EXHIBIT 10.2
AMENDED AND RESTATED NOTE AGREEMENT
NOTE AGREEMENT, dated as of April 26, 2002, and amended and
restated as of May 14, 2002, among Designs, Inc., a Delaware corporation (the
"COMPANY"), certain subsidiaries of the Company (each a "GUARANTOR") and the
Purchasers identified on the signature pages hereto.
The Company has duly authorized the creation of an issue of
12% Senior Subordinated Notes due 2007 (the "SECURITIES").
Each party hereto agrees as follows for the benefit of the
other parties and for the equal and ratable benefit of the Holders of the
Securities.
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any
of its Restricted Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary of the Company or at the time it merges or consolidates
with the Company or any of its Subsidiaries or is assumed in connection with the
acquisition of assets from such Person and not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such acquisition, merger or
consolidation.
"ACQUISITION CLOSING DATE" means the date upon which the
consummation of the Casual Male Acquisition occurs.
"ADDITIONAL CAPITAL STOCK" means (1) the Preferred Stock
issued on or about the Acquisition Closing Date and (2) any other Qualified
Capital Stock (including Preferred Stock) having terms not materially less
favorable to the Company, taken as a whole, than the Preferred Stock as
determined by the Board of Directors of the Company in good faith.
An "AFFILIATE" of a Person means a Person who directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AFFILIATE TRANSACTION" has the meaning set forth in Section
4.10.
"ASSET ACQUISITION" means
(a) an Investment by the Company or any Restricted Subsidiary
of the Company in any other Person pursuant to which such Person shall
become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company
or any Restricted Subsidiary of the Company, or
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(b) the acquisition by the Company or any Restricted
Subsidiary of the Company of the assets of any Person which constitute
all or substantially all of the assets of such Person, any division or
line of business of such Person or any other properties or assets of
such Person other than in the Ordinary Course of Business.
"ASSET PURCHASE AGREEMENT" has the meaning set forth in the
definition of "Transactions."
"ASSET SALE" means any direct or indirect sale, conveyance,
transfer, lease (other than operating leases entered into in the Ordinary Course
of Business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries, including any Sale and Leaseback Transaction that
does not give rise to a Capitalized Lease Obligation, to any Person other than
the Company or a Restricted Subsidiary of the Company of
(a) any Capital Stock of any Restricted Subsidiary of the
Company; or
(b) any other property or assets, other than cash or Cash
Equivalents, of the Company or any Restricted Subsidiary of the Company
other than in the Ordinary Course of Business;
PROVIDED, HOWEVER, that Asset Sales shall not include
(1) a transaction or series of related transactions for which
the Company or its Restricted Subsidiaries receive aggregate
consideration, exclusive of indemnities, of less than $2 million,
(2) the sale of accounts receivable pursuant to factoring or
similar arrangements in the Ordinary Course of Business,
(3) the sale, lease, conveyance, disposition or other transfer
of assets in the Ordinary Course of Business,
(4) the sale, lease, conveyance, disposition or other transfer
of all or substantially all of the assets of the Company and its
Restricted Subsidiaries or any Guarantor as permitted under Section
5.01,
(5) sales, transfers or other dispositions of assets resulting
from the creation, incurrence or assumption of (but not any foreclosure
with respect to) any Lien not prohibited by Section 4.12,
(6) sales, transfers or other dispositions of assets in a
transaction constituting a Permitted Investment or a Restricted Payment
permitted by Section 4.02, and
(7) the grant of licenses to third parties in the Ordinary
Course of Business of the Company or any of its Restricted
Subsidiaries.
"ATTRIBUTABLE DEBT" in respect of a Sale and Leaseback
Transaction consummated subsequent to the Issue Date means, at the time of
determination, the present value, discounted at the rate of interest implicit in
such transaction, determined in accordance with GAAP, of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction, including any period for which such
lease has been extended or may, at the option of the lessor, be extended.
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"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"BID DATE" means the date fixed pursuant to the applicable
orders of the Bankruptcy Court for the submission of bids to acquire
substantially all the assets of Casual Male and certain related entities.
"BIDDING PROCEDURES ORDER" has the meaning set forth in
Section 4.18.
"BOARD OF DIRECTORS" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and to
be in full force and effect on the date of such certification.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
any other day on which banking institutions in The City of New York are required
or authorized by law or other governmental action to be closed.
"CAPITAL STOCK" means (1) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents,
however designated, of corporate stock, including each class of common stock and
preferred stock of such Person and (2) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
"CAPITALIZED LEASE OBLIGATIONS" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"CASH EQUIVALENTS" means
(1) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued
by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof;
(2) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the
date of acquisition thereof and, at the time of acquisition, having one
of the two highest ratings obtainable from either S&P or Xxxxx'x;
(3) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 from S&P or at least P-1 from Xxxxx'x;
(4) certificates of deposit or bankers' acceptances (or, with
respect to foreign banks, similar instruments) maturing within one year
from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less
than $500 million;
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(5) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (1)
above entered into with any bank meeting the qualifications specified
in clause (4) above; and
(6) investments in money market funds which invest
substantially all their assets in securities of the types described in
clauses (1) through (5) above.
"CASUAL MALE" means Casual Male Corp. (f/k/a) X. Xxxxx, Inc.,
a Massachusetts corporation.
"CASUAL MALE ACQUISITION" has the meaning set forth in the
definition of "Transactions."
"CHANGE OF CONTROL" means the occurrence of one or more of the
following events:
(1) any sale, lease, exchange or other transfer, in one
transaction or a series of related transactions, of all or
substantially all of the assets of the Company to any Person or group
of related Persons for purposes of Section 13(d) of the Exchange Act (a
"GROUP") (whether or not otherwise in compliance with the provisions of
this Note Agreement);
(2) the approval by the holders of Capital Stock of the
Company of any plan or proposal for the liquidation or dissolution of
the Company (whether or not otherwise in compliance with the provisions
of this Note Agreement);
(3) any Person or Group, other than a Permitted Holder or
Holders, shall become the owner, directly or indirectly, beneficially,
of shares representing more than 25% of the aggregate voting power
represented by the issued and outstanding Capital Stock of the Company
entitled under ordinary circumstances to elect a majority of the
directors of the Company;
(4) the replacement of a majority of the Board of Directors of
the Company over a two-year period from the directors who constituted
the Board of Directors at the beginning of such period, and such
replacement shall not have been approved by a vote of at least a
majority of the Board of Directors then still in office who either were
members of the Board of Directors at the beginning of such period or
whose election as a member of the Board of Directors was previously so
approved; or
(5) the consolidation or merger of the Company with or into
another Person or the merger of another Person with or into the
Company, in any case pursuant to a transaction in which the outstanding
Capital Stock of the Company is converted into or exchanged for cash,
securities or other property other than any such transaction in which
the Capital Stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for Capital Stock (other
than Disqualified Capital Stock) of the resulting or surviving
corporation representing more than 25% of the voting power of the then
outstanding Capital Stock of the resulting or surviving corporation.
"CHANGE OF CONTROL OFFER" has the meaning set forth in Section
4.13.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning set forth in
Section 4.13.
"COMMISSION" or "SEC" means the Securities and Exchange
Commission, or any successor agency thereto with respect to the regulation or
registration of securities.
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"COMPANY" means the party named as such in this Note Agreement
until a successor replaces it pursuant to this Note Agreement.
"COMPANY PREFERRED STOCK" means the Company's mandatorily
Convertible Preferred Stock or any other Qualified Capital Stock issued pursuant
to or in satisfaction of (1) the commitments dated on or about April 26, 2002
between certain investors and the Company, and (2) certain warrants issued in
connection with the issuance of Preferred Stock or otherwise in connection with
the Transactions, or other Qualified Capital Stock constituting Additional
Capital Stock as defined herein.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
President, a Vice President or its Treasurer, and by an Assistant Treasurer, its
Secretary or an Assistant Secretary.
"CONSOLIDATED EBITDA" means, with respect to any Person, for
any period, the sum (without duplication) of
(1) Consolidated Net Income,
(2) to the extent Consolidated Net Income has been reduced
thereby, all losses from Asset Sales or abandonments or reserves
relating thereto, and all items classified as extraordinary losses,
(3) Consolidated Interest Expense,
(4) Consolidated Tax Expense, and
(5) Consolidated Non-cash Charges.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any
Person for any period, the sum of, without duplication,
(1) the aggregate of all cash and non-cash interest expense
with respect to all outstanding Indebtedness of such Person and its
Restricted Subsidiaries, including the net costs associated with
Interest Swap Obligations, capitalized interest, and imputed interest
with respect to Attributable Debt, for such period determined on a
consolidated basis in conformity with GAAP; and
(2) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and
its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any Person
for any period, the aggregate net income (or loss) of such Person and its
Restricted Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; PROVIDED, HOWEVER, that there shall be excluded therefrom
(a) items classified as extraordinary gains or losses, and the
related tax effects according to GAAP,
(b) the net loss of any Person, other than a Restricted
Subsidiary of the Company,
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(c) the net income of any Person, other than a Restricted
Subsidiary, in which such Person has an interest, except to the extent of cash
dividends or distributions paid to such Person or a Restricted Subsidiary of
such Person,
(d) amounts attributable to dividends paid in respect of
Qualified Capital Stock to the extent such dividends are paid in shares of
Qualified Capital Stock.
"CONSOLIDATED NET WORTH" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP less (to the extent otherwise included in accordance with
GAAP) amounts attributable to Disqualified Capital Stock.
"CONSOLIDATED NON-CASH CHARGES" means, with respect to any
Person for any period, the aggregate depreciation, amortization and other
non-cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED SENIOR DEBT RATIO" means, with respect to any
Person, the ratio of (x) consolidated Senior Debt of such Person at the date of
determination giving rise to the need to calculate the Consolidated Senior Debt
Ratio (the "DETERMINATION DATE") to (y) Consolidated EBITDA of such Person
during the four full fiscal quarters (the "FOUR QUARTER PERIOD") ending on or
prior to the Determination Date. In addition to and without limitation of the
foregoing, for purposes of this definition, "Consolidated EBITDA" and
"consolidated Senior Debt" shall be calculated after giving effect on a PRO
FORMA basis for the period of such calculation to
(1) the incurrence or repayment or retirement of any
Indebtedness of such Person or any of its Restricted Subsidiaries (and
the application of the proceeds thereof) at any time subsequent to the
last day of the Four Quarter Period and on or prior to the
Determination Date (other than the incurrence or repayment of
Indebtedness in the Ordinary Course of Business for working capital
purposes pursuant to working capital facilities), as if such incurrence
or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and
(2) any Asset Sales or Asset Acquisitions (including, without
limitation, any Consolidated EBITDA (including any PRO FORMA expense
and cost reductions calculated on a basis consistent with Regulation
S-X under the Securities Act) attributable to the assets which are the
subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior
to the Determination Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such
Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four Quarter Period.
"CONSOLIDATED TAX EXPENSE" means, with respect to any Person
for any period, the aggregate of all taxes of such Person and its Restricted
Subsidiaries paid or accrued for such period on a consolidated basis, determined
in accordance with GAAP.
"CONSOLIDATED TOTAL DEBT RATIO" means, with respect to any
Person, the ratio of (x) consolidated Indebtedness of such Person at the date of
determination giving rise to the need to calculate the Consolidated Total Debt
Ratio (the "DETERMINATION DATE") to (y) Consolidated EBITDA of such Person
during the four full fiscal quarters (the "FOUR QUARTER PERIOD") ending on or
prior to the Determination Date. In addition to and without limitation of the
foregoing, for purposes of this definition,
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"Consolidated EBITDA" and "consolidated Indebtedness" shall be calculated after
giving effect on a PRO FORMA basis for the period of such calculation to
(1) the incurrence or repayment or retirement of any
Indebtedness of such Person or any of its Restricted Subsidiaries (and
the application of the proceeds thereof) at any time subsequent to the
last day of the Four Quarter Period and on or prior to the
Determination Date (other than the incurrence or repayment of
Indebtedness in the Ordinary Course of Business for working capital
purposes pursuant to working capital facilities), as if such incurrence
or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and
(2) any Asset Sales or Asset Acquisitions (including, without
limitation, any Consolidated EBITDA (including any PRO FORMA expense
and cost reductions calculated on a basis consistent with Regulation
S-X under the Securities Act) attributable to the assets which are the
subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior
to the Determination Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such
Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four Quarter Period.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any Restricted Subsidiary against fluctuations in
currency values.
"DEFAULT" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an Event
of Default.
"DESIGNATED GUARANTOR SENIOR DEBT" means, with respect to any
Guarantor, (1) any Indebtedness outstanding under the New Credit Agreement to
the extent guaranteed by such Guarantor and (2) any other Guarantor Senior Debt
permitted under this Note Agreement that has been designated by the Company or
such Guarantor as Designated Guarantor Senior Debt in the instrument creating
such Indebtedness.
"DESIGNATED NON-CASH CONSIDERATION" means the fair market
value of non-cash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Non-cash Consideration pursuant to an Officers' Certificate executed
by the principal executive officer and the principal financial officer of the
Company or such Restricted Subsidiary.
"DESIGNATED SENIOR DEBT" means (1) any Indebtedness
outstanding under the New Credit Agreement and (2) any other Senior Debt
permitted under this Note Agreement that has been designated by the Company as
Designated Senior Debt in the instrument creating such Indebtedness.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event (other than an
event which would constitute a Change of Control), matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof (except, in each case,
upon the occurrence of a Change of Control), in whole or in part, on or prior to
the Final Maturity Date.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"FAIR MARKET VALUE" or "FAIR VALUE" means, with respect to any
asset or property, the price which could be negotiated in an arm's-length free
market transaction, for cash, between a willing seller and a willing buyer,
neither of whom is under pressure or compulsion to complete the transaction.
Fair market value shall be determined by the Board of Directors of the Company
acting reasonably and in good faith and shall be evidenced by a Board
Resolution.
"FINAL MATURITY DATE" means April 26, 2007.
"GAAP" is defined to mean generally accepted accounting
principles in the United States of America as in effect as of the Issue Date,
including, without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession.
"GUARANTEE" has the meaning set forth in Section 9.01.
"GUARANTOR" means (i) each of the wholly owned Subsidiaries of
the Company as of May 14, 2002, whether or not indicated on the signature pages
hereto, (ii) upon consummation of the Casual Male Acquisition, each of the
Subsidiaries to the Company (if any) which may on the Acquisition Closing Date
result from the Transactions (other than any Subsidiary which is or becomes a
party to, or assumes liabilities related to, the Assumed Mortgage (as defined in
the Asset Purchase Agreement), or which is or become an assignee of the Assumed
Mortgage or the Owned Real Property (as defined in the Asset Purchase
Agreement)) and (iii) each of the Company's Restricted Subsidiaries organized in
the United States that in the future executes a supplemental Note Agreement or
other agreement of guaranty in which such Restricted Subsidiary agrees to be
bound by the terms hereof as a Guarantor; PROVIDED that any Person constituting
a Guarantor as described above shall cease to constitute a Guarantor when its
respective Guarantee is released in accordance with the terms hereof.
"GUARANTOR SENIOR DEBT" means the principal of, premium, if
any, and interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on any Indebtedness of any Guarantor of the Securities, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Guarantee of the Securities. Without limiting the generality of the foregoing,
"Guarantor Senior Debt" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on, and all other amounts owing in respect of, all monetary obligations
(including guarantees thereof) of every nature of any Guarantor of the
Securities under the New Credit Agreement, including, without limitation,
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities. "Guarantor Senior Debt" shall
not include
(1) Indebtedness evidenced by a Guarantee of the Securities;
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(2) any Indebtedness of such Guarantor of the Securities owing
to the Company or to a Subsidiary of the Company;
(3) Indebtedness to, or guaranteed on behalf of, any director,
officer or employee of the Company or any Subsidiary of the Company or
Affiliate of the Company (including, without limitation, amounts owed
for compensation);
(4) trade payables and other current liabilities arising in
the Ordinary Course of Business in connection with obtaining goods,
materials or services;
(5) Indebtedness represented by Disqualified Stock;
(6) any liability for federal, state, local or other taxes
owed or owing by such Guarantor of the Securities;
(7) that portion of any Indebtedness incurred in violation of
this Note Agreement;
(8) any Indebtedness other than Indebtedness under the New
Credit Agreement which is, by its express terms, subordinated in right
of payment to any other Indebtedness of such Guarantor of the
Securities; and
(9) any Indebtedness which, when incurred and without respect
to any other election under Section 1111(b) of Xxxxx 00, Xxxxxx Xxxxxx
Code, is without recourse to such Guarantor of the Securities.
"HOLDER" means the Person in whose name a Security is
registered on the books and records of the Company.
"INCUR" means, with respect to any Indebtedness, to, directly
or indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise with respect to, or otherwise become responsible for
payment of such Indebtedness.
"INDEBTEDNESS" means with respect to any Person, without
duplication,
(1) the principal amount of all obligations of such Person for
borrowed money,
(2) the principal amount of all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments,
(3) all Capitalized Lease Obligations of such Person,
(4) all obligations of such Person to pay the deferred
purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding accounts
payable and other current liabilities arising in the Ordinary Course of
Business),
(5) all obligations of such Person for the reimbursement of
any obligor on any letter of credit or banker's acceptance,
(6) guarantees and other contingent obligations of such Person
in respect of Indebtedness referred to in clauses (1) through (5) above
and clause (8) below,
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(7) all Indebtedness of any other Person of the type referred
to in clauses (1) through (6) above which are secured by any Lien on
any property or asset of such Person, the amount of such obligation
being deemed to be the lesser of the fair market value at such date of
any asset subject to any Lien securing the Indebtedness of others and
the amount of the Indebtedness secured,
(8) all obligations under currency agreements relating to
Currency Swap Agreements and Interest Swap Obligations of such Person,
and
(9) all Disqualified Capital Stock issued by such Person with
the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any.
For purposes hereof, (1) the "MAXIMUM FIXED REPURCHASE PRICE"
of any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Note Agreement,
and if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock, and (2) accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Capital Stock in the form of additional
shares of the same class of Disqualified Capital Stock will not be deemed to be
an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for
purposes of Section 4.03. The amount of Indebtedness of any Person at any date
shall be the amount of all unconditional obligations described above, as such
amount would be reflected on a balance sheet prepared in accordance with GAAP,
and the maximum liability at such date of such Person for any contingent
obligations described above.
"INITIAL PURCHASERS" means those purchasers of the Securities
from the Company pursuant to this Note Agreement indicated on the signature
pages hereof.
"INTEREST PAYMENT DATE" means the stated due date of an
installment of interest on the Securities.
"INTEREST SWAP OBLIGATIONS" means the obligations of any
Person, pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount.
"INVESTMENT" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit by
the Company and its Subsidiaries in the Ordinary Course of Business on
commercially reasonable terms. For the purposes of Section 4.02,
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(1) "Investment" shall include and be valued at the fair
market value of the net assets of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted
Subsidiary and
(2) the amount of any Investment shall be the original cost of
such Investment plus the cost of all additional Investments by the
Company or any of its Restricted Subsidiaries, without any adjustments
for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment, reduced by the payment of
dividends or distributions (including tax sharing payments) in
connection with such Investment or any other amounts received in
respect of such Investment.
If the Company or any Restricted Subsidiary sells or otherwise
disposes of any Capital Stock of any Restricted Subsidiary such that, after
giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary, the Company shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value of the
Capital Stock of such Subsidiary not sold or disposed.
"ISSUE DATE" means the original date of issuance of the
Securities.
"JOINT VENTURE" means any Person (other than a Subsidiary of
the Company) engaged in a Related Business with respect to which at least 35% of
such Person's outstanding Capital Stock is owned directly or indirectly by the
Company.
"LIEN" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"MANDATORY REDEMPTION" has the meaning set forth in Section
3.05.
"MANDATORY REDEMPTION DATE" means the fifth day after the
funds deposited with Casual Male have been released to the Company (or its
designee) in accordance with the requirements of the Bidding Procedures Order.
"MANDATORY REDEMPTION EVENT" has the meaning set forth in
Section 3.05.
"MANDATORY REDEMPTION NOTICE" has the meaning set forth in
Section 3.05.
"MANDATORY REDEMPTION PRICE" means 100% of the principal
amount of the Securities.
"MOODY'S" means Xxxxx'x Investor Service, Inc. and its
successors.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of
(a) all out-of-pocket expenses and fees relating to such Asset
Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions),
(b) taxes paid or payable after taking into account any
reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements,
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(c) the amounts of
(x) any repayments of debt secured, directly or
indirectly, by Liens on the assets which are the subject of
such Asset Sale and
(y) any repayments of debt associated with such assets
which is due by reason of such Asset Sale (i.e., such
disposition is permitted by the terms of the instruments
evidencing or applicable to such debt, or by the terms of a
consent granted thereunder, on the condition the proceeds (or
portion thereof) of such disposition be applied to such debt),
and other fees, expenses and other expenditures, in each case,
reasonably incurred as a consequence of such repayment of debt
(whether or not such fees, expenses or expenditures are then
due and payable or made, as the case may be);
(d) any portion of cash proceeds which the Company determines
in good faith should be reserved for post-closing adjustments, it being
understood and agreed that on the day that all such post-closing
adjustments have been determined, the amount (if any) by which the
reserved amount in respect of such Asset Sale exceeds the actual
post-closing adjustments payable by the Company or any of its
Restricted Subsidiaries shall constitute Net Cash Proceeds on such
date;
(e) all amounts deemed appropriate by the Company to be
provided as a reserve, in accordance with GAAP ("GAAP RESERVES"),
against any liabilities associated with such assets which are the
subject of such Asset Sale or incurred in connection with such Asset
Sale;
(f) all foreign, federal, state and local taxes payable
(including taxes reasonably estimated to the payable) in connection
with or as a result of such Asset Sale; and
(g) with respect to Asset Sales by Restricted Subsidiaries of
the Company, the portion of such cash payments attributable to Persons
holding a minority interest in such Restricted Subsidiary.
Notwithstanding the foregoing, Net Cash Proceeds shall not
include proceeds received in a foreign jurisdiction from an Asset Sale of an
asset located outside the United States to the extent
(1) such proceeds cannot under applicable law be transferred
to the United States or
(2) such transfer would result (in the good faith
determination of the Board of Directors of the Company) in a foreign
tax liability that would be greater than if such Asset Sale occurred in
the United States;
PROVIDED that if, as, and to the extent that any of such proceeds may lawfully
be in the case of clause (1) or are in the case of clause (2) transferred to the
United States, such proceeds shall be deemed to be cash payments that are
subject to the terms of this definition of Net Cash Proceeds.
"NET PROCEEDS OFFER" has the meaning set forth in Section
4.16.
"NET PROCEEDS OFFER AMOUNT" has the meaning set forth in
Section 4.16.
"NET PROCEEDS OFFER PAYMENT DATE" has the meaning set forth in
Section 4.16.
"NET PROCEEDS OFFER TRIGGER DATE" has the meaning set forth in
Section 4.16.
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"NEW CREDIT AGREEMENT" means the Credit Agreement to be dated
on or about the Acquisition Closing Date between the Company and the lenders
thereto including all related notes, collateral documents and guarantees in each
case as such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, increasing the total commitment under,
refinancing, replacing or otherwise restructuring (including adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of lenders
(provided that no refinancing, modification, replacement, renewal, deferral,
extension, substitution, supplement, reissuance or resale of the New Credit
Agreement providing for a stated maturity date of the Indebtedness thereunder
later than April 26, 2007 shall constitute Permitted Indebtedness unless the
payment of principal of the Securities at their stated maturity is permitted
thereby absent a default or event of default thereunder).
"NOTE AGREEMENT" means this Note Agreement dated as of April
26, 2002, and amended and restated as of May 14, 2002, by and among the Company,
the Guarantors and the Initial Purchasers, as amended from time to time.
"OBLIGATIONS" means, with respect to any Indebtedness, all
principal, interest, premiums, penalties, fees, indemnities, expenses (including
legal fees and expenses), reimbursement obligations and other liabilities
payable to the holder of such Indebtedness under the documentation governing
such Indebtedness.
"OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Controller, the Treasurer, the Secretary or any
Assistant Vice President or Assistant Secretary of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed by two
Officers of the Company.
"OPINION OF COUNSEL" means a written opinion from legal
counsel which counsel may be counsel to or an employee of the Company.
"ORDINARY COURSE OF BUSINESS" means, in respect of any
transaction involving the Company or any Subsidiary of the Company, the ordinary
course of such Person's business, as conducted by any such Person substantially
in accordance with past practice and undertaken by such Person in good faith and
not for the purposes of evading any covenant or restriction in this Note
Agreement, the Securities, the Guarantee and the related documents.
"PARI PASSU INDEBTEDNESS" means any Indebtedness of the
Company or a Guarantor of the Securities ranking PARI PASSU with the Securities
or a Guarantee of the Securities, as the case may be, including the Company's 5%
Subordinated Notes due April 26, 2007.
"PERMITTED HOLDERS" means Jewelcor Management, Inc., each
Initial Purchaser of Securities, each initial purchaser of the Company's Series
B Convertible Preferred Stock, and each of their respective Affiliates.
"PERMITTED INDEBTEDNESS" means, without duplication,
(1) the Securities and the Guarantees thereof,
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(2) Indebtedness incurred pursuant to the New Credit Agreement
in an aggregate principal amount at any time outstanding not to exceed
$160 million reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction)
thereunder (excluding any such required permanent repayment and
corresponding permanent commitment reduction to the extent refinanced
at the time of payment under a replaced New Credit Agreement) and less
the amount of any prepayment made with the proceeds of an Asset Sale in
accordance with Section 4.16,
(3) other Indebtedness of the Company and its Subsidiaries
outstanding on the Acquisition Closing Date (including without
limitation any liability or guaranty of liability relating to the
Assumed Mortgage (as defined in the Asset Purchase Agreement), whether
or not the assignment and assumption of the Assumed Mortgage has
occurred on the Acquisition Closing Date),
(4) Interest Swap Obligations of the Company or any of its
Subsidiaries covering Indebtedness of the Company or any of its
Subsidiaries; PROVIDED, HOWEVER, that any Indebtedness to which any
such Interest Swap Obligations correspond is otherwise permitted to be
incurred under this Note Agreement; PROVIDED, FURTHER, that such
Interest Swap Obligations are entered into, in the judgment of the
Company, to protect the Company or any of its Subsidiaries from
fluctuation in interest rates on their respective outstanding
Indebtedness,
(5) Indebtedness under Currency Agreements,
(6) intercompany Indebtedness owed by the Company to any
Wholly Owned Restricted Subsidiary of the Company or by any Restricted
Subsidiary of the Company to the Company or any Wholly Owned Restricted
Subsidiary of the Company for so long as such Indebtedness is held by
the Company or a Wholly Owned Restricted Subsidiary of the Company in
each case subject to no Lien held by a Person other than the Company or
a Wholly Owned Restricted Subsidiary of the Company; PROVIDED, HOWEVER,
that if as of any date any Person other than the Company or a Wholly
Owned Restricted Subsidiary of the Company owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness under this
clause (6),
(7) Acquired Indebtedness to the extent the Company could have
incurred such Indebtedness in accordance with clause 11 or 12 of this
definition on the date such Indebtedness became Acquired Indebtedness,
(8) (A) guarantees by Restricted Subsidiaries pursuant to
Section 4.17 or guarantees by Restricted Subsidiaries of Indebtedness
of other Restricted Subsidiaries to the extent that such Indebtedness
is otherwise permitted under this Note Agreement and (B) guarantees by
the Company of its Wholly Owned Restricted Subsidiaries' Indebtedness;
PROVIDED that such Indebtedness is otherwise permitted to be incurred
under this Note Agreement,
(9) guarantees, letters of credit and indemnity agreements
relating to performance and surety bonds incurred in the Ordinary
Course of Business,
(10) any refinancing, modification, replacement, renewal,
deferral, extension, substitution, supplement, reissuance or resale of
Indebtedness referred to in clauses (2), (3) or (7) of this definition,
including any additional Indebtedness incurred to pay premiums required
by the instruments governing such Indebtedness as in effect at the time
of issuance thereof ("REQUIRED
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PREMIUMS") and fees in connection therewith; PROVIDED, HOWEVER, that
any such event shall not (1) result in an increase in the aggregate
principal amount of Permitted Indebtedness (except to the extent such
increase is a result of a simultaneous incurrence of additional
Indebtedness (A) to pay Required Premiums and related fees or (B)
otherwise permitted to be incurred under this Note Agreement) of the
Company and its Subsidiaries, (2) create Indebtedness with a stated
maturity date earlier than the stated maturity date of the Indebtedness
being refinanced or (3) create Indebtedness with a Weighted Average
Life to Maturity at the time such Indebtedness is incurred that is less
than the Weighted Average Life to Maturity at such time of the
Indebtedness being refinanced, modified, replaced, renewed, deferred,
extended, or substituted, supplemented, reissued or resold, (provided
that no refinancing, modification, replacement, renewal, deferral,
extension, substitution, supplement, reissuance or resale of the New
Credit Agreement providing for a stated maturity date of the
Indebtedness thereunder later than April 26, 2007 shall constitute
Permitted Indebtedness unless the payment of the principal of the
Securities at their stated maturity is permitted thereby absent a
default or event of default thereunder),
(11) additional Indebtedness of the Company or any Restricted
Subsidiary if (a) no Default or Event of Default shall have occurred
and be continuing at the time of the proposed incurrence thereof or
shall occur as a result of such proposed incurrence and (b) after
giving effect to such proposed incurrence the Consolidated Senior Debt
Ratio would not be greater than 2.5 to 1, and
(12) additional Indebtedness of the Company or any Restricted
Subsidiary in an aggregate principal amount not to exceed $10 million
at any one time outstanding.
"PERMITTED INVESTMENTS" means
(1) Investments by the Company or any Restricted Subsidiary of
the Company in, or for the benefit of, any Restricted Subsidiary of the
Company (whether existing on the Issue Date or created thereafter and
including Investments in any Person, if after giving effect to such
Investment, such Person would be a Restricted Subsidiary of the Company
or such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys all or substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company)
and Investments in, or for the benefit of, the Company by any
Restricted Subsidiary of the Company;
(2) cash and Cash Equivalents;
(3) Investments existing on the Issue Date;
(4) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers
or in settlement of or other resolution of claims or disputes, and in
each case, extensions, modifications and remands thereof;
(5) so long as no Default or Event of Default has occurred and
is continuing, loans and advances by the Company and its Restricted
Subsidiaries to their respective employees not to exceed $1 million at
any one time outstanding;
(6) Investments received by the Company or its Restricted
Subsidiaries as consideration for asset sales, including Asset Sales;
PROVIDED, HOWEVER, in the case of an Asset Sale, such Asset Sale is
effected in compliance with Section 4.16;
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(7) Currency Agreements and Interest Swap Obligations entered
into in the ordinary course of the Company's or its Restricted
Subsidiaries' business and otherwise in compliance with this Note
Agreement;
(8) guarantees by the Company or any of its Restricted
Subsidiaries of Indebtedness or other obligations otherwise permitted
to be incurred by the Company or any of its Restricted Subsidiaries
under this Note Agreement;
(9) so long as no Default or Event of Default has occurred and
is continuing, Investments in Joint Ventures not to exceed $25 million
at any one time outstanding; and
(10) any Investments received in exchange for the issuance of
Qualified Capital Stock of the Company or any warrants, rights or
options to purchase or acquire shares of any such Qualified Capital
Stock.
"PERMITTED JUNIOR SECURITIES" means
(1) Qualified Capital Stock of the Company or any Guarantor;
or
(2) debt securities that are subordinated to (a) all Senior
Debt or Guarantor Senior Debt and (b) any debt securities issued in
exchange for Senior Debt or Guarantor Senior Debt to substantially the
same extent as, or to a greater extent than, the Securities and the
Guarantees of the Securities are subordinated to Senior Debt and
Guarantor Senior Debt, respectively, under this Note Agreement.
"PERMITTED LIENS" means
(1) Liens securing Indebtedness consisting of Capitalized
Lease Obligations;
(2) Liens securing any Senior Debt or Guarantor Senior Debt,
including liens securing the New Credit Agreement;
(3) Liens on property existing at the time of acquisition
thereof by the Company or a Restricted Subsidiary; PROVIDED that such
Liens were in existence prior to the contemplation of such acquisition;
(4) Liens at any time outstanding with respect to assets of
the Company and its Restricted Subsidiaries, the fair market value of
which at the time the Lien was imposed does not exceed $2 million;
(5) Liens securing Indebtedness incurred pursuant to clauses
(9) or (12) of the definition of Permitted Indebtedness; or
(6) Liens created to replace Liens described in clause (3)
above to the extent that such Liens do not extend beyond the originally
encumbered property (other than improvements thereto or thereon,
attachments and other modifications reasonably required to maintain
such property) and are not otherwise materially less favorable to the
Company and its Restricted Subsidiaries than the Liens being replaced,
as determined by the Board of Directors of the Company in good faith.
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"PERSON" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"PREFERRED STOCK" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"PRINCIPAL" of any Indebtedness (including the Securities)
means the principal amount of such Indebtedness plus the premium, if any, on
such Indebtedness.
"PRO FORMA" means, with respect to any calculation made or
required to be made pursuant to the terms of this Note Agreement, a calculation
in accordance with Article II of Regulation S-X under the Securities Act.
"PRO RATA SHARE" has the meaning set forth in Section 4.16.
"PRODUCTIVE ASSETS" means assets of a kind used or usable in
the business of the Company and its Restricted Subsidiaries as conducted on the
date of the relevant Asset Sale or in a Related Business (including Capital
Stock in any such business or Related Business and licenses or similar rights to
operate); PROVIDED, HOWEVER, that accounts receivable acquired as part of an
acquisition of assets of a kind used or usable in such business shall be deemed
to be Productive Assets.
"QUALIFIED CAPITAL STOCK" means any stock that is not
Disqualified Capital Stock.
"RECORD DATE" means the applicable Record Date (whether or not
a Business Day) specified in the Securities.
"REDEMPTION DATE," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to this Note
Agreement and the Securities.
"REDEMPTION PRICE," when used with respect to any Security to
be redeemed, means the price fixed for such redemption, payable in immediately
available funds, pursuant to this Note Agreement and the Securities.
"RELATED BUSINESS" means the businesses of the Company and its
Restricted Subsidiaries as conducted on the Issue Date and similar,
complementary or related businesses or reasonable extensions, developments or
expansions thereof.
"RESTRICTED INVESTMENT" means an Investment other than a
Permitted Investment.
"RESTRICTED PAYMENT" has the meaning set forth in Section
4.02.
"RESTRICTED SECURITY" has the meaning set forth in Rule
144(a)(3) under the Securities Act.
"RESTRICTED SUBSIDIARY" of any Person means any Subsidiary of
such Person which at the time of determination is not an Unrestricted
Subsidiary.
"S&P" means Standard & Poor's, A division of the XxXxxx-Xxxx
Companies, and its successors.
-18-
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such Property;
PROVIDED, HOWEVER, that a Sale and Leaseback Transaction shall not include a
transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration (exclusive of
indemnities) of less than $2 million (a "DE MINIMIS TRANSACTION") so long as the
aggregate consideration (exclusive of indemnities) received by the Company or
its Restricted Subsidiaries from all De Minimis Transactions does not exceed an
aggregate of $2 million.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any successor statute or statutes thereto.
"SECURITYHOLDER" or "HOLDER" means the Person in whose name a
Security is registered on the books of the Company.
"SENIOR DEBT" means the principal of, premium, if any, and
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on any Permitted Indebtedness of the Company, whether outstanding on the Issue
Date or thereafter created, incurred or assumed as permitted under this Note
Agreement, unless, in the case of any particular Permitted Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Permitted Indebtedness shall not be
senior in right of payment to the Securities. Without limiting the generality of
the foregoing, "Senior Debt" shall also include the principal of, premium, if
any, interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, all monetary
obligations (including guarantees thereof) of every nature of the Company under
the New Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit, fees,
expenses and indemnities. "Senior Debt" shall not include
(1) Indebtedness evidenced by the Securities;
(2) any Indebtedness of the Company to a Subsidiary of the
Company;
(3) Indebtedness to, or guaranteed on behalf of, any director,
officer or employee of the Company or of any Subsidiary of the Company
or Affiliate of the Company (including, without limitation, amounts
owed for compensation);
(4) trade payables and other current liabilities arising in
the Ordinary Course of Business in connection with obtaining goods,
materials or services;
(5) any liability for federal, state, local or other taxes
owed or owing by the Company;
(6) that portion of any Indebtedness incurred in violation of
this Note Agreement;
(7) any Indebtedness other than Indebtedness under the New
Credit Agreement which is, by its express terms, subordinated in right
of payment to any other Indebtedness of the Company; and
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(8) any Indebtedness which, when incurred and without respect
to any other election under Section 1111(b) of Xxxxx 00, Xxxxxx Xxxxxx
Code, is without recourse to the Company.
"SUBSIDIARY," with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person, or (ii) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or indirectly,
owned by such Person.
"SURVIVING ENTITY" has the meaning set forth in Section 5.01.
"TRANSACTIONS" means (1) the acquisition of substantially all
the assets of Casual Male and certain related entities pursuant to the form of
Asset Purchase Agreement dated as of May 2, 2002 (as the same may hereafter be
amended, the "ASSET PURCHASE AGREEMENT"), by and among the Company, Casual Male
and certain such entities (the "CASUAL MALE ACQUISITION"), (2) the execution and
delivery of the New Credit Agreement and the anticipated borrowing of up to
approximately $140 million thereunder in connection with the consummation of the
Casual Male Acquisition, (3) the issuance of Preferred Stock, Common Stock
and/or warrants and the application of proceeds thereof to, among other things,
the consummation of the Casual Male Acquisition and the payment of fees and
expenses in connection therewith, (4) the issuance of the Company's 5%
Subordinated Notes due April 26, 2007 and (5) the issuance of the Securities
pursuant to this Note Agreement.
"UNRESTRICTED SUBSIDIARY" of any Person means
(1) any Subsidiary of such Person that at the time of
determination shall be or continue to be designated an Unrestricted
Subsidiary by the Board of Directors of such Person in the manner
provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; PROVIDED, HOWEVER, that each
Subsidiary to be so designated and each of its Subsidiaries has not at the time
of designation, and does not thereafter, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries except to the extent permitted
by Section 4.03.
The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary only if
(x) immediately after giving effect to such designation, the
Company is able to incur at least $1.00 of additional Permitted
Indebtedness and
(y) immediately before and immediately after giving effect to
such designation, no Default or Event of Default shall have occurred
and be continuing.
Any such designation by the Board of Directors shall be
evidenced by the resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
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"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of and
obligations guaranteed by the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing
(a) the then outstanding aggregate principal amount of such
Indebtedness into
(b) the sum of the total of the products obtained by
multiplying
(1) the amount of each then remaining installment,
sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect
thereof, by
(2) the number of years (calculated to the nearest
one-twelfth) which will elapse between such date and the
making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means any
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than directors' qualifying shares) are owned by such Person or
any Wholly Owned Restricted Subsidiary of such Person.
SECTION 1.02. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words in the
plural include the singular;
(4) provisions apply to successive events and transactions;
and
(5) "herein," "hereof" and other words of similar import refer
to this Note Agreement as a whole and not to any particular Article,
Section or other subdivision.
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ARTICLE TWO
THE SECURITIES
SECTION 2.01. FORM AND DATING.
The Securities shall be substantially in the form of EXHIBIT A
hereto. Each Security shall have an executed Guarantee from each of the
Guarantors endorsed thereon substantially in the form of EXHIBIT B hereto.
Upon any transfer provided for in Section 2.05, the Company
shall execute and deliver to the Person specified by the Assignment Form
attached to such Security a new Security in such names and in such authorized
denominations as such Assignment Form. Thereupon, the beneficial ownership of
such Security shown on the records maintained by the Company shall be amended to
reflect such transfer.
The Company shall act as registrar to maintain a record of the
issuance, registered transfer and registered Holder of each Security.
SECTION 2.02. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Company or if
the Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue a replacement Security if the
Company's requirements are met. If required by the Company, such Holder shall
provide an indemnity bond or other indemnity, sufficient in the judgment of the
Company, to protect the Company and the Guarantors from any loss which any of
them may suffer if a Security is replaced. The Company may charge such Holder
for its reasonable out-of-pocket expenses in replacing a Security, including
reasonable fees and expenses of counsel. Every replacement Security shall
constitute an additional obligation of the Company and every replacement
Guarantee shall constitute an additional obligation of the Guarantors.
SECTION 2.03. TREASURY SECURITIES.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any of its Affiliates shall be disregarded.
SECTION 2.04. DEFAULTED INTEREST.
The Company will pay interest on overdue principal from time
to time on demand at the rate of interest then borne by the Securities. The
Company shall, to the extent lawful, pay interest on overdue installments of
interest (without regard to any applicable grace periods) from time to time on
demand at the rate of interest then borne by the Securities. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months and,
in the case of a partial month, the actual number of days elapsed.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest, plus (to the extent lawful) any
interest payable on the defaulted interest, to the Persons who are Holders.
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SECTION 2.05 ASSIGNMENT AND TRANSFER.
Neither any Security nor any beneficial interest therein may
be sold, assigned or otherwise transferred except (a) in a principal amount of
not less than $2 million, (b) in accordance with applicable securities laws (as
referenced in the restrictive legend appearing on the form of Security), (c) by
due execution and delivery of the Form of Assignment attached to such Security,
and (d) with the consent of the Company, which consent shall not unreasonably be
withheld.
ARTICLE THREE
REDEMPTION
SECTION 3.01. NOTICES.
If the Company elects to redeem Securities pursuant to the
optional redemption provisions of Paragraph 5 or Paragraph 6 of the Securities,
it shall notify the Holders in writing of the Redemption Date, the Redemption
Price and the principal amount of Securities to be redeemed at least 15 days but
not more than 30 days before the Redemption Date together with an Officers'
Certificate and an Opinion of Counsel stating that such redemption will comply
with the conditions contained herein. Any such notice may be cancelled at any
time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED.
In the event that less than all of the Securities are to be
redeemed at any time pursuant to the optional redemption provisions of Paragraph
4 or Paragraph 5 of the Securities, selection of such Securities for redemption
will be made by the Company on a PRO RATA basis among all of the Holders (based
upon the relative principal amounts of Securities held by each such Holder).
The Company may select for redemption portions of the
principal amount at maturity of the Securities that have denominations larger
than $1,000. Securities and portions of them that the Company selects shall be
in principal amounts at maturity of $1,000 or a multiple thereof. Provisions of
this Note Agreement that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.03. EFFECT OF NOTICE OF REDEMPTION.
Unless the Company defaults in the payment when due of such
Redemption Price plus accrued interest, if any, interest on the Securities to be
redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Securities are presented for payment.
SECTION 3.04. SECURITIES REDEEMED IN PART.
Upon surrender and cancellation of a Security that is to be
redeemed in part only, the Company shall deliver to the Holder a new Security or
Securities in a principal amount equal to the unredeemed portion of the Security
surrendered.
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SECTION 3.05. SPECIAL MANDATORY REDEMPTION.
THE PROVISIONS OF THIS SECTION 3.05 SHALL BE VOID AND OF NO
FURTHER FORCE AND EFFECT FROM AND AFTER MAY 14, 2002.
In the event that the funds deposited with Casual Male have
been released to the Company (or its designee) in accordance with the
requirements of the Bidding Procedures Order (a "MANDATORY REDEMPTION EVENT"):
(i) The Company shall notify the Holders in writing on the next
succeeding Business Day after a Mandatory Redemption Event that the
Company will redeem the Securities on a specified Redemption Date no
later than the Mandatory Redemption Date at the Mandatory Redemption
Price plus accrued and unpaid interest to the Redemption Date (the
"MANDATORY REDEMPTION").
(ii) Within one Business Day after a Mandatory Redemption Event, the
Company shall mail a notice (the "MANDATORY REDEMPTION NOTICE") by
first class mail, postage prepaid, to each Holder at its registered
address. The Mandatory Redemption Notice shall identify:
(1) the Mandatory Redemption Date;
(2) the Mandatory Redemption Price and the amount of accrued
interest to be paid;
(3) that Securities called for redemption must be surrendered
to the Company at its offices at Needham, Massachusetts (or such other
office of the Company as the Company may have specified in such
Mandatory Redemption Notice) to collect the Mandatory Redemption Price
plus accrued interest, if any;
(4) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date, and the only remaining right of the
Holders of such Securities is to receive payment of the Mandatory
Redemption Price upon surrender to the Company of the Securities
redeemed; and
(5) the Securities are to be redeemed pursuant to this Section
3.05.
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.
The Company will pay the principal of and interest on the
Securities in the manner provided in the Securities and in this Note Agreement.
Interest including defaulted interest, if any, will be computed on the basis of
a 360-day year comprised of twelve 30-day months and in the case of a partial
month, the actual number of days elapsed. The interest rate in respect of any
overdue installment of interest on the Securities which is not paid when due by
virtue of Article 8 hereof shall be increased by 500 basis points, to a rate of
17% per annum.
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Notwithstanding anything to the contrary contained in this
Note Agreement, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States of
America from principal, premium or interest payments hereunder.
SECTION 4.02. LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution
(other than dividends or distributions payable in Qualified Capital
Stock of the Company or in warrants, rights or options to acquire
Qualified Capital Stock of the Company) on or in respect of shares of
the Company's Capital Stock to holders of such Capital Stock,
(b) purchase, redeem or otherwise acquire or retire for value
any Capital Stock of the Company or any warrants, rights or options to
purchase or acquire shares of any class of such Capital Stock, other
than the exchange of such Capital Stock, warrants, rights or options
for Qualified Capital Stock and/or for warrants, rights or options to
acquire Qualified Capital Stock, or
(c) make any Investment (other than Permitted Investments)
(each of the foregoing actions set forth in clauses (a), (b)
and (c) being referred to as a "RESTRICTED PAYMENT"), if at the time of such
Restricted Payment or immediately after giving effect thereto,
(1) a Default or an Event of Default shall have occurred and
be continuing,
(2) the Company could not incur at least $1.00 of Indebtedness
pursuant to Section 4.03, or
(3) the aggregate amount of Restricted Payments made
subsequent to the Issue Date shall exceed the sum of:
(x) 50% of the cumulative Consolidated Net Income, or
if cumulative Consolidated Net Income shall be a loss, minus
100% of such loss, of the Company earned subsequent to the
Issue Date and on or prior to the last day of the most recent
fiscal quarter for which financial statements are available
prior to such proposed Restricted Payments, treating such
period as a single accounting period, plus
(y) 100% of the aggregate Net Cash Proceeds received
by the Company from any Person from the issuance and sale
subsequent to the Issue Date and on or prior to the date the
Restricted Payment occurs of Qualified Capital Stock, or in
respect of warrants, rights or options to acquire Qualified
Capital Stock, excluding Qualified Capital Stock issued upon
the conversion of, or in exchange for, Capital Stock of the
Company or its Subsidiaries.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit
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(1) the payment of any dividend or distribution or the
redemption of any securities within 60 days after the date of
declaration of such dividend or distribution or the giving of formal
notice by the Company of such redemption, if the dividend or
distribution would have been permitted on the date of declaration or
the redemption would have been permitted on the date of the giving of
the formal notice thereof; and
(2) the repurchase of any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any such
Capital Stock deemed to occur upon the exercise of stock options to
acquire Qualified Capital Stock or other similar arrangements to
acquire Qualified Capital Stock if such repurchased Capital Stock or
warrants, rights or options to acquire shares of any such Capital Stock
represent a portion of the exercise price thereof.
SECTION 4.03. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, incur any Indebtedness, other than Permitted
Indebtedness.
Neither the Company nor any Guarantor will, directly or
indirectly, in any event incur any Indebtedness other than Indebtedness under
the New Credit Agreement which, by its terms or by the terms of any agreement
governing such Indebtedness, is both subordinated pursuant to its terms in right
of payment to any other Indebtedness of the Company or such Guarantor, as the
case may be, and senior in right of payment to the Securities or any such
Guarantor's Guarantee, as the case may be.
SECTION 4.04. CORPORATE EXISTENCE.
Except as otherwise permitted by Article Five, the Company
shall do or cause to be done, at its own cost and expense, all things necessary
to preserve and keep in full force and effect its corporate existence and the
corporate, partnership or other existence of each of the Subsidiaries in
accordance with the respective organizational documents of the Company or the
Subsidiary, as the case may be, and the rights (charter and statutory) and
material franchises of the Company and each of the Subsidiaries; PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such right or
franchise, or the corporate existence of any Subsidiary, if the Board of
Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and each of the
Subsidiaries, taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders.
SECTION 4.05. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed upon it or any of the
Subsidiaries or upon the income, profits or property of it or any of the
Subsidiaries and (b) all lawful claims for labor, materials and supplies which,
in each case, if unpaid, might by law become a material liability or Lien upon
the property of it or any of the Subsidiaries; PROVIDED, HOWEVER, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim the amount, applicability
or validity of which is being contested in good faith by appropriate proceedings
and for which adequate provision has been made or for which adequate reserves,
to the extent required under GAAP, have been taken.
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SECTION 4.06. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Company shall cause all material properties owned by
or leased by it or any of its Subsidiaries used or useful to the conduct of its
business or the business of any of its Subsidiaries to be maintained and kept in
normal condition, repair and working order and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals and
replacements thereof, all as in its judgment may be reasonably necessary, so
that the business carried on in connection therewith may be properly conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section 4.06 shall prevent
the Company or any of the Subsidiaries from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
properties are, in the reasonable and good faith judgment of the Board of
Directors of the Company or such Subsidiary, as the case may be, no longer
reasonably necessary in the conduct of their respective businesses or such
disposition is otherwise permitted by this Note Agreement.
(b) The Company shall provide or cause to be provided, for
itself and each of its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith judgment of the Board of Directors of the Company, are adequate and
appropriate for the conduct of the business of the Company and such Subsidiaries
in a prudent manner, with reputable insurers or with the government of the
United States of America or an agency or instrumentality thereof, in such
amounts, with such deductibles and by such methods as shall be customary, in the
good faith judgment of the Board of Directors of the Company, for companies
similarly situated in the industry.
SECTION 4.07. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Holders, within 90 days
after the end of each of the Company's fiscal years, an Officers' Certificate
(signed by the principal executive officer, principal financial officer and
principal accounting officer) stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing officers with a view to determining whether
it has kept, observed, performed and fulfilled its obligations under this Note
Agreement and further stating, as to each such officer signing such certificate,
that to the best of his knowledge the Company during such preceding fiscal year
has kept, observed, performed and fulfilled each and every such obligation and
no Default or Event of Default has occurred during such year and at the date of
such certificate there is no Default or Event of Default that has occurred and
is continuing or, if such signers do know of such Default or Event of Default,
the certificate shall describe the Default or Event of Default and its status in
reasonable detail.
(b) So long as any of the Securities are outstanding, if any
Default or Event of Default has occurred and is continuing, the Company shall
promptly deliver to the Holders an Officers' Certificate specifying such event,
notice or other action within 10 Business Days of its becoming aware of such
occurrence.
SECTION 4.08. COMPLIANCE WITH LAWS.
The Company will comply, and will cause each of the
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and restrictions of the United States, all states and municipalities thereof,
and of any governmental department, commission, board, regulatory authority,
bureau, agency and instrumentality of the foregoing, in respect of the conduct
of their respective businesses and the ownership of their respective properties,
except for such noncompliances as are being contested in good faith and by
appropriate proceedings and except for such noncompliances as would not
-27-
in the aggregate have a material adverse effect on the financial condition or
results of operations of the Company and its Subsidiaries taken as a whole.
SECTION 4.09. COMMISSION REPORTS.
(a) The Company will deliver to the Holders promptly, but in
any event no later than 15 days after it files with the Commission, copies of
the quarterly and annual reports and of the information, documents and other
reports, if any, which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
(b) Regardless of whether the Company is required to furnish
such reports to its stockholders pursuant to the Exchange Act, the Company (at
its own expense) shall cause its consolidated financial statements, comparable
to those which would have been required to appear in annual or quarterly
reports, to be delivered to the Holders.
SECTION 4.10. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions with any of its
Affiliates (an "AFFILIATE TRANSACTION"), other than
(x) Affiliate Transactions permitted under the next paragraph
and
(y) Affiliate Transactions on terms that are no less favorable
to the Company or such Restricted Subsidiary than those that might
reasonably have been obtained in a comparable transaction at such time
on an arm's-length basis from a Person that is not an Affiliate;
PROVIDED, HOWEVER, that for a transaction or series of related transactions with
an aggregate value of $1 million or more, such determination shall be made in
good faith by a majority of the disinterested members of the Board of the
Directors of the Company.
The foregoing restrictions shall not apply to
(1) reasonable fees and compensation paid to, and indemnity
provided on behalf of, officers, directors, employees or consultants of
the Company or any Subsidiary as determined in good faith by the
Company's Board of Directors;
(2) transactions between or among the Company and any of its
Restricted Subsidiaries so long as no portion of the minority interest
in such Restricted Subsidiary is owned by an Affiliate of the Company
(other than a Wholly Owned Subsidiary of the Company or directors or
officers of such Subsidiary that hold stock of such Subsidiary to the
extent that local law requires a resident of such jurisdiction to own
stock of such company) or between or among such Restricted
Subsidiaries; PROVIDED such transactions are not otherwise prohibited
by this Note Agreement;
(3) any agreement, understanding or arrangement in effect as
of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) or
in any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders in any
material respect, taken as a whole, than the original agreement as in
effect on the Issue Date;
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(4) Permitted Investments and Restricted Payments permitted by
this Note Agreement;
(5) commercially reasonable transactions between the Company
or a Restricted Subsidiary and any Joint Venture in the Ordinary Course
of Business that have been determined by the Board of Directors of the
Company to comply with clause (y) of the first paragraph above; and
(6) any agreement, understanding or arrangement of Casual Male
or its Subsidiaries as in effect on the Acquisition Closing Date or any
amendment thereto or any transaction contemplated thereby (including
pursuant to any amendment thereto) or in any replacement agreement
thereto so long as any such amendment or replacement agreement is not
more disadvantageous to the Holders in any material respect, taken as a
whole, than the original agreement as in effect on the Acquisition
Closing Date.
SECTION 4.11. LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary to
(a) pay dividends or make any other distributions on or in
respect of its Capital Stock;
(b) make loans or advances to or pay any Indebtedness or other
obligation owed to the Company or any other Restricted Subsidiary of
the Company; or
(c) transfer any of its property or assets to the Company or
any other Restricted Subsidiary of the Company,
except for such encumbrances or restrictions existing under or
by reason of:
(1) applicable law and agreements with governmental
authorities with respect to assets located in their jurisdiction,
(2) the Securities, this Note Agreement or any Guarantee,
(3) (A) customary provisions restricting (1) the subletting or
assignment of any lease or (2) the transfer of copyrighted or patented
materials, (B) provisions in agreements that restrict the assignment of
such agreements or rights thereunder or (C) provisions of a customary
nature contained in the terms of Capital Stock restricting the payment
of dividends and the making of distributions on Capital Stock,
(4) any agreement or instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than (a) the
Person or the properties or assets of the Person so acquired (including
the Capital Stock of such Person), or (b) any Restricted Subsidiary
having no assets other than (i) the Person or the properties or assets
of the Person so acquired (including the Capital Stock of such Person)
and (ii) other assets having a fair market value not in excess of $2
million, and, in each case, the monetary proceeds thereof,
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(5) any agreement or instrument governing Senior Debt or
Guarantor Senior Debt, including the New Credit Agreement,
(6) any agreement or instrument governing Indebtedness
incurred pursuant to clause (12) of the definition of Permitted
Indebtedness,
(7) restrictions on the transfer of assets subject to any Lien
permitted under this Note Agreement,
(8) restrictions imposed by any agreement to sell assets not
in violation of this Note Agreement to any Person pending the closing
of such sale,
(9) customary rights of first refusal with respect to the
Company's and its Restricted Subsidiaries' interests in their
respective Restricted Subsidiaries and joint ventures,
(10) Indebtedness of a Person that was a Restricted Subsidiary
at the time of incurrence and the incurrence of which Indebtedness is
permitted by Section 4.03; provided that such encumbrances and
restrictions apply only to such Restricted Subsidiary and its assets;
and provided, further, that the Board of Directors of the Company has
determined in good faith, at the time of creation of each such
encumbrance or restriction, that such encumbrances and restrictions
would not singly or in the aggregate have a materially adverse effect
on the Holders of the Securities,
(11) the subordination of any Indebtedness owed by the Company
or any of its Restricted Subsidiaries to the Company or any other
Restricted Subsidiary to any other Indebtedness of the Company or any
of its Restricted Subsidiaries; provided (A) such other Indebtedness is
permitted under this Note Agreement and (B) the Board of Directors of
the Company has determined in good faith, at the time of creation of
each such encumbrance or restriction, that such encumbrances and
restrictions would not singly or in the aggregate have a materially
adverse effect on the Holders of the Securities, or
(12) an agreement effecting a refinancing, replacement or
substitution of Indebtedness issued, assumed or incurred pursuant to an
agreement referred to in clauses (2), (4) and (5) above or any other
agreement evidencing Indebtedness permitted under this Note Agreement;
provided, however, that the provisions relating to such encumbrance or
restriction contained in any such refinancing, replacement or
substitution agreement or any such other agreement are not less
favorable to the Company in any material respect as determined by the
Board of Directors of the Company than the provisions of the
Indebtedness being refinanced.
SECTION 4.12. LIMITATION ON LIENS.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness (other than Permitted Liens) upon
any property or asset now owned or hereafter acquired by them, or any income or
profits therefrom, or assign or convey any right to receive income therefrom;
PROVIDED, HOWEVER, that in addition to creating Permitted Liens on their
properties or assets, the Company and any of its Restricted Subsidiaries may
create any Lien securing Indebtedness upon any of their properties and assets
(including, but not limited to, any Capital Stock of its Subsidiaries) if the
Securities are equally and ratably secured.
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SECTION 4.13. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder
will have the right to require that the Company repurchase all or a portion of
such Holder's Securities, at a purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
repurchase.
(b) Prior to the mailing of the notice described in paragraph
(c) below, but in any event within 30 days following any Change of Control, the
Company covenants to use reasonable efforts in good faith to obtain the
requisite consents under the New Credit Agreement and all such other Senior Debt
to permit the purchase of the Securities as provided below.
The Company shall first comply with the covenant in the immediately preceding
sentence before it shall be required to repurchase Securities pursuant to the
provisions described below. The Company's failure to comply with this Section
4.13 if such consents are not obtained despite such efforts shall not constitute
an Event of Default.
(c) Within 10 days following the date upon which a Change of
Control occurred, the Company shall send, by first class mail, a notice to each
Holder, which notice shall govern the terms of the Change of Control offer to
purchase (the "CHANGE OF CONTROL OFFER"). The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Change of Control Offer. Such notice shall
state:
(1) that the Change of Control Offer is being made pursuant to
this Section 4.13 and that all Securities tendered and not withdrawn
will be accepted for payment;
(2) the purchase price (including the amount of accrued
interest) and the purchase date, which shall be no earlier than 30 days
nor later than 45 days from the date such notice is mailed, other than
as may be required by law (the "Change of Control Payment Date");
(3) that any Security not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to a Change of Control Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Company at the address
specified in the notice prior to 5:00 p.m. New York City time on the
third Business Day prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Company receives, not later than 5:00 p.m. New York time on the
second Business Day prior to the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Securities the Holder
delivered for purchase and a statement that such Holder is withdrawing
his election to have such Security purchased;
(7) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered; and
-31-
(8) the circumstances and relevant facts regarding such Change
of Control.
On or before the Change of Control Payment Date, the Company
shall accept for payment Securities or portions thereof tendered (in integral
multiples of $1,000) pursuant to the Change of Control Offer. The Company shall
promptly mail to the Holders of Securities so accepted payment in an amount
equal to the purchase price plus accrued and unpaid interest, if any, thereon to
the Change of Control Payment Date and shall promptly mail to such Holders new
Securities equal in principal amount to any unpurchased portion of the
Securities surrendered. Any Securities not so accepted shall be promptly mailed
by the Company to the Holder thereof.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent, if any, such laws and regulations are applicable in connection
with the repurchase of Securities pursuant to a Change of Control Offer. To the
extent the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.13, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.13 by virtue thereof.
SECTION 4.14. LIMITATION ON PREFERRED STOCK OF RESTRICTED
SUBSIDIARIES.
The Company will not permit any of its Restricted Subsidiaries
that are not Guarantors of the Securities to issue any Preferred Stock (other
than to the Company or to a Wholly Owned Restricted Subsidiary of the Company)
or permit any Person (other than the Company or a Wholly Owned Restricted
Subsidiary of the Company) to own any Preferred Stock of any Restricted
Subsidiary of the Company that is not a Guarantor of the Securities.
SECTION 4.15. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any Restricted
Subsidiary to, enter into any Sale and Leaseback Transaction; PROVIDED that the
Company and any Guarantor may enter into a Sale and Leaseback Transaction if
(1) the Company or such Guarantor could have
(a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such Sale and Leaseback
Transaction pursuant to Section 4.03 and
(b) incurred a Lien to secure such Indebtedness pursuant
to Section 4.12,
(2) the gross cash proceeds of such Sale and Leaseback
Transaction are at least equal to the fair market value, as determined
in good faith by the Board of Directors and set forth in an Officers'
Certificate, of the property that is the subject of such Sale and
Leaseback Transaction and
(3) the transfer of assets in such Sale and Leaseback
Transaction is permitted by, and the Company or the applicable
Guarantor applies the proceeds of such transaction in accordance with,
Section 4.16.
SECTION 4.16. LIMITATION ON ASSET SALES.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless
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(1) the Company or the applicable Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale
at least substantially equal to the fair market value of the assets
sold or otherwise disposed of (taking into account any associated
liabilities and other considerations), as determined in good faith by
the Company's Board of Directors, and
(2) upon the consummation of an Asset Sale, the Company shall
apply directly or through a Restricted Subsidiary, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such
Asset Sale within 360 days of receipt thereof either (A) to repay
Senior Debt (and in the case of any Indebtedness outstanding under a
revolving credit facility, to permanently reduce the amounts that may
be reborrowed thereunder by an equivalent amount), with the Net Cash
Proceeds received in respect thereof, (B) to reinvest in Productive
Assets, or (C) a combination of prepayment, reduction and investment
permitted by the foregoing clauses (2)(A) and (2)(B);
On the 361st day after an Asset Sale or such earlier date, if any, as the Board
of Directors of the Company or of such Restricted Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(2)(A), (2)(B) and (2)(C) of the preceding sentence (each, a "NET PROCEEDS OFFER
TRIGGER DATE"), such aggregate amount of Net Cash Proceeds which have not been
so applied on or before such Net Proceeds Offer Trigger Date as permitted in
clauses (2)(A), (2)(B) and (2)(C) of the preceding sentence (each, a "NET
PROCEEDS OFFER AMOUNT") shall be applied by the Company to make an offer to
repurchase (the "NET PROCEEDS OFFER") on a date (the "NET PROCEEDS OFFER PAYMENT
DATE") not less than 30 nor more than 45 days following the applicable Net
Proceeds Offer Trigger Date, from all Holders on a PRO RATA basis that amount of
Securities equal to the Net Proceeds Offer Amount multiplied by a fraction, the
numerator of which is the aggregate principal amount of Securities then
outstanding and the denominator of which is the sum of the aggregate principal
amount of Securities and Pari Passu Indebtedness then outstanding (the "PRO RATA
SHARE"), at a price equal to 100% of the principal amount of the Securities to
be repurchased, plus accrued interest to the date of repurchase.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount
is less than $2 million, the application of the Net Cash Proceeds constituting
such Net Proceeds Offer Amount to a Net Proceeds Offer may be deferred until
such time as such Net Proceeds Offer Amount plus the aggregate amount of all Net
Proceeds Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date
relating to such initial Net Proceeds Offer Amount from all Asset Sales by the
Company and its Restricted Subsidiaries aggregates at least $2 million, at which
time the Company shall apply all Net Cash Proceeds constituting all Net Proceeds
Offer Amounts that have been so deferred to make a Net Proceeds Offer, the first
date the aggregate of all such deferred Net Proceeds Offer Amounts is equal to
$2 million or more being deemed to be a Net Proceeds Offer Trigger Date. To the
extent that the aggregate purchase price of Securities tendered pursuant to any
Net Proceeds Offer is less than the Pro Rata Share, the Company or any Guarantor
may use such amount for general corporate purposes. Upon completion of any Net
Proceeds Offer, the Net Proceeds Offer Amount shall be reset to zero.
Notwithstanding the first two paragraphs of this Section 4.16,
the Company and its Restricted Subsidiaries will be permitted to consummate an
Asset Sale without complying with such paragraphs to the extent
(1) any portion of the consideration for such Asset Sale
constitutes Productive Assets
and
(2) such Asset Sale is for substantially fair market value, as
determined in good faith by the Company's Board of Directors; PROVIDED
that the fair market value of any consideration
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not constituting Productive Assets received by the Company or any of
its Restricted Subsidiaries in connection with any Asset Sale permitted
to be consummated under this paragraph shall constitute Net Cash
Proceeds subject to the provisions of the first two paragraphs of this
Section 4.16.
Notice of a Net Proceeds Offer shall be mailed, by first-class
mail, by the Company to Holders of Securities at their last registered address
not less than 15 days nor more than 30 days before the Net Proceeds Offer
Payment Date. The notice shall contain all instructions and materials necessary
to enable such Holders to tender Securities pursuant to the Net Proceeds Offer
and shall state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to this
Section 4.16, that all Securities tendered will be accepted for
payment; PROVIDED, HOWEVER, that if the aggregate principal amount of
Securities tendered in a Net Proceeds Offer plus accrued interest at
the expiration of such offer exceeds the aggregate amount of the Net
Proceeds Offer, the Company shall purchase the Securities on a PRO RATA
basis and that the Net Proceeds Offer shall remain open for a period of
20 Business Days or such longer period as may be required by law;
(2) the purchase price (including the amount of accrued
interest) and the Net Proceeds Offer Payment Date (which shall be not
less than 30 nor more than 45 days following the applicable Net
Proceeds Offer Trigger Date;
(3) that any Security not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant to the Net
Proceeds Offer shall cease to accrue interest after the Net Proceeds
Offer Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to a Net Proceeds Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Company at the address
specified in the notice prior to the close of business on the Business
Day prior to the Net Proceeds Offer Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Company receives, not later than the second Business Day prior
to the Net Proceeds Offer Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Securities such Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have
such Securities purchased; and
(7) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered.
If an offer is made to repurchase the Securities pursuant to a
Net Proceeds Offer, the Company will and will cause its Restricted Subsidiaries
to comply with all tender offer rules under state and federal securities laws,
including, but not limited to, Section 14(e) under the Exchange Act and Rule
14e-1 thereunder, to the extent applicable to such offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.16, the Company shall comply with the applicable securities laws and
obligations and shall not be deemed to have breached its obligations hereunder
by virtue thereof.
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SECTION 4.17. LIMITATION OF GUARANTEES BY RESTRICTED
SUBSIDIARIES.
Any Guarantee of the Securities by a Restricted Subsidiary
shall provide by its terms that it shall be automatically and unconditionally
released and discharged, without any further action required on the part of or
any Holder, upon:
(1) the unconditional release of such Restricted Subsidiary
from its liability in respect of any and all other Indebtedness; or
(2) any sale or other disposition (by merger or otherwise) to
any Person which is not a Restricted Subsidiary of the Company, of all
of the Company's Capital Stock in, or all or substantially all of the
assets of, such Restricted Subsidiary; provided, however, that
(a) such sale or disposition of such Capital Stock or
assets is otherwise in compliance with the terms of this Note
Agreement and
(b) such assumption, guarantee or other liability of
such Restricted Subsidiary has been released by the holders of
the other Indebtedness so guaranteed.
SECTION 4.18. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Note Agreement; and the Company (to the
extent it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Holders, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. MERGER, CONSOLIDATION AND SALE OF ASSETS.
The Company will not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and its Restricted
Subsidiaries) whether as an entirety or substantially as an entirety to any
Person unless:
(1) either (A) the Company or a Restricted Subsidiary of the
Company shall be the surviving or continuing corporation or (B) the
Person, if other than the Company or a Restricted Subsidiary of the
Company, formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of
the Company's assets determined on a consolidated basis for the Company
and its Restricted Subsidiaries (the "Surviving Entity") (x) shall be a
corporation or limited liability company organized and validly existing
under the laws of the United States or
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any State thereof or the District of Columbia and (y) shall expressly
assume the due and punctual payment of the principal of and premium, if
any, and interest on all of the Securities and the performance of every
covenant of the Securities or this Note Agreement on the part of the
Company to be performed or observed;
(2) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (1)(B)(y)
above, including, without limitation, giving effect to any Indebtedness
and Acquired Indebtedness incurred or anticipated to be incurred and
any Lien granted in connection with or in respect of the transaction,
no Default or Event of Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction the
Consolidated Total Debt Ratio would not be greater than 3 to 1; and
(4) the Company or the Surviving Entity shall have delivered
to the Holders an Officers' Certificate and an Opinion of Counsel
stating that such consolidation, merger, sale, assignment, transfer,
lease, conveyance or other disposition shall comply with the applicable
provisions of this Note Agreement and that all conditions precedent in
this Note Agreement relating to the execution of such transaction have
been satisfied.
For purposes of the foregoing, the transfer, by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions, of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of the Company, other than to a Wholly Owned
Subsidiary that is a Guarantor, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
Upon any consolidation, combination or merger or any transfer
of all or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Note Agreement and the Securities with the same effect as if such surviving
entity had been named as such and the Company shall be relieved of all of its
obligations and duties under this Note Agreement and the Securities.
Each Guarantor, other than any Guarantor whose Guarantee is to
be released in accordance with the terms of the Guarantee and this Note
Agreement, will not, and the Company will not cause or permit any Guarantor to,
consolidate with or merge with or into any Person other than the Company or any
other Guarantor unless:
(1) the entity formed by or surviving any such consolidation
or merger, if other than the Guarantor, or to which such sale, lease,
conveyance or other disposition shall have been made is a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia;
(2) such entity assumes all of the obligations of the
Guarantor on the Guarantee; and
(3) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
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(4) immediately after giving effect to such transaction the
Consolidated Total Debt Ratio would not be greater than 3 to 1.
Any merger or consolidation of a Guarantor with and into the
Company, with the Company being the surviving entity, or another Guarantor that
is a Wholly Owned Restricted Subsidiary of the Company need not comply with this
Section 5.01.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any such consolidation, merger, conveyance, lease or
transfer of all or substantially all of the assets of the Company in accordance
with Section 5.01, in which the Company is not the surviving Person, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, lease or transfer is made will succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Note Agreement and the Securities with the same effect as if such
successor had been named as the Company therein. When a successor corporation
assumes all of the Obligations of the Company hereunder and under the Securities
and agrees to be bound hereby and thereby, the predecessor shall be released
from such Obligations.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" means any of the following events:
(a) the failure to pay interest on any Securities when the
same becomes due and payable and the default continues for a period of
15 days;
(b) the failure to pay the principal on any Securities, when
such principal becomes due and payable, at maturity, upon redemption or
otherwise, including the failure to make a payment to purchase
Securities tendered pursuant to a Change of Control Offer or a Net
Proceeds Offer;
(c) a default in the observance or performance of any other
covenant or agreement contained in this Note Agreement, which default,
in the case of any default which is susceptible of cure, continues for
a period of 30 days after the Company receives written notice
specifying the default, and demanding that such default be remedied,
from the Holders of at least 25% in outstanding principal amount of the
Securities;
(d) the failure to pay at final maturity, giving effect to any
extensions thereof, the principal amount of any Indebtedness of the
Company or any Restricted Subsidiary of the Company, other than
intercompany Indebtedness, and such failure continues for a period of
20 days or more, or the acceleration of the final stated maturity of
any such Indebtedness, which acceleration is not rescinded, annulled or
otherwise cured within 10 days of receipt by the Company or such
Restricted Subsidiary of notice of any such acceleration, if, in either
case, the aggregate principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in default for
failure to pay principal at final maturity or which has been
accelerated, in each case with respect to which the time periods
described above have passed, aggregates $5 million or more at any time;
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(e) one or more judgments in an aggregate amount in excess of
$1 million shall have been rendered against the Company or any of its
Restricted Subsidiaries and such judgments remain undischarged, unpaid
or unstayed for a period of 60 days;
(f) the Company or any of its Restricted Subsidiaries (i)
admits in writing its inability to pay its debts generally as they
become due, (ii) commences a voluntary case or proceeding under any
Bankruptcy Law with respect to itself, (iii) consents to the entry of a
judgment, decree or order for relief against it in an involuntary case
or proceeding under any Bankruptcy Law, (iv) consents to the
appointment of a Custodian of it or for substantially all of its
property, (v) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (vi) makes a general
assignment for the benefit of its creditors or (vii) takes any
partnership or corporate action, as the case may be, to authorize or
effect any of the foregoing;
(g) a court of competent jurisdiction enters a judgment,
decree or order for relief in respect of the Company or any of its
Restricted Subsidiaries in an involuntary case or proceeding under any
Bankruptcy Law, which shall (i) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or composition in
respect of the Company or any of its Significant Subsidiaries, (ii)
appoint a custodian of the Company or any of its Significant
Subsidiaries or for substantially all of any of their property or (iii)
order the winding-up or liquidation of its affairs; and such judgment,
decree or order shall remain unstayed and in effect for a period of 60
consecutive days;
(h) substantially simultaneously with or within 30 days
following the consummation of the Casual Male Acquisition and the
Transactions to be consummated concurrently therewith, the Company
fails to issue Additional Capital Stock for net cash proceeds of at
least $50 million;
(i) any Subsidiary Guarantee of any Restricted Subsidiary of
the Company shall for any reason cease to be, or shall be asserted in
writing by any responsible officer of such Restricted Subsidiary of the
Company or the Company not to be, in full force and effect (except as
may be otherwise contemplated by this Note Agreement) or enforceable in
accordance with its terms;
(j) the failure to deposit cash with Casual Male or otherwise
substantially in accordance with the Bidding Procedures Order on or
about the Bid Date in substantially the amount and at substantially the
time required pursuant to the terms of the Bidding Procedures Order,
and the default continues for a period of 5 days; or
(k) the representations and warranties of the Company set
forth pursuant to Section 11.09 shall not have been true and correct on
and as of May 14, 2002 (except those representations and warranties
which specify a specific date) except for any inaccuracies or breaches
of such representations and warranties which, either individually or in
the aggregate, have not caused and are not reasonably likely to cause a
Material Adverse Effect (as defined in Annex A hereto).
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default
specified in Section 6.01(f) or (g)) shall occur and be continuing, the Holders
of at least 25% in principal amount of outstanding Securities may declare the
principal of and accrued and unpaid interest on all the Securities to be due and
payable by notice in writing to the Company specifying the respective Event of
Default and that it is a "notice of acceleration", and the same shall become
immediately due and payable. If an Event of Default specified in Section 6.01(f)
or (g) occurs and is continuing, then all unpaid principal of and premium, if
any, and
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accrued and unpaid interest on all of the outstanding Securities shall IPSO
FACTO become and be immediately due and payable without any declaration or other
act on the part of any Holder.
At any time after a declaration of acceleration with respect
to the Securities as described in the preceding paragraph, the Holders of at
least 75% in principal amount of the Securities may rescind and cancel such
declaration and its consequences (i) if the rescission would not conflict with
any judgment or decree, (ii) if all existing Events of Default have been cured
or waived except nonpayment of principal or interest that has become due solely
because of the acceleration, (iii) to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue principal,
which has become due otherwise than by such declaration of acceleration, has
been paid, and (iv) in the event of the cure or waiver of an Event of Default of
the type described in clause (f) or (g) of Section 6.01, the Holder shall have
received an Officers' Certificate that such Event of Default has been cured or
waived. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Holders
of not less than 25% in principal amount of the outstanding Securities may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities, this Note Agreement or the
Guarantees. No remedy is exclusive of any other remedy. All available remedies
are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of not less than 75% in principal amount of the
outstanding Securities by written notice to the Company may waive an existing
Default or Event of Default and its consequences, except a Default in the
payment of principal of or interest on any Security as specified in clauses (a)
and (b) of Section 6.01. When a Default or Event of Default is waived, it is
cured and ceases.
SECTION 6.05. CONTROL.
The Holders of not less than 75% in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Holders or exercising any trust or
power conferred on it.
SECTION 6.06. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Note Agreement,
the right of any Holder to receive payment of principal of and interest on a
Security, on or after the respective due dates expressed in such Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the written consent of the
Holder.
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ARTICLE SEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 7.01. WITHOUT CONSENT OF HOLDERS.
The Company may amend or supplement this Note Agreement or the
Securities without notice to or consent of any Securityholder:
(1) to evidence the succession in accordance with Article Five
hereof of another Person to the Company and the assumption by any such
successor of the covenants of the Company herein, and in the
Securities; or
(2) to make any change that would provide any additional
benefit or rights to the Securityholders or that does not adversely
affect the rights of any Securityholder in any material respect;
PROVIDED that the Company has delivered to the Holders an Officers' Certificate,
stating that such amendment or supplement complies with the provisions of this
Section 7.01. After an amendment under this Section 7.01 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment.
SECTION 7.02. WITH CONSENT OF HOLDERS.
The Company, with the written consent of the Holder or Holders
of at least 75% in aggregate principal amount unless a greater principal amount
is specified herein of the outstanding Securities, may amend or supplement this
Note Agreement, the Securities, without notice to any other Securityholders. The
Holder or Holders of at least 75% in aggregate principal amount unless a greater
principal amount is specified herein of the outstanding Securities may waive
compliance by the Company with any provision of this Note Agreement or the
Securities without notice to any other Securityholder. Without the consent of
each Securityholder affected, however, no amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may:
(1) reduce the amount of Securities whose Holders must consent
to an amendment, supplement or waiver;
(2) reduce the rate of or change or have the effect of
changing the time for payment of interest, including defaulted
interest, on any Securities;
(3) reduce the principal of or change or have the effect of
changing the fixed maturity of any Securities, or change the date on
which any Securities may be subject to redemption or repurchase, or
reduce the redemption or repurchase price therefor;
(4) make any Securities payable in money other than that
stated in the Securities;
(5) make any change in provisions of this Note Agreement
protecting the right of each Holder to receive payment of principal of
and interest on such Security on or after the due date thereof or to
bring suit to enforce such payment, or permitting Holders of at least
75% in principal amount of the Securities to waive Defaults or Events
of Default (other than Defaults or Events of Default with respect to
the payment of principal of or interest on the Securities); or
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(6) modify or change any provision of this Note Agreement or
the related definitions that adversely affects the ranking of the
Securities or the Guarantees.
In addition, following the occurrence of a Change of Control,
as the case may be, without the consent of Holders of at least 75% of the
outstanding aggregate principal amount of Securities, an amendment, supplement
or waiver may not make any change to the Company's obligations to make and
consummate the required Change of Control Offer or modify any of the provisions
or definitions with respect thereto.
It shall not be necessary for the consent of the Holders under
this Section 7.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
7.02 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement, waiver
or supplemental indenture.
SECTION 7.03. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by notice to the
Company received before the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then notwithstanding
the last sentence of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to revoke any consent previously given, whether or
not such Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date.
SECTION 7.04. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a
Security, the Company may require the Holder of the Security to deliver it to
the Company. The Company may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company so
determines, the Company in exchange for the Security shall issue a new Security
that reflects the changed terms. Failure to make the appropriate notation or
issue a new Security shall not affect the validity and effect of such amendment,
supplement or waiver.
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ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. SECURITIES SUBORDINATED TO SENIOR DEBT.
The Company covenants and agrees, and each Holder of the
Securities by acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article Eight; and
each person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that all payments of the
principal of, or premium, if any, and interest on the Securities by the Company
shall, to the extent and in the manner set forth in this Article Eight, be
subordinated and junior in right of payment to the prior payment in full in cash
of all amounts payable under Senior Debt, whether outstanding on the Issue Date
or thereafter incurred.
SECTION 8.02. NO PAYMENT ON SECURITIES IN CERTAIN
CIRCUMSTANCES.
(a) No direct or indirect payment by or on behalf of the
Company of principal of, or premium, if any, and interest on the Securities,
whether pursuant to the terms of the Securities, upon acceleration, pursuant to
a Change of Control Offer or Net Proceeds Offer or otherwise, shall be made to
the Holders of Securities if (i) a default in the payment of the principal of,
or premium, if any, and interest on Designated Senior Debt occurs and is
continuing beyond any applicable period of grace or (ii) any other default
occurs and is continuing with respect to Designated Senior Debt that permits
holders of the Designated Senior Debt as to which such default relates to
accelerate its maturity and the Holder receives a written notice of such other
default (a "PAYMENT BLOCKAGE NOTICE") from the Company or the holders of any
Designated Senior Debt (with a copy to the Company) until all Obligations with
respect to such Designated Senior Debt are paid in full; payments on the
Securities shall be resumed (x) in the case of a payment default, upon the date
on which such default is cured or waived and (y) in case of a nonpayment
default, the earlier of the date on which such nonpayment default is cured or
waived or 179 days after the date on which the applicable Payment Blockage
Notice is received by the Holder (such period being referred to herein as the
"PAYMENT BLOCKAGE PERIOD"), unless the maturity of any Designated Senior Debt
has been accelerated (and written notice of such acceleration has been received
by the Company).
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Payment Blockage Period extend beyond 179 days
from the date the Payment Blockage Notice in respect thereof was given and (y)
not more than one Payment Blockage Period may be commenced with respect to the
Securities during any period of 360 consecutive days. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage Notice
shall be, or be made, the basis for a subsequent Payment Blockage Notice (it
being understood that any subsequent action, or any breach of any covenant for a
period commencing after the date of receipt of such Payment Blockage Notice,
that, in either case, would give rise to such a default pursuant to any
provisions under which a default previously existed or was continuing shall
constitute a new default for this purpose).
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by any Holder when such payment is prohibited by
Section 8.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Designated Senior Debt or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Designated Senior Debt may have been
issued, as their respective interests may appear, but only to the extent that,
upon notice to the holders of Designated Senior Debt that such prohibited
payment has been made, the holders of the Designated Senior Debt (or their
representative or representatives or a trustee) notify the Company and the
Holders in writing of the amounts then due and owing on the Designated
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Xxxxxx Xxxx, if any, and only the amounts specified in such notice shall be paid
to the holders of Designated Senior Debt.
(c) Nothing herein shall prohibit the Company from making
scheduled payments of interest on the Securities at the times and in the amounts
originally provided for herein so long as no default or event of default on
Designated Senior Debt has occurred and is continuing.
SECTION 8.03. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets or securities
of the Company of any kind or character, whether in cash, property or
securities, upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other similar proceedings, an assignment for the benefit of
creditors or any marshaling of the Company's assets, the holders of Senior Debt
shall be entitled to receive payment in full in cash of all Obligations due in
respect of such Senior Debt (including interest after the commencement of any
proceeding at the rate specified in the applicable Senior Debt) before the
Holders of the Securities shall be entitled to receive any payment by the
Company of the principal of, or premium, if any, and interest on the Securities,
or any payment by the Company to acquire any of the Securities for cash,
property or securities, or any distribution with respect to the Securities of
any cash, property or securities (except that the Holders may receive and retain
Permitted Junior Securities). Before any payment (other than Permitted Junior
Securities) may be made by, or on behalf of, the Company of the principal of, or
premium, if any, and interest on the Securities upon any such dissolution or
winding-up or liquidation or reorganization, any payment or distribution of
assets or securities of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities would be
entitled, but for the subordination provisions of this Note Agreement, shall be
made by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, directly to
the holders of the Senior Debt (to such holders as their interests may appear,
on the basis of the respective amounts of Senior Debt held by such holders) or
their representatives or agent or agents under any agreement or indenture
pursuant to which any of such Senior Debt may have been issued, as their
respective interests may appear, to the extent necessary to pay all such Senior
Debt in full in cash after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Senior Debt.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities, shall be received by any Holder of Securities at a time when such
payment or distribution is prohibited by Section 8.03(a) and before all
obligations in respect of Senior Debt are paid in full in cash, or payment
provided for, such payment or distribution shall be received and held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Debt (to such holders as their interests may appear, on the basis of the
respective amounts of Senior Debt held by such holders) or their respective
representatives, or to the trustee or trustees or agent or agents under any
indenture pursuant to which any of such Senior Debt may have been issued, as
their respective interests may appear, for application to the payment of Senior
Debt remaining unpaid until all such Senior Debt has been paid in full in cash
after giving effect to any prior or concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or
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reorganization for the purposes of this Section 8.03 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Five.
SECTION 8.04. SUBROGATION.
Upon the payment in full in cash of all Senior Debt, or
provision for payment, the Holders of the Securities shall be subrogated
(equally and ratably with the holders of all Indebtedness of the Company which
by its terms is not superior in right of payment to the Securities and which
ranks on a parity with the Securities) to the rights of the holders of Senior
Debt to receive payments or distributions of cash, property or securities of the
Company made on such Senior Debt until the principal of, or premium, if any, and
interest on the Securities shall be paid in full in cash; and, for the purposes
of such subrogation, no payments or distributions to the holders of the Senior
Debt of any cash, property or securities to which the Holders of the Securities
would be entitled except for the provisions of this Article Eight, and no
payment over pursuant to the provisions of this Article Eight to the holders of
Senior Debt by Holders of the Securities shall, as between the Company, its
creditors other than holders of Senior Debt, and the Holders of the Securities,
be deemed to be a payment by the Company to or on account of the Senior Debt. It
is understood that the provisions of this Article Eight are and are intended
solely for the purpose of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior Debt, on the other
hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Eight shall have been applied, pursuant to the provisions of this
Article Eight, to the payment of all amounts payable under Senior Debt, then and
in such case, the Holders of the Securities shall be entitled to receive from
the holders of such Senior Debt any payments or distributions received by such
holders of Senior Debt in excess of the amount required to make payment in full,
or provision for payment, of such Senior Debt.
SECTION 8.05. OBLIGATIONS OF COMPANY UNCONDITIONAL.
Nothing contained in this Article Eight or elsewhere in this
Note Agreement or in the Securities is intended to or shall impair, as between
the Company and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the Securities the
principal of, or premium, if any, and interest on the Securities as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of the Senior Debt, nor shall
anything herein or therein prevent the Holder of any Security from exercising
all remedies otherwise permitted by applicable law upon default under this Note
Agreement, subject to the rights, if any, under this Article Eight of the
holders of the Senior Debt in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing
contained in this Article Eight shall restrict the right of the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Article Six or to pursue any rights
or remedies hereunder; PROVIDED, HOWEVER, that all Senior Debt then due and
payable shall first be paid in full before the Holders of the Securities are
entitled to receive any direct or indirect payment from the Company of principal
of, or premium, if any, and interest on the Securities.
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SECTION 8.06. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets or securities
referred to in this Article Eight, the Holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the Holders of the Securities for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Eight.
SECTION 8.07. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE COMPANY OR HOLDERS OF SENIOR DEBT.
No right of any present or future holders of any Senior Debt
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company or the holders of the Senior Debt with the terms of
this Note Agreement, regardless of any knowledge thereof which any such holder
may have or otherwise be charged with. The provisions of this Article Eight are
intended to be for the benefit of, and shall be enforceable directly by, the
holders of Senior Debt.
SECTION 8.08. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of, or
premium, if any, and interest on the Securities by reason of any provision of
this Article Eight shall not be construed as preventing the occurrence of an
Event of Default specified in clause (a) or (b) of Section 6.01.
SECTION 8.09. NO WAIVER OF SUBORDINATION PROVISIONS.
Without in any way limiting the generality of Section 8.07,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Holders of the Securities, without incurring
responsibility to the Holders of the Securities and without impairing or
releasing the subordination provided in this Article Eight or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (a) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt; (c) release any
Person liable in any manner for the collection of Senior Debt; and (d) exercise
or refrain from exercising any rights against the Company and any other Person.
SECTION 8.10. ACCELERATION OF SECURITIES.
If payment of the Securities is accelerated because of an
Event of Default, the Company shall promptly notify holders of the Senior Debt
of the acceleration.
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ARTICLE NINE
GUARANTEE OF SECURITIES
SECTION 9.01. UNCONDITIONAL GUARANTEE.
Each of the Guarantors hereby, jointly and severally,
absolutely, irrevocably and unconditionally guarantees, on a senior subordinated
basis as hereinafter set forth (such guarantee to be referred to herein as a
"GUARANTEE") to each Holder of a Security that: (a) the principal of, premium,
if any, and interest on the Securities shall be promptly paid in full when due
(subject to any applicable grace periods) whether at maturity, upon redemption
at the option of Holders pursuant to the provisions of the Securities relating
thereto, by acceleration or otherwise, and interest on the overdue principal and
(to the extent permitted by law) interest, if any, on the Securities and all
other Obligations of the Company to the Holders hereunder or thereunder and all
other Obligations shall be promptly paid in full or performed, all in accordance
with the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Securities or any of such other Obligations, the same
shall be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed, or failing performance of any other obligation of the
Company to the Holders under this Note Agreement or under the Securities, for
whatever reason, each Guarantor shall be obligated to pay, or to perform or
cause the performance of, the same immediately. An Event of Default under this
Note Agreement or the Securities shall constitute an event of default under this
Guarantee, and shall entitle the Holders of Securities to accelerate the
Obligations of the Guarantors hereunder in the same manner and to the same
extent as the Obligations of the Company.
Each of the Guarantors hereby agrees that its Obligations
hereunder shall be absolute, irrevocable and unconditional, irrespective of the
validity, regularity or enforceability of the Securities or this Note Agreement,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Securities with respect to any provisions hereof or thereof, any
release of any other Guarantor, the recovery of any judgment against the
Company, any action to enforce the same, whether or not a Guarantee is affixed
to any particular Security, or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each of the
Guarantors hereby waives the benefit of diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that its Guarantee
shall not be discharged except by complete performance of the Obligations
contained in the Securities, this Note Agreement and this Guarantee. This
Guarantee is a guarantee of payment and not of collection. If any Holder is
required by any court or otherwise to return to the Company or to any Guarantor,
or any custodian, trustee, liquidator or other similar official acting in
relation to the Company or such Guarantor, any amount paid by the Company or
such Guarantor to such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor further
agrees that, as between it, on the one hand, and the Holders of Securities on
the other hand, (a) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article Six for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (b) in the
event of any acceleration of such Obligations as provided in Article Six hereof,
such Obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Guarantee.
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No stockholder, officer, director, employee or incorporator,
past, present or future, or any Guarantor, as such, shall have any personal
liability under this Guarantee by reason of his, her or its status as such
stockholder, officer, director, employee or incorporator.
Each Guarantor that makes a payment or distribution under its
Guarantee shall be entitled to a contribution from each other Guarantor in an
amount PRO RATA, based on the net assets of each Guarantor, determined in
accordance with GAAP.
SECTION 9.02. LIMITATIONS ON GUARANTEES.
The Obligations of each Guarantor under its Guarantee are
limited to the maximum amount which, after giving effect to all other contingent
and fixed liabilities of such Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the Obligations of such other Guarantor under its Guarantee or
pursuant to its contribution Obligations under this Note Agreement, will result
in the Obligations of such Guarantor under the Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under any laws of the United
States, any state or territory of the United States or the District of Columbia.
SECTION 9.03. EXECUTION AND DELIVERY OF GUARANTEE.
To evidence the Guarantee set forth in Section 9.01, each
Guarantor hereby agrees that a notation of such Guarantee, substantially in the
form of EXHIBIT B hereto, shall be endorsed on each Security. Such Guarantee
shall be executed on behalf of each Guarantor by either manual or facsimile
signature of two Officers of each Guarantor, who, in each case, shall have been
duly authorized to so execute by all requisite corporate action. The validity
and enforceability of any Guarantee shall not be affected by the fact that it is
not affixed to any particular Security.
Each of the Guarantors hereby agrees that its Guarantee set
forth in Section 11.01 shall remain in full force and effect (unless released in
accordance with Section 11.04) notwithstanding any failure to endorse on each
Security a notation of such Guarantee.
SECTION 9.04. RELEASE OF A GUARANTOR.
(a) Upon the sale or disposition of all of the Capital Stock
of a Guarantor by the Company, or upon the consolidation or merger of a
Guarantor with or into any Person in compliance with Article Five (in each case,
other than to the Company or an Affiliate of the Company), or if any Guarantor
is dissolved or liquidated in accordance with this Note Agreement, such
Guarantor's Guarantee shall be released, and such Guarantor and each Subsidiary
of such Guarantor that is also a Guarantor shall be deemed released from all
Obligations under this Note Agreement and the Securities without any further
action required on the part of the Company or any Holder. Any Guarantor not so
released or the entity surviving such Guarantor, as applicable, shall remain or
be liable under its Guarantee as provided in this Article Nine. In addition, a
Guarantor's Guarantee will also be released and such Guarantor will also be
released from all Obligations under this Note Agreement and the Securities if
such Guarantor is released from any and all guarantees of other Indebtedness of
the Company.
(b) The Holders shall deliver an appropriate instrument
evidencing the release of a Guarantor upon receipt of a request by the Company
or such Guarantor accompanied by an Officers' Certificate certifying as to
compliance with this Section 9.04.
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The Holders shall execute any documents reasonably requested
by the Company or a Guarantor in order to evidence the release of such Guarantor
from its Obligations under its Guarantee endorsed on the Securities and under
this Article Nine.
Except as set forth in Articles Four and Five and this Section
9.04, nothing contained in this Note Agreement or in any of the Securities shall
prevent any consolidation or merger of a Guarantor with or into the Company or
another Guarantor or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.
SECTION 9.05. WAIVER OF SUBROGATION.
Until all of the Securities are discharged and paid in full,
each Guarantor hereby irrevocably waives and agrees not to exercise any claim or
other rights which it may now or hereafter acquire against the Company that
arise from the existence, payment, performance or enforcement of the Company's
Obligations under the Securities or this Note Agreement and such Guarantor's
Obligations under this Guarantee and this Note Agreement, in any such instance
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, and any right to participate in any
claim or remedy of the Holders against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including, without limitation, the right to take or receive from the Issuer,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Guarantor in violation of the preceding sentence and
any amounts owing to the Holders of Securities under the Securities, this Note
Agreement, or any other document or instrument delivered under or in connection
with such agreements or instruments, shall not have been paid in full, such
amount shall have been deemed to have been paid to such Guarantor for the
benefit of, and held in trust for the benefit of the Holders and shall forthwith
be paid to such Holders to be credited and applied to the Obligations in favor
of the Holders, whether matured or unmarred, in accordance with the terms of
this Note Agreement. Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Note
Agreement and that the waiver set forth in this Section 9.05 is knowingly made
in contemplation of such benefits.
SECTION 9.06. OBLIGATIONS CONTINUING.
Subject to Section 9.04, the Obligations of each Guarantor
hereunder shall be continuing and shall remain in full force and effect until
all the Obligations have been paid and satisfied in full.
SECTION 9.07. OBLIGATIONS REINSTATED.
Subject to Section 9.04, the Obligations of each Guarantor
hereunder shall continue to be effective or shall be reinstated, as the case may
be, if at any time any payment which would otherwise have reduced the
Obligations of any Guarantor hereunder (whether such payment shall have been
made by or on behalf of the Company or by or on behalf of a Guarantor) is
rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy,
liquidation or reorganization of the Company or any Guarantor or otherwise, all
as though such payment had not been made. If demand for, or acceleration of the
time for, payment by the Company is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of the Company, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
each Guarantor as provided herein.
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SECTION 9.08. WAIVER.
Without in any way limiting the provisions of Section 9.01,
each Guarantor hereby waives notice or proof of reliance by the Holders upon the
Obligations of any Guarantor hereunder, and diligence, presentment, demand for
payment on the Company, protest or notice of dishonor of any of the Obligations.
SECTION 9.09. NO OBLIGATION TO TAKE ACTION AGAINST THE COMPANY.
Neither the Holders nor any other Person shall have any
obligation to enforce or exhaust any rights or remedies or to take any other
steps under any security for the Obligations or against the Company or any other
Person or any property of the Company or any other Person before the Holders are
entitled to demand payment and performance by any or all Guarantors of their
liabilities and Obligations under their Guarantees or under this Note Agreement.
SECTION 9.10. AMENDMENT, ETC.
No amendment, modification or waiver of any provision of this
Note Agreement relating to any Guarantor or consent to any departure by any
Guarantor or any other Person from any such provision will in any event be
effective unless it is signed by such Guarantor, other than a release pursuant
to Section 9.04.
SECTION 9.11. NO WAIVER; CUMULATIVE REMEDIES.
No failure to exercise and no delay in exercising, on the part
of the Holders, any right, remedy, power or privilege hereunder or under this
Note Agreement or the Securities, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder or under this Note Agreement or the Securities preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in the Guarantee and
under this Note Agreement, the Securities and any other document or instrument
between a Guarantor and/or the Company and the Holders are cumulative and not
exclusive of any rights, remedies, powers and privilege provided by law.
SECTION 9.12. SUCCESSORS AND ASSIGNS.
Each Guarantee shall be binding upon and inure to the benefit
of each Guarantor and the Holders and their respective successors and permitted
assigns, except that no Guarantor may assign any of its Obligations hereunder or
thereunder.
SECTION 9.13. CONTRIBUTION.
In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, INTER SE, that in the event any payment or
distribution is made by any Guarantor (a "FUNDING GUARANTOR") under its
Guarantee, such Funding Guarantor shall be entitled to contribution from all
other Guarantors in a PRO RATA amount based on the net assets (determined in
accordance with GAAP) of each Guarantor (including the Funding Guarantor) for
all payments, damages and expenses incurred by that Funding Guarantor in
discharging the Company's Obligations with respect to the Securities or any
other Guarantor's Obligations with respect to its Guarantee.
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SECTION 9.14. FUTURE GUARANTORS.
The Company shall cause (i) each of the Subsidiaries of the
Company (if any) which may on the Acquisition Closing Date result from the
Transactions (other than any Subsidiary which is or becomes a party to, or
assumes liabilities related to, the Assumed Mortgage (as defined in the Asset
Purchase Agreement), or which is or becomes an assignee of the Assumed Mortgage
or the Owned Real Property (as defined in the Asset Purchase Agreement)) on the
Acquisition Closing Date and (ii) each of the Company's Restricted Subsidiaries
to the extent required by the provisions of this Note Agreement, in each case,
to execute and deliver, within a reasonable time thereafter, a supplemental Note
Agreement or other agreement of guaranty and thereby become a Guarantor bound by
the Guarantee of the Securities in the form set forth in Article Nine hereof
(without such Guarantor being required to execute and deliver its Guarantee
endorsed on the securities); PROVIDED that no Subsidiary organized outside the
United States of America and no Unrestricted Subsidiary shall be required to
become a Guarantor.
ARTICLE TEN
SUBORDINATION OF GUARANTEE
SECTION 10.01. GUARANTEE OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR
DEBT.
Each Guarantor covenants and agrees, each Holder of the
Securities by acceptance thereof likewise covenants and agrees, that all
Guarantees shall be issued subject to the provisions of this Article Ten; and
each person holding any Guarantee, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that all payments of the
principal of, or premium, if any, and interest on the Securities pursuant to the
Guarantee made by or on behalf of such Guarantor shall, to the extent and in the
manner set forth in this Article Ten, be subordinated and junior in right of
payment to the prior payment in full in cash of all amounts payable under
Guarantor Senior Debt of such Guarantor.
SECTION 10.02. NO PAYMENT ON GUARANTEE IN CERTAIN CIRCUMSTANCES.
(a) No direct or indirect payment by or on behalf of any
Guarantor of principal of or interest on the Securities, whether pursuant to the
terms of the Securities or the Guarantees, upon acceleration, pursuant to a
Change of Control Offer or Net Proceeds Offer or otherwise, shall be made to the
Holders of Securities if (i) a default in the payment of the principal of, or
premium, if any, and interest on Designated Guarantor Senior Debt occurs and is
continuing beyond any applicable period of grace or (ii) any other default
occurs and is continuing with respect to Designated Guarantor Senior Debt that
permits holders of the Designated Guarantor Senior Debt as to which such default
relates to accelerate its maturity and the Holder receives a written notice of
such other default (a "GUARANTOR PAYMENT BLOCKAGE NOTICE") from the Company or a
Guarantor or the holders of any Designated Guarantor Senior Debt (with a copy to
the Company) until all Obligations with respect to such Designated Guarantor
Senior Debt are paid in full; payments on the Securities shall be resumed (x) in
the case of a payment default, upon the date on which such default is cured or
waived and (y) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived or 179 days after the date on which
the applicable Guarantor Payment Blockage Notice is received by the Holder (such
period being referred to herein as the "GUARANTOR PAYMENT BLOCKAGE PERIOD"),
unless the maturity of any Designated Guarantor Senior Debt has been accelerated
(and written notice of such acceleration has been received by the Company).
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Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Guarantor Payment Blockage Period extend
beyond 179 days from the date the Guarantor Payment Blockage Notice in respect
thereof was given and (y) not more than one Guarantor Payment Blockage Period
may be commenced with respect to the Securities during any period of 360
consecutive days. No nonpayment default that existed or was continuing on the
date of delivery of any Guarantor Payment Blockage Notice shall be, or be made,
the basis for a subsequent Guarantor Payment Blockage Notice (it being
understood that any subsequent action, or any breach of any covenant for a
period commencing after the date of receipt of such Guarantor Payment Blockage
Notice, that, in either case, would give rise to such a default pursuant to any
provisions under which a default previously existed or was continuing shall
constitute a new default for this purpose).
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by any Holder when such payment is prohibited by
Section 10.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of such Designated Guarantor
Senior Debt or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Designated Guarantor Senior
Debt may have been issued, as their respective interests may appear, but only to
the extent that, upon notice to the holders of such Designated Guarantor Senior
Debt that such prohibited payment has been made, the holders of such Designated
Guarantor Senior Debt (or their representative or representatives or a trustee)
notify the Company and the Holders in writing of the amounts then due and owing
on such Designated Guarantor Senior Debt, if any, and only the amounts specified
in such notice shall be paid to the holders of such Designated Guarantor Senior
Debt.
SECTION 10.03. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets or securities
of any Guarantor of any kind or character, whether in cash, property or
securities, upon any dissolution or winding-up or liquidation or reorganization
of such Guarantor, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other similar proceedings, the holders of Guarantor
Senior Debt of such Guarantor shall be entitled to receive payment in full in
cash of all Obligations due in respect of such Guarantor Senior Debt before the
Holders of the Securities shall be entitled to receive any payment by such
Guarantor of the principal of, or premium, if any, and interest or on the
Securities pursuant to its Guarantee, or any payment to acquire any of the
Securities for cash, property or securities, or any distribution with respect to
the Securities of any cash, property or securities (except that Holders may
receive and retain Permitted Junior Securities). Before any payment (other than
Permitted Junior Securities) may be made by, or on behalf of, any Guarantor of
the principal of, or premium, if any, and interest on the Securities upon any
such dissolution or winding-up or liquidation or reorganization, any payment or
distribution of assets or securities of such Guarantor of any kind or character,
whether in cash, property or securities, to which the Holders of the Securities
would be entitled, but for the subordination provisions of this Note Agreement,
shall be made by such Guarantor or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
directly to the holders of the Guarantor Senior Debt of such Guarantor (to such
holders as their interests may appear, on the basis of the respective amounts of
such Guarantor Senior Debt held by such holders) or their representatives or
agent or agents under any agreement or indenture pursuant to which any such
Guarantor Senior Debt may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Guarantor Senior Debt in full in
cash after giving effect to any prior or concurrent payment, distribution or
provision therefor to or for the holders of such Guarantor Senior Debt.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of a Guarantor of any kind or character, whether in cash, property
or securities, shall be received by any Holder of Securities at a time when such
payment or distribution is prohibited by Section 10.03(a) and before all
Obligations in respect of the
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Guarantor Senior Debt of such Guarantor are paid in full in cash, or payment
provided for, such payment or distribution shall be received and held in trust
for the benefit of, and shall be paid over or delivered to, the holders of such
Guarantor Senior Debt (to such holders as their interests may appear, on the
basis of the respective amounts of Guarantor Senior Debt held by such holders)
or their respective representatives, or to the trustee or trustees or agent or
agents under any indenture pursuant to which any of such Guarantor Senior Debt
may have been issued, as their respective interests may appear, for application
to the payment of the Guarantor Senior Debt remaining unpaid until all Guarantor
Senior Debt has been paid in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders of
any Guarantor Senior Debt; provided that the trustee shall be entitled to
receive from the holders of Guarantor Senior Debt written notice of the amounts
owing on the Guarantor Senior Debt.
The consolidation of a Guarantor with, or the merger of a
Guarantor with or into, another corporation or the liquidation or dissolution of
a Guarantor following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 10.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.
SECTION 10.04. SUBROGATION.
Upon the payment in full in cash of all Guarantor Senior Debt
of a Guarantor, or provision for payment, the Holders of the Securities shall be
subrogated to the rights of the holders of Guarantor Senior Debt to receive
payments or distributions of cash, property or securities of such Guarantor made
on Guarantor Senior Debt of such Guarantor until the principal of, or premium,
if any, and interest on the Securities shall be paid in full in cash; and, for
the purposes of such subrogation, no payments or distributions to the holders of
Guarantor Senior Debt of any cash, property or securities to which the Holders
of the Securities would be entitled except for the provisions of this Article
Ten, and no payment over pursuant to the provisions of this Article Ten to the
holders of the Guarantor Senior Debt by Holders of the Securities shall, as
between such Guarantor, its creditors other than holders of such Guarantor
Senior Debt of such Guarantor, and the Holders of the Securities, be deemed to
be a payment by such Guarantor to or on account of the Guarantor Senior Debt of
such Guarantor. It is understood that the provisions of this Article Twelve are
and are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Guarantor Senior
Debt, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Ten shall have been applied, pursuant to the provisions of this Article
Ten, to the payment of all amounts payable under Guarantor Senior Debt, then and
in such case, the Holders of the Securities shall be entitled to receive from
the holders of such Guarantor Senior Debt any payments or distributions received
by such holders of Guarantor Senior Debt in excess of the amount required to
make payment in full, or provision for payment, of such Guarantor Senior Debt.
SECTION 10.05. OBLIGATIONS OF GUARANTOR UNCONDITIONAL.
Nothing contained in this Article Ten or elsewhere in this
Note Agreement or in the Securities or the Guarantees is intended to or shall
impair, as between any Guarantor and the Holders of the Securities, the
obligation of such Guarantor, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of, or premium, if any, and interest on
the Securities as and when the same shall become due and payable in accordance
with the terms of its Guarantee, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Guarantors other
than
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the holders of Guarantor Senior Debt, nor shall anything herein or therein
prevent the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Note Agreement, subject to
the rights, if any, under this Article Ten of the holders of Guarantor Senior
Debt in respect of cash, property or securities of the Guarantors received upon
the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing
contained in this Article Ten shall restrict the right of the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; PROVIDED, HOWEVER, that all Guarantor Senior Debt of any
Guarantor then due and payable shall first be paid in full before the Holders of
the Securities are entitled to receive any direct or indirect payment from such
Guarantor of principal of, or premium, if any, and interest on the Securities
pursuant to such Guarantor's Guarantee.
SECTION 10.06. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets or securities of
any Guarantor referred to in this Article Ten, the Holders of the Securities
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which bankruptcy, dissolution, winding-up, liquidation
or reorganization proceedings are pending, or upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Holders of the Securities
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Guarantor Senior Debt and other Indebtedness of
such Guarantor, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article Ten.
SECTION 10.07. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF THE GUARANTORS OR HOLDERS OF GUARANTOR SENIOR DEBT.
No right of any present or future holders of any Guarantor
Senior Debt to enforce subordination as provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of any
Guarantor or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by any Guarantor with the terms of this Note Agreement,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with. The provisions of this Article Ten are intended to be for the
benefit of, and shall be enforceable directly by, the holders of Guarantor
Senior Debt.
SECTION 10.08. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of, or
premium, if any, and interest on the Securities by reason of any provision of
this Article Ten shall not be construed as preventing the occurrence of an Event
of Default specified in clauses (a) or (b) of Section 6.01.
SECTION 10.09. NO WAIVER OF GUARANTEE SUBORDINATION PROVISIONS.
Without in any way limiting the generality of Section 10.07,
the holders of Guarantor Senior Debt may, at any time and from time to time,
without the consent of or notice to the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article Ten or the obligations
hereunder of the Holders of the Securities to the holders of Guarantor Senior
Debt, do any one or more of the following: (a) change the manner, place or terms
of payment or extend the time of payment of, or renew or alter, Guarantor Senior
-53-
Debt or any instrument evidencing the same or any agreement under which
Guarantor Senior Debt is outstanding or secured; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Guarantor Senior Debt; (c) release any Person liable in any manner for the
collection of Guarantor Senior Debt; and (d) exercise or refrain from exercising
any rights against the Guarantor and any other Person.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. NOTICES.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, by telecopier, by reputable overnight delivery service, or registered
mail, postage prepaid, return receipt requested, addressed as follows:
if to the Company or any Guarantor:
Designs, Inc.
00 X Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to the Holders, to their respective addresses set forth on or
following the signature pages hereto or otherwise
specified to the Company in writing by notice given
in accordance with this Section 11.01,
with a copy to
Patterson, Belknap, Xxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxxx, Esq.
Facsimile: (000) 000-0000
-54-
and a copy to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Each of the Company, the Guarantors and the Holders by written
notice to each other may designate additional or different addresses for notices
to such Person. Any notice or communication to the Company and the Guarantors
shall be deemed to have been given or made as of the date so delivered if
personally delivered; when answered back, if telexed; when receipt is
acknowledged, if telecopied; one (1) business day after mailing by reputable
overnight courier; and five (5) calendar days after mailing if sent by
registered mail, postage prepaid (except that, notwithstanding the foregoing, a
notice of change of address shall not be deemed to have been given until
actually received by the addressee). Notice to the Holders shall be deemed given
when actually received by the Holders.
Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail or other equivalent means at his address as
it appears on the registration books of the Company and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.02. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Note Agreement, other than the
Officers' Certificate required by Section 4.08(a), shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition and the definitions
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 11.03. LEGAL HOLIDAYS.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York, or at such place of payment are
-55-
not required to be open. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 11.04. GOVERNING LAW.
THIS NOTE AGREEMENT, THE SECURITIES AND THE GUARANTEES WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE AGREEMENT OR THE
SECURITIES OR THE GUARANTEES.
SECTION 11.05. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder or incorporator, as
such, of the Company or any Guarantor shall not have any liability for any
Obligations of the Company or any Guarantor under the Securities, the Guarantees
or this Note Agreement or for any claim based on, in respect of or by reason of
such Obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Securities.
SECTION 11.06. SUCCESSORS.
All agreements of the Company in this Note Agreement and the
Securities shall bind its successors.
SECTION 11.07. DUPLICATE ORIGINALS.
All parties may sign any number of copies of this Note
Agreement. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
SECTION 11.08. SEVERABILITY.
In case any one or more of the provisions in this Note
Agreement, in the Securities or in the Guarantees shall be held invalid, illegal
or unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
SECTION 11.09 REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to each Initial
Purchaser of the Securities, as of May 14, 2002, as set forth in Annex A
attached to this Note Agreement and made a part hereof.
[SIGNATURE PAGES TO FOLLOW]
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Note
Agreement to be duly executed, all as of the date first written above.
THE COMPANY:
DESIGNS, INC.
By:
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
PURCHASERS:
XXXXX PARTNERS I, L.P.
By:
----------------------------------
Name:
Title:
JEWELCOR MANAGEMENT, INC.
By:
----------------------------------
Name:
Title:
BARON ASSET FUND
On behalf of THE BARON SMALL CAP FUND
SERIES
By: Bamco, inc.
By:
----------------------------------
Name:
Title:
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY
ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1)
REPRESENTS THAT IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "AI"), (2) AGREES
THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE
COMPANY, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (C) TO AN AI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE COMPANY
A SIGNED LETTER CONTAINING CERTAIN CUSTOMARY REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM
THE COMPANY) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (D) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) AND, IN EACH CASE,
IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHICH THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND, AND (4) FURTHER AGREES THAT IT MAY
NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (X) IN DENOMINATIONS OF NOT
LESS THAN $2 MILLION AND (Y) WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY,
WHICH CONSENT SHALL NOT UNREASONABLY BE WITHHELD. THIS NOTE IS SUBJECT AND
SUBORDINATE TO THE LIABILITIES OF DESIGNS, INC. DUE OR TO BECOME DUE TO FLEET
RETAIL FINANCE INC., AGENT PURSUANT TO A SUBORDINATION AGREEMENT DATED MAY 14,
2002, AS AMENDED AND IN EFFECT.
THIS NOTE IS SUBJECT AND SUBORDINATE TO THE LIABILITIES OF DESIGNS, INC. DUE OR
TO BECOME DUE TO FLEET RETAIL FINANCE INC., AGENT PURSUANT TO A SUBORDINATION
AGREEMENT DATED MAY 14, 2002, AS AMENDED AND IN EFFECT.
DESIGNS, INC.
12% Senior Subordinated Note
due 2007
No.__ $______________
DESIGNS, INC., a Delaware corporation (the "Company", which
term includes any successor corporation), for value received, promises to pay to
______________________, or registered assigns, the principal sum of
___________________ ($_____________) on April 26, 2007.
Interest Payment Dates: July 31, October 31, January 31, and
April 30.
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
A-1
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
DESIGNS, INC.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
A-2
DESIGNS, INC.
12% Senior Subordinated Note
due 2007
1. INTEREST.
DESIGNS, INC., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest quarterly on July 31,
October 31, January 31 and April 30 of each year (each an "Interest Payment
Date"), commencing July 31, 2002. Interest on the Securities will accrue from
the most recent date on which interest has been paid or, if no interest has been
paid, from __________, 2002. Interest will be computed on the basis of a 360-day
year of twelve 30-day months or in the case of a partial month, the actual
number of days elapsed.
The Company shall pay interest at the rate of interest then
borne by the Securities on overdue installments of principal and on overdue
installments of interest to the extent lawful as provided in the Note Agreement.
The interest rate in respect of any overdue installment of interest on the
Securities which is not paid when due by virtue of Article 8 of the Note
Agreement (as defined below) shall be increased by 500 basis points, to a rate
of 17% per annum.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders at the close
of business on the Interest Payment Date. Holders must surrender Securities to
the Company at its principal place of business to collect principal payments.
The Company shall pay principal and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
wire transfer of Federal funds, or interest by check payable in such U.S. Legal
Tender. The Company shall deliver any such interest payment to a Holder at the
Holder's registered address.
3. NOTE AGREEMENT.
The Company issued the Securities under a Note Agreement,
dated as of April 26, 2002, and amended and restated as of May 14, 2002 (the
"Note Agreement"), by and among the Company, the Guarantors named therein and
the Initial Purchasers. Capitalized terms herein are used as defined in the Note
Agreement unless otherwise defined herein. The terms of the Securities include
those stated in the Note Agreement and as it may be amended from time to time.
4. OPTIONAL REDEMPTION.
The Securities will be redeemable, at the Company's option, in
whole at any time or in part from time to time, upon not less than 15 nor more
than 30 days' notice, at 100% of the principal amount thereof, plus, in each
case, accrued and unpaid interest to the date of redemption.
A-3
5. NOTICE OF OPTIONAL REDEMPTION.
Notice of redemption will be sent, by first class mail,
postage prepaid, at least 15 days but not more than 30 days before the
Redemption Date to each Holder of Securities to be redeemed at such Holder's
registered address.
Except as set forth in the Note Agreement, unless the Company
defaults in the payment of such Redemption Price plus accrued and unpaid
interest, if any, the Securities called for redemption will cease to bear
interest from and after such Redemption Date and the only right of the Holders
of such Securities will be to receive payment of the Redemption Price plus
accrued and unpaid interest, if any to the Redemption Date.
6. OFFERS TO PURCHASE.
Section 4.13 of the Note Agreement provides that, and upon the
occurrence of a Change of Control and subject to further limitations contained
therein, the Company will make an offer to purchase the Securities in accordance
with the procedures set forth in the Note Agreement.
7. SPECIAL MANDATORY REDEMPTION. [This provision shall appear only in
Securities numbered Nos. 1 to 4 as originally issued. The provisions of Section
3.05 of the Note Agreement shall be void and of no further force and effect from
and after May 14, 2002. In Securities issued from and after May 14, 2002, this
provision shall be replaced by the notation "Intentionally Omitted as
Inapplicable From and After May 14, 2002."]
Section 3.05 of the Note Agreement provides that if the funds
deposited with Casual Male have been released to the Company (or its designee),
because substantially all of the assets of Casual Male and certain related
entities have been acquired by a party other than the Company or otherwise as
provided in the auction procedures approved by order of the United States
Bankruptcy Court, constituting a Mandatory Redemption Event (as defined in the
Note Agreement), the Company will redeem all of the Securities at 100% of the
principal amount of the Securities plus accrued and unpaid interest to the date
of redemption in accordance with the procedures set forth in Section 3.05.
8. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in registered form, without coupons. A
Holder shall register the transfer of or exchange Securities in accordance with
the Note Agreement. The Company may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Note Agreement. The Company need not register the transfer
of or exchange any Securities or portions thereof (i) during a period beginning
at the opening of business 15 days before the mailing of a notice of redemption
of Securities and ending at the close of business on the day of such mailing and
(ii) selected for redemption, except the unredeemed portion of any Security
being redeemed in part.
9. PERSONS DEEMED OWNERS.
The registered Holder of a Security shall be treated as the
owner of it for all purposes.
10. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Note Agreement and the
Securities may be amended or supplemented with the written consent of the
Holders of at least 75% in aggregate principal amount of the
A-4
Securities then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the Company may amend or supplement
the Note Agreement and the Securities to, among other things, cure any
ambiguity, defect or inconsistency or make any other change that does not
adversely affect the rights of any Holder of a Security in any material respect.
11. RESTRICTIVE COVENANTS.
The Note Agreement contains certain covenants that, among
other things, limit the ability of the Company and the Subsidiaries to incur
additional Indebtedness, create certain Liens, pay dividends or make certain
other Restricted Payments, consummate certain Asset Sales, enter into certain
transactions with Affiliates and merge or consolidate with any other Person or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company. The limitations are subject to a
number of important qualifications and exceptions.
12. SUBORDINATION.
The Indebtedness evidenced by the Securities is, to the extent
and in the manner provided in the Note Agreement, subordinated in right of
payment to the prior payment in full in cash of all Senior Debt, and this
Security is issued subject to such provisions. Each Holder of this Security, by
accepting the same, agrees to and shall be bound by such provisions.
13. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Holders
of at least 25% in aggregate principal amount of Securities then outstanding may
declare the principal of and accrued interest on all the Securities to be due
and payable immediately in the manner and with the effect provided in the Note
Agreement. Holders of Securities may not enforce the Note Agreement or the
Securities except as provided in the Note Agreement. The Note Agreement permits,
subject to certain limitations therein provided, Holders of a majority in
aggregate principal amount of the Securities then outstanding to exercise any
power.
14. NO RECOURSE AGAINST OTHERS.
No stockholder, director, officer, employee or incorporator,
as such, of the Company shall have any liability for any obligation of the
Company under the Securities or the Note Agreement or for any claim based on, in
respect of or by reason of, such Obligations or their creation. Each Holder of a
Security by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities.
15. GUARANTEES.
This Security will be entitled to the benefits of certain
Guarantees made for the benefit of the Holders. Reference is hereby made to the
Note Agreement for a statement of the respective rights, limitations of rights,
duties and Obligations thereunder of the Guarantors and the Holders.
16. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (=
A-5
joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
17. NOTE AGREEMENT.
The Company will furnish to any Holder of a Security upon
written request and without charge a copy of the Note Agreement. Requests may be
made to: Designs, Inc., 00 X Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, Attn: Chief
Financial Officer.
18. GOVERNING LAWS.
This Security and the Note Agreement shall be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Security.
A-6
ASSIGNMENT FORM
I or we assign and transfer this Security to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint
-------------------------------------------------------,
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
Dated:
-----------------------------------
Signed:
----------------------------------
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
----------------------------------
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Company)
A-7
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section ___ of the Note Agreement, check the box:
If you want to elect to have only part of this Security
purchased by the Company pursuant to ___ of the Note Agreement, state the
amount: $_____________
Dated:
-----------------------------------
Signed:
----------------------------------
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
----------------------------------
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Company)
A-8
EXHIBIT B
GUARANTEE
For value received, the undersigned hereby unconditionally,
absolutely and irrevocably guarantees, as principal obligor and not only as a
surety, to the Holder of this Security the cash payments in United States
dollars of principal of, premium, if any, and interest on this Security in the
amounts and at the times when due and interest on the overdue principal,
premium, if any, and interest, if any, of this Security, if lawful, and the
payment or performance of all other Obligations of the Company under the Note
Agreement (as defined below) or the Security, to the Holder of this Security,
all in accordance with and subject to the terms and limitations of this
Security, Article Nine and Article Ten of the Note Agreement and this Guarantee.
This Guarantee will become effective in accordance with Article Nine of the Note
Agreement and its terms shall be evidenced therein. The validity and
enforceability of this Guarantee shall not be affected by the fact that it is
not affixed to any particular Security. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Note Agreement dated as
of April 26, 2002, and amended and restated as of May 14, 2002, among Designs,
Inc., a Delaware corporation, as issuer (the "Company"), each of the Guarantors
referred to therein and the Initial Purchasers (as amended or supplemented, the
"Note Agreement").
The obligations of the undersigned to the Holders of
Securities pursuant to this Guarantee and the Note Agreement are expressly set
forth in Articles Nine and Ten of the Note Agreement and are expressly
subordinated in right of payment to the prior payment in full of all Guarantor
Senior Debt of the Guarantor issuing this Guarantee, to the extent and in the
manner provided in Article Ten of the Note Agreement and reference is hereby
made to the Note Agreement for the precise terms of the Guarantee and all of the
other provisions of the Note Agreement to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS. Each Guarantor hereby agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth
in the Note Agreement.
B-1
IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to
be duly executed.
Date:____________________
[NAME OF GUARANTOR], as Guarantor
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
B-2
