EXHIBIT 99.3
CREDIT AGREEMENT
Dated as of September 29, 2003
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
and
BANK OF AMERICA, N.A.
AS THE AGENT
and
LEVI XXXXXXX & CO.
and
LEVI XXXXXXX FINANCIAL CENTER CORPORATION
AS THE BORROWERS
FLEET RETAIL FINANCE INC.
AS SOLE SYNDICATION AGENT
GENERAL ELECTRIC CAPITAL CORPORATION
XXXXX FARGO FOOTHILL, LLC
XX XXXXXX XXXXX BANK
AS CO-DOCUMENTATION AGENTS
BANC OF AMERICA SECURITIES LLC
AS SOLE LEAD ARRANGER AND SOLE BOOK MANAGER
TABLE OF CONTENTS
PAGE
ARTICLE 1 LOANS AND LETTERS OF CREDIT..............................1
1.1 Total Facility...............................................1
1.2 Revolving Loans..............................................2
1.3 Letters of Credit............................................5
1.4 Bank Products................................................8
1.5 Relationship Between the Borrowers...........................9
ARTICLE 2 INTEREST AND FEES.......................................14
2.1 Interest....................................................14
2.2 Continuation and Conversion Elections.......................14
2.3 Maximum Interest Rate.......................................16
2.4 Unused Line Fee.............................................16
2.5 Other Fees..................................................16
2.6 Letter of Credit Fee........................................16
ARTICLE 3 PAYMENTS AND PREPAYMENTS................................17
3.1 Revolving Loans.............................................17
3.2 Termination of Facility; Reduction of Commitments...........17
3.3 Prepayments.................................................18
3.4 LIBOR Rate Revolving Loan Prepayments.......................18
3.5 Payments by the Borrowers...................................19
3.6 Payments as Revolving Loans.................................19
3.7 Apportionment, Application and Reversal of Payments.........19
3.8 Indemnity for Returned Payments.............................20
3.9 Agent's and Lenders' Books and Records; Monthly Statements..20
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY..................21
4.1 Taxes.......................................................21
4.2 Illegality..................................................22
4.3 Increased Costs and Reduction of Return.....................22
4.4 Funding Losses..............................................23
4.5 Inability to Determine Rates................................24
4.6 Certificates of Agent.......................................24
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TABLE OF CONTENTS
(continued)
PAGE
4.7 Survival....................................................24
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.......24
5.1 Books and Records...........................................24
5.2 Financial Information.......................................24
5.3 Notices to the Lenders......................................27
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS..................29
6.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents............................30
6.2 Validity and Priority of Security Interest..................30
6.3 Organization and Qualification..............................30
6.4 Corporate Name; Prior Transactions..........................30
6.5 Subsidiaries................................................30
6.6 Financial Statements and Projections........................31
6.7 Tax Shelter Regulations.....................................31
6.8 Solvency....................................................32
6.9 Debt........................................................32
6.10 Distributions...............................................32
6.11 Real Estate; Leases.........................................32
6.12 Proprietary Rights..........................................32
6.13 Trade Names.................................................32
6.14 Litigation..................................................32
6.15 Labor Disputes..............................................33
6.16 Environmental Laws..........................................33
6.17 No Violation of Law.........................................33
6.18 No Default..................................................33
6.19 ERISA Compliance............................................33
6.20 Taxes.......................................................34
6.21 Regulated Entities..........................................34
6.22 Use of Proceeds; Margin Regulations.........................34
6.23 No Material Adverse Change..................................35
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TABLE OF CONTENTS
(continued)
PAGE
6.24 Full Disclosure.............................................35
6.25 Bank Accounts...............................................35
6.26 Governmental Authorization..................................35
6.27 Materially Adverse Agreements...............................35
6.28 Extraordinary Events........................................35
6.29 Conduct of Business.........................................35
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS......................36
7.1 Taxes and Other Obligations.................................36
7.2 Legal Existence and Good Standing...........................36
7.3 Compliance with Law and Agreements; Maintenance of Licenses.36
7.4 Maintenance of Property; Inspection of Property.............36
7.5 Insurance...................................................37
7.6 Insurance and Condemnation Proceeds.........................37
7.7 Environmental Laws..........................................38
7.8 Compliance with ERISA.......................................38
7.9 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and Future
Subsidiaries................................................38
7.10 Matters Relating to Additional Real Property Collateral.....40
7.11 Post Closing Actions........................................41
7.12 Transactions Affecting Collateral or Obligations............42
7.13 Investment Banking and Finder's Fees........................42
7.14 LSFCC Subsidiaries..........................................43
7.15 Fiscal Year.................................................43
7.16 Liens.......................................................43
7.17 Investments.................................................45
7.18 Debt........................................................47
7.19 Fundamental Changes.........................................50
7.20 Dispositions................................................51
7.21 Restricted Payments.........................................53
7.22 Change in Nature of Business................................54
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TABLE OF CONTENTS
(continued)
PAGE
7.23 Transactions with Affiliates................................54
7.24 Burdensome Agreements.......................................54
7.25 Lease Obligations...........................................55
7.26 Amendments of Certain Documents.............................55
7.27 Prepayments, Etc., of Debt..................................55
7.28 Negative Pledge.............................................55
7.29 Restricted Subsidiaries.....................................56
7.30 Amendments of Documents Relating to Debt and Receivables....56
7.31 Consolidated Fixed Charge Coverage Ratio....................57
7.32 Use of Proceeds.............................................57
7.33 Reserves for Outstanding Notes..............................57
7.34 Further Assurances..........................................58
ARTICLE 8 CONDITIONS OF LENDING...................................58
8.1 Conditions Precedent to Making of Loans on the Closing Date.58
8.2 Conditions Precedent to Each Loan...........................60
ARTICLE 9 DEFAULT; REMEDIES.......................................61
9.1 Events of Default...........................................61
9.2 Remedies....................................................63
ARTICLE 10 TERM AND TERMINATION....................................65
10.1 Term and Termination........................................65
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS;
SUCCESSORS..............................................65
11.1 Amendments and Waivers......................................65
11.2 Assignments; Participations.................................67
ARTICLE 12 THE AGENT...............................................69
12.1 Appointment and Authorization...............................69
12.2 Delegation of Duties........................................69
12.3 Liability of Agent..........................................69
12.4 Reliance by Agent...........................................70
12.5 Notice of Default...........................................70
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TABLE OF CONTENTS
(continued)
PAGE
12.6 Credit Decision.............................................70
12.7 Indemnification.............................................71
12.8 Agent in Individual Capacity................................71
12.9 Successor Agent.............................................71
12.10 Withholding Tax.............................................72
12.11 Collateral Matters..........................................73
12.12 Restrictions on Actions by Lenders; Sharing of Payments.....74
12.13 Agency for Perfection.......................................75
12.14 Payments by Agent to Lenders................................75
12.15 Settlement..................................................75
12.16 Letters of Credit; Intra-Lender Issues......................78
12.17 Concerning the Collateral and the Related Loan Documents....80
12.18 Field Audit and Examination Reports; Disclaimer by Lenders..81
12.19 Relation Among Lenders......................................82
12.20 Co-Agents...................................................82
ARTICLE 13 MISCELLANEOUS...........................................82
13.1 No Waivers; Cumulative Remedies.............................82
13.2 Severability................................................83
13.3 Governing Law; Choice of Forum; Service of Process..........83
13.4 WAIVER OF JURY TRIAL........................................84
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TABLE OF CONTENTS
(continued)
PAGE
13.5 Survival of Representations and Warranties..................85
13.6 Other Security and Guaranties...............................85
13.7 Fees and Expenses...........................................85
13.8 Notices.....................................................86
13.9 Waiver of Notices...........................................87
13.10 Binding Effect..............................................87
13.11 Indemnity of the Agent and the Lenders by the Borrowers.....87
13.12 Limitation of Liability.....................................88
13.13 Final Agreement.............................................88
13.14 Counterparts; Effectiveness of Signatures...................89
13.15 Captions....................................................89
13.16 Right of Setoff.............................................89
13.17 Confidentiality.............................................89
13.18 Conflicts with Other Loan Documents.........................90
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ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT B - FINANCIAL STATEMENTS
EXHIBIT C - FORM OF NOTICE OF BORROWING
EXHIBIT D - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT E - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT F - FORM OF PLEDGE AND SECURITY AGREEMENT
EXHIBIT G - FORM OF SUBSIDIARY GUARANTY
EXHIBIT H - FORM OF COMPLIANCE CERTIFICATE
SCHEDULE 1.1 - EXISTING LETTERS OF CREDIT
SCHEDULE 1.2 - LENDERS' COMMITMENTS
SCHEDULE 6.4 - CORPORATE OR FICTITIOUS NAMES
SCHEDULE 6.5 - SUBSIDIARIES
SCHEDULE 6.9 - DEBT
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - THIRD PARTY PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR DISPUTES
SCHEDULE 6.19 - ERISA COMPLIANCE
SCHEDULE 6.25 - BANK ACCOUNTS
SCHEDULE 7.11(b) - MATERIAL FOREIGN SUBSIDIARIES
SCHEDULE 7.16 - EXISTING LIENS
SCHEDULE 7.17 - EXISTING INVESTMENTS
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CREDIT AGREEMENT
This Credit Agreement, dated as of September 29, 2003, (this
"AGREEMENT") among the financial institutions from time to time parties hereto
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "LENDER" and
collectively as the "LENDERS"), Bank of America, N.A. with an office at 00 Xxxxx
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, as agent for the Lenders (in
its capacity as agent, the "AGENT"), Levi Xxxxxxx & Co., a Delaware corporation,
with offices at 0000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("LS&CO")
and Levi Xxxxxxx Financial Center Corporation, a California corporation, with
offices at 0000 Xxxx Xxxxx, Xxxxxx, Xxxxxx 00000 ("LSFCC" and, together with
LS&Co, the "BORROWERS" and each a "BORROWER").
W I T N E S S E T H:
WHEREAS, the Borrowers have requested the Lenders to make
available to the Borrowers a revolving line of credit for loans and letters of
credit in an amount not to exceed $650,000,000, and which extensions of credit
the Borrowers will use for the purposes permitted hereunder;
WHEREAS, the Borrowers will secure all of the Obligations
hereunder and under the other Loan Documents by granting to the Agent, on behalf
of the Lenders, a first priority lien on certain of their respective real,
personal and mixed property, including a pledge of certain of the capital stock
of certain of their respective Subsidiaries; and
WHEREAS, the Guarantors and the Limited Guarantors have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to the Agent, on behalf of the Lenders, a
first priority lien on certain of their respective real, personal and mixed
property, including a pledge of certain of the capital stock of certain of their
respective Subsidiaries.
WHEREAS, capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings ascribed thereto in Annex A
which is attached hereto and incorporated herein; the rules of construction
contained therein shall govern the interpretation of this Agreement, and all
Annexes, Exhibits and Schedules attached hereto are incorporated herein by
reference;
WHEREAS, the Lenders have agreed to make available to the
Borrowers a revolving credit facility upon the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Borrowers each hereby agree as follows.
ARTICLE 1
LOANS AND LETTERS OF CREDIT
1.1 TOTAL FACILITY. Subject to all of the terms and conditions of this
Agreement, the Lenders agree to make available a total credit facility of up to
$650,000,000 (the "TOTAL FACILITY") to the Borrowers from time to time during
the term of this Agreement. The Total Facility shall be composed of a revolving
line of credit consisting of Revolving Loans and Letters of Credit.
1.2 REVOLVING LOANS.
(a) AMOUNTS. Subject to the satisfaction of the conditions precedent set
forth in ARTICLE 8, each Lender severally, but not jointly, agrees, upon LS&Co's
request from time to time on any Business Day during the period from the Closing
Date to the Termination Date, to make revolving loans (the "REVOLVING LOANS") to
the Borrower designated by LS&Co in amounts not to exceed such Lender's Pro Rata
Share of Availability, except for Non-Ratable Loans and Agent Advances. The
Lenders, however, in their unanimous discretion, may elect to make Revolving
Loans or issue or arrange to have issued Letters of Credit in excess of the
Borrowing Base on one or more occasions, but if they do so, neither the Agent
nor the Lenders shall be deemed thereby to have changed the limits of the
Borrowing Base or to be obligated to exceed such limits on any other occasion.
If the Aggregate Revolver Outstandings would exceed Availability after giving
effect to any Borrowing, the Lenders may refuse to make or may otherwise
restrict the making of Revolving Loans as the Lenders determine until such
excess has been eliminated, subject to the Agent's authority, in its sole
discretion, to make Agent Advances pursuant to the terms of SECTION 1.2(I).
Notwithstanding anything to the contrary herein, in no case shall the Aggregate
Revolver Outstandings at any time exceed the Maximum Revolver Amount.
(b) PROCEDURE FOR BORROWING.
(1) Each Borrowing shall be made upon LS&Co's irrevocable written
notice (including any electronic medium) delivered to the Agent in the form
of a notice of borrowing ("NOTICE OF BORROWING"), which must be received by
the Agent prior to (i) 12:00 noon (Pacific time) three Business Days prior
to the requested Funding Date, in the case of LIBOR Rate Revolving Loans
and (ii) 9:00 a.m. (Pacific time) on the requested Funding Date, in the
case of Base Rate Revolving Loans, specifying:
(A) the Borrower;
(B) the amount of the Borrowing, which in the case of a LIBOR
Rate Revolving Loan must equal or exceed $10,000,000 (and increments
of $1,000,000 in excess of such amount);
(C) the requested Funding Date, which must be a Business Day;
(D) whether the Revolving Loans requested are to be Base Rate
Revolving Loans or LIBOR Rate Revolving Loans (and if not specified,
it shall be deemed a request for a Base Rate Revolving Loan); and
(E) the duration of the Interest Period for LIBOR Rate Revolving
Loans (and if not specified, it shall be deemed a request for an
Interest Period of one month);
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provided, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowing will consist of Base Rate Revolving Loans only.
(2) In lieu of delivering a Notice of Borrowing, LS&Co may give the
Agent telephonic notice of such request for advances to the Designated
Account on or before the deadline set forth above. The Agent at all times
shall be entitled to rely on such telephonic notice in making such
Revolving Loans, regardless of whether any written confirmation is
received.
(3) Without limiting the provisions of SECTIONS 8.2 and 9.2, LS&Co
shall have no right to request a LIBOR Rate Revolving Loan while a Default
or Event of Default has occurred and is continuing.
(c) RELIANCE UPON AUTHORITY. Prior to the Closing Date, LS&Co shall deliver
to the Agent a notice setting forth the account of the Borrowers (the
"DESIGNATED ACCOUNT") to which the Agent is authorized to transfer the proceeds
of the Revolving Loans requested hereunder. LS&Co may designate one or more
replacement accounts from time to time by written notice to the Agent. In
addition, prior to the Closing Date, LS&Co shall deliver to the Agent a list of
individuals who are authorized to give instructions hereunder to the Agent on
behalf of LS&Co (each a "DESIGNATED PERSON", and collectively, the "DESIGNATED
PERSONS"). LS&Co may change the list of Designated Persons from time to time by
written notice to the Agent. Any such Designated Account must be reasonably
satisfactory to the Agent. The Agent is entitled to rely conclusively on any
Person's request for Revolving Loans on behalf of LS&Co, so long as the proceeds
thereof are to be transferred to the Designated Account. The Agent has no duty
to verify the identity of any Person representing himself or herself as a Person
authorized by LS&Co to make such requests on its behalf, other than to confirm
that such Person is representing himself or herself as a Designated Person.
(d) NO LIABILITY. The Agent shall not incur any liability to any Borrower
as a result of acting upon any notice referred to in SECTIONS 1.2(B) and (C),
which the Agent believes in good faith to have been given by a Person
representing himself or herself as a Designated Person. The crediting of
Revolving Loans to the Designated Account conclusively establishes the
obligation of the Borrowers to repay such Revolving Loans as provided herein.
(e) NOTICE IRREVOCABLE. Any Notice of Borrowing (or telephonic notice in
lieu thereof) made pursuant to SECTION 1.2(B) shall be irrevocable. The
Borrowers shall be bound to borrow the funds requested therein in accordance
therewith.
(f) AGENT'S ELECTION. Promptly after receipt of a Notice of Borrowing (or
telephonic notice in lieu thereof), the Agent shall elect to have the terms of
SECTION 1.2(G) or the terms of SECTION 1.2(H) apply to such requested Borrowing.
If the Bank declines in its sole discretion to make a Non-Ratable Loan pursuant
to SECTION 1.2(H), the terms of SECTION 1.2(G) shall apply to the requested
Borrowing; PROVIDED that to the extent such notice includes a request for LIBOR
Rate Revolving Loans and the Agent elects to have the terms of SECTION 1.2(H)
apply to such requested Borrowing, notwithstanding the terms of SECTION 1.2(H)
such requested Borrowing shall for all purposes constitute LIBOR Rate Revolving
Loans hereunder.
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(g) MAKING OF REVOLVING LOANS. If the Agent elects to have the terms of
this SECTION 1.2(G) apply to a requested Borrowing, then promptly after receipt
of a Notice of Borrowing or telephonic notice in lieu thereof, the Agent shall
notify the Lenders by telecopy, telephone or e-mail of the requested Borrowing.
Each Lender shall transfer its Pro Rata Share of the requested Borrowing
available to the Agent in immediately available funds, to the account from time
to time designated by the Agent, not later than 12:00 noon (Pacific time) on the
applicable Funding Date. After the Agent's receipt of all proceeds of such
Revolving Loans, the Agent shall make the proceeds of such Revolving Loans
available to the applicable Borrower on the applicable Funding Date by
transferring same day funds to the Designated Account; PROVIDED, HOWEVER, that
the amount of Revolving Loans so made on any date shall not exceed the
Availability on such date.
(h) MAKING OF NON-RATABLE LOANS.
(A) If the Agent elects, with the consent of the Bank, to have the
terms of this SECTION 1.2(H) apply to a requested Borrowing, the Bank shall
make a Revolving Loan in the amount of that Borrowing available to the
applicable Borrower on the applicable Funding Date by transferring same day
funds to the Designated Account. Each Revolving Loan made solely by the
Bank pursuant to this Section is herein referred to as a "NON-RATABLE
Loan", and such Revolving Loans are collectively referred to as the
"NON-RATABLE LOANS." Each Non-Ratable Loan shall be subject to all the
terms and conditions applicable to other Revolving Loans except that all
payments thereon shall be payable to the Bank solely for its own account.
The aggregate amount of Non-Ratable Loans outstanding at any time shall not
exceed $65,000,000. The Agent shall not request the Bank to make any
Non-Ratable Loan if (1) the Agent has received written notice from any
Lender that one or more of the applicable conditions precedent set forth in
ARTICLE 8 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (2) the requested Borrowing would exceed
Availability on that Funding Date.
(B) The Non-Ratable Loans shall be secured by the Agent's Liens in and
to the Collateral and shall constitute Base Rate Revolving Loans and
Obligations hereunder.
(i) AGENT ADVANCES.
(A) Subject to the limitations set forth below, the Agent is
authorized by the Borrowers and the Lenders, from time to time in the
Agent's sole discretion, (A) after the occurrence of a Default or an Event
of Default, or (B) at any time that any of the other conditions precedent
set forth in ARTICLE 8 have not been satisfied, to make Base Rate Revolving
Loans to the Borrowers on behalf of the Lenders in an aggregate amount
outstanding at any time not to exceed seven and one half percent (7.5%) of
the Borrowing Base but not in excess of the Maximum Revolver Amount which
the Agent, in its reasonable business judgment, deems necessary or
desirable (1) to preserve or protect the Collateral, or any portion
thereof, (2) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (3) to pay any other
amount chargeable to any Borrower pursuant to the terms of this Agreement,
including costs, fees and expenses as described in SECTION 13.7 (any of
such advances are herein referred to as "AGENT ADVANCES"); PROVIDED, that
the Majority Lenders
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may at any time revoke the Agent's authorization to make Agent Advances.
Any such revocation must be in writing and shall become effective
prospectively upon the Agent's receipt thereof.
(B) The Agent Advances shall be secured by the Agent's Liens in and to
the Collateral and shall constitute Base Rate Revolving Loans and
Obligations hereunder.
1.3 LETTERS OF CREDIT.
(a) AGREEMENT TO ISSUE OR CAUSE TO ISSUE. Subject to the terms and
conditions of this Agreement, the Agent agrees (i) to cause the Letter of Credit
Issuer to issue for the account of the Borrower designated by LS&Co (or, if
requested by LS&Co, for the account of both LS&Co and any one of its
Subsidiaries) one or more commercial/documentary and standby letters of credit
(or any other customary credit support instrument that the Letter of Credit
Issuer may from time to time be willing to provide) (including any Existing
Letter of Credit, each a "LETTER OF CREDIT") and/or (ii) to provide credit
support or other enhancement to a Letter of Credit Issuer acceptable to the
Agent, which issues a Letter of Credit for the account of the Borrower
designated by LS&Co (any such credit support or enhancement being herein
referred to as a "CREDIT SUPPORT") from time to time during the term of this
Agreement. All Existing Letters of Credit shall be deemed to have been issued
pursuant hereto, and from and after the Closing Date shall be subject to and
governed by the terms and conditions hereof.
(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have any
obligation to issue or cause to be issued any Letter of Credit or to provide
Credit Support for any Letter of Credit at any time if: (i) the maximum face
amount of the requested Letter of Credit is greater than the Unused Letter of
Credit Subfacility at such time; (ii) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
Borrowers in connection with the opening thereof would exceed Availability at
such time; or (iii) such Letter of Credit has an expiration date more than
twelve (12) months from the date of issuance for standby letters of credit and
one hundred eighty (180) days for documentary letters of credit. With respect to
any Letter of Credit which contains any "evergreen" or automatic renewal
provision, each Lender shall be deemed to have consented to any such extension
or renewal unless any such Lender shall have provided to the Agent, written
notice that it declines to consent to any such extension or renewal at least
thirty (30) days prior to the date on which the Letter of Credit Issuer is
entitled to decline to extend or renew the Letter of Credit. If all of the
requirements of this SECTION 1.3 are met and no Default or Event of Default has
occurred and is continuing, no Lender shall decline to consent to any such
extension or renewal.
(c) OTHER CONDITIONS. In addition to conditions precedent contained in
ARTICLE 8, the obligation of the Agent to issue or to cause to be issued any
Letter of Credit or to provide Credit Support for any Letter of Credit is
subject to the following conditions precedent having been satisfied in a manner
reasonably satisfactory to the Agent:
(1) LS&Co shall have delivered to the Letter of Credit Issuer, at such
times and in such manner as such Letter of Credit Issuer may prescribe, an
application in form and substance satisfactory to such Letter of Credit
Issuer and reasonably satisfactory to the Agent for the issuance of the
Letter of Credit (but in any case to include, without limitation, the
5
Person or Persons for the account of which the Letter of Credit is to be
issued, the original face amount of the Letter of Credit requested, the
Business Day on which the requested Letter of Credit is to be issued,
whether the Letter of Credit may be drawn in a single or in partial draws,
the Business Day on which the requested Letter of Credit is to expire, the
purpose for which the Letter of Credit is to be issued, and the beneficiary
of the requested Letter of Credit) and such other documents as may be
required pursuant to the terms thereof, and the form, terms and purpose of
the proposed Letter of Credit shall be reasonably satisfactory to the Agent
and the Letter of Credit Issuer; and
(2) As of the date of issuance, no order of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain
money center banks generally from issuing letters of credit of the type and
in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall
prohibit, or request that the proposed Letter of Credit Issuer refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit.
(d) ISSUANCE OF LETTERS OF CREDIT.
(1) REQUEST FOR ISSUANCE. LS&Co must notify the Agent of a requested
Letter of Credit at least two (2) Business Days prior to the proposed
issuance date by providing the Agent with a copy of the application
delivered to the Letter of Credit Issuer under SECTION 1.3(C)(1). Such
notice shall be irrevocable, and LS&Co shall attach to such notice the
proposed form of the Letter of Credit.
(2) RESPONSIBILITIES OF THE AGENT; ISSUANCE. As of the Business Day
immediately preceding the requested issuance date of the Letter of Credit,
the Agent shall determine the amount of the applicable Unused Letter of
Credit Subfacility and Availability. If (i) the face amount of the
requested Letter of Credit is less than the Unused Letter of Credit
Subfacility and (ii) the amount of such requested Letter of Credit and all
commissions, fees, and charges due from the Borrowers in connection with
the opening thereof would not exceed Availability, the Agent shall cause
the Letter of Credit Issuer to issue the requested Letter of Credit on the
requested issuance date so long as the other conditions hereof are met. If
the conditions in the foregoing clauses (i) and (ii) are not satisfied, the
Agent shall notify LS&Co on the Business Day immediately preceding the
requested issuance date that the Letter of Credit will not be issued.
(3) NO EXTENSIONS OR AMENDMENT. The Agent shall not be obligated to
cause the Letter of Credit Issuer to extend or amend any Letter of Credit
issued pursuant hereto unless the requirements of this SECTION 1.3 are met
as though a new Letter of Credit were being requested and issued.
(e) PAYMENTS PURSUANT TO LETTERS OF CREDIT. The Borrowers agree to
reimburse immediately the Letter of Credit Issuer for any draw under any Letter
of Credit and the Agent for the account of the Lenders upon any payment pursuant
to any Credit Support, and to pay the Letter of Credit Issuer the amount of all
other charges and fees payable to the Letter of Credit Issuer in connection with
6
any Letter of Credit immediately when due, irrespective of any claim, setoff,
defense or other right which any Borrower may have at any time against the
Letter of Credit Issuer or any other Person. Each drawing under any Letter of
Credit shall constitute a request by LS&Co, on behalf of the applicable Borrower
for whose account the Letter of Credit was issued, to the Agent for a Borrowing
of a Base Rate Revolving Loan in the amount of such drawing. The Funding Date
with respect to such Borrowing shall be the date of such drawing.
(f) EXONERATION; POWER OF ATTORNEY.
(1) ASSUMPTION OF RISK BY THE BORROWERS. As among the Borrowers, the
Lenders, and the Agent, the Borrowers, jointly and severally, assume all
risks of the acts and omissions of, or misuse of any of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Lenders and the
Agent shall not be responsible for: (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any
Person in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit, even
if it should prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective
for any reason; (C) the failure of the beneficiary of any Letter of Credit
to comply duly with conditions required in order to draw upon such Letter
of Credit; (D) 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; (E) errors in interpretation of technical
terms; (F) 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; (G) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of
Credit; (H) any consequences arising from causes beyond the control of the
Lenders or the Agent, including any act or omission, whether rightful or
wrongful, of any present or future DE JURE or DE FACTO Governmental
Authority or (I) the Letter of Credit Issuer's honor of a draw for which
the draw or any certificate fails to comply in any respect with the terms
of the Letter of Credit. None of the foregoing shall affect, impair or
prevent the vesting of any rights or powers of the Agent or any Lender
under this SECTION 1.3(F). Notwithstanding anything to the contrary
contained in this SECTION 1.3(F)(1), the Borrowers shall retain any and all
rights they may have against the Letter of Credit Issuer for any liability
arising solely out of the gross negligence or willful misconduct of the
Letter of Credit Issuer, as determined by a final judgment of a court of
competent jurisdiction.
(2) EXONERATION. Without limiting the foregoing, no action or omission
whatsoever by the Agent or any Lender (excluding any Lender in its capacity
as a Letter of Credit Issuer) pursuant to this SECTION 1.3 shall result in
any liability of the Agent or any Lender to any Borrower, or relieve any
Borrower of any of its obligations hereunder to any such Person.
(3) RIGHTS AGAINST LETTER OF CREDIT ISSUER. Nothing contained in this
Agreement is intended to limit any Borrower's rights, if any, with respect
to the Letter of Credit Issuer which arise as a result of the letter of
7
credit application and related documents executed by and between such
Borrower and the Letter of Credit Issuer.
(4) ACCOUNT PARTY. The Borrowers hereby authorize and direct any
Letter of Credit Issuer to name LS&Co or LSFCC, as the case may be, as the
"Account Party" therein and to deliver to the Agent all instruments,
documents and other writings and property received by the Letter of Credit
Issuer pursuant to the Letter of Credit, and to accept and rely upon the
Agent's instructions and agreements with respect to all matters arising in
connection with the Letter of Credit or the application therefor.
(g) CASH COLLATERAL; SUPPORTING LETTER OF CREDIT.
(1) Without prejudice to SECTION 1.3(G)(2), if any Letter of Credit or
Credit Support is outstanding on the date thirty (30) days prior to the
Stated Termination Date, then on such date the Borrowers shall immediately
pledge and deposit with the Agent, for the ratable benefit of the Agent and
the Lenders, as collateral for the Obligations relating to each Letter of
Credit or Credit Support then outstanding, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the Agent
(which documents are hereby consented to by the Lenders) in an amount equal
to one hundred and five percent (105%) of the greatest amount for which
such Letter of Credit or such Credit Support may be drawn plus any fees and
expenses associated with such Letter of Credit or such Credit Support. The
Borrowers hereby grant to the Agent, for the benefit of the Letter of
Credit Issuer and the Lenders, a security interest in all such cash,
deposit accounts and all balances therein and all proceeds of the
foregoing.
(2) If any Letter of Credit or Credit Support is outstanding on the
earlier of (i) the date thirty (30) days after the Stated Termination Date
and (ii) any date prior to the Stated Termination Date on which this
Agreement is terminated for any reason, then on such date the Borrowers
shall immediately deposit with the Agent, for the ratable benefit of the
Agent and the Lenders, with respect to each Letter of Credit or Credit
Support then outstanding, one or more standby letters of credit
(collectively, a "SUPPORTING LETTER OF CREDIT") in form and substance
satisfactory to the Agent, issued by an issuer satisfactory to the Agent in
an amount equal to the greatest amount for which such Letter of Credit or
such Credit Support may be drawn plus any fees and expenses associated with
such Letter of Credit or such Credit Support, under which Supporting Letter
of Credit the Agent is entitled to draw amounts necessary to reimburse the
Agent and the Lenders for payments to be made by the Agent and the Lenders
under such Letter of Credit or Credit Support and any fees and expenses
associated with such Letter of Credit or Credit Support. Such Supporting
Letter of Credit shall be held by the Agent, for the ratable benefit of the
Agent and the Lenders, as security for, and to provide for the payment of,
the aggregate undrawn amount of such Letters of Credit or such Credit
Support remaining outstanding.
(3) The agreements and obligations of each Borrower in this SECTION
1.3(G) shall survive termination of this Agreement and payment of all other
Obligations.
1.4 BANK PRODUCTS. LS&Co may request and the Agent or any Selected
Revolving Lender may, in its sole and absolute discretion, arrange for LS&Co,
any of its Material Domestic Subsidiaries or LSIFCS to obtain from the Bank or
8
the Bank's Affiliates, or such Selected Revolving Lender, Ordinary Course Hedge
Agreements, although LS&Co is not required to do so. LS&Co may request and the
Agent may, in its sole and absolute discretion, arrange for LS&Co or any of its
Subsidiaries to obtain from the Bank or the Bank's Affiliates Cash Management
Services, although LS&Co is not required to do so. If Ordinary Course Hedge
Agreements or Cash Management Services are provided by an Affiliate of the Bank
or any Selected Revolving Lender, as the case may be, the Borrowers agree to
indemnify and hold the Agent, the Bank and the Lenders harmless from any and all
costs and obligations now or hereafter incurred by the Agent, the Bank or any of
the Lenders related to such Ordinary Course Hedge Agreements or Cash Management
Services; PROVIDED, HOWEVER, nothing contained herein is intended to limit any
Borrower's rights, with respect to the Bank, the Bank's Affiliates or any
Selected Revolving Lender, if any, which arise as a result of the execution of
documents by and between such Borrower and the Bank or its Affiliates or any
Selected Revolving Lender, as the case may be, which relate to Ordinary Course
Hedge Agreements or Cash Management Services. The agreement contained in this
SECTION 1.4 shall survive termination of this Agreement. The Borrowers
acknowledge and agree that the obtaining of Ordinary Course Hedge Agreements or
Cash Management Services from the Bank, the Bank's Affiliates or any Selected
Revolving Lender, as the case may be, (a) is in the sole and absolute discretion
of the Bank, the Bank's Affiliates or the relevant Selected Revolving Lender, as
the case may be, and (b) is subject to all rules and regulations of the Bank,
the Bank's Affiliates or the relevant Selected Revolving Lender, as the case may
be.
1.5 RELATIONSHIP BETWEEN THE BORROWERS.
(a) ADMINISTRATIVE BORROWER. LSFCC hereby appoints LS&Co, and LS&Co shall
act under this Agreement, as the agent, attorney-in-fact and legal
representative of LSFCC for all purposes, including requesting Loans and
receiving account statements and other notices and communications to the
Borrowers (or any of them) from the Agent or any Lender. The Agent, the Letter
of Credit Issuer and the Lenders may rely, and shall be fully protected in
relying, on any Notice of Borrowing, Notice of Continuation/Conversion, request
for a Letter of Credit, disbursement instruction, report, information or any
other notice or communication made or given by LS&Co, whether in its own name,
as Borrowers' agent, on behalf of LSFCC or on behalf of the Borrowers, and
neither the Agent nor the Letter of Credit Issuer nor any Lender shall have any
obligation to make any inquiry or request any confirmation from or on behalf of
any other Borrower as to the binding effect on it of any such notice, request,
instruction, report, information, other notice or communications, nor shall the
joint and several character of the Borrowers' obligations hereunder be affected,
provided that the provisions of this SECTION 1.5(A) shall not be construed so as
to preclude any Borrower from taking actions permitted to be taken by a
"Borrower" hereunder.
(b) JOINT AND SEVERAL OBLIGATIONS. The obligations of the Borrowers
pursuant to the Loan Documents shall be joint and several. Each Borrower hereby
irrevocably and unconditionally guaranties, as primary obligor and not merely as
surety, the due and punctual payment in full of all Obligations of the other
Borrower when the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)).
9
(c) OBLIGATIONS ABSOLUTE. The obligations of each Borrower under this
SECTION 1.5 are irrevocable, absolute, independent and unconditional and shall
not be affected by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the
Obligations. In furtherance of the foregoing and without limiting the generality
thereof, each Borrower agrees that: (i) its obligation under this SECTION 1.5
with respect to the obligations of the other Borrower is a guaranty of payment
when due and not of collectibility; (ii) the Agent and any Lender may enforce
this obligation upon the occurrence of an Event of Default hereunder
notwithstanding the existence of any dispute between the other Borrower and the
Agent or any Lender with respect to the existence of such Event of Default;
(iii) the obligations of each Borrower hereunder are independent of each of the
obligations of the other Borrower under the Loan Documents and the obligations
of any other Person and a separate action or actions may be brought and
prosecuted against each Borrower whether or not any action is brought against
the other Borrower or any other Person and whether or not the other Borrower or
any other Person is joined in any such action or actions; and (iv) a payment of
a portion, but not all, of the Obligations by any Borrower shall in no way
limit, affect, modify or abridge the liability of such or any other Borrower for
any portion of the Obligations that has not been paid. Each Borrower agrees that
its obligation under this SECTION 1.5 with respect to the obligations of the
other Borrower is a continuing guaranty and shall be binding upon each Borrower
and its successors and assigns, and each Borrower irrevocably waives any right
to revoke its obligations under this SECTION 1.5 as to future transactions
giving rise to any Obligations.
(d) ACTIONS BY THE AGENT AND THE LENDERS. The Agent and any Lender may from
time to time, without notice or demand and without affecting the validity or
enforceability of this SECTION 1.5 or giving rise to any limitation, impairment
or discharge of any Borrower's liability hereunder, but subject to the
provisions of SECTION 11.1 (i) renew, extend, accelerate or otherwise change the
time, place, manner or terms of payment of the Obligations of the other Borrower
with the consent of such other Borrower, (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Obligations of the other Borrower or any agreement
relating thereto and/or subordinate the payment of the same to the payment of
any other obligations, (iii) request and accept other guaranties of the
Obligations of the other Borrower and take and hold security for the payment of
such Obligations, (iv) release, exchange, compromise, subordinate or modify,
with or without consideration, any security for payment of the Obligations of
the other Borrower, any other guaranties of such Obligations, or any other
obligation of any Person with respect to such Obligations, (v) enforce and apply
any security now or hereafter held from the other Borrower by or for the benefit
of the Agent or any Lender in respect of the Obligations of the other Borrower
and direct the order or manner of sale thereof, or exercise any other right or
remedy that the Agent or the Lenders, or any of them, may have against any such
security, in each case as the Agent or the Lenders in their discretion may
determine consistent with this Agreement and any applicable security agreement,
including foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable and (vi) exercise any other rights available to the Agent or the
Lenders, or any of them, under the Loan Documents.
(e) NO DISCHARGE. The obligations of each Borrower under this SECTION 1.5
shall be valid and enforceable and shall not be subject to any limitation,
impairment or discharge for any reason (other than payment in full of the
10
Obligations), including the occurrence of any of the following, whether or not
any Borrower shall have had notice or knowledge of any of them: (i) any failure
to assert or enforce or agreement not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the exercise
or enforcement of, any claim or demand or any right, power or remedy with
respect to the Obligations of the other Borrower or any agreement relating
thereto, or with respect to any other guaranty of or security for the payment of
such Obligations, (ii) any waiver or modification of, or any consent to
departure from, any of the terms or provisions of this Agreement or any of the
other Loan Documents or any agreement or instrument executed pursuant thereto,
or of any other guaranty or security for the Obligations of the other Borrower,
(iii) the Obligations of the other Borrower, or any agreement relating thereto,
at any time being found to be illegal, invalid or unenforceable in any respect,
(iv) the application of payments received from any source to the payment of
indebtedness other than the Obligations of the other Borrower, even though the
Agent or the Lenders, or any of them, might have elected to apply such payment
to any part or all of the Obligations of the other Borrower, (v) any failure to
perfect or continue perfection of a security interest in any collateral which
secures any of the Obligations of the other Borrower, (vi) any defenses,
set-offs or counterclaims which the other Borrower or any other Person may
assert against the Agent or any Lender in respect of the Obligations, including
but not limited to failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction and usury and
(vii) any other act or thing or omission, or delay to do any other act or thing,
which may or might in any manner or to any extent vary the risk of any Borrower
as an obligor in respect of the Obligations.
(f) WAIVERS. Each Borrower waives, for the benefit of the Agent and each
Lender: (i) any right to require the Agent or any Lender, as a condition of
payment or performance by such Borrower, to (A) proceed against the other
Borrower or any other Person, (B) proceed against or exhaust any security held
from the other Borrower or any other Person, (C) proceed against or have resort
to any balance of any deposit account or credit on the books of the Agent or any
Lender in favor of the other Borrower or any other Person, or (D) pursue any
other remedy in the power of the Agent or any Lender; (ii) any defense arising
by reason of the incapacity, lack of authority or any disability or other
defense of the other Borrower including any defense based on or arising out of
the lack of validity or the unenforceability of the Obligations or any agreement
or instrument relating thereto or by reason of the cessation of the liability of
the other Borrower from any cause other than payment in full of the Obligations;
(iii) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (iv) any defense based upon the
Agent's or any Lender's errors or omissions in the administration of the
Obligations, except behavior that amounts to gross negligence or willful
misconduct; (v) (A) any principles or provisions of law, statutory or otherwise,
that are or might be in conflict with the terms of this SECTION 1.5 and any
legal or equitable discharge of such Borrower's obligations hereunder, (B) the
benefit of any statute of limitations affecting such Borrower's liability
hereunder or the enforcement hereof, (C) any rights to set-offs, recoupments and
counterclaims and (D) promptness, diligence and any requirement that the Agent
or any Lender protect, secure, perfect or insure any Lien or any property
subject thereto; (vi) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction, including
acceptance of this SECTION 1.5, notices of default under this Agreement or any
agreement or instrument related thereto, notices of any renewal, extension or
modification of the Obligations or any agreement related thereto, notices of any
11
extension of credit to the other Borrower and notices of any of the matters
referred to in SECTIONS 1.5(D) and (e) and any right to consent to any thereof;
and (vii) to the fullest extent permitted by law, any defenses or benefits that
may be derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this SECTION
1.5.
As used in this paragraph, any reference to "the principal" includes each
Borrower and any reference to "the creditor" includes the Agent and each of the
Lenders. In accordance with Section 2856 of the California Civil Code each
Borrower waives any and all rights and defenses available to it by reason of
Sections 2787 to 2855, inclusive, 2899 and 3433 of the California Civil Code,
including any and all rights or defenses such Borrower may have because the
Obligations are secured by real property or by reason of protection afforded to
the principal with respect to any of the Obligations, or to any other guarantor
of any of the Obligations with respect to any of such guarantor's obligations
under its guaranty, in either case pursuant to the antideficiency or other laws
of the State of California limiting or discharging the principal's indebtedness
or such guarantor's obligations, including Section 580a, 580b, 580d or 726 of
the California Code of Civil Procedure. Consequently, among other things: (1)
the creditor may collect from such Borrower without first foreclosing on any
real or personal property collateral pledged by the principal; and (2) if the
creditor forecloses on any real property collateral pledged by the principal:
(x) the amount of the Obligations may be reduced only by the price for which the
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price and (y) the creditor may collect from such Borrower even if
the creditor, by foreclosing on the real property collateral, has destroyed any
right such Borrower may have to collect from the principal. This is an
unconditional and irrevocable waiver of any rights and defenses such Borrower
may have because the Obligations are secured by real property. Each Borrower
also waives all rights and defenses arising out of an election of remedies by
the creditor, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for an Obligation, has destroyed such
Borrower's rights of subrogation and reimbursement against the principal by the
operation of Section 580d of the Code of Civil Procedure or otherwise; and even
though that election of remedies by the creditor, such as nonjudicial
foreclosure with respect to security for an obligation of any other guarantor of
any of the Obligations, has destroyed such Borrower's rights of contribution
against such other Borrower or any other guarantor. No other provision of this
SECTION 1.5 shall be construed as limiting the generality of any of the
covenants and waivers set forth in this paragraph.
(g) BORROWERS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.; SUBORDINATION OF
OTHER OBLIGATIONS. Each Borrower waives any claim, right or remedy, direct or
indirect, that such Borrower now has or may hereafter have against the other
Borrower or any of its assets in connection with this SECTION 1.5 or the
performance by such Borrower of its obligations hereunder, in each case whether
such claim, right or remedy arises in equity, under contract, by statute
(including under California Civil Code Section 2847, 2848 or 2849), under common
law or otherwise and including (i) any right of subrogation, reimbursement or
indemnification that such Borrower now has or may hereafter have against the
other Borrower, (ii) any right to enforce, or to participate in, any claim,
right or remedy that the Agent or any Lender now has or may hereafter have
against the other Borrower and (iii) any benefit of, and any right to
participate in, any collateral or security now or hereafter held by the Agent or
any Lender. In addition, until the Obligations shall have been paid in full, the
Commitments shall have terminated and all Letters of Credit shall have expired
12
or been cancelled, each Borrower shall withhold exercise of any right of
contribution such Borrower may have against the other Borrower. Each Borrower
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification such Borrower may have against the other Borrower or against
any collateral or security, and any rights of contribution such Borrower may
have against such other Borrower, shall be junior and subordinate to any rights
the Agent or any Lender may have against such Borrower to all right, title and
interest the Agent or any Lender may have in any such collateral or security,
and to any right the Agent or any Lender may have against such other Borrower.
Any indebtedness of the other Borrower now or hereafter held by any
Borrower is subordinated in right of payment to the Obligations, and any such
indebtedness of the other Borrower to such Borrower collected or received by
such Borrower after an Event of Default has occurred and is continuing, and any
amount paid to a Borrower on account of any subrogation, reimbursement,
indemnification or contribution rights referred to in the preceding paragraph
when all Obligations have not been paid in full, shall be held in trust for the
Agent and the Lenders and shall forthwith be paid over to the Agent for the
benefit of the Lenders to be credited and applied against the Obligations.
(h) FRAUDULENT TRANSFER LAWS. Anything contained in this SECTION 1.5 to the
contrary notwithstanding, the obligations of each Borrower under this SECTION
1.5 shall be limited to a maximum aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any applicable provisions of comparable state law (collectively,
the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect to all other
liabilities of such Borrower, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however, any liabilities
of such Borrower (i) in respect of intercompany indebtedness to the other
Borrower or other affiliates of the other Borrower to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by such
Borrower hereunder and (ii) under any guaranty which contains a limitation as to
maximum amount similar to that set forth in this SECTION 1.5(H), pursuant to
which the liability of such Borrower hereunder is included in the liabilities
taken into account in determining such maximum amount) and after giving effect
as assets to the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to subrogation, reimbursement,
indemnification or contribution of such Borrower pursuant to applicable law or
pursuant to the terms of any agreement.
(i) RELATED GUARANTIES. Each Borrower under this SECTION 1.5 and each
guarantor under the Subsidiary Guaranty and any other guaranties, if any,
relating to the Credit Agreement (the "RELATED GUARANTIES") that contain a
contribution provision similar to that set forth in this SECTION 1.5, together
desire to allocate among themselves (collectively, the "CONTRIBUTING
GUARANTORS"), in a fair and equitable manner, their obligations arising under
this SECTION 1.5 and the Related Guaranties. Accordingly, in the event any
payment or distribution is made on any date by any Borrower under this SECTION
1.5 or a guarantor under a Related Guaranty, each such Borrower or such
guarantor shall be entitled to a contribution from each of the other
13
Contributing Guarantors in the maximum amount permitted by law so as to maximize
the aggregate amount of the Obligations paid to the Agent and the Lenders.
ARTICLE 2
INTEREST AND FEES
2.1 INTEREST.
(a) INTEREST RATES. All outstanding Obligations (other than Bank Products)
shall bear interest on the unpaid principal amount thereof (including, to the
extent permitted by law, on interest thereon not paid when due) from the date
made until paid in full in cash at a rate determined by reference to the Base
Rate or the LIBOR Rate PLUS the Applicable Margins as set forth below, but not
to exceed the Maximum Rate. If at any time Loans are outstanding with respect to
which LS&Co has not delivered to the Agent a notice specifying the basis for
determining the interest rate applicable thereto in accordance herewith, those
Loans shall bear interest at a rate determined by reference to the Base Rate
until notice to the contrary has been given to the Agent in accordance with this
Agreement and such notice has become effective. Except as otherwise provided
herein, the outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Revolving Loans and other Obligations (other
than LIBOR Rate Revolving Loans, Bank Products and Letters of Credit) at a
fluctuating per annum rate equal to the Base Rate plus the Applicable
Margin; and
(ii) For all LIBOR Rate Revolving Loans at a per annum rate equal to
the LIBOR Rate PLUS the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Revolving Loans as of the effective date of such change. All
interest charges shall be computed on the basis of a year of 360 days and actual
days elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). The Borrowers shall pay to the Agent, for the ratable
benefit of Lenders, interest accrued on all Base Rate Revolving Loans in arrears
on the first day of each month hereafter and on the Termination Date. The
Borrowers shall pay to the Agent, for the ratable benefit of Lenders, interest
on all LIBOR Rate Revolving Loans in arrears on each LIBOR Interest Payment
Date.
(b) DEFAULT RATE. If any Default or Event of Default occurs and is
continuing and the Agent or the Majority Lenders in their discretion so elect,
then, while any such Default or Event of Default is continuing, all of the
Obligations (other than Bank Products) shall bear interest at the Default Rate
applicable thereto.
2.2 CONTINUATION AND CONVERSION ELECTIONS.
(a) LS&Co may:
(i) elect, as of any Business Day, in the case of Base Rate Revolving
Loans to convert any Base Rate Revolving Loans (or any part thereof in an
14
amount not less than $10,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof) into LIBOR Rate Revolving Loans; or
(ii) elect, as of the last day of the applicable Interest Period, to
continue any LIBOR Rate Revolving Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than $10,000,000, or
that is in an integral multiple of $1,000,000 in excess thereof);
PROVIDED, that if at any time the aggregate amount of LIBOR Rate Revolving Loans
in respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $10,000,000, such LIBOR Rate Revolving Loans shall
automatically convert into Base Rate Revolving Loans; PROVIDED FURTHER that if
the notice shall fail to specify the duration of the Interest Period, such
Interest Period shall be one month.
(b) LS&Co shall deliver a notice of continuation/conversion ("NOTICE OF
CONTINUATION/CONVERSION") to the Agent not later than 12:00 noon (Pacific time)
at least three (3) Business Days in advance of the Continuation/Conversion Date,
if the Loans are to be converted into or continued as LIBOR Rate Revolving Loans
and specifying:
(i) the Borrower;
(ii) the proposed Continuation/Conversion Date;
(iii) the aggregate amount of Loans to be converted or renewed;
(iv) the type of Loans resulting from the proposed conversion or
continuation; and
(v) the duration of the requested Interest Period, PROVIDED, HOWEVER,
LS&Co may not select an Interest Period that ends after the Stated
Termination Date;
provided that in lieu of delivering a Notice of Continuation/Conversion, LS&Co
may give the Agent telephonic notice of such request for Continuation/Conversion
on or before the deadline set forth above. The Agent at all times shall be
entitled to rely on such telephonic notice in converting or continuing such
Revolving Loans, regardless of whether any written confirmation is received.
(c) If upon the expiration of any Interest Period applicable to LIBOR Rate
Revolving Loans, LS&Co has failed to select timely a new Interest Period to be
applicable to LIBOR Rate Revolving Loans or if any Default or Event of Default
then exists, the applicable Borrower shall be deemed to have elected to convert
such LIBOR Rate Revolving Loans into Base Rate Revolving Loans effective as of
the expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt of a Notice
of Continuation/Conversion. All conversions and continuations shall be made
ratably according to the respective outstanding principal amounts of the Loans
with respect to which the notice was given held by each Lender.
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(e) There may not be more than ten (10) different LIBOR Rate Revolving
Loans in effect hereunder at any time.
2.3 MAXIMUM INTEREST RATE. In no event shall any interest rate provided for
hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the "MAXIMUM RATE"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which would,
but for this SECTION 2.3, have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect over (b) the amount of interest actually paid or accrued
under this Agreement. If a court of competent jurisdiction determines that the
Agent and/or any Lender has received interest and other charges hereunder in
excess of the Maximum Rate, such excess shall be deemed received on account of,
and shall automatically be applied to reduce, the Obligations other than
interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Agent and/or such Lender shall refund to the applicable
Borrower such excess.
2.4 UNUSED LINE FEE. On the first day of each calendar month and on the
Termination Date the Borrowers agree to pay to the Agent, for the account of the
Lenders, in accordance with their respective Pro Rata Shares, an unused line fee
(the "UNUSED LINE FEE") equal to one half of one percent (0.50%) per annum times
the amount by which the Maximum Revolver Amount exceeded the sum of the average
daily outstanding amount of Revolving Loans and the average daily undrawn face
amount of outstanding Letters of Credit, during the immediately preceding month
or shorter period if calculated for the first month hereafter or on the
Termination Date. The Unused Line Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed. All principal payments
received by the Agent shall be deemed to be credited to the Borrowers' Loan
Account immediately upon receipt for purposes of calculating the Unused Line Fee
pursuant to this SECTION 2.4.
2.5 OTHER FEES. The Borrowers agree to pay to the Agent such fees in the
amounts and at the times separately agreed upon from time to time between any of
the Borrowers and the Agent.
2.6 LETTER OF CREDIT FEE. The Borrowers agree to pay to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata Shares, for
each Letter of Credit, a fee (the "LETTER OF CREDIT FEE") equal to two and three
quarters percent (2.75%) per annum and to the Agent for the benefit of the
Letter of Credit Issuer a fronting fee of one-eighth of one percent (0.125%) per
annum of the undrawn face amount of each Letter of Credit, and to the Letter of
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Credit Issuer, all out-of-pocket costs, fees and expenses incurred by the Letter
of Credit Issuer in connection with the application for, processing of, issuance
of, or amendment to any Letter of Credit, which costs, fees and expenses shall
include a "fronting fee" payable to the Letter of Credit Issuer. The Letter of
Credit Fee shall be payable monthly in arrears on the first day of each month
following any month in which a Letter of Credit is outstanding and on the
Termination Date. The Letter of Credit Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.
ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1 REVOLVING LOANS. The Borrowers shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date. The Borrowers may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement. In addition, and without
limiting the generality of the foregoing, the Borrowers immediately shall pay to
the Agent, for account of the Lenders, the amount, without duplication, by which
the Aggregate Revolver Outstandings exceeds the lesser of the Borrowing Base or
the Maximum Revolver Amount.
3.2 TERMINATION OF FACILITY; REDUCTION OF COMMITMENTS.
(a) The Borrowers may terminate this Agreement upon at least ten (10)
Business Days' notice to the Agent and the Lenders, upon (i) the payment in full
of all outstanding Revolving Loans, together with accrued interest thereon, and
the cancellation and return of all outstanding Letters of Credit, (ii) the
payment of the early termination fee set forth below, (iii) the payment in full
in cash of all reimbursable expenses and other Obligations, and (iv) with
respect to any LIBOR Rate Revolving Loans prepaid, payment of the amounts due
under SECTION 4.4, if any. If this Agreement is terminated at any time prior to
the Stated Termination Date, whether pursuant to this Section or pursuant to
SECTION 9.2, the Borrowers shall pay to the Agent, for the account of the
Lenders, an early termination fee determined in accordance with the following
table:
PERIOD DURING WHICH
EARLY TERMINATION OCCURS EARLY TERMINATION FEE
On or prior to the first Anniversary Date One percent (1.00%) of the
Maximum Revolver Amount
After the first Anniversary Date but on or One half of one percent (0.50%)
prior to the second Anniversary Date of the Maximum Revolver Amount
After the second Anniversary Date but prior None
to the Stated Termination Date
; provided, however, that in the event that LS&Co terminates this Agreement and
refinances the Obligations with the proceeds of a loan facility arranged by the
Bank or any Affiliate of the Bank, then no early termination fee shall apply.
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(b) The Borrowers may from time to time reduce the Commitments upon at
least ten (10) Business Days' notice to the Agent and the Lenders, PROVIDED that
(i) LS&Co shall not reduce the Commitments to the extent that, after giving
effect thereto, the Aggregate Revolver Outstandings would exceed Availability,
(ii) if, after giving effect to any reduction of the Commitments, the Letter of
Credit Subfacility exceeds the amount of the Commitments, the Letter of Credit
Subfacility shall automatically be reduced by the amount of such excess, and
(iii) if such reduction occurs on or prior to the second Anniversary Date, then
on or prior to the date of such reduction the Borrowers shall pay an early
termination fee equal to (A) one percent (1.00%) of the amount by which the
Commitments are being reduced if such reduction occurs on or prior to the first
Anniversary Date and (B) one half of one percent (0.50%) of the amount by which
the Commitments are being reduced if such reduction occurs after the first
Anniversary Date but on or prior to the second Anniversary Date. Any reduction
of the Commitments shall be applied to the Commitment of each Lender according
to its Pro Rata Share.
3.3 PREPAYMENTS.
(a) Immediately upon receipt by LS&Co or any of its Domestic Subsidiaries
of cash proceeds (including any cash received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) of any Disposition (or in the case of any Dispositions
permitted pursuant to SECTION 7.20(O), within five Business Days of such
receipt), the Borrowers shall prepay the Loans in an amount equal to all such
cash proceeds, net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by LS&Co and its Domestic Subsidiaries in connection therewith (in
each case, paid to non-Affiliates), (B) transfer taxes, (C) amounts payable to
holders of senior Liens (to the extent such Liens are permitted under SECTION
7.16), if any, and (D) an appropriate reserve for income taxes in accordance
with GAAP in connection therewith ("NET PROCEEDS"); PROVIDED that, at any time
the Term Loan Facility (or any replacement, renewal or extension thereof
permitted pursuant to SECTION 7.27) remains outstanding, no such prepayment
shall be required in respect of any Disposition of Intellectual Property Assets
to the extent that the Net Proceeds of such Disposition are required to be
applied to repayment of the Term Loan Facility (or any such replacement, renewal
or extension thereof). Any prepayment required under this SECTION 3.3(A) shall
be applied in accordance with SECTION 3.3(B).
(b) Prepayments from proceeds of asset dispositions in accordance with
SECTION 3.3(A) shall be applied as follows: FIRST, to accrued interest with
respect to the Revolving Loans, and SECOND, to pay the principal of the
Revolving Loans.
(c) No provision contained in this SECTION 3.3 shall constitute a consent
to an asset disposition that is otherwise not permitted by the terms of this
Agreement.
3.4 LIBOR RATE REVOLVING LOAN PREPAYMENTS. In connection with any
prepayment, if any LIBOR Rate Revolving Loans are prepaid prior to the
expiration date of the Interest Period applicable thereto, the Borrowers shall
pay to the Lenders the amounts described in SECTION 4.4.
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3.5 PAYMENTS BY THE BORROWERS.
(a) All payments to be made by the Borrowers shall be made without set-off,
recoupment or counterclaim. Except as otherwise expressly provided herein, all
payments by the Borrowers shall be made to the Agent for the account of the
Lenders, at the account designated by the Agent and shall be made in Dollars and
in immediately available funds, no later than 12:00 noon (Pacific time) on the
date specified herein. Any payment received by the Agent after such time shall
be deemed (for purposes of calculating interest only) to have been received on
the following Business Day and any applicable interest shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period", whenever any payment is due on a day other than a Business Day, such
payment shall be due on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.
3.6 PAYMENTS AS REVOLVING LOANS. At the election of the Agent, all payments
of principal, interest, reimbursement obligations in connection with Letters of
Credit and Credit Support for Letters of Credit, fees, premiums, reimbursable
expenses and other sums payable hereunder, may be paid from the proceeds of
Revolving Loans made hereunder. The Borrowers hereby irrevocably authorize the
Agent to charge the Loan Account for the purpose of paying all amounts from time
to time due hereunder and agrees that all such amounts charged shall constitute
Revolving Loans (including Non-Ratable Loans and Agent Advances).
3.7 APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS. Principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Loans to which such payments relate held by
each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders, except for fees payable solely to the Agent and the
Letter of Credit Issuer. All payments shall be remitted to the Agent and all
such payments not relating to principal or interest of specific Loans, or not
constituting payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement, FIRST, to pay any fees, indemnities or expense
reimbursements then due to the Agent from any Borrower; SECOND, to pay any fees,
indemnities or expense reimbursements then due to the Lenders from any Borrower;
THIRD, to pay interest due in respect of all Loans, including Non-Ratable Loans
and Agent Advances; FOURTH, to pay or prepay principal of the Non-Ratable Loans
and Agent Advances; FIFTH, to pay or prepay principal of the Revolving Loans
(other than Non-Ratable Loans and Agent Advances) and unpaid reimbursement
obligations in respect of Letters of Credit; SIXTH, to pay an amount to the
Agent equal to one hundred and five percent (105%) of all outstanding Letter of
Credit Obligations to be held as cash collateral for such Obligations; and
SEVENTH, to the payment of any other Obligation including any amounts relating
to Bank Products due to the Agent, the Bank, any Selected Revolving Lender or
any Affiliate of the Bank by LS&Co, any of its Material Domestic Subsidiaries or
LSIFCS; PROVIDED that notwithstanding anything to the contrary in this Agreement
or any other Loan Document, obligations of LS&Co, any of its Material Domestic
Subsidiaries or LSIFCS to any Selected Revolving Lender (other than the Bank)
under or in connection with any Ordinary Course Hedge Agreements shall not
constitute Obligations and shall not be secured by any of the Agent's Liens
except to the extent that such Selected Revolving Lender and LS&Co have
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delivered a written notice of the Hedge Termination Value of the obligations of
LS&Co, any of its Material Domestic Subsidiaries or LSIFCS to such Selected
Revolving Lender under such Ordinary Course Hedge Agreements to be included in
Obligations and to be secured by the Agent's Liens (or of any increase in such
Hedge Termination Value) to the Agent and the Agent has acknowledged and
accepted such notice in writing. Each Selected Revolving Lender hereby agrees
that it shall within five (5) Business Days after the end of each calendar month
(and at any other time requested by the Agent) report to the Agent and the
Borrower the aggregate Hedge Termination Value, as of the end of such calendar
month, under all Ordinary Course Hedge Agreements between LS&Co, any of its
Material Domestic Subsidiaries or LSIFCS and such Selected Revolving Lender.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by LS&Co, or unless an Event of Default has occurred and is continuing,
neither the Agent nor any Lender shall apply any payments which it receives to
any LIBOR Rate Revolving Loan, except (a) on the expiration date of the Interest
Period applicable to any such LIBOR Rate Revolving Loan, or (b) in the event,
and only to the extent, that there are no outstanding Base Rate Revolving Loans
and, in any event, the Borrowers shall pay LIBOR breakage losses in accordance
with SECTION 4.4. The Agent and the Lenders shall have the continuing and
exclusive right to apply and reverse and reapply any and all such proceeds and
payments to any portion of the Obligations.
3.8 INDEMNITY FOR RETURNED PAYMENTS. If after receipt of any payment which
is applied to the payment of all or any part of the Obligations, the Agent, any
Lender, the Bank or any Affiliate of the Bank is for any reason compelled to
surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender and the Borrowers shall be liable to
pay to the Agent and the Lenders, and hereby does indemnify the Agent and the
Lenders and hold the Agent and the Lenders harmless for the amount of such
payment or proceeds surrendered. The provisions of this SECTION 3.8 shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent's and the Lenders' rights under this Agreement and shall be deemed to
have been conditioned upon such payment or application of proceeds having become
final and irrevocable. The provisions of this SECTION 3.8 shall survive the
termination of this Agreement.
3.9 AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY STATEMENTS. The Agent
shall record the principal amount of the Loans owing to each Lender, the undrawn
face amount of all outstanding Letters of Credit and the aggregate amount of
unpaid reimbursement obligations outstanding with respect to the Letters of
Credit from time to time on its books. In addition, each Lender may note the
date and amount of each payment or prepayment of principal of such Lender's
Loans in its books and records. Failure by the Agent or any Lender to make such
notation shall not affect the obligations of the Borrowers with respect to the
Loans or the Letters of Credit. The Borrowers agree that the Agent's and each
Lender's books and records showing the Obligations and the transactions pursuant
to this Agreement and the other Loan Documents shall be admissible in any action
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or proceeding arising therefrom, and shall constitute rebuttably presumptive
proof thereof, irrespective of whether any Obligation is also evidenced by a
promissory note or other instrument. The Agent will provide to LS&Co a monthly
statement of Loans, payments, and other transactions pursuant to this Agreement,
including in respect of any month in which an assignment of any Commitment has
occurred a current schedule of the Lenders and each of their respective
Commitments hereunder. Such statement shall be deemed correct, accurate, and
binding on the Borrowers and an account stated (except for reversals and
reapplications of payments made as provided in SECTION 3.7 and corrections of
errors discovered by the Agent), unless LS&Co notifies the Agent in writing to
the contrary within thirty (30) days after such statement is rendered. In the
event a timely written notice of objections is given by LS&Co, only the items to
which exception is expressly made will be considered to be disputed by the
Borrowers.
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 TAXES.
(a) Any and all payments by any Borrower to each Lender or the Agent under
this Agreement and any other Loan Document shall be made free and clear of, and
without deduction or withholding for any Taxes. In addition, the Borrowers shall
pay all Other Taxes.
(b) The Borrowers agree to indemnify and hold harmless each Lender and the
Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section) paid by
any Lender or the Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within thirty (30) days after
the date such Lender or the Agent makes written demand therefor.
(c) If any Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Lender or the Agent, as the case may be, receives an amount equal to the
sum it would have received had no such deductions or withholdings been
made;
(ii) such Borrower shall make such deductions and withholdings;
(iii) such Borrower shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and
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(iv) such Borrower shall also pay to each Lender or the Agent for the
account of such Lender, at the time interest is paid, all additional
amounts which the respective Lender specifies as necessary to preserve the
after-tax yield such Lender would have received if such Taxes or Other
Taxes had not been imposed.
(d) At the Agent's request, within 30 days after the date of any payment by
any Borrower of Taxes or Other Taxes, LS&Co shall furnish the Agent the original
or a certified copy of a receipt evidencing payment thereof, or other evidence
of payment satisfactory to the Agent.
(e) If any Borrower is required to pay additional amounts to any Lender or
the Agent pursuant to SUBSECTION (C) of this Section, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its lending office so as to eliminate any such additional
payment by such Borrower which may thereafter accrue, if such change in the
judgment of such Lender is not otherwise disadvantageous to such Lender.
4.2 ILLEGALITY.
(a) If any Lender determines that the introduction of any Requirement of
Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable lending office to make LIBOR Rate Revolving
Loans, then, on notice thereof by that Lender to LS&Co through the Agent, any
obligation of that Lender to make LIBOR Rate Revolving Loans shall be suspended
until that Lender notifies the Agent and LS&Co that the circumstances giving
rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any LIBOR Rate
Revolving Loan, the Borrowers shall, upon LS&Co's receipt of notice of such fact
and demand from such Lender (with a copy to the Agent), prepay in full such
LIBOR Rate Revolving Loans of that Lender then outstanding, together with
interest accrued thereon and amounts required under SECTION 4.4, either on the
last day of the Interest Period thereof, if that Lender may lawfully continue to
maintain such LIBOR Rate Revolving Loans to such day, or immediately, if that
Lender may not lawfully continue to maintain such LIBOR Rate Revolving Loans. If
the Borrowers are required to so prepay any LIBOR Rate Revolving Loans, then
concurrently with such prepayment, the Borrowers shall borrow from the affected
Lender, in the amount of such repayment, a Base Rate Revolving Loan.
4.3 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender determines that due to either (i) the introduction of or
any change in the interpretation of any law or regulation or (ii) the compliance
by that Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to such Lender of agreeing to make or making, funding
or maintaining any LIBOR Rate Revolving Loans, then the Borrowers shall be
liable for, and shall from time to time, upon demand (with a copy of such demand
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to be sent to the Agent), pay to the Agent for the account of such Lender,
additional amounts as are sufficient to compensate such Lender for such
increased costs; PROVIDED that the Borrowers shall not be required to compensate
a Lender pursuant to this SECTION 4.3(A) for any such increased cost in respect
of a period occurring more than one hundred eighty (180) days prior to the date
that such Lender notifies LS&Co of such Lender's intention to claim compensation
therefor unless the circumstances giving rise to such increased cost became
applicable retroactively, in which case no such time limitation shall apply so
long as such Lender requests compensation within 180 days from the date such
circumstances become applicable.
(b) If any Lender shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Lender or
any corporation or other entity controlling such Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by such Lender or any corporation or other entity
controlling such Lender and (taking into consideration such Lender's or such
corporation's or other entity's policies with respect to capital adequacy and
such Lender's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitments, loans, credits or
obligations under this Agreement, then, upon demand of such Lender to LS&Co
through the Agent, the Borrowers shall pay to such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender for such increase; PROVIDED that the Borrowers shall not be required to
compensate a Lender pursuant to this SECTION 4.3(B) for any such increase in
respect of a period occurring more than one hundred eighty (180) days prior to
the date that such Lender notifies LS&Co of such Lender's intention to claim
compensation therefor unless the circumstances giving rise to such increase
became applicable retroactively, in which case no such time limitation shall
apply so long as such Lender requests compensation within 180 days from the date
such circumstances become applicable.
4.4 FUNDING LOSSES. The Borrowers shall reimburse each Lender and hold each
Lender harmless from any loss or expense which such Lender may sustain or incur
as a consequence of:
(a) the failure of any Borrower to make on a timely basis any payment of
principal of any LIBOR Rate Revolving Loan;
(b) the failure of any Borrower (for any reason other than the failure of
such Lender to make a Loan if such failure results in such Lender being a
Defaulting Lender under SECTION 12.15(C)) to borrow, continue or convert a Loan
after LS&Co has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after acceleration thereof)
of any LIBOR Rate Revolving Loans on a day that is not the last day of the
relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Revolving Loans or from fees payable to terminate the deposits from
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which such funds were obtained. The Borrowers shall also pay any customary
administrative fees charged by any Lender in connection with the foregoing.
4.5 INABILITY TO DETERMINE RATES. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate
Revolving Loan, or that the LIBOR Rate for any requested Interest Period with
respect to a proposed LIBOR Rate Revolving Loan does not adequately and fairly
reflect the cost to the Lenders of funding such Loan, the Agent will promptly so
notify LS&Co and each Lender. Thereafter, the obligation of the Lenders to make
or maintain LIBOR Rate Revolving Loans hereunder shall be suspended until the
Agent revokes such notice in writing. Upon receipt of such notice, LS&Co may
revoke any Notice of Borrowing or Notice of Continuation/Conversion then
submitted by it. If LS&Co does not revoke such Notice, the Lenders shall make,
convert or continue the Loans, as proposed by LS&Co, in the amount specified in
the applicable notice submitted by LS&Co, but such Loans shall be made,
converted or continued as Base Rate Revolving Loans instead of LIBOR Rate
Revolving Loans.
4.6 CERTIFICATES OF AGENT. If any Lender claims reimbursement or
compensation under this ARTICLE 4, the Agent shall determine the amount thereof
and shall deliver to LS&Co (with a copy to the affected Lender) a certificate
setting forth in reasonable detail the amount payable to the affected Lender,
and such certificate shall be conclusive and binding on the Borrowers in the
absence of manifest error.
4.7 SURVIVAL. The agreements and obligations of each Borrower in this
ARTICLE 4 shall survive the payment of all other Obligations.
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1 BOOKS AND RECORDS. The Borrowers shall maintain, at all times, correct
and complete books, records and accounts in which complete, correct and timely
entries are made of its transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to SECTION 5.2(A). The Borrowers shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation and
amortization of property and bad debts, all in accordance with GAAP. The
Borrowers shall maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all payments
received and all credits and extensions granted with respect to the Accounts and
(b) the return, rejection, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory.
5.2 FINANCIAL INFORMATION. The Borrowers shall promptly furnish to each
Lender, all such financial information as the Agent shall reasonably request.
Without limiting the foregoing, the Borrowers will furnish to the Agent, in
electronic form or in sufficient copies for distribution by the Agent to each
Lender, in such detail as the Agent or the Lenders shall request, the following:
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(a) As soon as available, but in any event not later than ninety (90) days
after the close of each Fiscal Year, consolidated audited and consolidating
unaudited balance sheets of LS&Co and its consolidated Subsidiaries as of the
end of such Fiscal Year, and related consolidated and consolidating income
statements, and consolidated cash flow statements and statements of changes in
stockholders' equity for LS&Co and its consolidated Subsidiaries for such Fiscal
Year, and the accompanying notes thereto, setting forth in each case in
comparative form figures for the previous Fiscal Year, all in reasonable detail,
fairly presenting the financial position and the results of operations of LS&Co
and its consolidated Subsidiaries as of the date thereof and for the Fiscal Year
then ended, and prepared in accordance with GAAP, together with a certificate
signed by a Responsible Officer of LS&Co in the form of EXHIBIT H (a "COMPLIANCE
CERTIFICATE"). Such statements shall be examined in accordance with generally
accepted auditing standards by and, in the case of such statements performed on
a consolidated basis, accompanied by a report thereon unqualified in any respect
of independent certified public accountants selected by LS&Co and reasonably
satisfactory to the Agent. LS&Co hereby authorizes the Agent to communicate
directly with its certified public accountants and, by this provision,
authorizes those accountants to disclose to the Agent any and all financial
statements and other supporting financial documents and schedules relating to
LS&Co and to discuss directly with the Agent the finances and affairs of LS&Co
and its Subsidiaries.
(b) As soon as available, but in any event not later than thirty (30) days
after the end of each Fiscal Month, (i) consolidated and consolidating unaudited
balance sheets of LS&Co and its consolidated Subsidiaries as of the end of such
Fiscal Month, and related consolidated and consolidating unaudited income
statements and consolidated cash flow statements for LS&Co and its consolidated
Subsidiaries for such Fiscal Month and for the period from the beginning of the
Fiscal Year to the end of such Fiscal Month, all in reasonable detail, fairly
presenting the financial position and results of operations of LS&Co and its
consolidated Subsidiaries as of the date thereof and for such periods, and
prepared in accordance with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to SECTION 5.2(A), together with a
certificate signed by a Responsible Officer that all such statements have been
prepared in accordance with GAAP and present fairly LS&Co's financial position
as of the dates thereof and its results of operations for the periods then
ended, subject to normal year-end adjustments, (ii) a Compliance Certificate;
PROVIDED that in respect of any period during which LS&Co is not required to
maintain a Consolidated Fixed Charge Coverage Ratio of 1.00 to 1.00 pursuant to
SECTION 7.31, in lieu of delivering a Compliance Certificate monthly LS&Co may
deliver a Compliance Certificate within forty five (45) days after the end of
each Fiscal Quarter, and (iii) a certificate signed by a Responsible Officer
stating that, except as explained in reasonable detail in such certificate, (A)
all of the representations and warranties of the Borrowers contained in this
Agreement and the other Loan Documents are correct and complete in all material
respects as of the date of such certificate as if made at such time, except for
those that speak as of a particular date, (B) the Borrowers are, at the date of
such certificate, in compliance in all material respects with all of their
respective covenants and agreements in this Agreement and the other Loan
Documents, and (C) no Default or Event of Default then exists or existed during
the period covered by the Financial Statements for such Fiscal Month. If such
certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Borrowers have taken or propose to take with respect thereto.
25
(c) With each of the audited Financial Statements delivered pursuant to
SECTION 5.2(A), a certificate of the independent certified public accountants
certifying such financial statements and stating that in making the examination
necessary therefor nothing came to their attention that caused them to believe
that the Borrowers failed to comply with the terms, covenants, provisions or
conditions of SECTION 7.31 insofar as they relate to accounting matters or, if
any such Event of Default shall exist, stating the nature and status thereof.
(d) No later than sixty (60) days after the beginning of each Fiscal Year,
annual forecasts (to include forecasted consolidated balance sheets, income
statements and cash flow statements) for LS&Co and its Subsidiaries as of the
end of and for each Fiscal Month of such Fiscal Year.
(e) If requested by the Agent, after filing with the PBGC and the IRS, a
copy of each annual report or other filing filed with respect to each Plan of
any Borrower.
(f) Promptly upon the filing thereof, copies of all reports, if any, to or
other documents filed by LS&Co or any of its Subsidiaries with the Securities
and Exchange Commission under the Exchange Act and not otherwise delivered to
the Agent pursuant hereto.
(g) Promptly after their preparation, copies of any and all proxy
statements which LS&Co makes available to its stockholders.
(h) Borrowing Base Certificates and supporting information in accordance
with Section 13 of the Pledge and Security Agreement.
(i) As soon as available, but in any event within sixty (60) days after the
end of each Fiscal Year, a report summarizing any material changes in the
insurance coverage maintained for LS&Co and its Subsidiaries during such Fiscal
Year and containing such additional information as any agent, or any Lender
through the Agent, may reasonably specify.
(j) No later than sixty (60) days after the end of each Fiscal Year, a list
of all Subsidiaries of each Loan Party showing (as to each such Subsidiary) the
jurisdiction of its incorporation, the number of shares of each class of its
Equity Interests authorized and the number outstanding, and the percentage of
each such class of its Equity Interests owned (directly or indirectly) by such
Loan Party and the number of shares covered by all outstanding options,
warrants, rights of conversion or purchase and similar rights.
(k) No later than sixty (60) days after the end of each Fiscal Year, a list
of all Subsidiaries indicating whether each such Subsidiary is a Borrower, a
Guarantor, a Limited Guarantor, a Pledged Foreign Subsidiary or an Unpledged
Foreign Subsidiary, and the percentage of the aggregate gross revenues of LS&Co
and its Subsidiaries on a consolidated basis for such Fiscal Year contributed by
each such Subsidiary.
(l) As soon as available, but in any event within ninety (90) days after
the end of each Fiscal Year, (i) a report as of the last day of such Fiscal Year
summarizing the total Dollar amount of the Leadership Shares Plan award to be
paid in cash in the immediately succeeding Fiscal Year and (ii) the Dollar
amount of such award to be deferred, the Dollar amount of such deferral to
26
remain unfunded, and the Dollar amount of salary and other bonus to be deferred
in such immediately succeeding Fiscal Year.
(m) Not later than forty five (45) days after the end of each Fiscal
Quarter, a list of all licenses entered into by LS&Co during such Fiscal Quarter
with third parties, granting exclusive Proprietary Rights in respect of apparel
products or product lines sold by LS&Co in the United States of America and
included within Inventory at the time of entry by LS&Co into such license.
(n) Such additional information as the Agent and/or any Lender may from
time to time reasonably request regarding the financial and business affairs of
LS&Co or any of its Subsidiaries.
Documents required to be delivered pursuant to SECTION 5.2(A) or (F) (to
the extent any such documents are included in materials otherwise filed with the
Securities and Exchange Commission) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which such
documents are received by the Agent; PROVIDED that: (i) LS&Co shall deliver
paper copies of such documents to the Agent or any Lender that requests LS&Co to
deliver such paper copies until a written request to cease delivering paper
copies is given by the Agent or such Lender and (ii) the Agent shall notify
(which may be by facsimile or electronic mail) each Lender of the posting of any
such documents. The Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by LS&Co with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery to
it or maintaining its copies of such documents, including any collateral reports
delivered pursuant to SECTION 5.2(H).
5.3 NOTICES TO THE LENDERS. Each Borrower shall notify the Agent and the
Lenders in writing of the following matters at the following times:
(a) Promptly, but in any event within five (5) Business Days, after
becoming aware of any Default or Event of Default;
(b) Promptly, but in any event within five (5) Business Days, after
becoming aware of the assertion by the holder of any capital stock of LS&Co or
of any of its Subsidiaries or the holder of any Debt of LS&Co or any of its
Subsidiaries in a face amount in excess of $10,000,000 that a default exists
with respect thereto or that LS&Co or such Subsidiary is not in compliance with
the terms thereof, or the threat or commencement by such holder of any
enforcement action because of such asserted default or non-compliance;
(c) Promptly, but in any event within five (5) Business Days, after
becoming aware of any event or circumstance which could reasonably be expected
to have a Material Adverse Effect;
(d) Promptly, but in any event within five (5) Business Days, after
becoming aware of any pending or threatened action, suit, or proceeding, by any
Person, or any pending or threatened investigation by a Governmental Authority,
which could reasonably be expected to have a Material Adverse Effect;
27
(e) Promptly, but in any event within five (5) Business Days, after
becoming aware of any pending or threatened strike, work stoppage, unfair labor
practice claim, or other labor dispute affecting LS&Co or any of its
Subsidiaries in a manner which could reasonably be expected to have a Material
Adverse Effect;
(f) Promptly, but in any event within five (5) Business Days, after
becoming aware of any violation of any law, statute, regulation, or ordinance of
a Governmental Authority affecting LS&Co or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect;
(g) Promptly, but in any event within five (5) Business Days, after receipt
of any notice of any violation by LS&Co or any of its Subsidiaries of any
Environmental Law which could reasonably be expected to have a Material Adverse
Effect or that any Governmental Authority has asserted in writing that LS&Co or
any of its Subsidiaries is not in compliance with any Environmental Law or is
investigating LS&Co's or such Subsidiary's compliance therewith, to the extent
that such non-compliance or investigation could reasonably be expected to have a
Material Adverse Effect;
(h) Promptly, but in any event within five (5) Business Days, after receipt
of any written notice that LS&Co or any of its Subsidiaries is or may be liable
to any Person as a result of the Release or threatened Release of any
Contaminant or that LS&Co or any of its Subsidiaries 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 that, in
either case, could reasonably be expected to have a Material Adverse Effect;
(i) Promptly, but in any event within five (5) Business Days, after receipt
of any written notice of the imposition of any Environmental Lien against any
property of LS&Co or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect;
(j) Any change in any Borrower's name, state of organization or form of
organization, locations of Inventory in the United States (excluding (i) in
transit Inventory, (ii) any location at which Inventory excluded from Eligible
Inventory in the most recent Borrowing Base Certificate delivered to the Agent
is located and (iii) locations of Inventory in the form of raw materials,
PROVIDED that the aggregate amount of all Eligible Inventory in the form of raw
materials does not exceed the amount specified in Section 5 of the Pledge and
Security Agreement), trade names under which any Borrower will sell Inventory or
create Accounts, or to which instruments in payment of Accounts may be made
payable, in each case at least thirty (30) days (or such shorter period as may
be agreed from time to time by the Agent in its sole discretion) prior thereto;
(k) Within ten (10) Business Days after any Borrower or any ERISA Affiliate
knows or has reason to know, that a prohibited transaction (as defined in
Sections 406 of ERISA and 4975 of the Code) that would result in a material
liability to any Borrower or such ERISA Affiliate or an ERISA Event has
occurred, and, when known, any action taken or threatened by the IRS, the DOL or
the PBGC with respect thereto;
28
(l) If requested by the Agent, after the filing thereof with the PBGC, the
DOL or the IRS, as applicable, copies of the following: (i) each annual report
(form 5500 series), including Schedule B thereto, filed with the PBGC, the DOL
or the IRS with respect to each Plan, (ii) a copy of each funding waiver request
filed with the PBGC, the DOL or the IRS with respect to any Plan and all
communications received by any Borrower or any ERISA Affiliate from the PBGC,
the DOL or the IRS with respect to such request, and (iii) a copy of each other
filing or notice filed with the PBGC, the DOL or the IRS, with respect to each
Plan by any Borrower or any ERISA Affiliate;
(m) If requested by the Agent, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan, and any
favorable determination letter from the IRS regarding the qualification of a
Plan under Section 401(a) of the Code; and within ten (10) Business Days after
receipt thereof by any Borrower or any ERISA Affiliate, copies of the following:
(i) any notices of the PBGC's intention to terminate a Plan or to have a trustee
appointed to administer such Plan; (ii) any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a) of the
Code; or (iii) any notice from a Multi-employer Plan regarding the imposition of
withdrawal liability;
(n) Within ten (10) Business Days after the occurrence thereof: (i) any
changes in the benefits of any existing Plan which increase any Borrower's
annual costs with respect thereto by an amount in excess of $10,000,000, or the
establishment of any new Plan or the commencement of contributions to any Plan
to which any Borrower or any ERISA Affiliate was not previously contributing; or
(ii) any failure by any Borrower or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment;
(o) Within ten (10) Business Days after any Borrower or any ERISA Affiliate
knows or has reason to know that any of the following events has or will occur:
(i) a Multi-employer Plan has been or will be terminated; (ii) the administrator
or plan sponsor of a Multi-employer Plan intends to terminate a Multi-employer
Plan; or (iii) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multi-employer Plan; or
(p) Promptly, but in any event within five (5) Business Days, after any
Borrower has notified the Agent of any intention by such Borrower to treat the
Loans and related transactions as being a "reportable transaction" (within the
meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS
Form 8886 or any successor form.
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the applicable
Borrower, its Subsidiary, or any ERISA Affiliate, as applicable, has taken or
proposes to take with respect thereto.
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Agent and the Lenders that
except as hereafter disclosed to and accepted by the Agent and the Majority
Lenders in writing:
29
6.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT AND THE
LOAN DOCUMENTS. Each Loan Party has the power and authority to execute, deliver
and perform its obligations under each Loan Document to which it is a party, to
incur the Obligations and to grant to the Agent Liens upon and security
interests in the Collateral. Each Loan Party has taken all necessary action
(including obtaining approval of its stockholders if necessary) to authorize its
execution, delivery, and performance of each Loan Document to which it is a
party. Each Loan Document to which it is a party has been duly executed and
delivered by each Loan Party, and constitutes the legal, valid and binding
obligations of each such Loan Party, enforceable against it in accordance with
their respective terms. Each Loan Party's execution, delivery, and performance
of each Loan Document to which it is a party does not and will not conflict
with, or constitute a violation or breach of, or result in the imposition of any
Lien upon the property of LS&Co or any of its Subsidiaries, by reason of the
terms of (a) any contract, mortgage, lease, agreement, indenture, or instrument
to which such Loan Party is a party or which is binding upon it, (b) any
Requirement of Law applicable to LS&Co or any of its Subsidiaries, or (c) the
certificate or articles of incorporation or by-laws or the limited liability
company or limited partnership agreement of LS&Co or any of its Subsidiaries.
6.2 VALIDITY AND PRIORITY OF SECURITY INTEREST. The provisions of this
Agreement, the Mortgages, and the other Loan Documents create (or, to the extent
any such documents are permitted hereunder to be executed and delivered after
the Closing Date, will create) legal and valid Liens on all the Collateral in
favor of the Agent, for the ratable benefit of the Agent and the Lenders, and
such Liens constitute perfected and continuing Liens (to the extent they can be
perfected by possession, by filing a UCC financing statement, by filing a
Mortgage with the appropriate real property office, by recording an appropriate
document with the PTO or by a control agreement) on all the Collateral, having
priority over all other Liens on the Collateral, except for those senior Liens
permitted under SECTION 7.16, and enforceable against each Loan Party and all
third parties.
6.3 ORGANIZATION AND QUALIFICATION. Each Loan Party (a) is duly organized
or incorporated and validly existing in good standing under the laws of the
state of its organization or incorporation, (b) is qualified to do business and
is in good standing in each jurisdiction in which qualification is necessary in
order for it to own or lease its property and conduct its business and (c) has
all requisite power and authority to conduct its business and to own its
property, except in each case to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.
6.4 CORPORATE NAME; PRIOR TRANSACTIONS. Each Loan Party has not, during the
past five (5) years, been known by or used any other corporate or fictitious
name except as set forth on SCHEDULE 6.4, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business.
6.5 SUBSIDIARIES. SCHEDULE 6.5 is a correct and complete list of the name
and relationship to LS&Co of each and all of LS&Co's Subsidiaries. Each
Subsidiary is (a) duly incorporated or organized and validly existing in good
standing under the laws of its state of incorporation or organization set forth
on SCHEDULE 6.5, and (b) qualified to do business and in good standing in each
jurisdiction in which it owns or leases property or conducts its business and
30
(c) has all requisite power and authority to conduct its business and own its
property, except in each case to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect. None of the
organizational documents of any of the Domestic Subsidiaries or Material Foreign
Subsidiaries contain any material restriction against the pledge of such
Subsidiary's Equity Interests to the Agent pursuant to the Collateral Documents.
6.6 FINANCIAL STATEMENTS AND PROJECTIONS.
(a) LS&Co has delivered to the Agent and the Lenders the audited balance
sheet and related statements of income, retained earnings, cash flows, and
changes in stockholders equity for LS&Co and its consolidated Subsidiaries as of
November 24, 2002, and for the Fiscal Year then ended, accompanied by the report
thereon of LS&Co's independent certified public accountants, KPMG. LS&Co has
also delivered to the Agent and the Lenders the unaudited balance sheets and
related statements of income and cash flows for LS&Co and its consolidated
Subsidiaries as of February 23, 2003, May 25, 2003, July 27, 2003 and August 24,
2003. Such financial statements are attached hereto as EXHIBIT B. All such
financial statements have been prepared in accordance with GAAP and present
accurately and fairly in all material respects the financial position of LS&Co
and its consolidated Subsidiaries as of the dates thereof and their results of
operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as required herein
represented LS&Co's reasonable estimate at such time of the future financial
performance of LS&Co and its consolidated Subsidiaries for the periods set forth
therein. The Latest Projections were prepared on the basis of the assumptions
set forth therein, which LS&Co believed at the time of preparation thereof were
fair and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lenders. Other than as has been
disclosed by LS&Co to the Agent in writing, since the Latest Projections were
submitted to the Lenders there has been no event or circumstance, either
individually or in the aggregate, that would materially affect the continuing
reasonableness of such estimates and assumptions, taken as a whole.
6.7 TAX SHELTER REGULATIONS. Neither Borrower intends to treat the Loans
and related transactions as being a "reportable transaction" (within the meaning
of Treasury Regulation Section 1.6011-4). In the event any Borrower determines
to take any action inconsistent with such intention, it will promptly notify the
Agent thereof. If any Borrower so notifies the Agent, such Borrower acknowledges
that one or more of the Lenders may treat its Loans as part of a transaction
that is subject to Treasury Regulation Section 301.6112-1, and such Lender or
Lenders, as applicable, will maintain the lists and other records required by
such Treasury Regulation.
31
6.8 SOLVENCY. Each Borrower individually, and LS&Co together with the
Guarantors and Limited Guarantors (taken as a whole), is Solvent prior to and
after giving effect to the Borrowings to be made on the Closing Date and the
issuance of the Letters of Credit to be issued on the Closing Date, and shall
remain Solvent during the term of this Agreement.
6.9 DEBT. After giving effect to the making of the Revolving Loans to be
made on the Closing Date, LS&Co and its Subsidiaries have no Debt, except (a)
the Obligations, and (b) Debt described on SCHEDULE 6.9 or otherwise permitted
under SECTION 7.18.
6.10 DISTRIBUTIONS. Since November 24, 2002, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of LS&Co.
6.11 REAL ESTATE; LEASES. SCHEDULE 6.11 sets forth, as of the Closing Date,
a correct and complete list of all Real Estate owned by any Loan Party and all
leases and subleases of real property held by any Loan Party as lessee or
sublessee. Each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and no default by any
party to any such lease or sublease exists. Each Loan Party has good and
marketable title in fee simple to the Real Estate identified on SCHEDULE 6.11 as
owned by such Loan Party, or valid leasehold interests in all Real Estate
designated therein as "leased" by such Loan Party and such Loan Party has good,
indefeasible, and merchantable title to all of its other property reflected on
the most recent Financial Statements delivered to the Agent and the Lenders,
except as disposed of in the ordinary course of business since the date thereof,
free of all Liens except Liens permitted under SECTION 7.16.
6.12 PROPRIETARY RIGHTS. LS&Co and each of its Subsidiaries possess the
right to use all of the Proprietary Rights reasonably necessary to the current
and anticipated future conduct of each Loan Party's business. None of the
Proprietary Rights material to any Loan Party's business is owned by a third
party or is otherwise subject to any material restrictions under any licensing
agreement or similar arrangement (other than (a) restrictions relating to
software licenses that may limit such Loan Party's ability to transfer or assign
any such agreement to a third party and (b) licensing agreements or similar
arrangements that do not materially impair the ability of the Agent or the
Lenders to avail themselves of their rights of disposal and other rights granted
under the Collateral Documents in respect of the Inventory), except as set forth
on SCHEDULE 6.12. To the best of each Loan Party's knowledge, none of the
Proprietary Rights infringes on or conflicts with any other Person's property,
and no other Person's property infringes on or conflicts with any of the
Proprietary Rights, except in each case to the extent that such infringement or
conflict could not reasonably be expected to have a Material Adverse Effect. No
claim or litigation regarding any Proprietary Rights is pending or, to the best
of each Loan Party's knowledge, threatened which could reasonably be expected to
have a Material Adverse Effect.
6.13 TRADE NAMES. All trade names or styles under which LS&Co or any of its
Subsidiaries will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, are listed on SCHEDULE 6.13.
6.14 LITIGATION. Except as set forth on SCHEDULE 6.14, there is no pending,
or to the best of each Loan Party's knowledge threatened, action, suit,
proceeding, or counterclaim by any Person, or to the best of each Loan Party's
32
knowledge, investigation by any Governmental Authority, or any basis for any of
the foregoing, which could reasonably be expected to have a Material Adverse
Effect.
6.15 LABOR DISPUTES. Except as set forth on SCHEDULE 6.15, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of LS&Co or any of its Domestic Subsidiaries, (b) no
such collective bargaining agreement or other labor contract is scheduled to
expire during the term of this Agreement, (c) to the best of each Loan Party's
knowledge, no union or other labor organization is seeking to organize, or to be
recognized as, a collective bargaining unit of employees of LS&Co or any of its
Domestic Subsidiaries or for any similar purpose, and (d) there is no pending or
(to the best of each Loan Party's knowledge) threatened, strike, work stoppage,
material unfair labor practice claim, or other material labor dispute against or
affecting LS&Co or its Domestic Subsidiaries or their employees.
6.16 ENVIRONMENTAL LAWS. The operations and properties of LS&Co and each of
its Subsidiaries comply in all respects with all applicable Environmental Laws
and Environmental Permits except where such noncompliance could not reasonably
be expected to have a Material Adverse Effect, and no circumstances exist that
could reasonably be expected to (a) form the basis of an Environmental Claim
against any Loan Party, any of its Subsidiaries or any of their properties that
could reasonably be expected to have a Material Adverse Effect or (b) cause any
such property to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law that could reasonably be expected to
have a Material Adverse Effect.
6.17 NO VIOLATION OF LAW. Neither LS&Co nor any of its Subsidiaries is in
violation of any law, statute, regulation, ordinance, judgment, order, or decree
applicable to it which violation could reasonably be expected to have a Material
Adverse Effect.
6.18 NO DEFAULT. Neither LS&Co nor any of its Subsidiaries is in default
with respect to any note, indenture, loan agreement, mortgage, lease, deed, or
other agreement to which LS&Co or such Subsidiary is a party or by which it is
bound, which default could reasonably be expected to have a Material Adverse
Effect.
6.19 ERISA COMPLIANCE. Except as specifically disclosed in SCHEDULE 6.19:
(a) 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 IRS and to the best knowledge of LS&Co, nothing
has occurred which would cause the loss of such qualification. LS&Co and each
ERISA Affiliate has 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.
(b) There are no pending or, to the best knowledge of each Loan Party,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
33
have a Material Adverse Effect. 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 have a Material Adverse Effect.
(c) No ERISA Event has occurred; (ii) no Pension Plan has a Funded Current
Liability Percentage of less than eighty five percent (85%) as of the most
recently completed valuation date; (iii) neither LS&Co nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither LS&Co 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 Multi-employer Plan; and (v) neither LS&Co nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
(d) With respect to each retirement plan or arrangement mandated by a
government other than the United States (a "FOREIGN GOVERNMENT SCHEME OR
ARRANGEMENT") and with respect to each employee benefit plan maintained or
contributed to by any Loan Party or any Subsidiary of any Loan Party that is not
subject to United States law (a "FOREIGN PLAN"), each Foreign Plan is in
compliance with the applicable Foreign Government Scheme or Arrangement and
neither LS&Co nor any of its Subsidiaries has incurred or reasonably expects to
incur any liability under any Foreign Government Scheme or Arrangement, which
noncompliance or liability could reasonably be expected to have a Material
Adverse Effect.
6.20 TAXES. LS&Co and its Subsidiaries have filed all federal and other tax
returns and reports required to be filed, and have paid all federal and other
taxes, assessments, fees and other governmental charges levied or imposed upon
them or their properties, income or assets otherwise due and payable unless such
unpaid taxes and assessments would constitute a Permitted Lien. Neither LS&Co or
any of its Subsidiaries is party to any tax sharing agreement. No issues have
been raised by taxing authorities that, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
6.21 REGULATED ENTITIES. None of LS&Co, any Person controlling LS&Co, or
any of its Subsidiaries, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. No Loan Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other
federal or state statute or regulation limiting its ability to incur
indebtedness.
6.22 USE OF PROCEEDS; MARGIN REGULATIONS. Neither Borrower is engaged nor
will it engage, principally or as one of its important activities, in the
business of purchasing or carrying Margin Stock, or extending credit for the
purpose of purchasing or carrying Margin Stock. Following the application of the
proceeds of each Borrowing or drawing under each Letter of Credit, not more than
twenty five percent (25%) of the value of the assets (either of LS&Co or LSFCC
individually, or of LS&Co and its Subsidiaries on a consolidated basis) subject
to the provisions of SECTION 7.16 or SECTION 7.20 or subject to any restriction
34
contained in any agreement or instrument between LS&Co and any Lender or any
Affiliate of any Lender relating to Indebtedness and within the scope of SECTION
9.1(D) will be Margin Stock.
6.23 NO MATERIAL ADVERSE CHANGE. Since November 24, 2002 there has been no
event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect, other than as
disclosed in the Borrower's public filings with the SEC on or prior to September
19, 2003.
6.24 FULL DISCLOSURE. None of the representations or warranties made by
LS&Co or any of its Subsidiaries in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of LS&Co or any of its Subsidiaries in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of LS&Co to the Lenders prior to the Closing Date), taken as a whole,
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.
6.25 BANK ACCOUNTS. SCHEDULE 6.25 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by each Loan Party
with any bank or other financial institution.
6.26 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, LS&Co or
any of its Subsidiaries of this Agreement or any other Loan Document, except as
contemplated by the Loan Documents.
6.27 MATERIALLY ADVERSE AGREEMENTS. Neither LS&Co nor any of its
Subsidiaries is a party to any indenture, loan or credit agreement or any lease
or other agreement or instrument or subject to any provisions in any of its
organizational documents or other corporate restrictions that could reasonably
be expected to have a Material Adverse Effect.
6.28 EXTRAORDINARY EVENTS. Neither the business nor the properties of LS&Co
or any of its Subsidiaries are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance) that could reasonably be expected to have a Material
Adverse Effect.
6.29 CONDUCT OF BUSINESS. LS&Co and its Subsidiaries, considered together,
are engaged only in businesses related or incidental to the manufacture and sale
of clothing and accessories and the LOS/DOS Business.
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ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower covenants to the Agent and each Lender that so long as any of
the Obligations (other than inchoate indemnity obligations) remain outstanding
or this Agreement is in effect:
7.1 TAXES AND OTHER OBLIGATIONS. Each Borrower shall, and shall cause each
of its Subsidiaries to, (a) file when due all tax returns and other reports
which it is required to file and pay, or provide for the payment, when due, of
all taxes, fees, assessments and other governmental charges against it or upon
its property, income and franchises, except those (i) which are being contested
in good faith by appropriate proceedings diligently conducted, (ii) for which
adequate reserves in accordance with GAAP are being maintained by such Borrower
or such Subsidiary, and (iii) in the case of a charge or claim which has or may
become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such charge or claim; and (b) pay when due all Debt owed by it and all
claims of materialmen, mechanics, carriers, warehousemen, landlords, processors
and other like Persons, and all other indebtedness owed by it and perform and
discharge in a timely manner all other obligations undertaken by it.
7.2 LEGAL EXISTENCE AND GOOD STANDING. Each Borrower shall, and shall cause
each of its Subsidiaries to, maintain its legal existence and its qualification
and good standing in all jurisdictions in which the failure to maintain such
existence and qualification or good standing could reasonably be expected to
have a Material Adverse Effect.
7.3 COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF LICENSES. Each
Borrower shall, and shall cause each of its Subsidiaries to, comply in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act and all Environmental Laws). Each Borrower shall, and shall cause
each of its Subsidiaries to, obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and to
conduct its business as conducted on the Closing Date, except in each case where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect. No Borrower shall modify, amend or alter its certificate or articles of
incorporation, as applicable, other than in a manner which does not adversely
affect the rights of the Lenders or the Agent.
7.4 MAINTENANCE OF PROPERTY; INSPECTION OF PROPERTY.
(a) Each Borrower shall, and shall cause each of its Subsidiaries to,
maintain all of its property necessary and useful in the conduct of its
business, in good operating condition and repair, ordinary wear and tear
excepted.
(b) Each Borrower shall permit representatives and independent contractors
of the Agent (at the expense of the Borrowers, at least three (3) times per
year, but not more than four (4) times per year unless an Event of Default has
occurred and is continuing) to visit and inspect any of its properties, to
examine its corporate, financial and operating records, and make copies thereof
or abstracts therefrom and to discuss its affairs, finances and accounts with
36
its directors, officers and independent public accountants, at such reasonable
times during normal business hours and as soon as may be reasonably desired,
upon reasonable advance notice to LS&CO; PROVIDED, HOWEVER, when an Event of
Default exists, the Agent may do any of the foregoing at the expense of the
Borrowers at any time during normal business hours and without advance notice.
7.5 INSURANCE.
(a) Each Borrower shall, and shall cause each of its Subsidiaries to,
maintain with financially sound and reputable insurance companies not Affiliates
of any Borrower, or with Majestic Insurance International Ltd., a wholly-owned
Subsidiary of LS&Co, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by businesses of
similar size engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
businesses and providing for not less than thirty (30) days' prior notice to the
Agent of termination, lapse or cancellation of such insurance. Without limiting
the foregoing, in the event that any improved Real Estate covered by the
Mortgages is determined to be located within an area that has been identified by
the Director of the Federal Emergency Management Agency as a Special Flood
Hazard Area ("SFHA"), each Borrower shall purchase and maintain flood insurance
on the improved Real Estate and any Equipment and Inventory located on such Real
Estate. The amount of said flood insurance will be reasonably determined by the
Agent, and shall, at a minimum, comply with applicable federal regulations as
required by the Flood Disaster Protection Act of 1973, as amended. Each Borrower
shall also maintain flood insurance for its Inventory and Equipment which is, at
any time, located in a SFHA.
(b) Each Borrower shall cause the Agent, for the ratable benefit of the
Agent and the Lenders, to be named as secured party or mortgagee and sole loss
payee or additional insured, in a manner acceptable to the Agent. Each policy of
insurance shall contain a clause or endorsement requiring the insurer to give
not less than thirty (30) days' prior written notice to the Agent in the event
of cancellation of the policy for any reason whatsoever and a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of any Borrower or any of its Subsidiaries or
the owner of any Real Estate for purposes more hazardous than are permitted by
such policy. All premiums for such insurance shall be paid by the Borrowers when
due, and certificates of insurance and, if requested by the Agent or any Lender,
photocopies of the policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the Lenders. If the
Borrowers fail to procure such insurance or to pay the premiums therefor when
due, the Agent may, and at the direction of the Majority Lenders shall, do so
from the proceeds of Revolving Loans.
7.6 INSURANCE AND CONDEMNATION PROCEEDS. Each Borrower shall promptly
notify the Agent and the Lenders of any loss, damage or destruction to the
Collateral, whether or not covered by insurance; PROVIDED that no Borrower shall
be required to notify the Agent under this SECTION 7.6 to the extent that any
such loss, damage or destruction (or any related events of such loss, damage or
destruction) result in loss, damage or destruction of Collateral with an
aggregate fair market value of not more than $1,000,000. The Agent is hereby
37
authorized to collect all insurance and condemnation proceeds in respect of
Collateral directly and to apply or remit them as follows:
(i) With respect to insurance and condemnation proceeds relating to
Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall apply such proceeds, ratably, to the
reduction of the Obligations in the order provided for in SECTION 3.3(B).
(ii) With respect to insurance and condemnation proceeds relating to
Collateral consisting of Fixed Assets, the Agent shall permit or require
the applicable Borrower to use such proceeds, or any part thereof, to
replace, repair, restore or rebuild the relevant Fixed Assets in a diligent
and expeditious manner with materials and workmanship of substantially the
same quality as existed before the loss, damage or destruction so long as
(1) no Default or Event of Default has occurred and is continuing, (2) the
aggregate proceeds do not exceed $25,000,000 and (3) the applicable
Borrower first (i) provides the Agent and the Majority Lenders with plans
and specifications for any such repair or restoration which shall be
reasonably satisfactory to the Agent and the Majority Lenders and (ii)
demonstrates to the reasonable satisfaction of the Agent and the Majority
Lenders that the funds available to it will be sufficient to complete such
project in the manner provided therein. In all other circumstances, the
Agent shall apply such insurance and condemnation proceeds, ratably, to the
reduction of the Obligations in the order provided for in SECTION 3.3(B).
7.7 ENVIRONMENTAL LAWS. Each Borrower shall, and shall cause each of its
Subsidiaries to, conduct its business in compliance with all Environmental Laws
applicable to it, except to the extent that non-compliance could not reasonably
be expected to have a Material Adverse Effect.
7.8 COMPLIANCE WITH ERISA. Each Borrower shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; and (e) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
7.9 EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS BY CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES.
(a) In the event that any Domestic Subsidiary of LS&Co existing on the
Closing Date that has not previously executed the Subsidiary Guaranty hereafter
qualifies under the definition of "Guarantor" or "Limited Guarantor", or in the
event that any Person becomes a Domestic Subsidiary and otherwise qualifies
under the definition of "Guarantor" or "Limited Guarantor" after the date
hereof, the Borrowers shall promptly notify the Agent of that fact and, within
thirty (30) days of such Domestic Subsidiary qualifying under the definition of
"Guarantor" or "Limited Guarantor" or such Person becoming a Domestic
Subsidiary, as the case may be:
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(i) (A) cause such Subsidiary to execute and deliver to the Agent a
counterpart of each of the Subsidiary Guaranty and the Pledge and Security
Agreement and to take all such further actions and execute all such further
documents and instruments as may be necessary or, in the opinion of the
Agent, desirable to create in favor of the Agent, for the benefit of the
Lenders, a valid and perfected first priority lien on all of the personal
and mixed property assets of such Subsidiary described in the applicable
forms of Collateral Documents and (B) deliver to the Agent all certificates
representing the Equity Interests of such Subsidiary (accompanied by
irrevocable undated stock powers, duly endorsed in blank) owned by the
respective pledgor; and
(ii) deliver to the Agent, together with such Loan Documents, (A)
certified copies of such Subsidiary's Certificate or Articles of
Incorporation, together with a good standing certificate from the Secretary
of State of the jurisdiction of its incorporation, to the extent generally
available and a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of such jurisdiction, each to be dated a recent date prior
to their delivery to the Agent, (B) a copy of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant secretary as of a
recent date prior to their delivery to the Agent, (C) a certificate
executed by the secretary or an assistant secretary of such Subsidiary as
to (1) the fact that the attached resolutions of the Board of Directors of
such Subsidiary approving and authorizing the execution, delivery and
performance of such Loan Documents are in full force and effect and have
not been modified or amended and (2) the incumbency and signatures of the
officers of such Subsidiary executing such Loan Documents, and (D) a
favorable opinion of counsel to such Subsidiary, in form and substance
reasonably satisfactory to the Agent and its counsel, as to (1) the due
organization and good standing of such Subsidiary, (2) the due
authorization, execution and delivery by such Subsidiary of such Loan
Documents, (3) the enforceability of such Loan Documents against such
Subsidiary, (4) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as the Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to the Agent and its counsel;
(b) In the event that any Person becomes a Material Foreign Subsidiary
after the date hereof, the Borrowers shall promptly notify the Agent of that
fact and use their commercially reasonable efforts to take or cause to be taken
all such actions, execute and deliver or cause to be executed and delivered all
such agreements, documents and instruments and make or cause to be made all such
filings and recordings that may be necessary or, in the opinion of the Agent,
desirable in order to create in favor of the Agent, for the benefit of the
Lenders, a valid and perfected security interest in sixty five percent (65%) of
the Equity Interests of such Person owned by any Loan Party; PROVIDED, HOWEVER,
that no action shall be required to be taken by any Loan Party with respect to
the Equity Interests of any Material Foreign Subsidiary pursuant to this
subsection in the event that LS&Co and the Agent agree in good faith that the
pledge of such Equity Interests would result in a significant tax liability to
any Loan Party or would otherwise be impracticable; and
(c) no Borrower shall establish or maintain a foreign branch.
39
PROVIDED, HOWEVER, neither LS&Co nor any of its Subsidiaries shall be required
pursuant to this SECTION 7.9 to grant Liens on any Principal Property, the
Equity Interests of a Restricted Subsidiary or any Debt of or issued by a
Restricted Subsidiary.
7.10 MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL. From and
after the Closing Date, in the event that (i) any Borrower, any Guarantor or any
Limited Guarantor acquires any fee interest in real property (other than
Principal Property) with an appraised value in excess of $10,000,000 or (ii) at
the time any Person becomes a Guarantor or a Limited Guarantor, such Person owns
or holds any fee interest in real property (other than Principal Property) with
an appraised value in excess of $10,000,000, in either case excluding any such
Real Estate the encumbrancing of which requires the consent of any applicable
lessor or (in the case of clause (ii) above) then-existing senior lienholder,
where such Borrower, such Guarantor or such Limited Guarantor is unable to
obtain such lessor's or senior lienholder's consent (any such non-excluded Real
Estate described in the foregoing clause (i) or (ii) being an "ADDITIONAL
MORTGAGED PROPERTY"), deliver to the Agent, as soon as practicable after such
Person acquires such Additional Mortgaged Property or becomes a Guarantor or a
Limited Guarantor, as the case may be, the following:
(a) ADDITIONAL MORTGAGE. A fully executed and notarized Mortgage (an
"ADDITIONAL MORTGAGE"), duly recorded in all appropriate places in all
applicable jurisdictions, encumbering the interest of such Loan Party in such
Additional Mortgaged Property;
(b) OPINIONS OF COUNSEL. A favorable opinion of counsel to such Loan Party,
in form and substance reasonably satisfactory to the Agent and its counsel, as
to the due authorization, execution and delivery by such Loan Party of such
Additional Mortgage and such other matters as the Agent may reasonably request;
(c) TITLE INSURANCE. (a) If required by the Agent, an ALTA mortgagee title
insurance policy or an unconditional commitment therefor (an "ADDITIONAL
MORTGAGE POLICY") issued by the Title Company with respect to such Additional
Mortgaged Property, in an amount satisfactory to the Agent (which in the absence
of a Default or Event of Default shall be an amount not to exceed ten percent
(10%) of the gross book value of such Additional Mortgaged Property), insuring
fee simple title to such Additional Mortgaged Property vested in such Loan Party
and assuring the Agent that such Additional Mortgage creates a valid and
enforceable first priority mortgage lien on such Additional Mortgaged Property,
subject only to a standard survey exception and such other exceptions as are
customary or are reasonably acceptable to the Agent, which Additional Mortgage
Policy (1) shall include an endorsement for mechanics' liens, for future
advances under this Agreement and for any other matters reasonably requested by
the Agent and (2) shall provide for affirmative insurance and such reinsurance
as the Agent may reasonably request, all of the foregoing in form and substance
reasonably satisfactory to the Agent; and (b) evidence satisfactory to the Agent
that such Loan Party has (i) delivered to the Title Company all certificates and
affidavits required by the Title Company in connection with the issuance of the
Additional Mortgage Policy and (ii) paid to the Title Company or to the
appropriate governmental authorities all expenses and premiums of the Title
Company in connection with the issuance of the Additional Mortgage Policy and
all recording and stamp taxes (including mortgage recording and intangible
40
taxes) payable in connection with recording the Additional Mortgage in the
appropriate real estate records;
(d) TITLE REPORT. If no Additional Mortgage Policy is required with respect
to such Additional Mortgaged Property, a title report issued by the Title
Company with respect thereto, dated not more than thirty (30) days prior to the
date such Additional Mortgage is to be recorded and satisfactory in form and
substance to the Agent;
(e) COPIES OF DOCUMENTS RELATING TO TITLE EXCEPTIONS. Copies of all
recorded documents listed as exceptions to title or otherwise referred to in the
Additional Mortgage Policy or title report delivered pursuant to clause (c) or
(d) above; and
(f) MATTERS RELATING TO FLOOD HAZARD PROPERTIES. (a) Evidence, which may be
in the form of a letter from an insurance broker or a municipal engineer, as to
(1) whether such Additional Mortgaged Property is a Flood Hazard Property and
(2) if so, whether the community in which such Flood Hazard Property is located
is participating in the National Flood Insurance Program, (b) if such Additional
Mortgaged Property is a Flood Hazard Property, such Loan Party's written
acknowledgement of receipt of written notification from the Agent (1) that such
Additional Mortgaged Property is a Flood Hazard Property and (2) as to whether
the community in which such Flood Hazard Property is located is participating in
the National Flood Insurance Program, and (c) in the event such Additional
Mortgaged Property is a Flood Hazard Property that is located in a community
that participates in the National Flood Insurance Program, evidence that the
Borrowers have obtained flood insurance in respect of such Flood Hazard Property
to the extent required under the applicable regulations of the Board of
Governors of the Federal Reserve System.
7.11 POST CLOSING ACTIONS.
(a) Within ninety (90) days after the Closing Date, or such later date
agreed to by the Agent in its sole discretion, deliver to the Agent an original
intercompany promissory note duly executed by each Foreign Subsidiary (other
than any Restricted Subsidiary) and duly endorsed to the Agent.
(b) Within one hundred eighty (180) days after the Closing Date, or such
later date agreed to by the Agent in its sole discretion, deliver to the Agent
such documents as shall be necessary to create and perfect a security interest
in sixty five percent (65%) of the Equity Interests of each Material Foreign
Subsidiary listed on SCHEDULE 7.11(B) owned by the respective pledgor, together
with the certificates or instruments, if any, representing sixty five percent
(65%) of such Equity Interests accompanied by irrevocable undated instruments of
transfer, duly endorsed in blank and otherwise in form and substance
satisfactory to the Agent; PROVIDED, however, that no action shall be required
to be taken by any Loan Party with respect to the Equity Interests of any
Material Foreign Subsidiary pursuant to this subsection in the event that LS&Co
and the Agent agree in good faith that the pledge of such Equity Interest would
result in a significant tax liability to any Loan Party or would otherwise be
impracticable.
(c) Within thirty (30) days after the Closing Date, or such later date
agreed to by the Agent in its sole discretion, each Borrower shall have, and
shall cause each Guarantor and Limited Guarantor to have, (i) delivered to the
41
Agent a control agreement in form and substance satisfactory to the Agent in
respect of each deposit account of such Person and (ii) taken all other steps
necessary or, in the opinion of the Agent, desirable to ensure that the Agent
has sole dominion and control over such deposit account; PROVIDED that if any
Borrower, any Guarantor or any Limited Guarantor is unable to obtain such an
agreement from any financial institution, the applicable Borrower shall, or
shall cause the applicable Guarantor or Limited Guarantor to, within sixty (60)
days after receiving a written request by the Agent to do so, transfer all
amounts in the applicable deposit account to a deposit account maintained at a
financial institution from which such Borrower, such Guarantor or such Limited
Guarantor has obtained such an agreement; PROVIDED FURTHER that this SECTION
7.11(C) shall not apply to any deposit account held by any such Person to the
extent (a) such deposit account is maintained with a financial institution with
which such Person has not entered into any control agreement in relation to any
other deposit account, (b) the aggregate assets in all deposit accounts
maintained by such Person with such financial institution at no time exceed
$100,000 and (c) the aggregate amount of assets in all deposit accounts of all
such Persons not subject to control agreements in reliance on the exemption
provided pursuant to CLAUSES (A)-(C) of this proviso at no time exceed
$1,000,000.
(d) Within thirty (30) days after the Closing Date, or such later date
agreed to by the Agent in its sole discretion, each Borrower shall have, and
shall cause each Guarantor and Limited Guarantor to have, delivered to the Agent
evidence that all action that the Agent may deem necessary or desirable in order
to perfect and protect the first priority Lien of the Agent for the benefit of
the Lenders in all domestic registrations of patents has been taken.
(e) Within thirty (30) days after the Closing Date, or such later date
agreed to by the Administrative Agent in its sole discretion, LS&Co shall have
delivered to the Agent in respect of the Little Rock, Arkansas property owned by
LS&Co all documents and taken all other actions required pursuant to SECTION
7.10 and not previously delivered to the Agent or taken, as the case may be, as
though such property were an Additional Mortgaged Property.
(f) Within thirty (30) days after the Closing Date, or such later date
agreed to by the Administrative Agent in its sole discretion, LS&Co shall have
delivered to the Agent evidence, in form, scope, and substance, reasonably
satisfactory to the Agent, of all insurance coverage and related endorsements as
required by SECTION 7.5(B).
7.12 TRANSACTIONS AFFECTING COLLATERAL OR OBLIGATIONS. No Borrower shall,
nor shall any Borrower permit any of its Subsidiaries to, enter into any
transaction which could be reasonably expected to have a Material Adverse
Effect.
7.13 INVESTMENT BANKING AND FINDER'S FEES. No Borrower shall, nor shall any
Borrower permit any of its Subsidiaries to, pay or agree to pay, or reimburse
any other party with respect to, any investment banking or similar or related
fee, underwriter's fee, finder's fee, or broker's fee to any Person in
connection with this Agreement other than as disclosed to the Agent. The
Borrowers shall defend and indemnify the Agent and the Lenders against and hold
them harmless from all claims of any Person that any Borrower is obligated to
42
pay for any such fees, and all costs and expenses (including attorneys' fees)
incurred by the Agent and/or any Lender in connection therewith.
7.14 LSFCC SUBSIDIARIES. All Subsidiaries of LSFCC shall at all times after
the Closing Date have no material assets or operations.
7.15 FISCAL YEAR. No Borrower shall, nor shall any Borrower permit any of
its Subsidiaries to, make or permit any change in its Fiscal Year.
7.16 LIENS. No Borrower shall, nor shall any Borrower permit any of its
Subsidiaries or the LS&Co. Trust to, directly or indirectly create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired or sign or file or suffer to exist under
the UCC of any jurisdiction, a financing statement that names LS&Co or any of
its Subsidiaries or the LS&Co. Trust as debtor, or sign or suffer to exist any
security agreement authorizing any secured party thereunder to file such
financing statement, other than the following:
(a) Permitted Liens;
(b) Liens existing on the date hereof and listed on SCHEDULE 7.16 and any
renewals or extensions thereof, PROVIDED that the property covered thereby is
not increased (except as contemplated thereby) and any renewal or extension of
the obligations secured or benefited thereby is permitted pursuant to SECTION
7.18(C)(I);
(c) purchase money Liens upon or in real property or Equipment acquired or
held by LS&Co or any of its Subsidiaries (other than LSFCC) in the ordinary
course of business to secure the purchase price of such property or to secure
Debt incurred solely for the purpose of financing the acquisition or improvement
of any such property to be subject to such Liens, or Liens existing on any such
property at the time of acquisition (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase price), or
extensions, renewals or replacements of any of the foregoing for the same or a
lesser amount; PROVIDED, HOWEVER, that no such Lien shall extend to or cover any
property other than the property being acquired or improved, and no such
extension, renewal or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed or replaced; and
PROVIDED FURTHER that the aggregate principal amount of the Debt secured by
Liens permitted by this clause (c) shall not exceed the amount permitted under
SECTION 7.18(C)(III) at any time outstanding;
(d) Liens in favor of customs and revenue authorities arising in the
ordinary course of business and as a matter of law or pursuant to a bond to
secure payment of customs duties in connection with the importation of goods;
(e) Liens arising in connection with Capital Leases permitted under SECTION
7.18(C)(XVIII); provided that no such Lien shall extend to or cover any
Collateral or assets other than the assets subject to such Capital Leases;
(f) Liens (other than Liens on assets of LSFCC or LSIFCS) attaching to
ownership interests in joint ventures (whether in partnership, corporate or
43
other form) engaged in the LOS/DOS Business or attaching to intellectual
property rights relating to the LOS/DOS Business;
(g) Liens (other than Liens on assets of LSFCC or LSIFCS) created in
connection with (A) Equipment Financing Transactions permitted under SECTION
7.18(C)(VIII) and (B) Real Estate Financing Transactions permitted under SECTION
7.18(C)(VII); PROVIDED, HOWEVER, that no such Lien shall extend to or cover
property other than the property subject to such Equipment Financing Transaction
or Real Estate Financing Transaction;
(h) Liens created pursuant to applications or reimbursement agreements
pertaining to documentary letters of credit which encumber documents and goods
of LS&Co or any of its Subsidiaries (other than LSFCC, LSIFCS or the LS&Co
Trust) constituting part of the goods covered by the applicable letter of credit
and the products and proceeds thereof;
(i) Liens in favor of the counterparty to a repurchase agreement entered
into in the ordinary course of business and permitted under SECTION 7.17(D) on
the cash and Cash Equivalents that are the subject of such repurchase agreement;
(j) any interest or title of a lessor or a sublessor and any restriction or
encumbrance to which the interest or title of such lessor or sublessor may be
subject that is incurred in the ordinary course of business and, either
individually or when aggregated with all other permitted Liens in effect on any
date of determination, could not be reasonably expected to have a Material
Adverse Effect;
(k) leases or subleases granted to others in the ordinary course of
business not interfering with the ordinary conduct of the business of the
grantor thereof;
(l) Liens arising solely by virtue of any statutory or common law provision
relating to banker's Liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution, or by virtue of the terms of an account agreement relating to a
deposit account not required pursuant to the Loan Documents to be subject to a
control agreement; PROVIDED THAT (i) such deposit account is not a dedicated
cash collateral account and is not subject to restrictions against access by
LS&Co or any of its Subsidiaries owning the affected deposit account or other
funds maintained with a creditor depository institution in excess of those set
forth by regulations promulgated by the Federal Reserve Board or any foreign
regulatory agency performing an equivalent function, and (ii) such deposit
account is not intended by LS&Co or any of its Subsidiaries to provide
collateral (other than such as is ancillary to the establishment of such deposit
account) to the depository institution;
(m) Liens, assignments and pledges of rights to receive premiums, interest
or loss payments or otherwise arising in connection with any insurance or
reinsurance agreements pertaining to losses covered by insurance, and Liens
(including, without limitation and to the extent constituting Liens, negative
pledges) in favor of insurers or reinsurers on pledges or deposits by LS&Co or
any of its Subsidiaries under workmens' compensation laws, unemployment
insurance laws or similar legislation;
(n) Liens on property of any Foreign Subsidiary;
44
(o) Liens on the Intellectual Property Assets and second priority Liens on
the Collateral granted to the Term Loan Lenders, and similar Liens granted in
connection with any replacement, renewal or extension of the Term Loan Facility,
PROVIDED that (i) any such transaction is on terms substantially similar to, and
no more onerous than, those reflected as of the Closing Date in the
documentation for the Term Loan Facility and (ii) the Agent shall be granted a
license in respect of the Intellectual Property Assets, in form and substance
satisfactory to the Agent and substantially in the form of the Trademark License
Agreement, in connection with any such transaction;
(p) Liens in favor of LS&Co on Accounts of LS&Co transferred to LSFCC
pursuant to that certain Third Amended and Fully Restated Receivables Purchase
and Sale Agreement between LSFCC and LS&Co effective January 28, 2000, as
amended by that certain Master Amendment and Consent to Receivables Sale
Agreements dated July 31, 2001 and that certain Second Amendment, dated as of
September 29, 2003, among LS&Co, LSFCC and LSRF;
(q) Liens on cash, Cash Equivalents or other assets of LS&Co or any of its
Subsidiaries (other than LSFCC) deposited in a margin account securing Ordinary
Course Hedge Agreements permitted under SECTION 7.18(C)(IV); and
(r) other Liens on assets other than Collateral securing Debt outstanding
of LS&Co or any of its Subsidiaries (other than LSFCC and the LS&Co Trust) in an
aggregate principal amount not to exceed $30,000,000 at any time.
7.17 INVESTMENTS. No Borrower shall, nor shall any Borrower permit any of
its Subsidiaries or the LS&Co. Trust to, directly or indirectly make or hold any
Investments, except:
(a) Investments existing on the date hereof and described on SCHEDULE 7.17
and any extensions or renewals thereof or conversions of any such loan
Investments to equity Investments;
(b) equity Investments by LS&Co and its Subsidiaries in their Subsidiaries
existing on the date hereof and described on SCHEDULE 7.17;
(c) advances by LS&Co or any of its Subsidiaries to officers, directors and
employees of LS&Co or any of its Subsidiaries for travel, entertainment,
relocation and analogous ordinary business purposes;
(d) Investments by LS&Co, any Guarantor or any Limited Guarantor in cash
and Cash Equivalents held in an account subject to a control agreement, and
Investments by LS&Co, any Guarantor or any Limited Guarantor in cash and Cash
Equivalents held in deposit accounts not subject to a control agreement to the
extent permitted pursuant to SECTION 7.11(C);
(e) Investments by LS&Co or any of its Subsidiaries consisting of
intercompany Debt permitted under SECTION 7.18;
45
(f) Investments by LS&Co or any of its Subsidiaries received in
satisfaction or partial satisfaction of extensions of credit to customers or
suppliers of LS&Co or any of its Subsidiaries in the ordinary course of
business;
(g) Investments by LS&Co in LSFCC or any Guarantor, and Investments by
LSFCC in LS&Co;
(h) Investments by any Guarantor in LS&Co, LSFCC or any other Guarantor;
(i) Investments by any Limited Guarantor in LS&Co, LSFCC, any Guarantor or
any other Limited Guarantor;
(j) Investments by any Foreign Subsidiary;
(k) Investments permitted under SECTION 7.19 or 7.21;
(l) so long as any Minimum Condition is met, Investments by LS&Co in any of
its Subsidiaries, Investments by any of its Subsidiaries in LS&Co and
Investments by any of its Subsidiaries (other than LSFCC) in any of its other
Subsidiaries; provided that the sum, without duplication, of (i) such
Investments made after the date hereof PLUS (ii) the aggregate principal amount
of Debt permitted by SECTION 7.18(C)(XIII) PLUS (iii) the aggregate dispositions
permitted by SECTION 7.20(K) shall not exceed $50,000,000 in the aggregate
during Fiscal Year 2003, or $100,000,000 in the aggregate during Fiscal Years
2003 and 2004, taken as a single period, or $150,000,000 in the aggregate during
Fiscal Years 2003, 2004 and 2005, taken as a single period, or $200,000,000 in
the aggregate during Fiscal Years 2003, 2004, 2005 and 2006, taken as a single
period, or $225,000,000 in the aggregate during Fiscal Years 2003, 2004, 2005,
2006 and 2007, taken as a single period; PROVIDED FURTHER that Investments in
Subsidiaries of LS&Co that are not Solvent immediately prior to the making of
any such Investment shall not exceed $10,000,000 in the aggregate in any Fiscal
Year;
(m) Investments by LS&Co in any of its Subsidiaries and Investments by any
of its Subsidiaries in LS&Co or any of its other Subsidiaries resulting from a
Disposition permitted under SECTION 7.20(M);
(n) so long as the requirements of subclause (c) under the definition of
"Minimum Condition" are satisfied, other Investments by LS&Co and its
Subsidiaries (other than LSFCC) not otherwise permitted under this Section 7.17
in an aggregate amount not to exceed $35,000,000 at any time outstanding;
(o) contribution of a promissory note executed by Levi Xxxxxxx & Co. Europe
S.A. in favor of Levi Xxxxxxx Continental S.A. (or its successors) from Levi
Xxxxxxx Continental S.A. (or its successors) to LSIFCS in connection with sales
permitted under SECTIONS 7.20(E) and 7.20(M); and
(p) Investments by LS&Co into the LS&Co. Trust and by the LS&Co. Trust
permitted by the LS&Co. Trust Agreement;
46
PROVIDED, HOWEVER, that for all purposes under this SECTION 7.17 (i) all direct
and indirect references to "Limited Guarantors" shall exclude foreign branches
of Limited Guarantors and (ii) foreign branches of Limited Guarantors shall be
treated as separate entities constituting Pledged Foreign Subsidiaries except
with respect to SECTION 7.17(J).
7.18 DEBT. No Borrower shall, nor shall any Borrower permit any of its
Subsidiaries or the LS&Co. Trust to, directly or indirectly create, incur,
assume or suffer to exist any Debt, except:
(a) in the case of LS&Co,
(i) Debt owed to LSFCC or any Subsidiary, which Debt, if owed to any
Guarantor or Limited Guarantor, (A) shall constitute Pledged Debt and (B)
shall be evidenced by promissory notes in form and substance satisfactory
to the Agent, shall be subordinated in right of payment to the payment in
full of the Obligations and such promissory notes shall be pledged as
security for the Obligations of the holder thereof under the Loan Documents
to which such holder is a party and delivered to the Agent pursuant to the
terms of the Pledge and Security Agreement;
(ii) Debt of LS&Co issued in a Capital Markets Transaction provided
such Debt is unsecured and such Debt does not have a stated maturity date
or required principal payments earlier than six months after the Stated
Termination Date;
(iii) Guarantees of LS&Co under the LS&Co. Trust Agreement, PROVIDED
that the investment activities of the LS&Co. Trust are in compliance with
the Investment Policies; and
(iv) Guarantees of LS&Co in respect of the obligations of Guarantors
or Limited Guarantors arising under or in connection with Selected
Revolving Lender Cash Management Services;
(b) in the case of Subsidiaries specified in this SECTION 7.18(B),
(i) Debt owed to LS&Co by LSFCC or any Guarantor or Debt owed to any
Guarantor or any Limited Guarantor by another Guarantor, which Debt (A)
shall constitute Pledged Debt and (B) shall, except in the case of
redeemable preferred stock, be evidenced by promissory notes in form and
substance satisfactory to the Agent, shall be subordinated in right of
payment in full of the Obligations, and such promissory notes shall be
pledged as security for the Obligations of the holder thereof under the
Loan Documents to which such holder is a party and delivered to the Agent
pursuant to the terms of the Pledge and Security Agreement;
(ii) Debt owed to any Limited Guarantor by any Guarantor or another
Limited Guarantor;
(iii) Debt owed to any Foreign Subsidiary by any Guarantor, any
Limited Guarantor or another Foreign Subsidiary;
47
(c) in the case of LS&Co and Subsidiaries specified in this SECTION
7.18(C),
(i) Debt of LS&Co and its Subsidiaries outstanding on the Closing Date
and listed on SCHEDULE 6.9 hereto;
(ii) Debt of LS&Co and its Subsidiaries under the Loan Documents;
(iii) Debt of LS&Co and its Subsidiaries (other than LSFCC) secured by
Liens permitted by SECTION 7.16(C) not to exceed in the aggregate
$50,000,000 at any time outstanding;
(iv) Debt of LS&Co, LSIFCS or any Material Domestic Subsidiary in
respect of Ordinary Course Hedge Agreements and consistent with prudent
business practice, provided that the aggregate Hedge Termination Value of
all such Ordinary Course Hedge Agreements with third parties under which
LS&Co, LSIFCS or any Material Domestic Subsidiary would be required to make
a payment on termination thereof does not exceed in the aggregate
$75,000,000;
(v) so long as any Minimum Condition is met, Debt of LS&Co and its
Subsidiaries (other than LSFCC) to LSIFCS in the ordinary course of
business and Debt of LSIFCS to LS&Co and any of its other Subsidiaries
(other than LSFCC) in the ordinary course of business;
(vi) Debt of LS&Co to the Term Loan Lenders in an aggregate principal
amount not to exceed $500,000,000 and Guarantees of the Guarantors and the
Limited Guarantors in respect of the obligations of LS&Co arising under or
in connection with the Term Loan Facility, and in each case any
replacement, renewal or extension thereof permitted pursuant to SECTION
7.27;
(vii) Debt of LS&Co and its Subsidiaries (other than LSFCC) in the
form of Real Estate Financing Transactions, provided the aggregate
principal amount of all Debt permitted under this SECTION 7.18(C)(VII) and
SECTION 7.18(C)(VIII) (including all such Debt existing on the Closing Date
and listed on SCHEDULE 6.9 hereto) does not exceed in the aggregate
$175,000,000 at any time outstanding;
(viii) Debt of LS&Co and its Subsidiaries (other than LSFCC) in the
form of Equipment Financing Transactions, provided the aggregate principal
amount of all Debt permitted under this SECTION 7.18(C)(VIII) and SECTION
7.18(C)(VII) (including all such Debt existing on the Closing Date and
listed on SCHEDULE 6.9 hereto) does not exceed in the aggregate
$175,000,000 at any time outstanding;
(ix) Ordinary Course Hedge Agreements between LS&Co and its
Subsidiaries (other than LSFCC) and between LSIFCS and any other
Subsidiaries of LS&Co (other than LSFCC) in the ordinary course of
business;
48
(x) customary unsecured indemnification obligations and other
unsecured Guarantees of LS&Co incurred in connection with any Permitted
Foreign Receivables Transaction or any Foreign Inventory Transaction;
(xi) Debt of LS&Co to any of its Subsidiaries (other than LSFCC) or of
any of its Subsidiaries (other than LSFCC) to any of its Subsidiaries
(other than LSFCC) in connection with the purchases of inventory or raw
materials in the ordinary course of business in an amount not to exceed the
purchase price thereof and any related servicing fees;
(xii) Debt of LS&Co and its Subsidiaries arising from the honoring of
a check, draft, wire transfer or similar instrument against insufficient
funds; PROVIDED that such Debt is unsecured other than by a Lien permitted
pursuant to SECTION 7.16(L) or is supported by a Letter of Credit;
(xiii) so long as any Minimum Condition is met, Debt of LS&Co to any
of its Subsidiaries and Debt of any of its Subsidiaries to LS&Co or to any
of its other Subsidiaries (other than LSFCC); PROVIDED, HOWEVER, that the
sum, without duplication, of (1) the aggregate principal amount of all such
Debt incurred after the date hereof PLUS (2) the aggregate Investments
permitted by SECTION 7.17(L) PLUS (3) the aggregate dispositions permitted
by SECTION 7.20(K) shall not exceed $50,000,000 in the aggregate during
Fiscal Year 2003, or $100,000,000 in the aggregate during Fiscal Years 2003
and 2004, taken as a single period, or $150,000,000 in the aggregate during
Fiscal Years 2003, 2004 and 2005, taken as a single period, or $200,000,000
in the aggregate during Fiscal Years 2003, 2004, 2005 and 2006, taken as a
single period, or $225,000,000 in the aggregate during Fiscal Years 2003,
2004, 2005, 2006 and 2007, taken as a single period;
(xiv) Debt of LS&Co to any of its Subsidiaries and Debt of any of its
Subsidiaries to LS&Co or to any of its other Subsidiaries incurred in
connection with a Disposition permitted under SECTIONS 7.20(E) and 7.20(M);
(xv) Debt of any Foreign Subsidiary to any Person other than LS&Co or
any of its Subsidiaries;
(xvi) in addition to the foregoing SECTIONS 7.18(C)(I)-(XV) and
without duplication, Debt (other than Debt under Ordinary Course Hedge
Agreements) of LS&Co and its Subsidiaries (other than LSFCC), PROVIDED that
the sum, without duplication, of the aggregate principal amount of all Debt
outstanding at any time under this SECTION 7.18(C)(XVI) and SECTION
7.18(C)(XVII) shall not exceed $75,000,000 at any time;
(xvii) Debt (other than Debt under Ordinary Course Hedge Agreements)
of LSFCC not exceeding $10,000,000 in aggregate principal amount at any
time outstanding; and
(xviii) Capital Leases of LS&Co, LSFCC, any Guarantor or any Limited
Guarantor not exceeding $75,000,000 in aggregate principal amount at any
time outstanding;
49
PROVIDED, HOWEVER, that for all purposes under this SECTION 7.18 (A) all direct
and indirect references to "Limited Guarantors" shall exclude foreign branches
of Limited Guarantors and (B) foreign branches of Limited Guarantors shall be
treated as separate entities constituting Pledged Foreign Subsidiaries except
with respect to SECTION 7.18(C)(XV).
7.19 FUNDAMENTAL CHANGES. No Borrower shall, nor shall any Borrower permit
any of its Subsidiaries or the LS&Co. Trust to, directly or indirectly merge,
dissolve, liquidate, consolidate with or into another Person, or Dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to or in favor of
any Person, except that, so long as no Default or Event of Default has occurred
and is continuing or would result therefrom:
(a) LS&Co may merge into or consolidate with LSFCC, and LSFCC may merge
into or consolidate with LS&Co; PROVIDED that the Person formed by such merger
or consolidation shall be LS&Co;
(b) any Domestic Subsidiary (other than LSFCC) may merge into or
consolidate with, or may be liquidated, wound-up or dissolved into, LS&Co or any
other Domestic Subsidiary (other than LSFCC); PROVIDED that (i) the Person
formed by such merger or consolidation, or into which such Domestic Subsidiary
is liquidated, wound-up or dissolved (A) in the case of any such transaction
involving LS&Co, shall be LS&Co, (B) in the case of any such transaction
involving a Guarantor and not LS&Co, shall be a Guarantor, and (C) in the case
of any such transaction involving a Limited Guarantor and not LS&Co, shall be a
Limited Guarantor, and (ii) concurrently with or prior to the consummation of
such transaction, LS&Co shall have or caused to be delivered to the Agent such
instruments, agreements or other documents as contemplated under SECTIONS 7.9(A)
as the Agent may reasonably request; PROVIDED FURTHER that a Domestic Subsidiary
that is not Solvent shall in no case merge into or consolidate with, or be
liquidated, wound-up or dissolved into any Guarantor or LS&Co;
(c) any Pledged Foreign Subsidiary may merge into or consolidate with, or
may be liquidated, wound-up or dissolved into, LS&Co, any Guarantor, any Limited
Guarantor or any other Pledged Foreign Subsidiary; PROVIDED that (i) the Person
formed by such merger or consolidation, or into which such Pledged Foreign
Subsidiary is liquidated, wound-up or dissolved (A) in the case of any such
transaction involving LS&Co, shall be LS&Co, (B) in the case of any such
transaction involving a Guarantor and not LS&Co, shall be a Guarantor, and (C)
in the case of any such transaction involving a Limited Guarantor and not LS&Co,
shall be a Limited Guarantor, and (ii) concurrently with or prior to the
consummation of such transaction, LS&Co shall have or caused to be delivered to
the Agent such instruments, agreements or other documents as contemplated under
SECTIONS 7.9(A) and (B) as the Agent may reasonably request; PROVIDED FURTHER
that a Pledged Foreign Subsidiary that is not Solvent shall in no case merge
into or consolidate with, or be liquidated, wound-up or dissolved into a
Domestic Subsidiary or LS&Co;
(d) any Unpledged Foreign Subsidiary may merge into or consolidate with, or
may be liquidated, wound-up or dissolved into, LS&Co or any other Subsidiary
(other than LSFCC); PROVIDED that (i) the Person formed by such merger or
consolidation, or into which such Unpledged Foreign Subsidiary is liquidated,
wound-up or dissolved (A) in the case of any such transaction involving LS&Co,
50
shall be LS&Co, (B) in the case of any such transaction involving a Guarantor
and not LS&Co, shall be a Guarantor, (C) in the case of any such transaction
involving a Limited Guarantor and not LS&Co, shall be a Limited Guarantor, and
(D) in the case of any such transaction involving a Pledged Foreign Subsidiary
and not LS&Co or a Domestic Subsidiary, shall be a Pledged Foreign Subsidiary,
and (ii) concurrently with or prior to the consummation of such transaction,
LS&Co shall have or caused to be delivered to the Agent such instruments,
agreements or other documents as contemplated under SECTIONS 7.9(A) and (B) as
the Agent may reasonably request; PROVIDED FURTHER that an Unpledged Foreign
Subsidiary that is not Solvent shall in no case merge into or consolidate with,
or be liquidated, wound-up or dissolved into a Pledged Foreign Subsidiary, a
Domestic Subsidiary or LS&Co;
(e) the LS&Co Trust may merge into or consolidate with any other trust
adopted and maintained by LS&Co for a similar purpose pursuant to a trust
agreement in form and substance satisfactory to the Agent; and
(f) LS&Co and any of its Subsidiaries may make any Disposition permitted
pursuant to SECTION 7.20(K) OR 7.20(M).
7.20 DISPOSITIONS. No Borrower shall, nor shall any Borrower permit any of
its Subsidiaries or the LS&Co. Trust to, directly or indirectly make any
Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business, including any property
no longer used in the business;
(b) Dispositions of inventory (i) in the ordinary course of business or
(ii) by LS&Co or any of its Subsidiaries to LS&Co or any of its Subsidiaries in
arms length transactions in the ordinary course of business;
(c) Dispositions of accounts receivable to collection agencies provided the
aggregate face amount of all such accounts receivable does not exceed
$5,000,000;
(d) Dispositions by any Foreign Subsidiary;
(e) Dispositions permitted by SECTION 7.19;
(f) Dispositions of real property pursuant to Real Estate Financing
Transactions permitted under SECTION 7.18(C)(VII);
(g) Licenses of IP Rights in the ordinary course of business;
(h) Transfers and contributions of funds from time to time (i) by LS&Co to
that certain grantor trust adopted and maintained by LS&Co in connection with
the deferred compensation plan adopted by LS&Co and effective as of January 1,
2003 (the "LS&CO. DEFERRED COMPENSATION PLAN") for the purpose of contributing
funds to be held until paid to participants in the LS&Co. Deferred Compensation
Plan and their beneficiaries (together with any successors, the "LS&CO. TRUST")
pursuant to those certain trust agreements in form and substance satisfactory to
51
the Agent (the "LS&CO. TRUST AGREEMENT") and (ii) by the LS&Co. Trust to plan
participants or LS&Co in accordance with the LS&Co. Trust Agreement;
(i) Licenses of Intellectual Property Assets other than in the ordinary
course of business or other Dispositions of all right, title and interest in any
Intellectual Property Assets, PROVIDED that (i) the Net Proceeds from any such
Disposition are applied to the prepayment of obligations in accordance with the
terms of the Term Loan Facility, and (ii) each such Disposition is for fair
market value (in the case of any material Disposition, as determined in good
faith by the board of directors of LS&Co), PROVIDED FURTHER that, with respect
to the Intellectual Property Assets subject to any such Disposition, the sales
in the applicable jurisdictions for the prior twelve-month period of Inventory
using such Intellectual Property Assets in the production thereof do not in the
aggregate (A) with respect to any single Disposition (or series of Dispositions)
account for more than five percent (5%) of the consolidated net sales of LS&Co
and its Subsidiaries for the prior twelve-month period and (B) with respect to
all such Dispositions account for more than ten percent (10%) of the
consolidated net sales of LS&Co and its Subsidiaries for the prior twelve-month
period;
(j) Dispositions of equipment pursuant to Equipment Financing Transactions
permitted under SECTION 7.18(C)(VIII);
(k) so long as any Minimum Condition is met, Dispositions by LS&Co to any
of its Subsidiaries of property other than Inventory and Accounts and
dispositions by any of its Subsidiaries to LS&Co or (except in the case of
LSFCC) any of its other Subsidiaries of property other than accounts receivable
and inventory; PROVIDED that the sum, without duplication, of (i) the aggregate
fair market value of such property sold, transferred, licensed or otherwise
disposed of after the date hereof PLUS (ii) the aggregate principal amount of
Debt permitted by SECTION 7.18(C)(XIII) PLUS (iii) the aggregate Investments
permitted by SECTION 7.17(L) shall not exceed $50,000,000 in the aggregate
during Fiscal Year 2003, or $100,000,000 in the aggregate during Fiscal Years
2003 and 2004, taken as a single period, or $150,000,000 in the aggregate during
Fiscal Years 2003, 2004 and 2005, taken as a single period, or $200,000,000 in
the aggregate during Fiscal Years 2003, 2004, 2005 and 2006, taken as a single
period, or $225,000,000 in the aggregate during Fiscal Years 2003, 2004, 2005,
2006 and 2007, taken as a single period;
(l) other Dispositions by LS&Co and its Subsidiaries of property other than
inventory, accounts receivable and Intellectual Property Assets; PROVIDED that
(i) at the time of any such Disposition, no Default or Event of Default shall
exist or shall result from such Disposition; (ii) the consideration received for
such Disposition shall be in an amount at least equal to the fair market value
of the assets sold, transferred, licensed or otherwise disposed of; (iii) at
least seventy five percent (75%) of the consideration received for such
Disposition shall be cash; (iv) the non-cash consideration received for all such
Dispositions in the aggregate shall not exceed $30,000,000 at any time
outstanding; and (v) the aggregate fair market value of all assets so sold,
transferred, licensed or otherwise disposed of by LS&Co and its Subsidiaries
shall not exceed $50,000,000 in any Fiscal Year;
(m) Dispositions for no more than fair market value of property, including
Equity Interests, (i) of any Borrower to the other Borrower; (ii) of any
Guarantor to any Borrower or another Guarantor; (iii) of any Limited Guarantor
52
to LS&Co, LSFCC, any Guarantor or another Limited Guarantor; (iv) of any Pledged
Foreign Subsidiary to LS&Co, LSFCC, any Guarantor, any Limited Guarantor or
another Pledged Foreign Subsidiary; and (v) of any Unpledged Foreign Subsidiary
to LS&Co or any of its other Subsidiaries;
(n) Dispositions constituting leases or subleases granted to others in the
ordinary course of business not interfering with the ordinary conduct of the
business of the grantor thereof;
(o) Dispositions involving the liquidation of any Foreign Subsidiary held
directly by any Borrower, any Guarantor or any Limited Guarantor, PROVIDED that
such Disposition is for the purpose of converting LS&Co's business in such
foreign region into licensee operations; and
(p) a Disposition of the promissory note permitted pursuant to SECTION
7.17(O);
(q) so long as the requirements of subclause (c) under the definition of
"Minimum Condition" are satisfied, Dispositions of inventory and accounts
receivable by foreign branches of Limited Guarantors; PROVIDED that (i) the
consideration received for such Disposition shall be in an amount at least equal
to the fair market value of the assets sold, transferred, licensed or otherwise
disposed of and (ii) at least seventy five percent (75%) of the consideration
received for such Disposition shall be cash;
PROVIDED, HOWEVER, that for all purposes under this SECTION 7.20 (i) all direct
and indirect references to "Limited Guarantors" shall exclude foreign branches
of Limited Guarantors and (ii) foreign branches of Limited Guarantors shall be
treated as separate entities constituting Pledged Foreign Subsidiaries, except
with respect to SECTION 7.20(D).
7.21 RESTRICTED PAYMENTS. No Borrower shall, nor shall any Borrower permit
any of its Subsidiaries to, directly or indirectly declare or pay any dividends,
purchase, redeem, retire, defease or otherwise acquire for value any of its
Equity Interests now or hereafter outstanding, return any capital to its
stockholders, partners or members (or the equivalent Persons thereof) as such,
make any distribution of assets, Equity Interests, obligations or securities to
its stockholders, partners or members (or the equivalent Persons thereof) as
such, except that, so long as no Default or Event of Default shall have occurred
and be continuing at the time of any action described below or would result
therefrom:
(a) LS&Co may declare and pay dividends and distributions payable only in
common stock (other than Disqualified Stock) of LS&Co; and
(b) (i) any Subsidiary of LS&Co may declare and pay cash dividends, other
cash distributions and dividends and distributions payable in property or in
common stock (other than Disqualified Stock) of such Subsidiary to LS&Co and
(ii) cash dividends, other cash distributions and dividends and distributions
payable in property or in common stock (other than Disqualified Stock) may be
declared and paid by (A) any Guarantor to LSFCC or any other Guarantor of which
such Guarantor is a Subsidiary, (B) any Limited Guarantor to LSFCC, any
Guarantor or any other Limited Guarantor of which such Limited Guarantor is a
Subsidiary, and (C) any Foreign Subsidiary to any Subsidiary of which such
53
Foreign Subsidiary is a Subsidiary; PROVIDED in each case that any dividends
paid by a Subsidiary of LS&Co which is not a wholly-owned Subsidiary are paid to
all stockholders thereof on a pro rata basis or on a basis that results in the
receipt by LS&Co or a Subsidiary that is the parent of that Subsidiary of
dividends or distributions of greater value than it would receive on a pro rata
basis.
7.22 CHANGE IN NATURE OF BUSINESS. No Borrower shall, nor shall any
Borrower permit any of its Subsidiaries to, directly or indirectly engage in any
business not related or incidental to the manufacture and sale of clothing and
accessories. The LOS/DOS Business is a business that is related or incidental to
the manufacture and sale of clothing within the meaning of the preceding
sentence. LSFCC shall not, and LS&Co shall not suffer or permit LSFCC to, (a)
cease to be a directly held wholly-owned Domestic Subsidiary of LS&Co or (b)
engage in any business other than the purchase, holding and servicing of
Inventory and Accounts generated by LS&Co, the processing of accounts payable of
LS&Co and its Subsidiaries, procurement support services for LS&Co and its
Subsidiaries and other accounting and general customer relationship functions.
7.23 TRANSACTIONS WITH AFFILIATES. Subject to SECTION 7.20(M), no Borrower
shall, nor shall any Borrower permit any of its Subsidiaries to, directly or
indirectly enter into any transaction of any kind with any Affiliate of any
Borrower, whether or not in the ordinary course of business, other than on fair
and reasonable terms substantially as favorable to LS&Co or such Subsidiary as
would be obtainable by LS&Co or such Subsidiary at the time in a comparable
arm's length transaction with a Person other than an Affiliate.
7.24 BURDENSOME AGREEMENTS. No Borrower shall, nor shall any Borrower
permit any of its Subsidiaries to, directly or indirectly enter into or suffer
to exist any agreement or arrangement limiting the ability of any of its
Subsidiaries to declare or pay dividends or other distributions in respect of
its Equity Interests or repay or prepay any Debt owed to, make loans or advances
to, or otherwise transfer assets to or invest in, LS&Co or any of its
Subsidiaries (whether through a covenant restricting dividends, loans, asset
transfers or investments, a financial covenant or otherwise), except (a) the
Loan Documents, (b) restrictions on Foreign Subsidiaries formed in connection
with Permitted Foreign Receivables Transactions or Foreign Inventory
Transactions contained in documentation for such Permitted Foreign Receivables
Transactions or Foreign Inventory Transaction to the extent such restrictions
are required by the other party thereto or are otherwise customary in standard
market practice for similar receivables purchase or inventory financing
transactions, (c) restrictions on the declaration or payment or other
distributions in respect of such Equity Interests contained in documentation for
any Capital Markets Transaction permitted under SECTION 7.18(A)(II) provided
such restrictions do not prohibit any actions expressly permitted hereunder, (d)
restrictions on the foregoing (other than restrictions of the type set forth in
clause (c)), if any, contained in documentation for any Capital Markets
Transaction permitted under SECTION 7.18(A)(II) provided that any such
restrictions shall be deemed to be included herein as if set forth in this
Agreement, (e) restrictions on the transfer of the property subject to Equipment
Financing Transactions permitted under SECTION 7.18(C)(VIII), Real Estate
Financing Transactions permitted under SECTION 7.18(C)(VII) and Dispositions of
accounts receivable permitted under SECTION 7.20(D), (f) restrictions placed on
the transfer by a Subsidiary of IP Rights granted by LS&Co in connection with
the terms of licenses between LS&Co and any of its Subsidiaries relating to such
IP Rights, (g) restrictions required to be placed on the transfer of property
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pursuant to a Lien permitted under SECTION 7.16; and (h) restrictions contained
in the documentation for the Term Loan Facility.
7.25 LEASE OBLIGATIONS. No Borrower shall, nor shall any Borrower permit
any of its Subsidiaries to, create, incur, assume or suffer to exist, any
obligations as lessee (a) for the rental or hire of real or personal property in
connection with any sale and leaseback transaction other than (i) Capital Leases
permitted under SECTION 7.18(C)(XVIII), (ii) Real Estate Financing Transactions
permitted under SECTION 7.18(C)(VII) and (iii) Equipment Financing Transactions
permitted under SECTION 7.18(C)(VIII), or (b) for the rental or hire of other
real or personal property of any kind under leases or agreements to lease
(excluding Capital Leases) other than (i) leases in existence on the Closing
Date and (ii) leases entered into or assumed by LS&Co or any of its Subsidiaries
after the date hereof in the ordinary course of business.
7.26 AMENDMENTS OF CERTAIN DOCUMENTS. No Borrower shall, nor shall any
Borrower permit any of its Subsidiaries or the LS&Co. Trust to, amend, any of
its organizational documents, the Investment Policies or the Leadership Shares
Plan if the effect of such amendment would be materially adverse to LS&Co or to
the Lenders.
7.27 PREPAYMENTS, ETC., OF DEBT. No Borrower shall, nor shall any Borrower
permit any of its Subsidiaries to, prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner any
Debt, except (a) the prepayment of the Loans in accordance with the terms of
this Agreement and the prepayment of Debt payable to LS&Co, (b) the payment of
the outstanding principal amount of, premium or penalty, if any, and interest on
any Debt (other than the Loans) that is secured by a Lien on the stock or assets
in question and that is required to be repaid under the terms thereof as a
result of a permitted Disposition, (c) the prepayment of secured Debt other than
the Term Loan Facility, in whole or in part, provided there are no outstanding
Loans after giving effect to such prepayment, (d) the close out of Ordinary
Course Hedge Agreements, (e) Debt of LS&Co to any of its Subsidiaries and Debt
of any of its Subsidiaries to LS&Co or any of its other Subsidiaries to the
extent such Debt to be prepaid is permitted pursuant to SECTIONS 7.18, in each
case, in accordance with any subordination terms thereof, (f) prepayment by
Foreign Subsidiaries of Debt of Foreign Subsidiaries; (g) mandatory prepayments
required under the documentation for the Term Loan Facility; (h) prepayments of
LS&Co's outstanding 6.80% notes due 2003 and 7.00% notes due November 2006 in
accordance with SECTION 7.33; and (i) prepayment of all or part of LS&Co's
outstanding 11-5/8% notes due January 2008 and prepayment of all or part of the
Term Loan Facility, PROVIDED in each case that (i) prior to any such prepayment
all of LS&Co's outstanding 6.80% notes due 2003 and 7.00% notes due November
2006 shall have been fully repaid, redeemed, repurchased, defeased or otherwise
satisfied in accordance with SECTION 7.33, (ii) the requirements of subclause
(c) under the definition of "Minimum Condition" shall be satisfied with respect
to such prepayment and (iii) any Debt issued to refinance the 11-5/8% notes due
January 2008 or the Term Loan Facility, as the case may be, shall be otherwise
permitted hereunder, shall have a maturity date after January 2008 and shall be
on terms no more onerous than the Debt being refinanced thereby.
7.28 NEGATIVE PLEDGE. No Borrower shall, nor shall any Borrower permit any
of its Subsidiaries to, enter into or suffer to exist, any agreement prohibiting
or conditioning the creation or assumption of any Lien upon any of its property
or assets except:
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(a) negative pledges existing on property of LS&Co and its Subsidiaries on
the Closing Date and listed on SCHEDULE 7.16;
(b) negative pledges in favor of the Agent and the Lenders;
(c) negative pledges in connection with any purchase money Debt permitted
under SECTION 7.18(C)(III) solely to the extent that the agreement or instrument
governing such Debt prohibits a Lien on the property acquired with the proceeds
of such Debt;
(d) negative pledges in connection with any Capital Lease permitted under
SECTION 7.18(C)(XVIII) solely to the extent that such Capital Lease prohibits a
Lien on the property subject thereto;
(e) negative pledges on the property subject to Equipment Financing
Transactions permitted under SECTION 7.18(C)(VIII) and Real Estate Financing
Transactions permitted under SECTION 7.18(C)(VII), and negative pledges on the
property subject to Liens permitted under SECTION 7.16;
(f) negative pledges on IP Rights licensed from third parties, provided
such negative pledges expressly permit Liens on such IP Rights in favor of the
Agent and in favor of the collateral agent for the Term Loan Lenders;
(g) negative pledges with respect to property of LS&Co and its Subsidiaries
contained in documentation for any Capital Markets Transaction (provided such
negative pledges expressly permit Liens in favor of the Agent and in favor of
the agent for the Term Loan Lenders) on all assets of LS&Co and its
Subsidiaries, and Liens on equipment subject to Equipment Financing
Transactions, real property subject to Real Estate Financing Transactions,
accounts receivable subject to Permitted Foreign Receivables Transactions,
inventory subject to Foreign Inventory Transactions and property subject to any
other Lien permitted under SECTION 7.16;
(h) negative pledges contained, as of the Closing Date, in the
documentation for the Term Loan Facility or any replacement, extension or
renewal thereof permitted under SECTION 7.27; PROVIDED that any negative pledge
permitted pursuant to the immediately foregoing clause (ii) shall in no case
directly or indirectly prohibit the first priority Lien of the Lenders on such
assets; and
(i) negative pledges on property of Foreign Subsidiaries.
7.29 RESTRICTED SUBSIDIARIES. LS&Co shall not permit any of its
Subsidiaries (other than Unpledged Foreign Subsidiaries) to become a Restricted
Subsidiary, other than as a result of a change in Consolidated Net Tangible
Assets.
7.30 AMENDMENTS OF DOCUMENTS RELATING TO DEBT AND RECEIVABLES. No Borrower
shall, nor shall any Borrower permit any of its Domestic Subsidiaries to, amend
or otherwise change the terms of any Debt (including without limitation any
terms of the Term Loan Facility and any terms of any security agreement relating
to the Term Loan Facility or any other Debt), or make any payment consistent
with an amendment thereof or change thereto, if the effect of such amendment or
56
change is to increase the interest rate on such Debt, change (to earlier dates)
any dates upon which payments of principal or interest are due thereon, change
any event of default or condition to an event of default with respect thereto
(other than to eliminate or make less onerous any such event or default or
increase any grace period related thereto), change the redemption, prepayment or
defeasance provisions thereof, or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other amendments or changes made, is to increase materially the
obligations of the obligor thereunder or to confer any additional rights on the
holders of such Debt (or a trustee or other representative on their behalf)
which would be materially adverse to LS&Co or to the Lenders; PROVIDED that none
of the foregoing shall apply to any Debt of LS&Co to any of its Subsidiaries or
to Debt of any Subsidiary to LS&Co or any other Subsidiary other than amendments
to the terms of any subordination provisions relating to any Debt that is
Pledged Collateral.
7.31 CONSOLIDATED FIXED CHARGE COVERAGE RATIO. If, as of any date,
Availability is less than the greater of (a) twenty percent (20%) of the
Borrowing Base and (b) $50,000,000, LS&Co shall have a Consolidated Fixed Charge
Coverage Ratio for the period of twelve (12) consecutive Fiscal Months ended on
the last day of the Fiscal Month most recently ended of not less than 1.00 to
1.00.
7.32 USE OF PROCEEDS.
(a) No Borrower shall, nor shall any Borrower permit any of its
Subsidiaries to, use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of LS&Co or others incurred to purchase or carry Margin Stock,
(iii) to extend credit for the purpose of purchasing or carrying any Margin
Stock, or (iv) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act.
(b) Each Borrower shall, and shall cause each of its Subsidiaries to, use
the Loan proceeds solely (i) to refinance obligations of LS&Co and its
Subsidiaries under the Existing Credit Agreement and the Existing Domestic
Receivables Transaction Documents and (ii) for working capital, capital
expenditures and other general corporate purposes not in contravention of any
Requirement of Law or of any Loan Document.
7.33 RESERVES FOR OUTSTANDING NOTES.
(a) Until all of LS&Co's outstanding 6.80% notes due 2003 have been repaid,
redeemed, repurchased or otherwise satisfied, LS&Co shall maintain restricted
cash on its balance sheet sufficient for the purpose of repayment, redemption,
repurchase or other satisfaction of such 6.80% notes and any interest thereon.
(b) LS&Co shall refinance, repurchase, defease, reserve cash or reserve
Availability for its 7.00% notes due November 2006 at least six months prior to
their maturity; PROVIDED that if LS&Co reserves cash or Availability for such
purpose, after applying such reserve LS&Co shall have Availability of at least
$150,000,000 at all times until all of such notes have been repaid, redeemed,
repurchased or otherwise satisfied.
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7.34 FURTHER ASSURANCES. Each Borrower shall execute and deliver, or cause
to be executed and delivered, to the Agent and/or the Lenders such documents and
agreements, and shall take or cause to be taken such actions, as the Agent or
any Lender may, from time to time, request to carry out the terms and conditions
of this Agreement and the other Loan Documents.
ARTICLE 8
CONDITIONS OF LENDING
8.1 CONDITIONS PRECEDENT TO MAKING OF LOANS ON THE CLOSING DATE. The
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause the Letter of Credit Issuer to
issue any Letter of Credit on the Closing Date, are subject to the following
conditions precedent having been satisfied in a manner satisfactory to the Agent
and each Lender:
(a) This Agreement and the other Loan Documents each shall have been
executed by each party thereto and each Borrower shall have performed and
complied with, in all material respects, all covenants, agreements and
conditions contained herein and the other Loan Documents which are required to
be performed or complied with by such Borrower before or on such Closing Date.
(b) Upon making the Revolving Loans (including such Revolving Loans made to
finance the Closing Fee or otherwise as reimbursement for fees, costs and
expenses then payable under this Agreement) and with all its obligations
current, the Borrowers shall have Availability of at least $250,000,000.
(c) All representations and warranties made hereunder and in the other Loan
Documents shall be true and correct as if made on such date.
(d) No Default or Event of Default shall have occurred and be continuing
after giving effect to the Loans to be made and the Letters of Credit to be
issued on the Closing Date.
(e) The Agent and the Lenders shall have received such opinions of counsel
for LS&Co and its Subsidiaries as the Agent or any Lender shall request, each
such opinion to be in a form, scope, and substance satisfactory to the Agent,
the Lenders, and their respective counsel.
(f) The Agent shall have received:
(i) acknowledgment copies of proper financing statements, duly filed
on or before the Closing Date under the UCC of all jurisdictions that the
Agent may deem necessary or desirable in order to perfect the Agent's
Liens; and
(ii) duly executed UCC-3 termination statements and such other
instruments, in form and substance satisfactory to the Agent, as shall be
necessary to terminate and satisfy all Liens on the property of LS&Co and
its Subsidiaries except Liens permitted under SECTION 7.16.
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(g) The Borrowers shall have paid all fees and expenses of the Agent and
the reasonable Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby to the extent invoiced.
(h) The Agent and the Lenders shall have had an opportunity, if they so
choose, to examine the books of account and other records and files of the
Borrowers and to make copies thereof, and to conduct a pre-closing audit which
shall include, without limitation, verification of Inventory, Accounts, and the
Borrowing Base, and the results of such examination and audit shall have been
satisfactory to the Agent and the Lenders in all respects.
(i) All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents and all documents and papers relating
thereto shall be reasonably satisfactory in form, scope, and substance to the
Agent and the Lenders.
(j) The Agent shall have received copies of all documents relating to the
Term Loan Facility in final form and evidence that the Term Loan Facility shall
become effective prior to or concurrently with the Closing Date, in each case in
form and substance reasonably satisfactory to the Agent.
(k) The Agent shall have received evidence, in form, scope, and substance,
reasonably satisfactory to the Agent that the existing domestic accounts
receivable securitization facility has been or concurrently with the Closing
Date is being terminated or irrevocably defeased to the Lenders' satisfaction,
including without limitation that (i) the Existing Domestic Receivables
Transaction Documents (other than the Intercompany Note and the RPSA) have been
or concurrently with the Closing Date are being terminated, and each material
obligation of each Borrower thereunder has been terminated or irrevocably
defeased, as applicable, to the Lenders' satisfaction, (ii) all domestic
accounts receivable and related rights transferred or sold to LSRF under any
Existing Domestic Receivables Transaction Document have been transferred to
LSFCC on or prior to the Closing Date and (iii) all funds remaining with either
with the Indenture Trustee or LSRF as a result of any transactions contemplated
under the Existing Domestic Receivables Transaction Documents not used to
terminate or irrevocably defease all material obligations of each Borrower
thereunder have been transferred to LSFCC on or prior to the Closing Date.
(l) The Agent shall have received evidence, in form, scope, and substance,
reasonably satisfactory to the Agent that the Existing Credit Agreement has been
or concurrently with the Closing Date is being terminated and all Liens securing
obligations under the Existing Credit Agreement have been or are being released.
(m) Without limiting the generality of the items described above, each Loan
Party shall have delivered or caused to be delivered to the Agent (in form and
substance reasonably satisfactory to the Agent), the financial statements,
instruments, resolutions, documents, agreements, certificates, opinions and
other items set forth on the "Closing Checklist" delivered by the Agent to LS&Co
on or prior to the Closing Date.
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(n) Each of the Intercreditor Agreement and the Trademark License Agreement
shall be in form and substance reasonably satisfactory to the Agent and shall
have been executed by each party thereto.
The acceptance by any Borrower of any Loans made or Letters of Credit
issued on the Closing Date shall be deemed to be a representation and warranty
made by each Borrower to the effect that all of the conditions precedent to the
making of such Loans or the issuance of such Letters of Credit have been
satisfied, with the same effect as delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of such Borrower, dated the Closing
Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this SECTION 8.1 have been fulfilled to the satisfaction of such
Lender, (ii) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently and
without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this SECTION 8.1, and (iii) all documents sent
to such Lender for approval consent, or satisfaction were acceptable to such
Lender.
8.2 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the Lenders to
make each Loan, including the initial Revolving Loans on the Closing Date, and
the obligation of the Agent to cause the Letter of Credit Issuer to issue any
Letter of Credit shall be subject to the further conditions precedent that on
and as of the date of any such extension of credit:
(a) The following statements shall be true, and the acceptance by any
Borrower of any extension of credit shall be deemed to be a statement to the
effect set forth in CLAUSES (I), (II) and (III) with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer, dated the date of such extension of credit, stating that:
(i) The representations and warranties contained in this Agreement and
the other Loan Documents are correct in all material respects on and as of
the date of such extension of credit as though made on and as of such date,
other than any such representation or warranty which relates to a specified
prior date and except to the extent the Agent and the Lenders have been
notified in writing by LS&Co that any representation or warranty is not
correct and the Majority Lenders have explicitly waived in writing
compliance with such representation or warranty; and
(ii) No event has occurred and is continuing, or would result from
such extension of credit, which constitutes a Default or an Event of
Default; and
(iii) No event has occurred and is continuing, or would result from
such extension of credit, which has had or could reasonably be expected to
have a Material Adverse Effect.
(b) No such Borrowing shall exceed Availability, PROVIDED, HOWEVER, that
the foregoing conditions precedent are not conditions to each Lender
participating in or reimbursing the Bank or the Agent for such Lenders' Pro Rata
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Share of any Non-Ratable Loan or Agent Advance made in accordance with the
provisions of SECTIONS 1.2(H) and (I).
ARTICLE 9
DEFAULT; REMEDIES
9.1 EVENTS OF DEFAULT. It shall constitute an event of default ("EVENT OF
DEFAULT") if any one or more of the following shall occur for any reason:
(a) any failure by any Borrower to pay the principal of or interest or
premium on any of the Obligations or any fee or other amount payable hereunder
or under any other Loan Document when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by any Borrower in
this Agreement or by LS&Co or any of its Subsidiaries in any of the other Loan
Documents, any Financial Statement, or any certificate furnished by LS&Co or any
of its Subsidiaries at any time to the Agent or any Lender shall prove to be
untrue in any material respect as of the date on which made, deemed made, or
furnished;
(c) (i) any default shall occur in the observance or performance of any of
the covenants and agreements contained in SECTIONS 5.2(H), 5.3, 7.2, 7.5, 7.12
through 7.33, or Section 11 of the Pledge and Security Agreement, (ii) any
default shall occur in the observance or performance of any of the covenants and
agreements contained in SECTION 5.2 (other than SECTION 5.2(H)) and such default
shall continue for five (5) days or more; or (iii) any default shall occur in
the observance or performance of any of the other covenants or agreements
contained in any other Section of this Agreement or any other Loan Document, any
other Loan Documents, or any other agreement entered into at any time to which
LS&Co or any of its Subsidiaries and the Agent or any Lender are party
(including in respect of any Bank Products) and such default shall continue for
twenty (20) days or more;
(d) any default shall occur with respect to any Debt (other than the
Obligations) of LS&Co or any of its Subsidiaries in an outstanding aggregate
principal amount which individually or collectively exceeds $25,000,000, or
under any agreement or instrument under or pursuant to which any such Debt may
have been issued, created, assumed, or guaranteed by LS&Co or any of its
Subsidiaries, and such default shall continue for more than the period of grace,
if any, therein specified, if the effect thereof (with or without the giving of
notice or further lapse of time or both) is to accelerate, or to permit the
holders of any such Debt to accelerate, the maturity of any such Debt; or any
such Debt shall be declared due and payable or be required to be prepaid (other
than by a regularly scheduled required prepayment) prior to the stated maturity
thereof;
(e) LS&Co or any of its Material Domestic Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state or federal, now or hereafter existing, or consent to, approve of, or
acquiesce in, any such petition, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator,
61
custodian, monitor, trustee or similar officer for it or for all or any part of
its property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(f) an involuntary petition shall be filed or an action or proceeding
otherwise commenced seeking reorganization, arrangement, consolidation or
readjustment of the debts of LS&Co or any of its Material Domestic Subsidiaries
or for any other relief under the federal Bankruptcy Code, as amended, or under
any other bankruptcy or insolvency act or law, state or federal, now or
hereafter existing and such petition or proceeding shall not be dismissed within
thirty (30) days after the filing or commencement thereof or an order of relief
shall be entered with respect thereto;
(g) other than in connection with a transaction permitted under SECTION
7.19, a receiver, assignee, liquidator, sequestrator, custodian, monitor,
trustee or similar officer for LS&Co or any of its Material Domestic
Subsidiaries or for all or any part of any such Person's property shall be
appointed or a warrant of attachment, execution or similar process shall be
issued against any part of the property of LS&Co or any of its Material Domestic
Subsidiaries;
(h) other than in connection with a transaction permitted under SECTION
7.19, LS&Co or any of its Material Domestic Subsidiaries shall file a
certificate of dissolution under applicable state law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it any action
or proceeding for dissolution, winding-up or liquidation, or shall take any
corporate action in furtherance thereof;
(i) any Loan Document shall be terminated, revoked or declared void or
invalid or unenforceable or challenged by any Loan Party;
(j) (i) a final judgment or order for the payment of money is entered
against LS&Co or any of its Subsidiaries involving in the aggregate liability
(to the extent not covered by independent third-party insurance) of $10,000,000
or more, or (ii) any one or more non-monetary final judgments is entered against
LS&Co or any of its Subsidiaries that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of thirty (30) consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect;
(k) any loss, theft, damage or destruction of any item or items of
Collateral or other property of LS&Co or any of its Subsidiaries occurs which
could reasonably be expected to have a Material Adverse Effect and is not
adequately covered by insurance;
(l) there is filed against LS&Co or any of its Subsidiaries any action,
suit or proceeding under any federal or state racketeering statute (including
the Racketeer Influenced and Corrupt Organization Act of 1970), which action,
suit or proceeding (i) is not dismissed within one hundred twenty (120) days,
and (ii) could reasonably be expected to result in the confiscation or
forfeiture of any material portion of the Collateral;
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(m) for any reason other than the failure of the Agent to take any action
available to it to maintain perfection of the Agent's Liens pursuant to the Loan
Documents, any Loan Document ceases to be in full force and effect or any Lien
with respect to any material portion of the Collateral intended to be secured
thereby ceases to be, or is not, valid, perfected and prior to all other Liens
(other than senior Liens permitted under SECTION 7.16) or is terminated, revoked
or declared void;
(n) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to result
in liability of the Borrowers under Title IV of ERISA to the Pension Plan,
Multi-employer Plan or the PBGC in an aggregate amount in excess of $15,000,000
; (ii) any Pension Plan shall have a Funded Current Liability Percentage of less
than eighty five percent (85%) as of the most recently completed valuation date;
or (iii) any Borrower or any ERISA Affiliate shall fail to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multi-employer Plan in an aggregate amount in excess of $15,000,000; or
(o) there occurs a Change of Control.
9.2 REMEDIES.
(a) If a Default or an Event of Default exists, the Agent may, in its
discretion, and shall, at the direction of the Majority Lenders, do one or more
of the following at any time or times and in any order, without notice to or
demand on any Borrower: (i) reduce the Maximum Revolver Amount, or the advance
rates against Eligible Accounts and/or Eligible Inventory used in computing the
Borrowing Base, or reduce one or more of the other elements used in computing
the Borrowing Base; (ii) restrict the amount of or refuse to make Revolving
Loans; and (iii) restrict or refuse to provide Letters of Credit or Credit
Support. If an Event of Default exists, the Agent shall, at the direction of the
Majority Lenders, do one or more of the following, in addition to the actions
described in the preceding sentence, at any time or times and in any order,
without notice to or demand on any Borrower: (A) terminate the Commitments and
this Agreement; (B) declare any or all Obligations to be immediately due and
payable; PROVIDED, HOWEVER, that upon the occurrence of any Event of Default
described in SECTIONS 9.1(E), 9.1(F), 9.1(G), or 9.1(H), the Commitments shall
automatically and immediately expire and all Obligations shall automatically
become immediately due and payable without notice or demand of any kind; (C)
require the Borrowers to cash collateralize all outstanding Letter of Credit
Obligations in an amount equal to one hundred and five percent (105%) of the
greatest amount for which the outstanding Letters of Credit may be drawn plus
any fees and expenses associated with such Letters of Credit; and (D) pursue its
other rights and remedies under the Loan Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i) the Agent
shall have for the benefit of the Lenders, in addition to all other rights of
the Agent and the Lenders, the rights and remedies of a secured party under the
Loan Documents and the UCC; (ii) the Agent may, at any time, take possession of
the Collateral and keep it on any Borrower's premises, at no cost to the Agent
or any Lender, or remove any part of it to such other place or places as the
Agent may desire, or the Borrowers shall, upon the Agent's demand, at the
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Borrowers' cost, assemble the Collateral and make it available to the Agent at a
place reasonably convenient to the Agent; and (iii) the Agent may sell and
deliver any Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Agent deems advisable, in
its sole discretion, and may, if the Agent deems it reasonable, postpone or
adjourn any sale of the Collateral by an announcement at the time and place of
sale or of such postponed or adjourned sale without giving a new notice of sale.
Without in any way requiring notice to be given in the following manner, each
Borrower agrees that any notice by the Agent of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the UCC
or otherwise, shall constitute reasonable notice to the Borrowers if such notice
is mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least ten (10) Business
Days prior to such action to LS&Co's address specified in or pursuant to SECTION
13.8. If any Collateral is sold on terms other than payment in full at the time
of sale, no credit shall be given against the Obligations until the Agent or the
Lenders receive payment, and if the buyer defaults in payment, the Agent may
resell the Collateral without further notice to any Borrower. In the event the
Agent seeks to take possession of all or any portion of the Collateral by
judicial process, each Borrower irrevocably waives: (A) the posting of any bond,
surety or security with respect thereto which might otherwise be required; (B)
any demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (C) any requirement that the Agent retain possession
and not dispose of any Collateral until after trial or final judgment. Each
Borrower agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. Each
Borrower hereby grants to the Agent the irrevocable, nonexclusive, royalty-free
right and license to use all present and future trademarks, trade names, trade
dress, copyrights, patents or technical processes (including the Intellectual
Property Collateral (as such term is defined in the Intercreditor Agreement) and
the IP Collateral (as such term is defined in the Pledge and Security
Agreement)) owned or used by such Borrower that relate to the Collateral and any
other collateral granted by such Borrower as security for the Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable the Agent to realize on, and exercise all rights of the Agent and the
Lenders in relation to, the Collateral in accordance with this Agreement
(including without limitation advertising in all media as the Agent deems
appropriate in connection with marketing and sales of the Collateral) and to
enable any transferee or assignee of the Collateral to enjoy the benefits of the
Collateral, and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof. The proceeds of sale
shall be applied first to all expenses of sale, including attorneys' fees, and
then to the Obligations. The Agent will return any excess to the Borrowers and
the Borrowers shall remain liable for any deficiency.
(c) If an Event of Default occurs, each Borrower hereby waives all rights
to notice and hearing prior to the exercise by the Agent of the Agent's rights
to repossess the Collateral without judicial process or to reply, attach or levy
upon the Collateral without notice or hearing.
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ARTICLE 10
TERM AND TERMINATION
10.1 TERM AND TERMINATION. The term of this Agreement shall end on the
Stated Termination Date unless sooner terminated in accordance with the terms
hereof. The Agent upon direction from the Majority Lenders may terminate this
Agreement without notice if an Event of Default has occurred and is continuing.
Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including all unpaid principal, accrued and unpaid
interest and any early termination or prepayment fees or penalties) shall become
immediately due and payable and the Borrowers shall immediately arrange for the
cancellation and return of Letters of Credit then outstanding. Notwithstanding
the termination of this Agreement, until all Obligations are indefeasibly paid
and performed in full in cash, the Borrowers shall remain bound by the terms of
this Agreement and shall not be relieved of any of its Obligations hereunder or
under any other Loan Document, and the Agent and the Lenders shall retain all
their rights and remedies hereunder (including the Agent's Liens in and all
rights and remedies with respect to all then existing and after-arising
Collateral).
ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1 AMENDMENTS AND WAIVERS.
(a) No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by any Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Lenders (or by the Agent at the written request of the Majority
Lenders) and each Borrower and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Lenders and each Borrower and
acknowledged by the Agent, do any of the following:
(i) increase or extend the Commitment of any Lender;
(ii) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts
due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(iii) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under
any other Loan Document;
(iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or
any of them to take any action hereunder;
(v) increase any of the percentages set forth in the definition of
"Borrowing Base";
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(vi) amend this Section or any provision of this Agreement providing
for consent or other action by all Lenders;
(vii) release all or substantially all Guarantors or release all or
substantially all Collateral;
(viii) change any of the definitions of "Majority Lenders" or "Pro
Rata Share";
(ix) increase the Maximum Revolver Amount, the Maximum Inventory Loan
Amount, or Letter of Credit Subfacility; or
(x) amend SECTION 12.12;
PROVIDED, HOWEVER, the Agent may, in its sole discretion and notwithstanding the
limitations contained in CLAUSES (V) and (IX) above and any other terms of this
Agreement, make Agent Advances in accordance with SECTION 1.2(I) and, PROVIDED
FURTHER, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and, PROVIDED FURTHER, that Schedule 1.2
hereto (Commitments) may be amended from time to time by the Agent alone to
reflect assignments of Commitments in accordance herewith and, PROVIDED FURTHER,
that notwithstanding anything to the contrary contained in this Agreement, any
Loan Document entered into solely in connection with Bank Products may be
amended from time to time by the parties thereto in accordance with its terms.
(b) LS&Co shall be permitted to replace any Lender that fails to consent to
any amendment, waiver or consent to any Loan Document requested by LS&Co, and
supported by the Majority Lenders, with a replacement financial institution;
PROVIDED that (i) no later than one hundred twenty (120) days after the date
Majority Lender consent was obtained with respect to such amendment, waiver or
consent, LS&Co shall notify the Lender of LS&Co's intention to replace such
Lender, (ii) such replacement does not conflict with any applicable requirement
of law, (iii) no Default shall have occurred and be continuing at the time of
such replacement, (iv) the replacement financial institution shall purchase, at
par, all Loans and other amounts owing to such replaced Lender on or prior to
the date of replacement, (v) the Borrowers shall be liable to such replaced
Lender under SECTION 4.4 if any LIBOR Rate Revolving Loan owing to such replaced
Lender shall be purchased other than on the last day of the Interest Period
relating thereto, (vi) the replacement financial institution, if not already a
Lender, shall be reasonably satisfactory to the Agent and satisfactory to the
Letter of Credit Issuer in its sole discretion, (vii) the replaced Lender shall
be obligated to make such replacement in accordance with the provisions of
SECTION 11.2 (provided that the Borrowers shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such time as
such replacement shall be consummated, the Borrowers shall pay all additional
amounts (if any) required pursuant to SECTION 4.1 or 4.3, as the case may be,
(ix) any such replacement shall not be deemed to be a waiver of any rights that
the Borrowers, the Agent or any other Lender shall have against the replaced
Lender, and (x) the replacement financial institution has agreed to the
respective amendment, waiver or consent in connection with such replacement.
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11.2 ASSIGNMENTS; PARTICIPATIONS.
(a) Any Lender may, with the written consent of the Agent and, unless an
Event of Default has occurred and is continuing, LS&Co (in each case, such
consent not to be unreasonably withheld or delayed), assign and delegate to one
or more Eligible Assignees (provided that no consent of the Agent or LS&Co shall
be required in connection with any assignment and delegation by a Lender to an
Affiliate of such Lender) (each an "ASSIGNEE") all, or any ratable part of all,
of the Loans, the Commitments and the other rights and obligations of such
Lender hereunder in a minimum amount of $5,000,000, or in a minimum amount of
$1,000,000 in the case of an Assignee that is already a Lender (except that in
any case (A) no minimum will apply to an assignment of the entire remaining
amount of the assigning Lender's Loans, Commitments and other rights and
obligations hereunder, and (B) unless an assignor Lender has assigned and
delegated all of its Loans and Commitments, no such assignment and/or delegation
shall be permitted unless, after giving effect thereto, such assignor Lender
retains a Commitment in a minimum amount of $5,000,000); PROVIDED, HOWEVER, that
the Borrowers and the Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions, addresses
and related information with respect to the Assignee, shall have been given to
LS&Co and the Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to LS&Co and the Agent an Assignment and
Acceptance in the form of EXHIBIT E ("ASSIGNMENT AND ACCEPTANCE") together with
any note or notes subject to such assignment and (iii) the assignor Lender or
Assignee has paid to the Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the assignor Lender
that it has received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents 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 an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto or
the attachment, perfection, or priority of any Lien granted by any Loan Party to
the Agent or any Lender in the Collateral; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under this Agreement or any other Loan
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Document furnished pursuant hereto; (iii) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon satisfaction of the requirements of SECTION 11.2(A),
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender PRO TANTO.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of the Borrowers (a
"PARTICIPANT") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "ORIGINATING LENDER")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrowers and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan Document
except the matters set forth in SECTION 11.1(A) (I), (II) AND (III), and all
amounts payable by the Borrowers hereunder shall be determined as if such Lender
had not sold such participation; except that, (a) if amounts outstanding under
this Agreement are due and unpaid, or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent and subject to the same limitation as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement, and (b) if the Borrowers are notified of the participating
interest sold to a Participant that is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Participant agrees, for the
benefit of the Borrowers, to comply and actually complies with the requirements
of SECTIONS 12.10(A) and (B) as though it were a Lender, such Participant shall
be entitled to the benefits of SECTION 4.1 on the same terms and subject to the
same limitations as would be applicable if such Participant were a Lender
hereunder.
(f) Notwithstanding any other provision in this Agreement, any Lender may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the Federal Reserve Board or U.S. Treasury
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Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
ARTICLE 12
THE AGENT
12.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby designates and
appoints Bank as its Agent under this Agreement and the other Loan Documents and
each Lender hereby irrevocably authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as such on
the express conditions contained in this ARTICLE 12. The provisions of this
ARTICLE 12 are solely for the benefit of the Agent and the Lenders and no
Borrower shall have any rights as a third party beneficiary of any of the
provisions contained herein. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
SECTION 1.2(I), and (c) the exercise of remedies pursuant to SECTION 9.2, and
any action so taken or not taken shall be deemed consented to by the Lenders,
PROVIDED that such action shall not have constituted gross negligence or willful
misconduct of the Agent under the circumstances in question (as determined by a
final judgment of a court of competent jurisdiction).
12.2 DELEGATION OF DUTIES. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
12.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
69
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of any Borrower or any Subsidiaries or
Affiliates of any Borrower.
12.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to LS&Co),
independent accountants and other experts selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Lenders (or all Lenders if so required by SECTION 11.1) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
12.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or LS&Co referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with ARTICLE 9; PROVIDED, HOWEVER, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
12.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrowers and their respective Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers and their respective Affiliates, and all
applicable bank regulatory laws relating to the transactions contemplated
70
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrowers. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrowers
which may come into the possession of any of the Agent-Related Persons.
12.7 INDEMNIFICATION. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrowers and
without limiting the obligation of the Borrowers to do so), in accordance with
their Pro Rata Shares, from and against any and all Indemnified Liabilities;
PROVIDED, HOWEVER, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand
for its Pro Rata Share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
12.8 AGENT IN INDIVIDUAL CAPACITY. The Bank and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with any Borrower and its
Subsidiaries and Affiliates as though the Bank were not the Agent hereunder and
without notice to or consent of the Lenders. The Bank or its Affiliates may
receive information regarding any Borrower, its Affiliates and Account Debtors
(including information that may be subject to confidentiality obligations in
favor of such Borrower, Affiliates or Account Debtors) and acknowledge that the
Agent and the Bank shall be under no obligation to provide such information to
them. With respect to its Loans, the Bank shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the Agent, and the terms "Lender" and "Lenders" include the Bank in its
individual capacity.
12.9 SUCCESSOR AGENT. The Agent may resign as Agent upon at least thirty
(30) days' prior notice to the Lenders and LS&Co, such resignation to be
effective upon the acceptance of a successor agent to its appointment as Agent.
In the event the Bank sells all of its Commitment and Revolving Loans as part of
a sale, transfer or other disposition by the Bank of substantially all of its
loan portfolio, the Bank shall resign as Agent and such purchaser or
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transferee shall become the successor Agent hereunder. Subject to the foregoing,
if the Agent resigns under this Agreement, the Majority Lenders shall appoint
from among the Lenders a successor agent for the Lenders. If no successor agent
is appointed prior to the effective date of the resignation of the Agent, the
Agent may appoint, after consulting with the Lenders and LS&Co, a successor
agent from among the Lenders. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and duties as Agent
shall be terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this ARTICLE 12 shall continue to inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
12.10 WITHHOLDING TAX.
(a) Each Lender that is a "foreign corporation, partnership or trust"
within the meaning of the Code agrees with and in favor of the Agent and the
Borrowers, to deliver to the Agent and LS&Co:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States of America tax treaty or because
interest paid under this Agreement is effectively connected with a United
States of America trade or business of such Lender, two properly completed
IRS Forms W-8BEN and W-8ECI, as applicable, before the payment of any
interest in the first calendar year and before the payment of any interest
in each third succeeding calendar year during which interest may be paid
under this Agreement; and
(ii) such other form or forms as may be required under the Code or
other laws of the United States of America as a condition to exemption
from, or reduction of, United States of America withholding tax.
Such Lender agrees to promptly notify the Agent and LS&Co of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding tax
by providing the forms referenced in SECTION 12.10(A) and such Lender sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations owing to such Lender, such Lender agrees to notify the Agent and
LS&Co of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrowers to such Lender. To the extent of such percentage
amount, the Agent and LS&Co will treat such Lender's IRS Form W-8BEN or W-8ECI,
as applicable, as no longer valid.
(c) If any Lender does not provide the forms referenced in SECTION 12.10(A)
or cannot claim a complete exemption from withholding tax on such forms, the
Agent and the Borrowers may withhold from any interest payment to such Lender
the appropriate amount of withholding tax and the Lender shall not be entitled
to any payments pursuant to SECTION 4.1 with respect to the amount so withheld
(except to the extent that any change after the date on which such Lender became
a Lender hereunder in any requirement for a deduction, withholding or payment
shall result in an increase in the rate of such deduction, withholding or
72
payment from that in effect on the date on which such Lender became a Lender).
If the forms or other documentation required by SECTION 12.10(A) are not
delivered to the Agent and LS&Co, then the Agent and the Borrowers may withhold
from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax and the
Lender shall not be entitled to any payments pursuant to SECTION 4.1 with
respect to United States of America withholding tax or amounts payable with
respect thereto (except to the extent that any change after the date on which
such Lender became a Lender hereunder in any requirement for a deduction,
withholding or payment shall result in an increase in the rate of such
deduction, withholding or payment from that in effect on the date on which such
Lender became a Lender).
(d) If the IRS or any other Governmental Authority of the United States of
America or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.
12.11 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize the Agent, at its option and
in its sole discretion, (i) to release any Agent's Liens upon any Collateral (A)
upon the termination of the Commitments and payment and satisfaction in full by
Borrower of all Loans and reimbursement obligations in respect of Letters of
Credit and Credit Support, and the termination of all outstanding Letters of
Credit (whether or not any of such obligations are due) and all other
Obligations (excluding Obligations relating to Bank Products); (B) constituting
property being sold or disposed of, or property that is the subject of a Real
Estate Financing Transaction or an Equipment Financing Transaction, if the
applicable Borrower certifies to the Agent that the sale, Disposition, Real
Estate Financing Transaction or Equipment Financing Transaction is made in
compliance with SECTION 7.18(C)(VII), 7.18(C)(VIII) or 7.20, as the case may be
(and the Agent may rely conclusively on any such certificate, without further
inquiry); (C) constituting property in which no Loan Party owned any interest at
the time the Lien was granted or at any time thereafter; or (D) constituting
property leased to a Loan Party under a lease which has expired or been
terminated in a transaction permitted under this Agreement; and (ii) to release
any Guarantor or Limited Guarantor from the Subsidiary Guaranty and any
Collateral Document to which it is a party upon the sale or other disposition of
all the Equity Interests in such Guarantor or Limited Guarantor to any Person
(other than an Affiliate of the Borrower) permitted by this Agreement or to
which the Majority Lenders have otherwise consented, for which a Loan Party
desires to obtain a release of such Guarantor from the Administrative Agent.
Except as provided above, the Agent will not release any of the Agent's Liens or
any Guarantees without the prior written authorization of the Lenders; PROVIDED
that the Agent may, in its discretion, release the Agent's Liens on Collateral
valued in the aggregate not
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in excess of $5,000,000 during each Fiscal Year without the prior written
authorization of the Lenders and, other than as provided under SECTION
11.1(A)(VII), the Agent may release any Guarantors and the Agent's Liens on any
Collateral with the prior written authorization of Majority Lenders. Upon
request by the Agent or LS&Co at any time, the Lenders will confirm in writing
the Agent's authority to release any Agent's Liens or Guarantees upon particular
types or items of Collateral pursuant to this SECTION 12.11.
(b) Upon receipt by the Agent of any authorization required pursuant to
SECTION 12.11(A) from the Lenders of the Agent's authority to release Agent's
Liens upon particular types or items of Collateral, or Guarantees, as the case
may be, and upon at least five (5) Business Days prior written request by LS&Co,
the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Agent's Liens
upon such Collateral, or Guarantees, as the case may be; PROVIDED, HOWEVER, that
(i) the Agent shall not be required to execute any such document on terms which,
in the Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens or
Guarantees without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of the Loan Parties in
respect of) all interests retained by any Loan Party, including the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by the Borrowers or is cared for,
protected or insured or has been encumbered, or that the Agent's Liens 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 Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion given the Agent's own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing.
12.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders, and that it shall, to the extent it is lawfully entitled
to do so, upon the request of all Lenders, set off against the Obligations, any
amounts owing by such Lender to any Borrower or any accounts of any Borrower now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by the Agent, take or
cause to be taken any action to enforce its rights under this Agreement or
against any Borrower, including the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of any Borrower to such Lender arising under, or
relating to, this Agreement or the
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other Loan Documents, except for any such proceeds or payments received by such
Lender from the Agent pursuant to the terms of this Agreement, or (ii) payments
from the Agent in excess of such Lender's ratable portion of all such
distributions by the Agent, such Lender shall promptly (1) turn the same over to
the Agent, in kind, and with such endorsements as may be required to negotiate
the same to the Agent, or in same day funds, as applicable, for the account of
all of the Lenders and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Obligations owed to the
other Lenders so that such excess payment received shall be applied ratably as
among the Lenders 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 of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
12.13 AGENCY FOR PERFECTION. Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
12.14 PAYMENTS BY AGENT TO LENDERS. All payments to be made by the Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans or otherwise.
Unless the Agent receives notice from LS&Co prior to the date on which any
payment is due to the Lenders that the Borrowers will not make such payment in
full as and when required, the Agent may assume that the Borrowers have made
such payment in full to the Agent on such date in immediately available funds
and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrowers have not made
such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.
12.15 SETTLEMENT.
(a) Each Lender's funded portion of the Revolving Loans is intended by the
Lenders to be equal at all times to such Lender's Pro Rata Share of the
outstanding Revolving Loans. Notwithstanding such agreement, the Agent, the
Bank, and the other Lenders agree (which agreement shall not be for the benefit
of or enforceable by any Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents,
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settlement among them as to the Revolving Loans, the Non-Ratable Loans and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) The Agent shall request settlement ("SETTLEMENT") with the Lenders
on at least a weekly basis, or on a more frequent basis at Agent's
election, (A) on behalf of the Bank, with respect to each outstanding
Non-Ratable Loan, (B) for itself, with respect to each Agent Advance, and
(C) with respect to collections received, in each case, by notifying the
Lenders of such requested Settlement by telecopy, telephone or other
similar form of transmission, of such requested Settlement, no later than
10:00 a.m. (Pacific time) on the date of such requested Settlement (the
"SETTLEMENT DATE"). Each Lender (other than the Bank, in the case of
Non-Ratable Loans and the Agent in the case of Agent Advances) shall
transfer the amount of such Lender's Pro Rata Share of the outstanding
principal amount of the Non-Ratable Loans and Agent Advances with respect
to each Settlement to the Agent, to Agent's account, not later than 12:00
noon (Pacific time), on the Settlement Date applicable thereto. Settlements
may occur during the continuation of a Default or an Event of Default and
whether or not the applicable conditions precedent set forth in ARTICLE 8
have then been satisfied. Such amounts made available to the Agent shall be
applied against the amounts of the applicable Non-Ratable Loan or Agent
Advance and, together with the portion of such Non-Ratable Loan or Agent
Advance representing the Bank's Pro Rata Share thereof, shall constitute
Revolving Loans of such Lenders. If any such amount is not transferred to
the Agent by any Lender on the Settlement Date applicable thereto, the
Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after the Settlement Date and thereafter at the
Interest Rate then applicable to the Revolving Loans (A) on behalf of the
Bank, with respect to each outstanding Non-Ratable Loan, and (B) for
itself, with respect to each Agent Advance.
(ii) Notwithstanding the foregoing, not more than one (1) Business Day
after demand is made by the Agent (whether before or after the occurrence
of a Default or an Event of Default and regardless of whether the Agent has
requested a Settlement with respect to a Non-Ratable Loan or Agent
Advance), each other Lender (A) shall irrevocably and unconditionally
purchase and receive from the Bank or the Agent, as applicable, without
recourse or warranty, an undivided interest and participation in such
Non-Ratable Loan or Agent Advance equal to such Lender's Pro Rata Share of
such Non-Ratable Loan or Agent Advance and (B) if Settlement has not
previously occurred with respect to such Non-Ratable Loans or Agent
Advances, upon demand by Bank or Agent, as applicable, shall pay to Bank or
Agent, as applicable, as the purchase price of such participation an amount
equal to one hundred percent (100%) of such Lender's Pro Rata Share of such
Non-Ratable Loans or Agent Advances. If such amount is not in fact made
available to the Agent by any Lender, the Agent shall be entitled to
recover such amount on demand from such Lender together with interest
thereon at the Federal Funds Rate for the first three (3) days from and
after such demand and thereafter at the Interest Rate then applicable to
Base Rate Revolving Loans.
(iii) From and after the date, if any, on which any Lender purchases
an undivided interest and participation in any Non-Ratable Loan or Agent
Advance pursuant to CLAUSE (II) above, the Agent shall promptly distribute
to such Lender, such Lender's Pro Rata Share of all payments of principal
and interest and all proceeds of Collateral received by the Agent in
respect of such Non-Ratable Loan or Agent Advance.
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(iv) Between Settlement Dates, the Agent, to the extent no Agent
Advances are outstanding, may pay over to the Bank any payments received by
the Agent, which in accordance with the terms of this Agreement would be
applied to the reduction of the Revolving Loans, for application to the
Bank's Revolving Loans including Non-Ratable Loans. If, as of any
Settlement Date, collections received since the then immediately preceding
Settlement Date have been applied to the Bank's Revolving Loans (other than
to Non-Ratable Loans or Agent Advances in which such Lender has not yet
funded its purchase of a participation pursuant to CLAUSE (II) above), as
provided for in the previous sentence, the Bank shall pay to the Agent for
the accounts of the Lenders, to be applied to the outstanding Revolving
Loans of such Lenders, an amount such that each Lender shall, upon receipt
of such amount, have, as of such Settlement Date, its Pro Rata Share of the
Revolving Loans. During the period between Settlement Dates, the Bank with
respect to Non-Ratable Loans, the Agent with respect to Agent Advances, and
each Lender with respect to the Revolving Loans other than Non-Ratable
Loans and Agent Advances, shall be entitled to interest at the applicable
rate or rates payable under this Agreement on the actual average daily
amount of funds employed by the Bank, the Agent and the other Lenders.
(v) Unless the Agent has received written notice from a Lender to the
contrary, the Agent may assume that the applicable conditions precedent set
forth in ARTICLE 8 have been satisfied and the requested Borrowing will not
exceed Availability on any Funding Date for a Revolving Loan or Non-Ratable
Loan.
(b) LENDERS' FAILURE TO PERFORM. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Revolving Loans hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligation to make any Revolving Loans
hereunder, (ii) no failure by any Lender to perform its obligation to make any
Revolving Loans hereunder shall excuse any other Lender from its obligation to
make any Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.
(c) DEFAULTING LENDERS. Unless the Agent receives notice from a Lender on
or prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that such
Lender will not make available as and when required hereunder to the Agent that
Lender's Pro Rata Share of a Borrowing, the Agent may assume that each Lender
has made such amount available to the Agent in immediately available funds on
the Funding Date. Furthermore, the Agent may, in reliance upon such assumption,
make available to any Borrower on such date a corresponding amount. If any
Lender has not transferred its full Pro Rata Share to the Agent in immediately
available funds and the Agent has transferred corresponding amount to any
Borrower on the Business Day following such Funding Date that Lender shall make
such amount available to the Agent, together with interest at the Federal Funds
Rate for that day. A notice by the Agent submitted to any Lender with respect to
amounts owing shall be conclusive, absent manifest error. If each Lender's full
Pro Rata Share is transferred to the Agent as required, the amount transferred
to the Agent shall constitute that Lender's Revolving Loan for all purposes of
this Agreement. If that amount is not transferred to the Agent on the Business
Day following the
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Funding Date, the Agent will notify LS&Co of such failure to fund and, upon
demand by the Agent, the Borrowers shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the Interest Rate
applicable at the time to the Revolving Loans comprising that particular
Borrowing. The failure of any Lender to make any Revolving Loan on any Funding
Date (any such Lender, prior to the cure of such failure, being hereinafter
referred to as a "DEFAULTING LENDER") shall not relieve any other Lender of its
obligation hereunder to make a Revolving Loan on that Funding Date. No Lender
shall be responsible for any other Lender's failure to advance such other
Lenders' Pro Rata Share of any Borrowing.
(d) RETENTION OF DEFAULTING LENDER'S PAYMENTS. The Agent shall not be
obligated to transfer to a Defaulting Lender any payments made by Borrower to
the Agent for the Defaulting Lender's benefit; nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder. Amounts payable to a
Defaulting Lender shall instead be paid to or retained by the Agent. In its
discretion, the Agent may loan Borrower the amount of all such payments received
or retained by it for the account of such Defaulting Lender. Any amounts so
loaned to the Borrowers shall bear interest at the rate applicable to Base Rate
Revolving Loans and for all other purposes of this Agreement shall be treated as
if they were Revolving Loans, provided, however, that for purposes of voting or
consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender". Until
a Defaulting Lender cures its failure to fund its Pro Rata Share of any
Borrowing (A) such Defaulting Lender shall not be entitled to any portion of the
Unused Line Fee and (B) the Unused Line Fee shall accrue in favor of the Lenders
which have funded their respective Pro Rata Shares of such requested Borrowing
and shall be allocated among such performing Lenders ratably based upon their
relative Commitments. This Section shall remain effective with respect to such
Lender until such time as the Defaulting Lender shall no longer be in default of
any of its obligations under this Agreement. The terms of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Borrower of its duties and obligations
hereunder.
(e) REMOVAL OF DEFAULTING LENDER. At LS&Co's request, the Agent or an
Eligible Assignee reasonably acceptable to the Agent and the Borrowers shall
have the right (but not the obligation) to purchase from any Defaulting Lender,
and each Defaulting Lender shall, upon such request, sell and assign to the
Agent or such Eligible Assignee, all of the Defaulting Lender's outstanding
Commitments hereunder. Such sale shall be consummated promptly after Agent has
arranged for a purchase by Agent or an Eligible Assignee pursuant to an
Assignment and Acceptance, and at a price equal to the outstanding principal
balance of the Defaulting Lender's Loans, plus accrued interest and fees,
without premium or discount.
12.16 LETTERS OF CREDIT; INTRA-LENDER ISSUES.
(a) NOTICE OF LETTER OF CREDIT BALANCE. On each Settlement Date the Agent
shall notify each Lender of the issuance of all Letters of Credit since the
prior Settlement Date.
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(b) PARTICIPATIONS IN LETTERS OF CREDIT.
(i) PURCHASE OF PARTICIPATIONS. Immediately upon issuance of any
Letter of Credit in accordance with SECTION 1.3(D), each Lender shall be
deemed to have irrevocably and unconditionally purchased and received
without recourse or warranty, an undivided interest and participation equal
to such Lender's Pro Rata Share of the face amount of such Letter of Credit
or the Credit Support provided through the Agent to the Letter of Credit
Issuer, if not the Bank, in connection with the issuance of such Letter of
Credit (including all obligations of the Borrowers with respect thereto,
and any security therefor or guarantee pertaining thereto).
(ii) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS. Whenever the Agent
receives a payment from any Borrower on account of reimbursement
obligations in respect of a Letter of Credit or Credit Support as to which
the Agent has previously received for the account of the Letter of Credit
Issuer thereof payment from a Lender, the Agent shall promptly pay to such
Lender such Lender's Pro Rata Share of such payment from such Borrower.
Each such payment shall be made by the Agent on the next Settlement Date.
(iii) DOCUMENTATION. Upon the request of any Lender, the Agent shall
furnish to such Lender copies of any Letter of Credit, Credit Support for
any Letter of Credit, reimbursement agreements executed in connection
therewith, applications for any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(iv) OBLIGATIONS IRREVOCABLE. The obligations of each Lender to make
payments to the Agent with respect to any Letter of Credit or with respect
to their participation therein or with respect to any Credit Support for
any Letter of Credit or with respect to the Revolving Loans made as a
result of a drawing under a Letter of Credit and the obligations of the
Borrower for whose account the Letter of Credit or Credit Support was
issued to make payments to the Agent, for the account of the Lenders, shall
be irrevocable and shall not be subject to any qualification or exception
whatsoever, including any of the following circumstances:
(1) any lack of validity or enforceability of this Agreement or any of
the other Loan Documents;
(2) 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 any Letter of Credit (or any Person for whom
any such transferee may be acting), any Lender, the Agent, the issuer of
such Letter of Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transactions between
any Borrower or any other Person and the beneficiary named in any Letter of
Credit);
(3) any draft, certificate or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
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(4) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;
(5) the occurrence of any Default or Event of Default; or
(6) the failure of any Borrower to satisfy the applicable conditions
precedent set forth in ARTICLE 8.
(c) RECOVERY OR AVOIDANCE OF PAYMENTS; REFUND OF PAYMENTS IN ERROR. In the
event any payment by or on behalf of any Borrower received by the Agent with
respect to any Letter of Credit or Credit Support provided for any Letter of
Credit and distributed by the Agent to the Lenders on account of their
respective participations therein is thereafter set aside, avoided or recovered
from the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or recovered,
together with interest at the rate required to be paid by the Agent upon the
amount required to be repaid by it. Unless the Agent receives notice from LS&Co
prior to the date on which any payment is due to the Lenders that the Borrowers
will not make such payment in full as and when required, the Agent may assume
that the Borrowers have made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrowers have not made such payment in full to the Agent, each Lender shall
repay to the Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
(d) INDEMNIFICATION BY LENDERS. To the extent not reimbursed by the
Borrowers and without limiting the obligations of any Borrower hereunder, the
Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance
with their respective Pro Rata Shares, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys' fees) or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by or asserted against the Letter of Credit
Issuer in any way relating to or arising out of any Letter of Credit or the
transactions contemplated thereby or any action taken or omitted by the Letter
of Credit Issuer under any Letter of Credit or any Loan Document in connection
therewith; PROVIDED that no Lender shall be liable for any of the foregoing to
the extent it arises from the gross negligence or willful misconduct of the
Person to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro
Rata Share of any costs or expenses payable by any Borrower to the Letter of
Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly
reimbursed for such costs and expenses by the Borrowers. The agreement contained
in this SECTION 12.16(D) shall survive payment in full of all other Obligations.
12.17 CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS.
(a) Each Lender authorizes and directs the Agent to enter into the other
Loan Documents, for the ratable benefit and obligation of the Agent and the
Lenders. Each Lender agrees that any action taken by the Agent or Majority
Lenders in accordance with the
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terms of this Agreement or the other Loan Documents, and the exercise by the
Agent or the Majority Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders. The Lenders acknowledge that the
Revolving Loans, Agent Advances, Non-Ratable Loans, Bank Products and all
interest, fees and expenses hereunder constitute one Debt, secured PARI PASSU by
all of the Collateral.
(b) Without derogating from or limiting any other authority granted to the
Agent herein or in any other Loan Document, each Lender hereby specifically (i)
authorizes the Agent to enter into the Foreign Pledge Agreements, including,
without limitation, such Foreign Pledge Agreements governed by the laws of
Australia, Belgium, Bermuda, Brazil, Canada, Chile, China, Columbia, Costa Rica,
the Czech Republic, the Dominican Republic, Finland, France, Germany, Greece,
Hong Kong, Hungary, India, Indonesia, Italy, Japan, Korea, Malaysia, Mauritius,
Mexico, The Netherlands, New Zealand, Norway, Philippines, Poland, Portugal,
Singapore, South Africa, Spain, Switzerland, Turkey, and the United Kingdom,
respectively, as agent on behalf of the Lenders, with the effect that the
Lenders each become a Secured Party thereunder, (ii) appoints the Agent as its
attorney-in-fact granting it the powers to execute and register, as applicable,
each such Foreign Pledge Agreement or any other document, instrument or
agreement related to perfection, enforceability or notice of the security
interests of Lenders in any of the Collateral in its name and on its behalf,
(iii) authorizes and empowers the Agent to sub-delegate to third parties any or
all of its powers as attorney-in-fact of each of the Lenders and (iv) authorizes
and empowers the Agent to use its reasonable business judgment to establish the
value of any Collateral for purposes of or in connection with perfection,
enforceability or notice of the security interests of Lenders in any of the
Collateral to the extent the Agent believes may be necessary or desirable with
respect to any foreign jurisdiction.
(c) Without derogating from or limiting any other authority granted to the
Agent herein or in any other Loan Document, each Lender hereby specifically
authorizes the Agent to enter into the Intercreditor Agreement and the Trademark
License Agreement and appoints the Agent as its attorney-in-fact granting it the
powers to execute the Intercreditor Agreement and the Trademark License
Agreement and, in both cases, any other document, instrument or agreement
related thereto in its name and on its behalf.
12.18 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "REPORT" and collectively, "REPORTS") prepared by or on behalf of
the Agent;
(b) expressly agrees and acknowledges that neither the Bank nor the Agent
(i) makes any representation or warranty as to the accuracy of any Report, or
(ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other party
performing any audit or examination will inspect only specific information
regarding the Borrowers and will rely
81
significantly upon the Borrowers' books and records, as well as on
representations of the Borrowers' respective personnel;
(d) agrees to keep all Reports confidential and strictly for its internal
use, and not to distribute except to its participants, or use any Report in any
other manner; and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold the Agent and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to any Borrower, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
any Borrower; and (ii) to pay and protect, and indemnify, defend and hold the
Agent and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses and other amounts
(including Attorney Costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.
12.19 RELATION AMONG LENDERS. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agent) authorized to act for, any
other Lender.
12.20 CO-AGENTS. None of the Lenders identified on the facing page or
signature pages of this Agreement as a "co-agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing, none of
the Lenders so identified as a "co-agent" shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders so identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.
ARTICLE 13
MISCELLANEOUS
13.1 NO WAIVERS; CUMULATIVE REMEDIES. No failure by the Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other agreement between or among any
Borrower and the Agent and/or any Lender, or delay by the Agent or any Lender in
exercising the same, will operate as a waiver thereof. No waiver by the Agent or
any Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by any Borrower of any provision of
this Agreement. The Agent and the Lenders may proceed directly to collect the
Obligations without any prior recourse to the Collateral. The Agent's and each
Lender's rights under this Agreement will be cumulative and not exclusive of any
other right or remedy which the Agent or any Lender may have.
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13.2 SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement or any Loan Document or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
13.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED
TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH RESPECT
TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW
RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF CALIFORNIA; PROVIDED
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR
OF THE UNITED STATES OF AMERICA LOCATED IN LOS ANGELES COUNTY, CALIFORNIA, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER, THE AGENT AND EACH
LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH BORROWER, THE AGENT AND EACH LENDER
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO 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 ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING:
(1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
(c) EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS ADDRESS SET
FORTH IN SECTION 13.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE
PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS
TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
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(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY,
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES, ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT INCLUDING ANY CLAIM BASED
ON OR ARISING FROM AN ALLEGED TORT, SHALL AT THE REQUEST OF ANY PARTY HERETO BE
DETERMINED BY BINDING ARBITRATION. The arbitration shall be conducted in
accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement, and under the
Commercial Rules of the American Arbitration Association ("AAA"). The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s). Judgment upon the arbitration award may be
entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuant to a provisional or ancillary remedy
shall not constitute a waiver of the right of either party, including the
plaintiff, to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief.
(e) Notwithstanding the provisions of (d) above, no controversy or claim
shall be submitted to arbitration without the consent of all parties if, at the
time of the proposed submission, such controversy or claim arises from or
related to an obligation to the Lenders which is secured by real estate property
collateral (exclusive of real estate space lease assignments). If all the
parties do not consent to submission of such a controversy or claim to
arbitration, the controversy or claim shall be determined as provided in SECTION
13.3(F).
(f) At the request of any party a controversy or claim which is not
submitted to arbitration as provided and limited in SECTIONS 13.3(D) and (E)
shall be determined by judicial reference. If such an election is made, the
parties shall designate to the court a referee or referees selected under the
auspices of the AAA in the same manner as arbitrators are selected in
AAA-sponsored proceedings. The presiding referee of the panel, or the referee if
there is a single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be entered in
the court in which such proceeding was commenced.
(g) No provision of SECTIONS 13.3(D) through (F) shall limit the right of
the Agent or the Lenders to exercise self-help remedies such as setoff,
foreclosure against or sale of any real or personal property collateral or
security, or obtaining provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any arbitration
or other proceeding. The exercise of a remedy does not waive the right of either
party to resort to arbitration or reference. At the Agent's option, foreclosure
under a deed of trust or mortgage may be accomplished either by exercise of
power of sale under the deed of trust or mortgage or by judicial foreclosure.
13.4 WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF SECTION 13.3(D),
EACH BORROWER, THE LENDERS AND THE AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
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OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH BORROWER, THE
LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
13.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each Borrower's
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
13.6 OTHER SECURITY AND GUARANTIES. The Agent, may, without notice or
demand and without affecting any Borrower's obligations hereunder, from time to
time: (a) take from any Person and hold collateral (other than the Collateral)
for the payment of all or any part of the Obligations and exchange, enforce or
release such collateral or any part thereof; and (b) accept and hold any
endorsement or guarantee of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
13.7 FEES AND EXPENSES. Each Borrower agrees to pay to the Agent, for its
benefit, on demand, all reasonable costs and expenses that Agent pays or incurs
in connection with the negotiation, preparation, syndication, consummation,
administration, enforcement, and termination of this Agreement or any of the
other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses
(including attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches and title insurance; (d) taxes, fees and other charges
for recording the Mortgages, filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent's Liens (including
costs and expenses paid or incurred by the Agent in connection with the
consummation of Agreement); (e) sums paid or incurred to pay any amount or take
any action required of any Borrower under the Loan Documents that such Borrower
fails to pay or take; (f) costs of appraisals, inspections, and verifications of
the Collateral, including travel, lodging, and meals for inspections of the
Collateral and the Borrowers' operations by the Agent plus the Agent's then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $850 per day (or portion thereof) for
each Person retained or employed by the Agent with respect to each field
examination or audit); and (g) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
Payment Accounts and lock boxes, and costs and expenses of preserving and
protecting the Collateral. In addition, each Borrower agrees to pay costs and
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expenses incurred by the Agent (including Attorneys' Costs) to the Agent, for
its benefit, on demand, and to the other Lenders for their benefit, on demand,
and all reasonable fees, expenses and disbursements incurred by such other
Lenders for one law firm retained by such other Lenders, in each case, paid or
incurred to obtain payment of the Obligations, enforce the Agent's Liens, sell
or otherwise realize upon the Collateral, and otherwise enforce the provisions
of the Loan Documents, or to defend any claims made or threatened against the
Agent or any Lender arising out of the transactions contemplated hereby
(including preparations for and consultations concerning any such matters). The
foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrowers. All of the
foregoing costs and expenses shall be charged to the Loan Account as Revolving
Loans as described in SECTION 3.6.
13.8 NOTICES. Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing (including any electronic medium), or by a telecommunications device
capable of creating a written record, and any such notice shall become effective
(a) upon personal delivery thereof, including, but not limited to, delivery by
overnight mail and courier service, (b) four (4) days after it shall have been
mailed by United States mail, first class, certified or registered, with postage
prepaid, or (c) in the case of notice by such electronic medium or
telecommunications device, when properly transmitted, in each case addressed to
the party to be notified as follows:
If to the Agent or to the Bank:
Bank of America, N.A.
00 Xxxxx Xxxx Xxxxxx,
Xxxxx 000,
Xxxxxxxx, XX 00000
Attention: Business Credit - Xxxxxxx X.
Xxxxxxxxxx, Portfolio Manager
Telecopy No.: (000) 000-0000
Email: Xxxxxxx.X.Xxxxxxxxxx@xxxxxxxxxxxxx.xxx
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If to LS&Co or the Borrowers:
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Treasurer
Telecopy No.: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
and
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Assistant Treasurer
Telecopy No.: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
If to any Lender, to the contact address specified on the
administrative questionnaire delivered by such Lender to the Agent,
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
13.9 WAIVER OF NOTICES. Unless otherwise expressly provided herein, each
Borrower waives presentment, and notice of demand or dishonor and protest as to
any instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
it might otherwise be entitled. No notice to or demand on any Borrower which the
Agent or any Lender may elect to give shall entitle such Borrower to any or
further notice or demand in the same, similar or other circumstances.
13.10 BINDING EFFECT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; PROVIDED, HOWEVER, that no interest herein may be
assigned by any Borrower without prior written consent of the Agent and each
Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if
such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.
13.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWERS.
(a) Each Borrower agrees to defend, indemnify and hold the Agent-Related
Persons, and each Lender and each of its respective officers, directors,
employees,
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counsel, representatives, agents and attorneys-in-fact (each, an "INDEMNIFIED
PERSON") harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in any
way relating to or arising out of this Agreement or any document contemplated by
or referred to herein, or the transactions contemplated hereby, or any action
taken or omitted by any such Person under or in connection with any of the
foregoing, including with respect to any investigation, litigation or proceeding
(including any insolvency proceeding or appellate proceeding) related to or
arising out of this Agreement, any other Loan Document, or the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES");
PROVIDED, that no Borrower shall have any obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely from
the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
(b) Each Borrower agrees to indemnify, defend and hold harmless the Agent
and the Lenders from any loss or liability directly or indirectly arising out of
the use, generation, manufacture, production, storage, release, threatened
release, discharge, disposal or presence of a hazardous substance relating to
any Borrower's operations, business or property. This indemnity will apply
whether the hazardous substance is on, under or about any Borrower's property or
operations or property leased to any Borrower. The indemnity includes but is not
limited to Attorneys Costs. The indemnity extends to the Agent and the Lenders,
their parents, affiliates, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys and assigns. "HAZARDOUS SUBSTANCES"
means any substance, material or waste that is or becomes designated or
regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar
designation or regulation under any federal, state or local law (whether under
common law, statute, regulation or otherwise) or judicial or administrative
interpretation of such, including petroleum or natural gas. This indemnity will
survive repayment of all other Obligations.
13.12 LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY ANY BORROWER, ANY
LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR
ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, 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 ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND EACH BORROWER AND EACH LENDER HEREBY
WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER
OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
13.13 FINAL AGREEMENT. This Agreement and the other Loan Documents are
intended by each Borrower, the Agent and the Lenders to be the final, complete,
and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or
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written agreements relating to the subject matter hereof except for that certain
"fee letter" dated as of September 10, 2003, between LS&Co, Banc of America
Securities LLC and the Agent. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement or any other Loan Document shall be
made, except by a written agreement signed by each Borrower and a duly
authorized officer of each of the Agent and the Majority Lenders.
13.14 COUNTERPARTS; EFFECTIVENESS OF SIGNATURES. This Agreement may be
executed in any number of counterparts, and by the Agent, each Lender and each
Borrower in separate counterparts, each of which shall be an original, but all
of which shall together constitute one and the same agreement; signature pages
may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. Loan Documents and notices under the Loan Documents may be transmitted
and/or signed by telefacsimile. The effectiveness of any such documents and
signatures shall, subject to applicable law, have the same force and effect as
an original copy with manual signatures and shall be binding on all Loan
Parties, the Agent and Lenders. The Agent may also require that any such
documents and signature be confirmed by a manually-signed copy thereof;
PROVIDED, HOWEVER, that the failure to request or deliver any such
manually-signed copy shall not affect the effectiveness of any facsimile
document or signature.
13.15 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
13.16 RIGHT OF SETOFF. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Borrower, any such notice being waived by each
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Borrower
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify LS&Co and the
Agent after any such set-off and application made by such Lender; provided,
HOWEVER, that the failure to give such notice shall not affect the validity of
such set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT
ACCOUNT OR PROPERTY OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT
THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
13.17 CONFIDENTIALITY.
(a) Each Borrower hereby consents that the Agent and each Lender may issue
and disseminate to the public general information describing the credit
accommodation entered into pursuant to this Agreement, including the name and
address of any Borrower and a general description of any Borrower's business and
may use any Borrower's name in advertising and other promotional material.
89
(b) Each Lender severally agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by LS&Co and provided to the Agent or
such Lender by or on behalf of LS&Co, under this Agreement or any other Loan
Document, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Agent or such Lender, or (ii) was or becomes available on a nonconfidential
basis from a source other than LS&Co, provided that such source is not bound by
a confidentiality agreement with LS&Co known to the Agent or such Lender;
PROVIDED, HOWEVER, that the Agent and any Lender may disclose such information
(1) at the request or pursuant to any requirement of any Governmental Authority
to which the Agent or such Lender is subject or in connection with an
examination of the Agent or such Lender by any such Governmental Authority; (2)
pursuant to subpoena or other court process; (3) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (4) to the
extent reasonably required in connection with any litigation or proceeding
(including, but not limited to, any bankruptcy proceeding) to which the Agent,
any Lender or their respective Affiliates may be party; (5) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (6) to the Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors; (7) to any
prospective Participant or Assignee under any Assignment and Acceptance, actual
or potential, provided that such prospective Participant or Assignee agrees to
keep such information confidential to the same extent required of the Agent and
the Lenders hereunder; (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which LS&Co is party or is
deemed party with the Agent or such Lender, and (9) to its Affiliates.
(c) Notwithstanding anything herein to the contrary, this Agreement is
intended to provide express authorization to the Agent, each Lender, each
Borrower and each of their respective Affiliates (and each of their respective
employees, representatives, or other agents) to disclose to any and all Persons,
without limitation of any kind, the "tax treatment" and "tax structure" (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to any such Person relating to
such tax treatment and tax structure; provided, that, with respect to any
document or similar item that in either case contains information concerning the
tax treatment or tax structure of the transactions contemplated hereby as well
as other information, this authorization shall only apply to such portions of
the document or similar item that relate to the tax treatment or tax structure
of the Loans and transactions contemplated hereby.
13.18 CONFLICTS WITH OTHER LOAN DOCUMENTS. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control.
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IN WITNESS WHEREOF, the parties have entered into this Agreement
on the date first above written.
LEVI XXXXXXX & CO.
By:__________________________,
LEVI XXXXXXX FINANCIAL CENTER CORPORATION
By:__________________________,
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Bank of America, N.A., as the Agent
By:_____________________________,
Bank of America, N.A., as a Lender
By:______________________________,
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_______________________________,
as a Lender
By:____________________________,
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ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have the
following respective meanings (unless otherwise defined therein), and all
section references in the following definitions shall refer to sections of the
Agreement:
"1996 INDENTURE" means that certain indenture dated as of
November 6, 1996 between LS&Co and Wilmington Trust Company (as successor to
Citibank, N.A.), as trustee.
"ACCOUNTS" means all now owned or hereafter acquired or arising
accounts of any Borrower, as defined in the UCC, including any rights to payment
for the sale or lease of goods or rendition of services, whether or not they
have been earned by performance.
"ACCOUNT DEBTOR" means each Person obligated in any way on or in
connection with an Account.
"ACH TRANSACTIONS" means any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of any Borrower pursuant to agreement or overdrafts.
"ADDITIONAL MORTGAGE" has the meaning specified in SECTION
7.10(A).
"ADDITIONAL MORTGAGE POLICY" has the meaning specified in SECTION
7.10(C).
"ADDITIONAL MORTGAGED PROPERTY" has the meaning specified in
SECTION 7.10.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person or which owns, directly or indirectly, ten percent
(10%) or more of the outstanding equity interest of such Person. A Person shall
be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise.
"AGENT" means the Bank, solely in its capacity as agent for the
Lenders, and any successor agent.
"AGENT ADVANCES" has the meaning specified in SECTION 1.2(I).
"AGENT'S LIENS" means the Liens in the Collateral granted to the
Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this
Agreement and the other Loan Documents.
Annex A-1
"AGENT-RELATED PERSONS" means the Agent, together with its
Affiliates, and the officers, directors, employees, counsel, representatives,
agents and attorneys-in-fact of the Agent and such Affiliates.
"AGGREGATE REVOLVER OUTSTANDINGS" means, at any date of
determination: the sum of (a) the unpaid balance of Revolving Loans, (b) the
aggregate amount of Pending Revolving Loans, (c) one hundred percent (100%) of
the aggregate undrawn face amount of all outstanding Letters of Credit, and (d)
the aggregate amount of any unpaid reimbursement obligations in respect of
Letters of Credit.
"AGREEMENT" means the Credit Agreement to which this Annex A is
attached, as from time to time amended, modified or restated.
"ANNIVERSARY DATE" means each anniversary of the Closing Date.
"APPLICABLE MARGIN" means
(i) with respect to Base Rate Revolving Loans and all other
Obligations (other than LIBOR Rate Revolving Loans), one
half of one percent 0.50%; and
(ii) with respect to LIBOR Rate Revolving Loans, two and three
quarters percent (2.75%).
"ASSIGNEE" has the meaning specified in SECTION 11.2(A).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in Section
11.2(a).
"ATTORNEY COSTS" means and includes all fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent and the
allocated costs and expenses of internal legal services of the Agent.
"ATTRIBUTABLE DEBT" means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a Capital Lease.
"AVAILABILITY" means, at any time (a) the lesser of (i) the
Maximum Revolver Amount or (ii) the Borrowing Base, MINUS (b) Reserves other
than Reserves deducted in the calculation of the Borrowing Base, MINUS (c) in
each case, the Aggregate Revolver Outstandings.
"BANK" means Bank of America, N.A., a national banking
association, or any successor entity thereto.
"BANK PRODUCTS" means Selected Revolving Lender Hedge Agreements
and Selected Revolving Lender Cash Management Services.
Annex A-2
"BANKRUPTCY CODE" means Title 11 of the United States Code (11
U.S.C.ss.101 ET SEQ.).
"BASE RATE" means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by the Bank in Charlotte,
North Carolina as its "prime rate" (the "prime rate" being a rate set by the
Bank based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"BASE RATE REVOLVING LOAN" means a Revolving Loan during any
period in which it bears interest based on the Base Rate.
"BORROWER" and "BORROWERS" each have the meaning specified in the
introductory paragraph to this Agreement.
"BORROWING" means a borrowing hereunder consisting of Revolving
Loans made on the same day by the Lenders to any Borrower or by Bank in the case
of a Borrowing funded by Non-Ratable Loans or by the Agent in the case of a
Borrowing consisting of an Agent Advance, or the issuance of Letters of Credit
hereunder.
"BORROWING BASE" means, at any time, an amount equal to (a) the
sum of (i) eighty five percent (85%) of the Net Amount of Eligible Accounts;
PLUS (ii) fifty percent (50%) of the value of Eligible Inventory that is in the
form of raw materials; PLUS (iii) the lesser of (A) (1) ninety percent (90%) of
the lower of cost or current market value of Eligible Inventory that is in the
form of finished goods (excluding Genco Goods) PLUS (2) fifty percent (50%) of
the lower of cost or current market value of Eligible Inventory that is in the
form of Genco Goods and (B) eighty percent (80%) of the appraised net
liquidation value of Eligible Inventory that is in the form of finished goods
(including Genco Goods); MINUS (b) Reserves from time to time established by the
Agent in its reasonable credit judgment; provided that the aggregate Revolving
Loans advanced against Eligible Inventory shall not exceed the Maximum Inventory
Loan Amount.
"BORROWING BASE CERTIFICATE" means a certificate by a Responsible
Officer of LS&Co, substantially in the form of EXHIBIT A (or another form
acceptable to the Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof, all in such detail as shall
be reasonably satisfactory to the Agent. All calculations of the Borrowing Base
in connection with the preparation of any Borrowing Base Certificate shall
originally be made by LS&Co and certified to the Agent; provided, that the Agent
shall have the right to review and adjust, in the exercise of its reasonable
credit judgment, any such calculation (1) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein, and (2) to the
extent that such calculation is not in accordance with this Agreement.
"BUSINESS DAY" means (a) any day that is not a Saturday, Sunday,
or a day on which banks in San Francisco, California or Charlotte, North
Carolina are required or permitted
Annex A-3
to be closed, and (b) with respect to all notices, determinations, fundings and
payments in connection with the LIBOR Rate or LIBOR Rate Revolving Loans, any
day that is a Business Day pursuant to CLAUSE (A) above and that is also a day
on which trading in Dollars is carried on by and between banks in the London
interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"CAPITAL LEASE" means any lease of property by LS&Co or any of
its Subsidiaries which, in accordance with GAAP, should be reflected as a
capital lease on the balance sheet of LS&Co or any of its Subsidiaries.
"CAPITAL MARKETS TRANSACTION" means an issuance or sale of
unsecured Debt by LS&Co through a public offering or private placement (other
than unsecured Debt expressly permitted to be incurred or issued pursuant to
SECTION 7.18 (other than SECTION 7.18(A)(II))).
"CASH EQUIVALENTS" means, as of any date of determination, (a)
marketable securities (i) issued or directly and unconditionally guaranteed as
to interest and principal by the United States government or (ii) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (b) marketable direct obligations issued by any state of the
United States or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, a rating of at least A- from
S&P or the equivalent thereof from another nationally recognized rating agency;
(c) commercial paper maturing no more than two hundred seventy (270) days from
the date of creation thereof and having, at the time of the acquisition thereof,
a rating of at least A-1 from S&P or at least P-1 from Xxxxx'x; (d) time
deposits, certificates of deposit or bankers' acceptances maturing within one
year after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States, any state thereof or an OECD
country having, at such date, a rating of at least A- from S&P or the equivalent
thereof from another nationally recognized rating agency (except as otherwise
approved by the Treasurer of LS&Co) or by a primary government securities dealer
reporting to the Market Reports Division of the Federal Reserve Bank of New
York; (e) repurchase agreements with financial institutions organized under the
laws of the United States, any state thereof or an OECD country having, at such
date, a rating of at least A- from S&P or the equivalent thereof from another
nationally recognized rating agency (except as otherwise approved by the
Treasurer of LS&Co) or with a primary government securities dealer reporting to
the Market Reports Division of the Federal Reserve Bank of New York; (f) Dollar
denominated floating rate notes, foreign currency denominated floating rate
notes and foreign indexed notes, in each case maturing within one year after
such date and having, at the time of the acquisition thereof, a rating of at
least A or A-1 from S&P or the equivalent thereof from another nationally
recognized rating agency; (g) auction rate notes maturing within one year after
such date and having, at the time of the acquisition thereof, a rating of at
least A or A-1 from S&P or the equivalent thereof from another nationally
recognized rating agency; (h) money market preferred funds maturing within one
year after such date and having, at the time of the
Annex A-4
acquisition thereof, a rating of at least AA from S&P or the equivalent thereof
from another nationally recognized rating agency; and (i) money market funds
maturing within one year after such date and having, at the time of the
acquisition thereof, a rating of at least A- from S&P or the equivalent thereof
from another nationally recognized rating agency; provided such investments are
limited to $25,000,000 for each such fund and $100,000,000 in the aggregate for
all such funds, such funds are open-end funds with total assets of more than
$1,000,000,000 and an expressed goal of maintaining a net asset value of $1.00
per share and such funds limit their investments to the prime credit instruments
allowed in this definition with average weighted maturity of less than ninety
(90) days.
"CASH MANAGEMENT SERVICES" means (a) ACH Transactions, clearing
lines, overdraft facilities, controlled disbursement services or similar cash
management arrangements including, without limitation, any obligations arising
from the honoring of a draft or payment order or the settlement of a Hedge
Agreement and (b) credit card services.
"CASH MANAGEMENT SERVICES RESERVES" means all reserves which the
Agent from time to time establishes in its reasonable discretion for the Cash
Management Services then being provided or outstanding.
"CHANGE OF CONTROL" means:
(a) with respect to any Person, an event or series of events by
which any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan), other than Permitted Transferees, becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
except that a person or group shall be deemed to have "beneficial ownership" of
all securities that such person or group has the right to acquire (such right,
an "OPTION RIGHT"), whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of thirty percent (30%) or more of
all Equity Interests of such Person entitled to vote for members of the board of
directors or equivalent governing body of such Person on a fully-diluted basis
(and taking into account all such securities that such person or group has the
right to acquire pursuant to any option right); PROVIDED that the provisions of
this subclause (a) shall not apply to Voting Trustees serving in their
capacities as such under the Voting Trust Agreement;
(b) with respect to any Person, an event or series of events by
which during any period of 24 consecutive months, a majority of the members of
the board of directors or other equivalent governing body of such Person cease
to be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period or (ii) whose election or
nomination to that board was approved by individuals referred to in clause (i)
above constituting at the time of such election or nomination at least a
majority of that board or who were nominated by Permitted Transferees or by any
of the Voting Trustees; or
(c) the occurrence of any "Change in Control" as defined in any
of (i) the Indentures, (ii) that certain U.S. Dollar Indenture dated as of
January 18, 2001 between LS&Co and Wilmington Trust Company (as successor to
Citibank), as trustee, (iii) that certain Euro
Annex A-5
Indenture dated as of January 18, 2001 between LS&Co and Wilmington Trust
Company (as successor to Citibank), as trustee, (iv) that certain indenture
dated as of December 4, 2002 between LS&Co and Wilmington Trust Company, as
trustee, and (v) any other indenture or agreement executed in connection with a
Capital Markets Transaction.
"CHATTEL PAPER" means all of each Borrower's now owned or
hereafter acquired chattel paper, as defined in the UCC, including electronic
chattel paper.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986.
"COLLATERAL" means all real and personal property of any Borrower
and all other assets of any Person from time to time subject to Agent's Liens
securing payment or performance of the Obligations; PROVIDED, HOWEVER, that the
Collateral shall not include the Intellectual Property Assets.
"COLLATERAL ACCESS AGREEMENT" means any landlord waiver, bailee
letter or any similar agreement of or notice to any landlord, bailee,
warehouseman or processor in possession of any inventory of any Loan Party,
acknowledged by such bailee, warehouseman or processor, in such form as may be
agreed to by the Agent in the reasonable exercise of its discretion.
"COLLATERAL DOCUMENTS" means the Pledge and Security Agreement,
the Foreign Pledge Agreements, the Mortgages, any control agreement, any
securities account control agreement and all other instruments or documents
delivered by any Loan Party pursuant to this Agreement or any of the other Loan
Documents in order to grant to the Agent, on behalf of the Lenders, a Lien on
any real, personal or mixed property of that Loan Party as security for the
Obligations.
"COMMITMENT" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"COMMITMENT" on SCHEDULE 1.2 attached to the Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 11.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of SECTION
11.2, and "COMMITMENTS" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"COMPLIANCE CERTIFICATE" has the meaning specified in SECTION
5.2(A).
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
sum of the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of LS&Co and its
Subsidiaries) by LS&Co and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of LS&Co and its Subsidiaries but EXCLUDING the aggregate of all
expenditures by LS&Co and its Subsidiaries during that period to acquire (by
purchase or otherwise) the business, property or fixed assets of any Person, or
the stock or other evidence of beneficial ownership of any Person that, as a
result
Annex A-6
of such acquisition, becomes a Subsidiary of LS&Co. For purposes of this
definition, the purchase price of equipment that is purchased simultaneously
with the trade-in of existing equipment or with insurance proceeds shall be
included in Consolidated Capital Expenditures only to the extent of the gross
amount of such purchase price less the credit granted by the seller of such
equipment for the equipment being traded in at such time or the amount of such
proceeds, as the case may be.
"CONSOLIDATED EBITDA" means, for any period, for LS&Co and its
Subsidiaries on a consolidated basis, an amount equal to (a) Consolidated Net
Income for such period, PLUS (b) the sum of the following to the extent deducted
in calculating such Consolidated Net Income: (i) Consolidated Interest Charges
for such period, (ii) the provision for federal, state, local and foreign income
taxes for such period, (iii) the amount of depreciation and amortization
expense, (iv) (A) all non-cash nonoperating expense and any non-cash
nonoperating expense constituting restructuring and restructuring related
charges incurred after June 25, 2003 MINUS (B) all non-cash nonoperating income
and any non-cash nonoperating income constituting reversals of restructuring and
restructuring related charges, where such charges are incurred after June 25,
2003, (v) foreign exchange losses (whether or not included in operating expense)
of LS&Co and its Subsidiaries for such period MINUS foreign exchange gains
(whether or not included in operating income) of LS&Co and its Subsidiaries for
such period, (vi) solely with respect to the Fiscal Months ended September 2002,
October 2002 and November 2002, amounts of $1,636,174, $1,632,061 and
$5,519,765, respectively, which shall be deemed by the parties hereto to be
amounts relating to restructuring and restructuring related charges for such
periods, (vii) solely with respect to the Fiscal Month ended February 2003, a
one-time non-cash adjustment to lease expense in an amount not to exceed
$25,000,000 and (viii) without duplication, all restructuring and restructuring
related charges incurred after June 25, 2003 (the "RESTRUCTURING CHARGES"),
MINUS (c) without duplication, the aggregate amount of cash payments made during
such period in respect of the Restructuring Charges.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, as of any date
of determination, the ratio of (a) (i) Consolidated EBITDA for the twelve Fiscal
Months most recently ended, MINUS (ii) the sum of (A) the aggregate amount of
all Consolidated Capital Expenditures made by LS&Co and its Subsidiaries during
such period PLUS (B) the provision for federal, state, local and foreign income
taxes for such period, TO (b) the sum of (i) Consolidated Interest Charges for
such period or any other period to the extent paid in cash during such period
and (ii) the aggregate principal amount (or the equivalent thereto) of all
repayments of scheduled Debt made by LS&Co and its Subsidiaries during such
period (other than to the extent such Debt has been refinanced or defeased, or
with respect to which restricted cash has been set aside to repay, during such
period from the proceeds of new Debt that is not secured by any of the
Collateral); PROVIDED, HOWEVER, that for purposes of this clause (ii) such
repayments shall not include (A) any repayments under the Existing Credit
Agreement, (B) any repurchase, redemption or defeasance of the Existing Domestic
Receivables Transaction Documents, (C) any repurchase, redemption or defeasance
of LS&Co's outstanding 6.80% Notes due 2003, (D) any repayments of principal
during the Fiscal Year ending November 2003 in an aggregate amount not to exceed
46,900,000 euros PLUS 2,400,000 pounds sterling (which amounts shall be
expressed in Dollars for purposes of calculations relating to this definition
based on the nominal rate of exchange of the Agent in the New York foreign
exchange market for the sale of such currency in exchange for Dollars at 12:00
noon (New York time) as of the applicable date of
Annex A-7
repayment) required to be made in connection with the European Receivables
Program and (E) repayment of LS&Co's industrial revenue bond during June 2003 in
an amount not to exceed $10,000,000.
"CONSOLIDATED INTEREST CHARGES" means, for any period, for LS&Co
and its Subsidiaries on a consolidated basis, all interest (net of all interest
income), premium amortization, debt discount, fees, charges and related expenses
of LS&Co and its Subsidiaries in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, for LS&Co and
its Subsidiaries on a consolidated basis, the net income of LS&Co and its
Subsidiaries for that period.
"CONSOLIDATED NET TANGIBLE ASSETS" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any indebtedness for
money borrowed having a maturity of less than twelve (12) months from the date
of the most recent consolidated balance sheet of LS&Co but which by its terms is
renewable or extendable beyond twelve (12) months from such date at the option
of LS&Co or any of its Subsidiaires), and (b) all Intangible Assets, all as set
forth on the most recent consolidated balance sheet of LS&Co and computed in
accordance with GAAP.
"CONTAMINANT" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
(PCBs), or any constituent of any such substance or waste.
"CONTINUATION/CONVERSION DATE" means the date on which a Loan is
converted into or continued as a LIBOR Rate Revolving Loan.
"CONTRIBUTING GUARANTORS" has the meaning specified in SECTION
1.5(I).
"CREDIT SUPPORT" has the meaning specified in SECTION 1.3(A).
"DEBT" means, without duplication, all liabilities, obligations
and indebtedness of LS&Co or any of its Subsidiaries to any Person, of any kind
or nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, consisting of indebtedness for borrowed money or
the deferred purchase price of property, excluding trade payables, but
including, whether or not included as indebtedness or liabilities in accordance
with GAAP:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments;
Annex A-8
(b) all direct or contingent obligations of such Person arising
under letters of credit (including standby and trade letters of credit),
bankers' acceptances, bank guaranties, surety bonds and similar instruments;
(c) net obligations of such Person under any Hedge Agreement or
in connection with any Cash Management Services;
(d) all obligations of such Person to pay the deferred purchase
price of property or services (other than trade accounts payable in the ordinary
course of business);
(e) indebtedness (excluding prepaid interest thereon) secured by
a Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;
(f) Capital Leases and Synthetic Lease Obligations;
(g) all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Equity Interests in such
Person or any other Person or any warrants, rights or options to acquire such
Equity Interests, valued, in the case of redeemable Preferred Interests, at the
greater of its voluntary or involuntary liquidation preference PLUS accrued and
unpaid dividends;
(h) all amounts shown on a balance sheet of such Person as
indebtedness or liabilities in accordance with GAAP; and
(i) all Guarantees of such Person in respect of any of the
foregoing.
For all purposes hereof, the Debt of any Person shall include the
Debt of any partnership or joint venture (other than a joint venture that is
itself a corporation or limited liability company) in which such Person is a
general partner or a joint venturer, unless such Debt is expressly made
non-recourse to such Person. The amount of any net obligation under any Hedge
Agreement on any date shall be deemed to be the Hedge Termination Value thereof
as of such date. The amount of any Capital Lease or Synthetic Lease Obligation
as of any date shall be deemed to be the amount of Attributable Debt in respect
thereof as of such date.
"DEFAULT" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"DEFAULT RATE" means a fluctuating per annum interest rate at all
times equal to the sum of (a) the otherwise applicable Interest Rate PLUS (b)
two percent (2%) per annum. Each Default Rate shall be adjusted simultaneously
with any change in the applicable Interest Rate. In addition, the Default Rate
shall result in an increase in the Letter of Credit Fee by two percentage points
per annum.
"DEFAULTING LENDER" has the meaning specified in SECTION
12.15(C).
Annex A-9
"DESIGNATED ACCOUNT" has the meaning specified in SECTION 1.2(C).
"DESIGNATED PERSONS" has the meaning specified in SECTION 1.2(C).
"DISPOSITION" or "DISPOSE" means the sale, transfer, license,
lease or other disposition (including any sale and leaseback transaction) of any
property by any Person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith and any grant of any option or rights
relating to any such property.
"DISQUALIFIED STOCK" has the meaning specified in that certain
U.S. Dollar Indenture dated as of January 18, 2001 between LS&Co and Wilmington
Trust Company (as successor to Citibank), as trustee, that certain Euro
Indenture dated as of January 18, 2001 between LS&Co and Wilmington Trust
Company (as successor to Citibank), as trustee and that certain Indenture dated
as of December 4, 2002 between LS&Co and Wilmington Trust Company, as trustee.
"DISTRIBUTION" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in respect
of capital stock (or any options or warrants for, or other rights with respect
to, such stock) of such corporation, other than distributions in capital stock
(or any options or warrants for such stock) of the same class; or (b) the
redemption or other acquisition by such corporation of any capital stock (or any
options or warrants for such stock) of such corporation.
"DOCUMENTS" means all documents as such term is defined in the
UCC, including bills of lading, warehouse receipts or other documents of title,
now owned or hereafter acquired by LS&Co.
"DOL" means the United States Department of Labor or any
successor department or agency.
"DOLLAR" and "$" means dollars in the lawful currency of the
United States. Unless otherwise specified, all payments under the Agreements
shall be made in Dollars.
"DOMESTIC SUBSIDIARY" means any Subsidiary of LS&Co that is
organized under the laws of any political subdivision of the United States.
"ELIGIBLE ACCOUNTS" means the Accounts which the Agent in the
exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to establish other
criteria of ineligibility, Eligible Accounts shall not, unless the Agent in its
reasonable discretion elects, include any Account:
(a) (i) on terms of net thirty (30) days or fewer with respect to
which more than 97 days have elapsed since the date of the original invoice
therefor or which is more than 67 days past due; or (ii) on terms longer than
net thirty (30) days, provided that an aggregate net amount of such Accounts not
to exceed $10,000,000 with respect to which not more than 127 days have elapsed
since the date of the original invoice therefore may be Eligible Accounts;
Annex A-10
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in the Pledge and Security Agreement are
incorrect or have been breached;
(c) with respect to which Account (or any other Account due from
such Account Debtor), in whole or in part, a check, promissory note, draft,
trade acceptance or other instrument for the payment of money has been received,
presented for payment and returned uncollected for any reason;
(d) which represents a progress billing (as hereinafter defined)
or as to which any Borrower has extended the time for payment without the
consent of the Agent; for the purposes hereof, "progress billing" means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon any Borrower's completion of any further performance under
the contract or agreement;
(e) with respect to which any one or more of the following events
has occurred to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor as a
going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar amount
of outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible under CLAUSE (A) above;
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States of America or Canada (other than the
Province of Newfoundland); or (ii) is not organized under the laws of the United
States of America or Canada or any state or province thereof; or (iii) is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof; except to the
extent that such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion;
Annex A-11
(h) owed by an Account Debtor which is an Affiliate or employee
of any Borrower;
(i) except as provided in CLAUSE (K) below, with respect to which
either the perfection, enforceability, or validity of the Agent's Liens in such
Account, or the Agent's right or ability to obtain direct payment to the Agent
of the proceeds of such Account, is governed by any federal, state, or local
statutory requirements other than those of the UCC;
(j) owed by an Account Debtor to which LS&Co or any of its
Subsidiaries, is indebted in any way, or which is subject to any right of setoff
or recoupment by the Account Debtor, unless the Account Debtor has entered into
an agreement acceptable to the Agent to waive setoff rights; or if the Account
Debtor thereon has disputed liability or made any claim with respect to any
other Account due from such Account Debtor; but in each such case only to the
extent of such indebtedness, setoff, recoupment, dispute, or claim;
(k) owed by the government of the United States of America, or
any department, agency, public corporation, or other instrumentality thereof,
unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. ss.
3727 ET SEQ.), and any other steps necessary to perfect the Agent's Liens
therein, have been complied with to the Agent's satisfaction with respect to
such Account;
(l) owed by any state, municipality, or other political
subdivision of the United States of America, or any department, agency, public
corporation, or other instrumentality thereof and as to which the Agent
determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis;
(n) which is evidenced by a promissory note or other instrument
or by Chattel Paper;
(o) if the Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or similar
report in order to permit any Borrower to seek judicial enforcement in such
State of payment of such Account, unless such Borrower has qualified to do
business in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year;
(q) which arises out of a sale not made in the ordinary course of
LS&Co's or LSFCC's business;
(r) with respect to which the goods giving rise to such Account
have not been shipped and delivered to and accepted by the Account Debtor, and,
if applicable, accepted by the Account Debtor, or the Account Debtor revokes its
acceptance of such goods or services;
Annex A-12
(s) owed by an Account Debtor which is obligated to LS&Co or any
of its Subsidiaries respecting Accounts the aggregate unpaid balance of which
exceeds fifteen percent (15%) of the aggregate unpaid balance of all Accounts
owed to LS&Co or any of its Subsidiaries at such time by all of the Account
Debtors of the Borrowers, but only to the extent of such excess, provided that
such percentage shall be twenty five percent (25%) with respect to any such
Account Debtor whose lowest short term or long term unsecured debt rating with
Xxxxx'x or S&P is not lower than Baa3 or BBB-, respectively;
(t) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account, then
such Account shall promptly be excluded from the calculation of Eligible
Accounts.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank, commercial
finance company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default has occurred and
is continuing, any Person reasonably acceptable to the Agent.
"ELIGIBLE INVENTORY" means Inventory, valued at the lower of cost
(on a first-in, first-out basis) or market, which the Agent, in its reasonable
discretion, determines to be Eligible Inventory. Without limiting the discretion
of the Agent to establish other criteria of ineligibility, Eligible Inventory
shall not, unless the Agent in its reasonable discretion elects, include any
Inventory:
(a) that is not owned by LS&Co;
(b) that is not subject to the Agent's Liens, which are perfected
as to such Inventory, or that are subject to any other Lien whatsoever (other
than (i) the Liens described in CLAUSE (D) of the definition of Permitted Liens
provided that such Permitted Liens (A) are junior in priority to the Agent's
Liens or subject to Reserves and (B) do not impair directly or indirectly the
ability of the Agent to realize on or obtain the full benefit of the Collateral
and (ii) the subordinated Lien securing the Term Loan Facility);
(c) that does not consist of finished goods or raw materials;
(d) that consists of work-in-process, chemicals, samples,
prototypes, supplies, or packing and shipping materials as they relate to raw
materials;
(e) that is not in good condition, is unmerchantable, or does not
meet all standards imposed by any Governmental Authority, having regulatory
authority over such goods, their use or sale;
(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of LS&Co's business, or that
is slow moving or stale;
(g) that is obsolete or returned or repossessed or used goods
taken in trade;
Annex A-13
(h) that is located outside the United States of America (other
than Inventory in-transit to the United States from vendors or suppliers with
respect to which the Agent's first priority Lien on behalf of the Lenders has
been perfected to the Agent's satisfaction);
(i) that is located in a public warehouse or in possession of a
bailee or in a facility leased by LS&Co, if the warehouseman, or the bailee, or
the lessor has not delivered to the Agent, if requested by the Agent, a
subordination agreement, bailee letter or similar waiver in form and substance
satisfactory to the Agent or if a Reserve for rents or storage charges has not
been established for Inventory at that location;
(j) that contains or bears any Proprietary Rights licensed to a
Borrower by any Person, if the Agent is not satisfied that it may sell or
otherwise dispose of such Inventory in accordance with the terms of the Pledge
and Security Agreement and SECTION 9.2 without infringing the rights of the
licensor of such Proprietary Rights or violating any contract with such licensor
(and without payment of any royalties other than any royalties due with respect
to the sale or disposition of such Inventory pursuant to the existing license
agreement), and, as to which LS&Co has not delivered to the Agent a consent or
sublicense agreement from such licensor in form and substance acceptable to the
Agent if requested;
(k) that is not reflected in the details of a current perpetual
inventory report; or
(l) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory,
such Inventory shall promptly be excluded from the calculation of Eligible
Inventory.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
relating to environmental, health, safety and land use matters.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) 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 PERMIT" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"EQUIPMENT" means all now owned and hereafter acquired machinery,
equipment, furniture, furnishings, fixtures, and other tangible personal
property (except Inventory) of any Borrower, including embedded software, dies,
tools, jigs, molds and office equipment, as well as all of such types of
property leased by any Borrower and all rights and interests of any Borrower
with respect thereto under such leases (including, without limitation, options
to purchase);
Annex A-14
together with all present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and supplies used or to be
used in connection therewith, and all substitutes for any of the foregoing, and
all manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.
"EQUIPMENT FINANCING TRANSACTION" means any financing with any
Person of Equipment which will be treated as Debt.
"EQUITY INTERESTS" means, with respect to any Person, all of the
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including, without
limitation, partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on any date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with any Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a
Pension Plan, (b) a withdrawal by any Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA, (c) a complete or partial withdrawal by any Borrower or any
ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer
Plan is in reorganization, (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan, (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan, or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate.
"EUROPEAN RECEIVABLES PROGRAM" means the Permitted Foreign
Receivables Program pursuant to (a) that certain Receivables Purchase Agreement
between Tulip Asset Purchase Company B.V. and Levi Xxxxxxx Germany GmbH, dated
as of February 29, 2000, (b) that certain Receivables Purchase Agreement among
ABN AMRO Bank N.V., Levi Xxxxxxx Continental SA and Levi Xxxxxxx & Co., dated as
of February 29, 2000, (c) that certain
Annex A-15
Receivables Purchase Agreement among Tulip Asset Purchase Company B.V., Levi
Xxxxxxx (U.K.) Limited and Levi Xxxxxxx & Co., dated as of February 29, 2000,
(d) that certain Receivables Purchase Agreement among Tulip Asset Purchase
Company B.V., Levi Xxxxxxx de Espana, S.A. and Levi Xxxxxxx & Co., dated as of
February 29, 2000 and (e) that certain Italian Receivables Purchase Agreement
among ABN AMRO Bank N.V., Belgian Xxxxxx, Xxxx Xxxxxxx Italia S.R.L. and Levi
Xxxxxxx & Co., dated as of February 29, 2000.
"EVENT OF DEFAULT" has the meaning specified in SECTION 9.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"EXISTING CREDIT AGREEMENT" means that certain Credit Agreement,
dated as of January 31, 2003, among LS&Co, the financial institutions party
thereto, and Citicorp North America, Inc., as administrative agent (as amended,
supplemented or otherwise modified prior to the Closing Date).
"EXISTING LETTERS OF CREDIT" means the Letters of Credit set
forth on SCHEDULE 1.1.
"EXISTING DOMESTIC RECEIVABLES TRANSACTION DOCUMENTS" means,
collectively, each of (i) the Third Amended and Fully Restated Receivables
Purchase and Sale Agreement, dated as of January 28, 2000 (the "RPSA"), between
LS&Co and LSFCC, as amended by that certain Master Amendment and Consent to the
Receivables Purchase and Sale Agreement and the Receivables Sale Agreement,
dated as of July 31, 2001, among LS&Co, LSFCC, Levi Xxxxxxx Funding, LLC
("FUNDING") and Levi Xxxxxxx Receivables Funding, LLC ("LSRF"), (ii) the
Intercompany Note, dated as of January 31, 2000 (the "INTERCOMPANY NOTE"),
issued by LS&Co. in favor of LSFCC pursuant to the RPSA, (iii) the Receivables
Purchase Agreement, dated as of July 31, 2001 (the "RPA"), among LSFCC, LSRF,
FUNDING, and Levi Xxxxxxx Securitization Corp., (iv) the Subordinated Note,
dated as of July 31, 2001, issued by LSRF in favor of LSFCC pursuant to the RPA,
(v) the Master Indenture, dated as of July 31, 2001 (the "LSRF Indenture"),
between LSRF and Citibank, N.A., as Indenture Trustee, Paying Agent,
Authentication Agent, Transfer Agent and Registrar (in such capacities, the
"Indenture Trustee"), as amended and supplemented by that certain Series 2001-A
Indenture Supplement, dated as of July 31, 2001, between LSRF and the Indenture
Trustee, (vi) each secured promissory note issued under the LSRF Indenture,
(vii) the Lockbox Account Agreement, dated as of July 31, 2001, among Bank of
America, N.A., LS&Co, LSFCC, LSRF and the Indenture Trustee, (viii) the Lock-Box
Account Agreement, dated as of July 31, 2001, among Bank One, NA, LSFCC, LSRF
and the Indenture Trustee, (ix) the Parent Undertaking, dated as of July 31,
2001, made by LS&Co in favor of LSRF and (x) the Consent and Release Agreement,
dated as of January 31, 2003, among LS&Co, LSFCC, Funding, LSRF, the Indenture
Trustee and Citicorp North America, Inc.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight
Annex A-16
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such day; PROVIDED that (a) if
such day is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to the Bank on such day on such
transactions as determined by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"FINANCIAL STATEMENTS" means, according to the context in which
it is used, the financial statements referred to in SECTIONS 5.2 AND 6.6 or any
other financial statements required to be given to the Lenders pursuant to this
Agreement.
"FISCAL MONTH" means, with respect to LS&Co or any of its
Subsidiaries, the approximately one-month period ending each month on a day not
earlier than the tenth Business Day before the last day of such month, as
determined from time to time by LS&Co in the ordinary course of its business, as
the context may require, or, if any such Subsidiary was not in existence on the
first day of any such period, the period commencing on the date on which such
Subsidiary is incorporated, organized, formed or otherwise created and ending on
the last day of such period.
"FISCAL QUARTER" means, with respect to LS&Co or any of its
Subsidiaries, the approximately three-month period ending on a day in February,
May, August or November, as the case may be, not earlier than the tenth Business
Day before the last day of such month, as determined from time to time by LS&Co
in the ordinary course of its business, as the context may require, or, if any
such Subsidiary was not in existence on the first day of any such period, the
period commencing on the date on which such Subsidiary is incorporated,
organized, formed or otherwise created and ending on the last day of such
period.
"FISCAL YEAR" means, with respect to LS&Co or any of its
Subsidiaries, the approximately twelve-month period ending on a day in November
not earlier than the tenth Business Day before the last day of such month, as
determined from time to time by LS&Co in the ordinary course of its business or,
if any such Subsidiary was not in existence on such day in November in any
calendar year, the period commencing on the date on which such Subsidiary is
incorporated, organized, formed or otherwise created and ending on the fourth
Sunday of the next succeeding November.
"FIXED ASSETS" means the Equipment and Real Estate of any
Borrower.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property located in an
area designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards.
"FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT" has the meaning
specified in SECTION 6.19(D).
Annex A-17
"FOREIGN INVENTORY TRANSACTION" means any financing with any
Person of Inventory owned by a Foreign Subsidiary which will be treated as Debt.
"FOREIGN PLAN" has the meaning specified in SECTION 6.19.
"FOREIGN PLEDGE AGREEMENTS" means each pledge agreement or
similar instrument governed by the laws of a country other than the United
States, executed and delivered by LS&Co or any Domestic Subsidiary that owns
Equity Interests of one or more Pledged Foreign Subsidiaries organized in such
country, in form and substance satisfactory to the Agent.
"FOREIGN RECEIVABLES" means all obligations of any obligor
(whether now existing or hereafter arising) under a contract for sale of goods
or services by Foreign Subsidiaries, which includes any obligation of such
obligor (whether now existing or hereafter arising) to pay interest, finance
charges or amounts with respect thereto, and, with respect to any of the
foregoing receivables or obligations, (a) all of the interest of Foreign
Subsidiaries in the goods (including returned goods) the sale of which gave rise
to such receivable or obligation after the passage of title thereto to any
obligor, (b) all other Liens and property subject thereto from time to time
purporting to secure payment of such receivables or obligations, (c) all
guaranties, insurance, letters of credit and other agreements or arrangements of
whatever character from time to time supporting or securing payment of any such
receivables or obligations, (d) all books and records relating to the foregoing,
lockbox accounts containing primarily proceeds of the foregoing, and other
similar related assets customarily transferred (or in which security interests
are customarily granted) to purchasers in receivables purchase transactions that
are treated as sales under GAAP, (e) all rights of Foreign Subsidiaries to
refunds on account of value added tax in respect of goods sold to an obligor,
any receivable from whom is or becomes a defaulted receivable, and (f) proceeds
of or judgments relating to any of the foregoing, any debts represented thereby
and all rights of action against any Person in connection therewith.
"FOREIGN SUBSIDIARY" means any Subsidiary of LS&Co, other than a
Domestic Subsidiary.
"FRAUDULENT TRANSFER LAWS" has the meaning specified in SECTION
1.5(H).
"FUNDED CURRENT LIABILITY PERCENTAGE" means "funded current
liability percentage" within the meaning of Section 412(1)(8)(B) of the Internal
Revenue Code.
"FUNDING" has the meaning specified in the definition of
"Existing Domestic Receivables Transaction Documents".
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and
practices set forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to the
circumstances as of the Closing Date.
Annex A-18
"GENCO GOODS" means finished goods owned by LS&Co and held by
GENCO I, Inc., a third party logistics provider, or any of its Affiliates or
successors or other third party logistics providers providing similar services.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"GUARANTEE" means, with respect to any Person, all obligations of
such Person which in any manner directly or indirectly guarantee or assure, or
in effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"GUARANTORS" means, collectively, each Domestic Subsidiary of
LS&Co other than (a) any Restricted Subsidiary, (b) any Limited Guarantor and
(c) LSFCC.
"HAZARDOUS SUBSTANCES" has the meaning specified in SECTION
13.11(B).
"HEDGE AGREEMENT" means (a) any and all rate swap transactions,
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or options
or forward bond or forward bond price or forward bond index transactions,
interest rate options, forward foreign exchange transactions, put or call
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, spot contracts, or any other similar transactions or any combination of
any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any international foreign exchange master
agreement, or any other master agreement (any such master agreement, together
with any related schedules, a "MASTER AGREEMENT"), including any such
obligations or liabilities under any Master Agreement.
"HEDGE AGREEMENT RESERVES" means all reserves which the Agent
from time to time establishes in its reasonable discretion for the Hedge
Agreements then outstanding.
"HEDGE TERMINATION VALUE" means, with respect to each Hedge
Agreement on any date of determination, after taking into account the effect of
any legally enforceable netting agreement relating to such Hedge Agreement, an
amount equal to the termination value,
Annex A-19
expressed in Dollars, as determined by LS&Co; provided, HOWEVER, that in the
event that two Lenders determine that the xxxx-to-market value, expressed in
Dollars, for any Hedge Agreement, as determined based upon one or more
mid-market or other readily available quotations provided by any recognized
dealer in such Hedge Agreement, is greater than the termination value for such
Hedge Agreement determined by LS&Co, the Hedge Termination Value of such Hedge
Agreement shall be the amount determined by such Lenders; PROVIDED FURTHER that
any such determination shall have no evidentiary value for purposes of
determining the amount owed to the applicable Selected Revolving Lender.
"INDEMNIFIED LIABILITIES" has the meaning specified in SECTION
13.11(A).
"INDEMNIFIED PERSON" has the meaning specified in SECTION
13.11(A).
"INDENTURES" means the 1996 Indenture and that certain Fiscal
Agency Agreement dated as of November 22, 1996 between LS&Co and Citibank, N.A.,
as fiscal agent.
"INSTRUMENTS" means all instruments as such term is defined in
the UCC, now owned or hereafter acquired by any Borrower.
"INTELLECTUAL PROPERTY ASSETS" has the meaning specified in the
Intercreditor Agreement.
"INTERCOMPANY NOTE" has the meaning specified in the definition
of "Existing Domestic Receivables Transaction Documents".
"INTERCREDITOR AGREEMENT" means that certain Intercreditor
Agreement dated as of the date hereof by and among the Agent, and the Bank, as
agent for the Term Loan Lenders, as from time to time amended, modified or
restated.
"INTEREST PERIOD" means, as to any LIBOR Rate Revolving Loan, the
period commencing on the Funding Date of such Loan or on the
Continuation/Conversion Date on which the Loan is converted into or continued as
a LIBOR Rate Revolving Loan, and ending on the date one, two, three or six
months thereafter as selected by LS&Co in its Notice of Borrowing, in the form
attached hereto as EXHIBIT C, or Notice of Continuation/Conversion, in the form
attached hereto as EXHIBIT D, provided that:
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(b) any Interest Period pertaining to a LIBOR Rate Revolving Loan
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period; and
Annex A-20
(c) no Interest Period shall extend beyond the Stated Termination
Date.
"INTEREST RATE" means each or any of the interest rates,
including the Default Rate, set forth in SECTION 2.1.
"INVENTORY" means all of LS&Co's now owned and hereafter acquired
inventory, goods and merchandise, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in LS&Co's business or used in connection with the packing, shipping,
advertising, selling or finishing of such goods, merchandise, and all documents
of title or other Documents representing them.
"INVESTMENT" means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of capital stock or other securities of another Person, (b)
a loan, advance or capital contribution to, Guarantee or assumption of debt of,
or purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit; PROVIDED that customary trade credit extended and
paid in the ordinary course of business shall not constitute Investments. For
purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment (other than adjustments for the
repayment of, or the refund of capital with respect to, the original principal
amount of any such Investment).
"INVESTMENT POLICIES" means LS&Co's U.S. Deferred Compensation
Plan for Executives and Outside Directors Statement of Investment Policy in the
form delivered to the Agent prior to the Closing Date, as such document may be
amended from time to time in accordance with SECTION 7.26.
"IP RIGHTS" means trademarks, service marks, trade names,
copyrights, patents, patent rights, franchises, licenses and other intellectual
property rights.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"LATEST PROJECTIONS" means: (a) on the Closing Date and
thereafter until the Agent receives new projections pursuant to SECTION 5.2(D),
the projections of LS&Co's consolidated financial condition, results of
operations, and cash flows, for the period commencing in August 2003 and ending
in November 2007 and delivered to the Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Agent pursuant to
SECTION 5.2(D).
"LEADERSHIP SHARES PLAN" means the Leadership Shares Plan of
LS&Co, as restated as of June 1, 2002 or any predecessor long-term management
incentive program, as such document may be amended from time to time in
accordance with SECTION 7.26.
Annex A-21
"LENDER" and "LENDERS" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance outstanding and the Bank to the extent of any Non-Ratable Loan
outstanding; PROVIDED that no such Agent Advance or Non-Ratable Loan shall be
taken into account in determining any Lender's Pro Rata Share.
"LETTER OF CREDIT" has the meaning specified in SECTION 1.3(A).
"LETTER OF CREDIT FEE" has the meaning specified in SECTION 2.6.
"LETTER OF CREDIT ISSUER" means the Bank, any affiliate of the
Bank or any other financial institution that issues any Letter of Credit
pursuant to this Agreement.
"LETTER OF CREDIT SUBFACILITY" means $350,000,000.
"LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR Rate
Revolving Loan, the Termination Date, the last day of each month and the last
day of each Interest Period applicable to such Loan.
"LIBOR RATE" means, for any Interest Period, with respect to
LIBOR Rate Revolving Loans, the rate of interest per annum determined pursuant
to the following formula:
LIBOR Rate = OFFSHORE BASE RATE
_________________________________________
1.00 - Eurodollar Reserve Percentage
Where,
"OFFSHORE BASE RATE" means the rate per annum appearing on
Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the Offshore Base Rate shall
be, for any Interest Period, the rate per annum appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable
to such Interest Period; PROVIDED, HOWEVER, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates. If for any reason none of the
foregoing rates is available, the Offshore Base Rate shall be, for any
Interest Period, the rate per annum determined by the Agent as the
rate of interest at which dollar deposits in the approximate amount of
the LIBOR Rate Revolving Loan comprising part of such Borrowing would
be offered by the Bank's London Branch to major banks in the offshore
dollar market at their request at or about 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day during
any Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day
applicable to member banks under regulations issued from time to time
by the Federal Reserve Board for determining the maximum reserve
Annex A-22
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Offshore Rate for each
outstanding LIBOR Rate Revolving Loan shall be adjusted automatically
as of the effective date of any change in the Eurodollar Reserve
Percentage.
"LIBOR RATE REVOLVING LOAN" means a Revolving Loan during any
period in which it bears interest based on the LIBOR Rate.
"LIEN" means: (a) any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; (b) to the extent not included
under CLAUSE (A), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
or encumbrance affecting property; and (c) any contingent or other agreement to
provide any of the foregoing.
"LIMITED GUARANTORS" means, collectively, each Domestic
Subsidiary of LS&Co with a foreign branch other than any Restricted Subsidiary.
"LOAN ACCOUNT" means the loan account of the Borrowers, which
account shall be maintained by the Agent.
"LOAN DOCUMENTS" means this Agreement, the Collateral Documents,
the Subsidiary Guaranty and any other agreements, instruments, and documents
heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral, or any other aspect of the
transactions contemplated by this Agreement.
"LOAN PARTIES" means, collectively, LS&Co, LSFCC and each of the
Domestic Subsidiaries party to the Subsidiary Guaranty or any of the Collateral
Documents.
"LOANS" means, collectively, all loans and advances provided for
in ARTICLE 1.
"LOS/DOS BUSINESS" means the ownership and operation by LS&Co or
a Subsidiary of LS&Co, whether directly or through joint ventures with third
parties in partnership, corporate or other form, of businesses engaged solely in
selling apparel and accessories and related products including, without
limitation, selling through retail stores, outlet stores, telephone sales,
catalog or other mail orders, and electronic sales. LOS/DOS Business shall not
include any business engaging in manufacturing or in selling and in
manufacturing.
"LS&CO" has the meaning specified in the introductory paragraph
to this Agreement.
"LS&CO. DEFERRED COMPENSATION PLAN" has the meaning specified in
SECTION 7.20(H).
Annex A-23
"LS&CO. TRUST" has the meaning specified in SECTION 7.20(H).
"LS&CO. TRUST AGREEMENT" has the meaning specified in SECTION
7.20(H).
"LSFCC" has the meaning specified in the introductory paragraph
to this Agreement.
"LSIFCS" means Levi Xxxxxxx International Group Finance
Coordination Services C.V.A./S.C.A., a Belgian corporation, and any successors.
"LSRF" has the meaning specified in the definition of "Existing
Domestic Receivables Transaction Documents".
"MAJORITY LENDERS" means at any date of determination Lenders
whose Pro Rata Shares aggregate more than fifty percent (50%).
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"MASTER AGREEMENT" has the meaning specified in the definition of
"Hedge Agreement".
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of any Loan Party, LS&Co and its
Subsidiaries taken as a whole or the Collateral; (b) a material impairment of
the ability of any Loan Party to perform under any Loan Document to which it is
a party; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any Loan Party of any Loan Document to which it
is a party.
"MATERIAL DOMESTIC SUBSIDIARY" means any Domestic Subsidiary that
is a Material Subsidiary.
"MATERIAL FOREIGN SUBSIDIARY" means any Material Subsidiary
(other than a Restricted Subsidiary) if such Material Subsidiary is (a) not a
Domestic Subsidiary and (b) owned by LS&Co either directly or indirectly through
a chain of one or more Domestic Subsidiaries.
"MATERIAL SUBSIDIARY" means (a) any Subsidiary of LS&Co, (i) the
net book value of which is $5,000,000 or more or (ii) the annual gross revenue
of which is $15,000,000 or more and (b) any other Subsidiary of LS&Co designated
by LS&Co to be a "Material Subsidiary" for purposes of this Agreement.
"MAXIMUM INVENTORY LOAN AMOUNT" means $450,000,000.
"MAXIMUM RATE" has the meaning specified in SECTION 2.3.
"MAXIMUM REVOLVER AMOUNT" means $650,000,000.
Annex A-24
"MINIMUM CONDITION" means:
(a) with respect to any proposed intercompany Investment,
incurrence of intercompany Debt or making of an intercompany Disposition, that
such intercompany Investment, intercompany Debt or intercompany Disposition,
considered as a single transaction, would at no time prior to the Stated
Termination Date directly or indirectly result in a transfer of cash or property
(i) from any Borrower to any Limited Guarantor or any Foreign Subsidiary, (ii)
from any Guarantor to any Limited Guarantor or any Foreign Subsidiary, or (iii)
from any Limited Guarantor to any Foreign Subsidiary; or
(b) with respect to any proposed substantially concurrent
combination of related intercompany Investments, intercompany Debt and/or
intercompany Dispositions, that such combination of transactions would at no
time prior to the Stated Termination Date directly or indirectly result in a net
transfer of cash and/or property (i) from any Borrower to any Limited Guarantor
or any Foreign Subsidiary, (ii) from any Guarantor to any Limited Guarantor or
any Foreign Subsidiary, or (iii) from any Limited Guarantor to any Foreign
Subsidiary; or
(c) with respect to any other proposed Investment, Debt or
Disposition, prepayment or any other proposed combination thereof, (i) no Event
of Default has occurred and is continuing or would result from such Investment,
Debt, Disposition, prepayment or combination of transactions, and (ii) average
daily Availability during the preceding calendar month is no less than
$150,000,000 and current Availability would be no less than $150,000,000 after
giving effect to such Investment, Debt, Disposition, prepayment or combination
of transactions;
PROVIDED, HOWEVER, that for all purposes under this definition (A) all direct
and indirect references to "Limited Guarantors" shall exclude foreign branches
of Limited Guarantors and (B) foreign branches of Limited Guarantors shall be
treated as separate entities constituting Pledged Foreign Subsidiaries.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"MORTGAGES" means and includes any and all of the mortgages,
deeds of trust, deeds to secure debt, assignments and other instruments executed
and delivered by any Loan Party to or for the benefit of the Agent by which the
Agent, on behalf of the Lenders, acquires a Lien on the Real Estate or a
collateral assignment of such Loan Party's interest under leases of Real Estate,
and all amendments, modifications and supplements thereto.
"MULTI-EMPLOYER PLAN" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Borrower or any
ERISA Affiliate.
"NET AMOUNT OF ELIGIBLE ACCOUNTS" means, at any time, the gross
amount of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits, allowances, accrued rebates, offsets,
deductions, counterclaims, disputes and other defenses of any nature at any time
issued, owing, granted, outstanding, available or claimed.
"NET PROCEEDS" has the meaning specified in SECTION 3.3(A).
Annex A-25
"NON-RATABLE LOAN" and "NON-RATABLE LOANS" have the meanings
specified in Section 1.2(h).
"NOTICE OF BORROWING" has the meaning specified in SECTION
1.2(B).
"NOTICE OF CONTINUATION/CONVERSION" has the meaning specified in
Section 2.2(b).
"OBLIGATIONS" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by each Loan Party
to the Agent and/or any Lender, arising under or pursuant to this Agreement or
any of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guarantee, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including all principal,
interest (including all interest that accrues after the commencement of any case
or proceeding by or against any Borrower in bankruptcy, whether or not allowed
in such case or proceeding), charges, expenses, fees, attorneys' fees, filing
fees and any other sums chargeable to any Loan Party hereunder or under any of
the other Loan Documents. "OBLIGATIONS" includes, without limitation, (a) all
debts, liabilities, and obligations now or hereafter arising from or in
connection with the Letters of Credit and (b) all debts, liabilities and
obligations now or hereafter under or arising from or in connection with Bank
Products.
"OECD" means the Organization for Economic Cooperation and
Development.
"ORDINARY COURSE HEDGE AGREEMENTS" means any and all interest
rate swaps, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
interest rate options, forward foreign exchange transactions, put or call
transactions, cap transactions, floor transactions, collar transactions,
currency swaps, cross-currency rate swaps, currency options, spot contracts or
any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any
such transaction is governed by or subject to any master agreement, in each case
that are (or were) entered into by any Person in the ordinary course of business
for the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person and not
for purposes of speculation or taking a "market view" and that do not contain
any provision ("walk-away" provision) exonerating the non-defaulting party from
its obligation to make payments on outstanding transactions to the defaulting
party; PROVIDED that Ordinary Course Hedge Agreements shall not include
customary spot foreign exchange transactions engaged in solely for the purpose
of settling foreign currency denominated trade payables and receivables in the
ordinary course of business.
"ORIGINATING LENDER" has the meaning specified in SECTION
11.2(E).
"OTHER TAXES" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made
Annex A-26
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"PARTICIPANT" means any Person who shall have been granted the
right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who shall have entered into a participation agreement
in form and substance satisfactory to such Lender.
"PAYMENT ACCOUNT" means each bank account established pursuant to
the Pledge and Security Agreement, to which the proceeds of Accounts and other
Collateral are deposited or credited, and which is maintained in the name of the
Agent or LS&Co, as the Agent may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PENDING REVOLVING LOANS" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice of Borrowing
received by the Agent which have not yet been advanced.
"PENSION PLAN" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which any Borrower sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or in
the case of a Multi-employer Plan has made contributions at any time during the
immediately preceding five (5) plan years.
"PERMITTED FOREIGN RECEIVABLES TRANSACTION" means any arrangement
of Foreign Subsidiaries providing for sales, transfers or conveyances of, or
granting of security interests in, Foreign Receivables that do not provide,
directly or indirectly, for recourse against the seller of such Foreign
Receivables (or against any of such seller's Affiliates) by way of a guarantee
or any other support arrangement, with respect to the amount of such Foreign
Receivables (based on the financial condition or circumstances of the obligor
thereunder), other than such limited recourse as is reasonable given market
standards for receivables purchase transactions that are treated as sales under
GAAP, taking into account such factors as historical bad debt loss experience
and obligor concentration levels.
"PERMITTED LIENS" means:
(a) Liens for taxes not yet due or which are being contested in
good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP and no right of enforcement of such Lien is then
available to the relevant taxing authority;
(b) the Agent's Liens;
(c) Liens consisting of assignments, pledges or deposits made in
the ordinary course of business in connection with, or to secure payment of,
obligations under worker's compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of Debt) or to secure
Annex A-27
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of Debt) or to secure
statutory obligations (other than liens arising under ERISA or Environmental
Liens) or surety or appeal bonds (other than bonds related to judgments or
litigation), or to secure indemnity, performance or other similar bonds;
(d) materialmen's, mechanics', workmen's and repairmen's Liens
securing obligations (other than Debt for borrowed money) which are not overdue
for more than thirty (30) days and carriers' and warehousemen's Liens and other
similar Liens arising in the ordinary course of business securing obligations
(other than Debt for borrowed money) which are not overdue more than fifteen
(15) days or, in each case, which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves as required
by GAAP with respect thereto are maintained on the books of the applicable
Person;
(e) easements, rights-of-way, zoning restrictions and other
similar encumbrances on title to real property that were not incurred in
connection with and do not secure Debt and do not, either individually or in the
aggregate, materially interfere with the ordinary conduct of LS&Co and its
Subsidiaries, taken as a whole; and
(f) Liens arising from judgments and attachments in connection
with court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have been
set aside and no material property is subject to a material risk of loss or
forfeiture and a stay of execution pending appeal or proceeding for review is in
effect.
"PERMITTED TRANSFEREES" has the meaning specified in the
Stockholders Agreement dated as of April 15, 1996 between LS&Co and the
stockholders of LS&Co party thereto as in effect as of the Closing Date, except
that transferees pursuant to Section 2.2(a)(x) thereof shall not be deemed to be
Permitted Transferees for purposes of this Agreement.
"PERSON" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"PLAN" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which any Borrower sponsors or maintains or to which any Borrower
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"PLEDGE AND SECURITY AGREEMENT" means that certain Pledge and
Security Agreement of even date herewith by and among LS&Co, LSFCC, the
Guarantors, the Limited Guarantors and the Agent for the benefit of the Agent
and the Lenders, substantially in the form attached hereto as EXHIBIT F.
"PLEDGED COLLATERAL" means, collectively, the "Pledged
Collateral" as defined in the Pledge and Security Agreement.
"PLEDGED DEBT" has the meaning specified in the Pledge and
Security Agreement.
Annex A-28
"PLEDGED FOREIGN SUBSIDIARY" means a Material Foreign Subsidiary
no more than sixty five (65%) of the Equity Interests of which is pledged to the
Agent, for the benefit of the Lenders.
"PREFERRED INTERESTS" means, with respect to any Person, Equity
Interests issued by such Person that are entitled to a preference or priority
over any other Equity Interests issued by such Person upon any distribution of
such Person's property and assets, whether by dividend or upon liquidation.
"PRINCIPAL PROPERTY" means any contiguous or proximate parcel of
real property owned by, or leased to, LS&Co or any of its Restricted
Subsidiaries, and any equipment located at or comprising a part of any such
property, having a gross book value (without deduction of any depreciation
reserves), as of the date of determination, in excess of one percent (1%) of
Consolidated Net Tangible Assets; PROVIDED, HOWEVER, that in the event that the
Indentures, or the limitations regarding Liens granted by LS&Co or Restricted
Subsidiaries contained in the Indentures, are no longer binding on LS&Co, no
property shall be a Principal Property.
"PROPRIETARY RIGHTS" means all now owned and hereafter arising or
acquired: licenses, franchises, permits, patents, patent rights, copyrights,
works which are the subject matter of copyrights, trademarks, service marks,
trade names, trade styles, patent, trademark and service xxxx applications of
any Borrower, and all licenses and rights related to any of the foregoing, and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and
all rights to xxx for past, present and future infringement of any of the
foregoing.
"PRO RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders, in each case giving effect to a
Lender's participation in Non-Ratable Loans and Agent Advances.
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of the Agent, desirable in order to create or perfect Liens on any Collateral
consisting of IP Rights registered under the laws of the United States
"REAL ESTATE" means all now or hereafter owned or leased estates
in real property of any Borrower, including, without limitation, all fees,
leaseholds and future interests, together with all of each Borrower's now or
hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto.
"REAL ESTATE FINANCING TRANSACTIONS" means any arrangement with
any Person pursuant to which LS&Co or any of its Subsidiaries incurs Debt
secured by a Lien on real property of LS&Co or any of its Subsidiaries and
related personal property.
Annex A-29
"REDEEMABLE" means, with respect to any Equity Interest, Debt or
other right or obligation, any such Equity Interest, Debt or other right or
obligation that (a) the issuer has undertaken to redeem at a fixed or
determinable date or dates, whether by operation of a sinking fund or otherwise,
or upon the occurrence of a condition not solely within the control of the
issuer or (b) is redeemable at the option of the holder.
"RELATED GUARANTIES" has the meaning specified in SECTION 1.5(I).
"RELEASE" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"REPORT" and "REPORTS" each have the meaning specified in SECTION
12.18(A).
"REPORTABLE EVENT" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"RESERVES" means reserves that limit the availability of credit
hereunder, consisting of reserves against Availability, Eligible Accounts or
Eligible Inventory, established by the Agent from time to time in the Agent's
reasonable credit judgment. Without limiting the generality of the foregoing,
the following reserves shall be deemed to be a reasonable exercise of the
Agent's credit judgment: (a) Hedge Agreement Reserves, (b) Cash Management
Services Reserves, (c) a reserve for accrued, unpaid interest on the
Obligations, (c) reserves for rent at leased locations subject to statutory or
contractual landlord liens, (d) customs charges, (e) dilution, and (f)
warehousemen's or bailees' charges.
"RESPONSIBLE OFFICER" means, with respect to any Borrower the
chief executive officer, president, chief financial officer, treasurer or
assistant treasurer of such Borrower, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance with
financial covenants and the preparation of the Borrowing Base Certificate, the
chief financial officer or the treasurer or assistant treasurer of LS&Co, or any
other officer having substantially the same authority and responsibility. Any
document delivered hereunder that is signed by a Responsible Officer of any
Borrower shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Borrower and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Borrower.
"RESTRICTED SUBSIDIARY" means any Subsidiary of LS&Co which owns
or leases a Principal Property; PROVIDED, HOWEVER, that in the event that the
Indentures, or the limitations regarding Liens granted by or on the Equity
Interests or Debt of Restricted Subsidiaries
Annex A-30
contained in the Indentures, are no longer binding on LS&Co, no Subsidiary of
LS&Co shall be a Restricted Subsidiary.
"RESTRUCTURING CHARGES" has the meaning specified in the
definition of "Consolidated EBITDA".
"REVOLVING LOANS" has the meaning specified in SECTION 1.2 and
includes each Agent Advance and Non-Ratable Loan.
"RPA" has the meaning specified in the definition of "Existing
Domestic Receivables Transaction Documents".
"RPSA" has the meaning specified in the definition of "Existing
Domestic Receivables Transaction Documents".
"S&P" means Standard and Poor's, a division of The XxXxxx-Xxxx
Companies, Inc.
"SELECTED REVOLVING LENDER" means, at any time, (a) with respect
to Ordinary Course Hedge Agreements, any Revolving Lender holding at least two
percent (2%) of the Commitments at such time or any of its Affiliates, in any
such Revolving Lender's or any such Affiliate's capacity as a party to an
Ordinary Course Hedge Agreement that is entered into by and between LS&Co,
LSIFCS or any Material Domestic Subsidiary that is party to the Subsidiary
Guaranty and such Selected Revolving Lender and that is subject to a legally
enforceable netting agreement between LS&Co, LSIFCS, or such Material Domestic
Subsidiary, as the case may be, and such Selected Revolving Lender, and (b) with
respect to Cash Management Services, the Bank or any of the Bank's Affiliates.
"SELECTED REVOLVING LENDER CASH MANAGEMENT SERVICES" any one or
more Cash Management Services extended to LS&Co or any of its Subsidiaries by
the Bank or the Bank's Affiliates.
"SELECTED REVOLVING LENDER HEDGE AGREEMENT" means any Ordinary
Course Hedge Agreement entered into with a Selected Revolving Lender and
included in the definition of "Obligations" in accordance with SECTION 3.7.
"SETTLEMENT" and "SETTLEMENT DATE" have the meanings specified in
SECTION 12.15(A)(I).
"SFHA" has the meaning specified in SECTION 7.5(A).
"SOLVENT" means, when used with respect to any Person, that at
the time of determination:
(a) the assets of such Person, at a fair valuation, are in excess
of the total amount of its debts (including contingent liabilities); and
Annex A-31
(b) 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
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the
amount of any contingent liability shall be computed as the amount that, in
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
"STATED TERMINATION DATE" means September 29, 2007.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than fifty percent (50%) of the voting stock or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof, PROVIDED, HOWEVER, in no
event shall the LS&Co. Trust be considered to be a Subsidiary of LS&Co. Unless
the context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of LS&Co.
"SUBSIDIARY GUARANTY" means that certain Subsidiary Guaranty of
even date herewith by and among the Guarantors and the Limited Guarantors for
the benefit of the Agent and the Lenders, substantially in the form of EXHIBIT
G.
"SUPPORTING LETTER OF CREDIT" has the meaning specified in
SECTION 1.3(G).
"SUPPORTING OBLIGATIONS" means all supporting obligations as such
term is defined in the UCC.
"SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations that do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).
"TAXES" means 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 and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by the
Agent's or each Lender's net income in any the jurisdiction (whether federal,
state or local and including any political subdivision thereof) under the laws
of which such Lender or the Agent, as the case may be, is organized or maintains
a lending office.
Annex A-32
"TERM LOAN FACILITY" means senior secured term loan facility
pursuant to that certain Credit Agreement by and among LS&Co, the lenders party
thereto (the "TERM LOAN LENDERS"), and the Bank, as administrative agent.
"TERM LOAN LENDERS" has the meaning specified in the definition
of "Term Loan Facility".
"TERMINATION DATE" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrowers pursuant to SECTION 3.2 or by the Majority Lenders pursuant to SECTION
9.2, and (iii) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"TITLE COMPANY" means one or more other title insurance companies
reasonably satisfactory to the Agent.
"TOTAL FACILITY" has the meaning specified in SECTION 1.1.
"TRADEMARK LICENSE AGREEMENT" means that certain Trademark
License Agreement of even date herewith by and between the administrative agent
for the Term Loan Lenders and the Agent.
"UCC" means the Uniform Commercial Code, as in effect from time
to time, of the State of California or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412(c) of the Code for the applicable plan
year.
"UNPLEDGED FOREIGN SUBSIDIARIES" means Foreign Subsidiaries none
of the Equity Interests of which is pledged to the Agent.
"UNUSED LETTER OF CREDIT SUBFACILITY" means an amount equal to
$350,000,000 MINUS the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit PLUS, without duplication, (b) the aggregate
unpaid reimbursement obligations with respect to all Letters of Credit.
"UNUSED LINE FEE" has the meaning specified in SECTION 2.4.
"VOTING TRUST AGREEMENT" means the Voting Trust Agreement entered
into as of April 15, 1996 by and among Xxxxxx X. Xxxx; Xxxxx X. Xxxx, Xx.; Xxxxx
X. Xxxx, Xx.; and F. Xxxxxx Xxxxxxx as the Voting Trustees and the stockholders
of LS&Co (as successor to LSAI Holding Corp.) who are parties thereto.
"VOTING TRUSTEES" means the individuals designated as Voting
Trustees under the Voting Trust Agreement.
Annex A-33
ACCOUNTING TERMS. Any accounting term used in the Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations in the Agreement
shall be computed, unless otherwise specifically provided therein, in accordance
with GAAP as consistently applied and using the same method for inventory
valuation as used in the preparation of the Financial Statements.
INTERPRETIVE PROVISIONS. (a) The meanings of defined terms are
equally applicable to thesingular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to the Agreement as a whole and not to any particular provision of the
Agreement; and Subsection, Section, Schedule and Exhibit references are to the
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding"
and the word "through" means "to and including."
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including the Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of the Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of the Agreement.
(f) The Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) For purposes of SECTION 9.1, a breach of a financial covenant
contained in SECTION 7.31 shall be deemed to have occurred as of any date of
determination thereof by the Agent or as of the last day of any specified
measuring period, regardless of when the Financial Statements reflecting such
breach are delivered to the Agent.
(h) The Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, LS&Co and the
other
Annex A-34
parties, and are the products of all parties. Accordingly, they shall not be
construed against the Lenders or the Agent merely because of the Agent's or
Lenders' involvement in their preparation.
Annex A-35
SCHEDULE 1.2
COMMITMENTS
LENDER COMMITMENT PRO RATA SHARE
(3 decimals)
Bank of America, N.A. $650,000,000.00 100.00%
Schedule 1.2-1
