent will, unless the Issuer and its successors and assigns
shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
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with all applicable laws, rules, regulations, judgments, decrees and orders
(including, without limitation, those relating to the Receivables) with respect
to it, its business and properties in each case to the extent that any such
failure to comply, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(b) Preservation of Corporate Existence. Other than as permitted
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pursuant to clause (f) below, (i) preserve and maintain its corporate existence,
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rights, franchises and privileges in the jurisdiction of its incorporation, and
(ii) qualify and remain qualified in good standing as a foreign corporation in
each jurisdiction in which the failure to preserve and maintain such
qualification as a foreign corporation could reasonably be expected to have a
Material Adverse Effect.
(c) Reporting Requirements. Furnish to the Issuer and its
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successors and assigns:
(i) as soon as available, and in any event within ninety (90)
days after the end of each fiscal year of the Parent, copies of the
audited consolidated financial statements of the Parent and its
Subsidiaries, certified in a manner reasonably acceptable to the Issuer
and its successors and assigns by a nationally recognized independent
public accounting firm acceptable to the Issuer and its successors and
assigns (it being agreed that any such audited financial statements,
if accompanied by the Parent's annual audit report and otherwise in
compliance with Section 5.03(b) of the Credit Agreement, shall be
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deemed to be reasonably acceptable hereunder), and (B) within forty-
five (45) days after the end of the first, second and third quarterly
accounting periods in each fiscal year of the Parent, copies of the
unaudited consolidated financial statements of the Parent and its
Subsidiaries, including an unaudited consolidated balance sheet of the
Parent and its Subsidiaries as of the end of such quarterly accounting
period, all in reasonable detail; provided, however, that at any time
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that the financial statements described in this Section 6(c)(i) are
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otherwise available to the Issuer and its successors and assigns, the
Parent shall have no obligation to provide such financial statements to
the Issuer and its successors and assigns pursuant to this Agreement;
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(ii) as soon as possible and in any event within two (2)
Business Days after the Parent has Actual Knowledge of the occurrence
of each Purchase Termination Event, Unmatured Purchase Termination
Event, Servicer Default, Unmatured Servicer Default, Amortization
Event, Unmatured Amortization Event, Event of Default or event that
with the passage of time or the giving of notice, or both, would become
an Event of Default, a statement of the treasurer (or equivalent
officer) of the Parent setting forth details of such event and the
action that the Parent has taken and proposes to take with respect
thereto;
(iii) promptly upon the Parent's first having Actual Knowledge
of the occurrence thereof, notice of any of the following events
affecting the Parent or any ERISA Affiliate (but in no event more than
10 Business Days after such event), and the Parent shall also furnish
to the Issuer and its successors and assigns a copy of any notice with
respect to such event that is filed with a Governmental Authority and
any notice delivered by a Governmental Authority to the Parent or any
ERISA Affiliate with respect to such event:
(A) an ERISA Event;
(B) a decrease in the Funded Current Liability
Percentage for any Plan at the end of any fiscal quarter to
less than 90%; or
(C) any occurrence that is required to be disclosed by
the Parent to the lenders under Section 4.01(n) of the Credit
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Agreement; and
(iv) such other information, documents, records, or reports
respecting the condition or operations, financial or otherwise, of the
Parent or any of its subsidiaries as the Issuer or its successors and
assigns may from time to time reasonably request.
(d) Affiliate Ownership. (i) Continue to own, directly or
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indirectly, all of the issued and outstanding shares of the capital stock of the
Seller and (ii) continue to own, directly or indirectly all of the issued and
outstanding membership interests of the Transferor; provided, however, that
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notwithstanding any term to the contrary contained herein, the Parent and each
of its Affiliates shall be entitled to pledge its shares and membership
interests of the Seller and Transferor, respectively, in accordance with the
terms of the Credit Agreement.
(e) Separate Existence of the Issuer. The Parent hereby
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acknowledges that the Indenture Trustee and the Noteholders are entering into
the transactions contemplated by the Transaction Documents in reliance upon the
Issuer's identity as a legal entity that is separate from the Transferor, the
Seller, the Parent and the other members of the Parent Affiliated Group.
Therefore, from and after the date of execution and delivery of this Agreement,
Parent will take all reasonable steps including, without limitation, all steps
that Issuer or any assignee of Issuer may from time to time reasonably request
to maintain Issuer's identity as a separate legal entity and to make it manifest
to third-parties that Issuer is an entity with assets and liabilities distinct
from those of Transferor, the Parent and any other members of the Parent
Affiliated Group. Without limiting the generality of the foregoing and in
addition to the other covenants set forth herein, Parent (i) will not hold
itself out to third-parties as liable for the debts of the Issuer nor purport to
own the Receivables and other assets acquired by the Issuer, (ii) will take all
other actions necessary on its part to ensure that Issuer is at all times in
compliance with the covenants
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set forth in Section 3.07 of the Indenture and Section 2.20 of the Receivables
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Purchase Agreement and (iii) will cause any and all tax liabilities arising in
connection with the transactions contemplated herein or otherwise to be
allocated between Parent or other members of the Parent Affiliated Group on the
one hand and the Issuer on the other on an arm's-length basis in proportion to
their respective items of income and deduction and other tax attributes based on
the "separate return tax liability" method and the "immediate payment" method.
In addition to the foregoing, the Parent will cause any financial statements
Consolidated with those of the Issuer to state that the Issuer's business
consists of the direct and indirect purchase of Receivables from the Parent and
the Applicable Parties and that the Issuer is a separate corporate entity with
its own separate creditors who, in any liquidation of the Parent or any
Applicable Party, will be entitled to be satisfied out of the Issuer's assets
prior to any value in any Applicable Party becoming available to the Issuer's
equity holders.
(f) Merger, Consolidation, Etc. Consolidate with or merge with
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or into any other Person or convey, transfer or sell all or substantially all of
its properties and assets to any Person, unless:
(i) the Parent is the surviving entity thereof or, if Parent is
not the surviving entity thereof, (x) the Person formed by such
consolidation or into which Parent is merged or the entity that
acquires by conveyance, transfer or sale all or substantially all of
the properties and assets of Parent (any such Person, the "Surviving
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Entity") is an entity organized and existing under the laws of the
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United States of America or any state thereof and (y) such Surviving
Entity expressly assumes, by an agreement supplemental hereto in form
and substance satisfactory to the Issuer and its assignees, performance
of every covenant and obligation of Parent hereunder and under the
other Transaction Documents to which Parent is a party and (z) such
Surviving Entity delivers to the Issuer and its assignees an opinion of
counsel that such Surviving Entity is duly organized and validly
existing under the laws of its organization, has duly executed and
delivered such supplemental agreement, and such supplemental agreement
is a valid and binding obligation of such Surviving Entity, enforceable
against such Surviving Entity in accordance with its terms (subject to
customary exceptions relating to bankruptcy and equitable principles)
and covering such other matters as the Issuer or its assignees may
reasonably request;
(ii) all actions necessary to maintain the perfection of the
security interests or ownership interests of the Issuer in the
Purchased Assets in connection with such consolidation, merger,
conveyance or transfer as may be reasonably requested by the Issuer
and its assignees have been taken, as evidenced by an opinion of
counsel reasonably satisfactory to Issuer and its assignees; and
(iii) no Purchase Termination Event, Unmatured Purchase
Termination Event, Servicer Default, Unmatured Servicer Default,
Amortization Event, Unmatured Amortization Event, Event of Default or
event that with the passage of time or the giving of notice, or both,
would become an Event of Default, would result from such merger,
consolidation, conveyance or transfer.
10
(g) Separate Existence of the Transaction Parties. The Parent
----------------------------------------------
hereby acknowledges that the Indenture Trustee and the Noteholders are entering
into the transactions contemplated by the Transaction Documents in reliance not
only upon the Issuer's identity as a legal entity that is separate from the
Transferor, the Seller, the Parent and the other members of the Parent
Affiliated Group, but also on the understanding that the members of the Parent
Affiliated Group associated with the Issuer will seek to maintain their separate
existence from each other in order to ensure that the Purchased Assets sold by
any Transaction Party are sold in a true sale such that the Issuer's right,
title and interest in and to such Purchased Assets is free from the claim of any
creditors of the Originator, the Seller and/or the Transferor, as described in
that certain legal opinion (the "Bankruptcy Opinion") from Xxxxxxx, Xxxx LLP
------------------
dated July 31, 2001 with respect to certain bankruptcy issues. Parent hereby
represents and warrants that, as of the date hereof, the factual assumptions set
forth in the Bankruptcy Opinion are true and accurate in all material respects
and further covenants that, from and after the date of execution and delivery of
this Agreement, Parent will take all reasonable steps including, without
limitation, all steps that Issuer or any assignee of Issuer may from time to
time reasonably request, to operate, and to cause each of its Subsidiaries and
Affiliates to operate, in a manner consistent with the assumptions set forth in
the Bankruptcy Opinion. Without limiting the foregoing, Parent shall, so long as
the Transaction Documents remain in effect, cause each of itself, the Seller,
the Transferor, NF Industries, Inc, the SPC Member and the Issuer (each an
"Entity"): (1) to continue to be, duly incorporated or formed, in legal
------
existence and in good standing under the laws of its state of incorporation or
formation; (2) to observe all requisite corporate or limited liability company
formalities and procedures, where relevant and applicable thereto, including the
retention of minutes of meetings and other proceedings of its stockholder(s) and
Board of Directors or members and Board of Managers, as the case may be; (3) to
maintain separate and accurate accounts, books, records and financial
statements; (4) not to commingle its bank accounts, money and other assets with
that of another Entity or, where relevant, of any of its equity holders, except
that the members of the Parent Affiliated Group may maintain concentration
accounts and other accounts with financial institutions in respect of which they
will maintain accurate records of all inter-company debits and credits and from
which funds will be transferred to the separate bank accounts of the members of
the Parent Affiliated Group as their needs require; (5) to act solely in its own
name, through its own officials or representatives where relevant, and not hold
itself as a "division" or "part" of another Entity; (6) to conduct its business
and daily operations independently, free from the dictates of another Entity,
except to the extent that any Entity, holding the equity of another Entity, acts
solely in that capacity or in the capacity as a managing member of any Entity
which is a limited liability company, sensitive to any fiduciary duties to the
other Entity and, where and when relevant, its creditors; (7) to allocate fairly
any overhead for shared office space or business facilities or equipment shared
with another Entity; (8) not to make any loans, gifts or fraudulent conveyances
to any other Entity, except that any Entity, unless otherwise prohibited by the
Transaction Documents, may make loans to one another and may make capital
contributions and/or declare dividends and/or returns of equity and which will
be properly evidenced in their respective corporate or limited liability company
records and which will otherwise comply with all necessary corporate or other
organizational formalities regarding such contributions, dividends or other
returns of equity and (9) so long as the Transaction Documents remain in effect
(except, in the case of the Transferor, to the extent contemplated therein),
cause or seek the dissolution or winding up, in whole or in part, of any other
Entity.
11
(h) Limitation on Transactions with the Issuer. Enter into, or
------------------------------------------
be a party to any transaction with the Issuer, except for:
(i) the transactions contemplated by this Agreement, the
Transfer Agreements and the other Transaction Documents (including any
intercompany notes contemplated thereunder);
(ii) to the extent not otherwise prohibited under the
Receivables Purchase Agreement, other transactions in the nature of
employment contracts and directors' fees, upon fair and reasonable
terms materially no less favorable to the Issuer than would be obtained
in a comparable arm's-length transaction with a Person not an
Affiliate; and
(iii) transactions between the Issuer and the Parent, which
transactions consist of ordinary course of business transactions
between a parent corporation and its Subsidiary.
SECTION 7. Payments Free and Clear of Taxes, Etc. (a) Any and
-------------------------------------
all payments made by the Parent hereunder 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 Indemnified Party, taxes imposed on its income
and franchise taxes imposed on it by the jurisdiction under the laws of which
such Indemnified Party is organized (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Parent shall be required by law to deduct any
-----
Taxes from or in respect of any sum payable hereunder to any Indemnified Party,
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 7) such Indemnified Party receives an amount equal to
---------
the sum it would have received had no such deductions been made, (ii) the Parent
shall make such deductions and (iii) the Parent shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Parent agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
-----------
(c) Without prejudice to the survival of any other agreement of
the Parent hereunder, the agreements and obligations of the Parent contained in
this Section 7 shall survive any termination of the Receivables Purchase
--------
Agreement.
SECTION 8. Consent to Jurisdiction. THE PARENT HEREBY
------------------------
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW
YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND HEREBY (A) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR
FEDERAL COURT; (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
12
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING; AND (C) IRREVOCABLY APPOINTS CORPORATION SERVICE
COMPANY (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 00 XXXXX
--------------
XXXXXX, XXXXXX, XXX XXXX 00000-0000, XXXXXX XXXXXX OF AMERICA, AS ITS AGENT TO
RECEIVE ON BEHALF OF IT SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY
OTHER PROCESS THAT MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE
MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS IN CARE OF THE
PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND THE PARENT HEREBY
IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON
ITS BEHALF. THE PARENT AGREES TO ENTER INTO ANY AGREEMENT RELATING TO SUCH
APPOINTMENT THAT THE PROCESS AGENT MAY CUSTOMARILY REQUIRE AND TO PAY THE
PROCESS AGENT'S CUSTOMARY FEES UPON DEMAND. AS AN ALTERNATIVE METHOD OF SERVICE,
THE PARENT ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO THE
PARENT AT THE ADDRESS SPECIFIED ON THE SIGNATURE PAGE HEREOF. NOTHING IN THIS
SECTION 8 SHALL AFFECT THE RIGHT OF EITHER THE PARENT OR ANY BENEFICIARY OF THIS
---------
AGREEMENT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF EITHER THE PARENT OR ANY BENEFICIARY OF THIS AGREEMENT TO BRING ANY
ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 9. Amendments, Etc. No amendment or waiver of any
----------------
provision of this Agreement or consent to any departure by the Parent herefrom
shall be effective unless in a writing signed by the Issuer and its successors
and assigns (and, in the case of any amendment, also signed by the Parent), and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 10. Address for Notices. All notices and other
-----------------------
communications hereunder shall be in writing (which shall include facsimile or
electronic mail communication) and faxed, delivered or sent electronically, if
to the Parent, at its address set forth below its name on the signature page
hereto, and if to any Indemnified Party, at its address set forth in the
Receivables Purchase Agreement, or if sent electronically to the Parent, the
Issuer or the Indenture Trustee, to such e-mail addresses as such parties
provide for such purpose, or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. Notices and
communications by facsimile shall be effective when sent, and notices and
communications sent by other means shall be effective when received.
SECTION 11. No Waiver; Remedies. No failure on the part of any
-------------------
Indemnified Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
13
SECTION 12. Continuing Agreement; Assignments under Receivables
----------------------------------------------------
Purchase Agreement. This Agreement is a continuing agreement and shall (i)
-------------------
remain in full force and effect until the latest of (x) the payment and
performance in full of the Obligations and the payment of all other amounts
payable under this Agreement (y) the payment in full of all amounts payable to
the Indemnified Parties under each Transaction Document and (z) the Final Payout
Date, (ii) be binding upon the Parent, its successors and permitted assigns, and
(iii) inure to the benefit of, and be enforceable by, the Indemnified Parties
and each of their respective successors, transferees and assigns.
SECTION 13. Acknowledgement and Consent.
---------------------------
(a) The Parent acknowledges that, the Issuer has pledged all of
its right, title and interest in the Purchased Assets to the Indenture Trustee
pursuant to the Indenture. The Parent acknowledges and agrees to such pledge by
the Issuer and consents to the assignment by the Issuer of all or any portion of
its right, title and interest in, to and under this Agreement and the other
Transaction Documents and all of the Issuer's rights, remedies, powers and
privileges and all claims of the Issuer against the Parent under or with respect
to this Agreement and the other Transaction Documents (whether arising pursuant
to the terms of this Agreement or otherwise available at law or in equity),
including without limitation (whether or not any Purchase Termination Event,
Unmatured Purchase Termination Event, Servicer Default, Unmatured Servicer
Default, Amortization Event, Unmatured Amortization Event, Event of Default or
event that with the passage of time or the giving of notice, or both, would
become an Event of Default, has occurred and is continuing) (i) the right of the
Issuer at any time to enforce this Agreement against the Parent and the
obligations of the Parent hereunder and (ii) the right at any time to give or
withhold any and all consents, requests, notices, directions, approvals,
demands, extensions or waivers under or with respect to this Agreement, any
other Transaction Document or the obligations in respect of the Parent
thereunder, all of which rights, remedies, powers, privileges and claims may be
exercised and/or enforced by the Issuer's successors and assigns to the same
extent as the Issuer may do.
(b) The Parent hereby agrees to execute all agreements,
instruments and documents and to take all other actions that the Issuer or its
assignees reasonably determines are necessary or appropriate to evidence its
consent described in Section 13(a). The Parent hereby acknowledges and agrees
------------
that the Issuer may assign to the Issuer's successors and assigns such rights
and interests granted by the Parent to the Issuer hereunder and agrees to
cooperate fully with the Issuer and the Indenture Trustee in the exercise of
such rights.
SECTION 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES).
SECTION 15. Waiver of Jury Trial. Each of the Parent and the
--------------------
Indemnified Parties (in accepting this Agreement) irrevocably waives all right
to trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the
Transaction Documents, the Purchased Interests or the actions of the
14
Issuer, its successors and assigns or any other Indemnified Party in the
negotiation, administration or enforcement thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the Parent has cause this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
LEVI XXXXXXX & CO.
By_______________________________
Name:
Title:
Address: 0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer's Department LS/4
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
