Exhibit 4-C-1
[Execution Copy]
LOAN AND SECURITY AGREEMENT
by and among
HARTMARX CORPORATION
as US Borrower
XXXXXXX APPAREL GROUP LIMITED
ROYAL SHIRT COMPANY LIMITED
L'ESPRIT DU PANTALON CANADIEN, INC.
as Canadian Borrowers
and
THE SUBSIDIARIES OF HARTMARX CORPORATION
PARTIES HERETO
as Guarantors
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Agent
JPMORGAN CHASE BANK
as Co-Agent
and
THE LENDERS FROM TIME TO TIME PARTIES HERETO
as Lenders
Dated: August 30, 2002
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS............................................................................1
SECTION 2. CREDIT FACILITIES.....................................................................37
2.1 Loans.................................................................................37
2.2 Letter of Credit Accommodations.......................................................38
2.3 Commitments...........................................................................44
2.4 Additional Borrowing Base Guarantors. ...............................................44
SECTION 3. INTEREST AND FEES.....................................................................45
3.1 Interest..............................................................................45
3.2 Fees..................................................................................48
3.3 Changes in Laws and Increased Costs of Loans..........................................49
SECTION 4. CONDITIONS PRECEDENT..................................................................52
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations........................................................................52
4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations.................................................................55
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST.............................................58
5.1 Grant of Security Interest............................................................58
5.2 Perfection of Security Interests......................................................60
SECTION 6. COLLECTION AND ADMINISTRATION.........................................................65
6.1 Borrowers' Loan Accounts..............................................................65
6.2 Statements............................................................................66
6.3 Collection of Accounts................................................................66
6.4 Payments..............................................................................68
6.5 Authorization to Make Loans...........................................................70
6.6 Use of Proceeds; Intercompany Loans...................................................70
6.7 Appointment of US Borrower as Agent for Requesting Loans
and Receipts of Loans and Statements..................................................72
6.8 Pro Rata Treatment....................................................................73
6.9 Sharing of Payments, Etc..............................................................73
6.10 Settlement Procedures.................................................................74
6.11 Obligations Several; Independent Nature of Lenders' Rights............................77
SECTION 7. COLLATERAL REPORTING AND COVENANTS....................................................80
7.1 Collateral Reporting..................................................................80
7.2 Accounts Covenants....................................................................82
7.3 Inventory Covenants...................................................................83
7.4 Equipment and Real Property Covenants.................................................83
7.5 Power of Attorney.....................................................................84
7.6 Right to Cure.........................................................................85
7.7 Access to Premises....................................................................86
SECTION 8. REPRESENTATIONS AND WARRANTIES........................................................86
8.1 Corporate Existence, Power and Authority..............................................87
8.2 Name; State of Organization; Chief Executive Office;
Collateral Locations..................................................................87
8.3 Financial Statements; No Material Adverse Change......................................88
8.4 Priority of Liens; Title to Properties................................................88
8.5 Tax Returns...........................................................................88
8.6 Litigation............................................................................89
8.7 Compliance with Other Agreements and Applicable Laws..................................89
8.8 Environmental Compliance..............................................................89
8.9 Employee Benefits.....................................................................90
8.10 Bank Accounts.........................................................................92
8.11 Intellectual Property.................................................................92
8.12 Subsidiaries; Affiliates; Capitalization; Solvency....................................92
8.13 Labor Disputes........................................................................93
8.14 Restrictions on Subsidiaries..........................................................94
8.15 Material Contracts....................................................................94
8.16 Payable Practices.....................................................................94
8.18 Accuracy and Completeness of Information..............................................95
8.19 Survival of Warranties; Cumulative....................................................95
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS....................................................96
9.1 Maintenance of Existence. ...........................................................96
9.2 New Collateral Locations..............................................................96
9.3 Compliance with Laws, Regulations, Etc................................................97
9.4 Payment of Taxes and Claims...........................................................98
9.5 Insurance.............................................................................98
9.6 Financial Statements and Other Information............................................99
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc..............................101
9.8 Encumbrances.........................................................................107
9.9 Indebtedness.........................................................................110
9.10 Loans, Investments, Etc..............................................................117
9.11 Dividends and Redemptions............................................................125
9.12 Transactions with Affiliates.........................................................126
9.13 Compliance with ERISA. .............................................................126
9.14 End of Fiscal Years; Fiscal Quarters.................................................127
9.15 Change in Business...................................................................128
9.16 Limitation of Restrictions Affecting Subsidiaries....................................128
9.17 Adjusted Net Worth...................................................................129
9.18 License Agreements...................................................................129
9.19 After Acquired Real Property.........................................................131
9.20 Applications under Insolvency Statutes...............................................132
9.21 Costs and Expenses...................................................................132
9.22 Further Assurances...................................................................133
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.......................................................133
10.1 Events of Default....................................................................133
10.2 Remedies.............................................................................135
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW .................................................................141
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver....................................................................141
11.2 Waiver of Notices....................................................................142
11.3 Amendments and Waivers. ............................................................142
11.4 Waiver of Counterclaims..............................................................145
11.5 Indemnification......................................................................145
11.6 Currency Indemnity...................................................................146
SECTION 12. THE AGENT............................................................................146
12.1 Appointment, Powers and Immunities...................................................146
12.2 Reliance by Agent....................................................................147
12.3 Events of Default....................................................................147
12.4 Congress in its Individual Capacity..................................................148
12.5 Indemnification......................................................................148
12.6 Non-Reliance on Agent and Other Lenders..............................................148
12.7 Failure to Act.......................................................................149
12.8 Additional Loans.....................................................................149
12.9 Concerning the Collateral and the Related Financing Agreements.......................150
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders................................................................150
12.11 Collateral Matters...................................................................150
12.12 Agency for Perfection................................................................152
12.13 Successor Agent......................................................................153
12.14 Co-Agent.............................................................................153
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS.....................................................153
13.1 Term.................................................................................153
13.2 Interpretative Provisions............................................................156
13.3 Notices..............................................................................158
13.4 Partial Invalidity...................................................................158
13.5 Confidentiality......................................................................158
13.6 Successors...........................................................................159
13.7 Assignments; Participations..........................................................160
13.8 Entire Agreement.....................................................................162
INDEX TO
EXHIBITS AND SCHEDULES
----------------------
Exhibit A Form of Assignment and Acceptance
Exhibit B Borrowing Base Certificate
Exhibit C Information Certificate
Exhibit D Form of Compliance Certificate
Schedule 1.41 List of Customs Brokers
Schedule 1.61(a) Excluded Real Property Subject to Existing
Mortgage
Schedule 1.61(b) Excluded Property Subject to Sale
Schedule 1.63 Existing Letters of Credit
Schedule 1.69 List of Guarantors
Schedule 1.76 List of Intercompany Notes
Schedule 1.77 List of Intercompany Security Agreements
Schedule 1.97 List of Mortgages
Schedule 1.107 List of Primary Marks
Schedule 1.108 List of Primary Product Lines
Schedule 8.17 Schedule of Intercompany Indebtedness between
US Borrower and Borrowing Base Guarantors
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated August 30, 2002 is entered
into by and among Hartmarx Corporation, a Delaware corporation ("US
Borrower" as hereinafter further defined), Xxxxxxx Apparel Group Limited,
an Ontario corporation ("Coppley"), Royal Shirt Company Limited, an Ontario
corporation ("Royal"), L'Esprit du Pantalon Canadien, Inc., a Canadian
corporation ("L'Esprit", and together with Coppley and Royal, collectively,
"Canadian Borrowers" as hereinafter further defined), the Guarantors (as
hereinafter defined), the parties hereto from time to time as lenders,
whether by execution of this Agreement or an Assignment and Acceptance
(each individually, a "Lender" and collectively, "Lenders"), Congress
Financial Corporation (Central), a Illinois corporation, in its capacity as
agent for Lenders (in such capacity, "Agent") and JPMorgan Chase Bank, New
York banking corporation, in its capacity as co-agent for Lenders (in such
capacity, "Co-Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrowers and Guarantors have requested that Agent and
Lenders enter into financing arrangements with Borrowers pursuant to which
Lenders will make loans and provide other financial accommodations to
Borrowers on the terms and conditions contained herein; and
WHEREAS, each Lender is willing to agree (severally and not
jointly) to make such loans and provide such financial accommodations to
Borrowers on a pro rata basis according to its Commitment (as defined
below) on the terms and conditions set forth herein and Agent is willing to
act as agent for Lenders on the terms and conditions set forth herein and
the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS
-----------
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower and Guarantor, all
present and future rights of such Borrower and Guarantor to payment of a
monetary obligation, whether or not earned by performance, which is not
evidenced by chattel paper or an instrument, (a) for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b)
for services rendered or to be rendered, (c) for a secondary
obligation incurred or to be incurred, or (d) arising out of the use of a
credit or charge card or information contained on or for use with the card.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%)
percent) determined by dividing (a) the Eurodollar Rate for such Interest
Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage. For purposes hereof, "Reserve Percentage" shall mean the
reserve percentage, expressed as a decimal, prescribed by any United States
or foreign banking authority for determining the reserve requirement which
is or would be applicable to deposits of United States dollars in a
non-United States or an international banking office of Reference Bank used
to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the
proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
1.3 "Adjusted Net Worth" shall mean as to any Person, at any time,
in accordance with GAAP (except as otherwise specifically set forth below),
on a consolidated basis for such Person and its Subsidiaries (if any), the
amount equal to the difference between: (a) the aggregate net book value of
all assets of such Person and its Subsidiaries (and as to Borrowers and
Guarantors, calculating the book value of inventory of US Borrower and its
Subsidiaries for this purpose on a first-in-first-out basis or on such
other basis in accordance with GAAP as is consistent with the current
practices of such Borrower or Guarantor as of the date hereof), after
reflecting in such book values all appropriate reserves in accordance with
GAAP (including all reserves for doubtful receivables, obsolescence,
depreciation and amortization) and (b) the aggregate amount of the
Indebtedness and other liabilities of such Person and its Subsidiaries
(including tax and other proper accruals) appearing on a consolidated
balance sheet; provided, that, for purposes of Section 9.17 hereof the
calculation of the Adjusted Net Worth of US Borrower and its Subsidiaries
shall be calculated without taking into account: (i) the effect of non-cash
reductions to net worth relating to other comprehensive income or non- cash
impairment charges to any of the following: property, plant and equipment,
goodwill, intangible assets, stock options, deferred tax assets and the
extinguishment or refinancing of debt and (ii) the effect of any change in
accounting principles adopted by such Person or its Subsidiaries after the
date hereof.
1.4 "Affiliate" shall mean, with respect to a specified Person,
any other Person which directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control
with such Person, and without limiting the generality of the foregoing,
includes (a) any Person which beneficially owns or holds five (5%) percent
or more of any class of Voting Stock of such Person or other equity
interests in such Person, (b) any Person of which such Person beneficially
owns or holds five (5%) percent or more of any class of Voting Stock or in
which such Person beneficially owns or holds five (5%) percent or more of
the equity interests and (c) any director or executive officer of such
Person. For the purposes of this definition, the term "control" (including
with correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of Voting Stock, by agreement or otherwise.
1.5 "Agent" shall mean Congress Financial Corporation (Central),
in its capacity as agent on behalf of Lenders pursuant to the terms hereof
and any replacement or successor agent hereunder.
1.6 "Agent Payment Account" shall mean account no. 5000000030266
of Agent at Wachovia Bank, National Association, or such other account of
Agent as Agent may from time to time designate to US Borrower as the Agent
Payment Account for purposes of this Agreement and the other Financing
Agreements.
1.7 "Applicable Margin" means, at any time, as to the interest
rate for Prime Rate Loans, the interest rate for Eurodollar Rate Loans, and
the interest rate for the Canadian Prime Rate Loans, the applicable
percentage (on a per annum basis) set forth below if either the Quarterly
Average Excess Availability for the immediately preceding fiscal quarter is
at or within the amounts indicated for such percentage or the Leverage
Ratio as of the last day of the immediately preceding fiscal quarter (which
ratio for this purpose shall be calculated based on the four (4)
immediately preceding fiscal quarters) is at or within the levels indicated
for such percentage:
Applicable
Applicable Applicable Canadian
Quarterly Average US Prime Eurodollar Prime Rate
Tier Excess Availability Leverage Ratio Rate Margin Rate Margin Margin
---- ------------------- -------------- ----------- ----------- ---------
1 $45,000,000 or more 2.00 to 1.00 or less 1/4% 2 1/4% 1 1/4%
2 Greater than or equal to Greater than 2.00 to 1.00 but 1/2% 2 1/2% 1 1/2%
$30,000,000 and less than equal to or less than 3.00 to
$45,000,000 1.00
3 Greater than or equal to Greater than 3.00 to 1.00 but 3/4% 2 3/4% 1 3/4%
$15,000,000 and less than equal to or less than 4.00 to
$30,000,000 1.00
4 Less than $15,000,000 Greater than 4.00 to 1.00 1% 3 % 2%
Provided, that, (i) the Applicable Margin shall be calculated and
established once each fiscal quarter (commencing with the fiscal quarter
ending November 30, 2002) and shall remain in effect until adjusted
thereafter at the end of the next quarter and (ii) the Applicable Margin
shall be the lower percentage set forth above based on the Quarterly
Average Excess Availability or the Leverage Ratio.
1.8 "Assignment and Acceptance" shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto (with
blanks appropriately completed) delivered to Agent in connection with an
assignment of a Lender's interest hereunder in accordance with the
provisions of Section 13.7 hereof.
1.9 "Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
1.10 "Borrowers" shall mean, collectively, US Borrower and Canadian
Borrowers; each sometimes being referred to herein individually as a
"Borrower".
1.11 "Borrowing Base" shall mean, as to US Borrower, the US
Borrowing Base and as to Canadian Borrowers, the Canadian Borrowing Base.
1.12 "Borrowing Base Certificate" shall mean a certificate
substantially in the form of Exhibit B hereto, as such form may from time
to time be modified by Agent with the consent of US Borrower (which consent
shall not be unreasonably withheld, conditioned or delayed), which is duly
completed (including all schedules thereto) and executed by the chief
financial officer, treasurer, assistant treasurer, controller or other
financial or senior officer of US Borrower and delivered to Agent.
1.13 "Borrowing Base Guarantors" shall mean, collectively, the
following (together with their respective successors and assigns): (a) Xxxx
Xxxxxxxxx & Xxxx, a New York corporation; (b) HMX Sportswear, Inc., a New
York corporation; (c) National Clothing Company, Inc., a New York
corporation; (d) Xxxxxx-Xxxxxxx Co., Inc., a New York corporation; (e)
International Women's Apparel, Inc., a Texas corporation; (f) Xxxxxx-Xxxx,
Inc., an Indiana corporation; (g) Anniston Sportswear Corporation , an
Indiana corporation; (h) Men's Quality Brands, Inc., a New York
corporation; (i) X. Xxxx & Company, Inc. (d/b/a HMX Tailored, Inc.), a New
York corporation; (j) Universal Design Group, Ltd., a New York corporation;
(k) Consolidated Apparel Group, Inc., a Delaware corporation; (l) Direct
Route Marketing Corporation, a New Hampshire corporation and (m) such other
Guarantors as US Borrower may specify after the date hereof, subject to the
satisfaction of the conditions set forth in Section 2.4 hereof; each of the
foregoing sometimes being referred to herein individually as a "Borrowing
Base Guarantor".
1.14 "Business Day" shall mean (a) in connection with any Loans or
Letter of Credit Accommodations made or provided to a Canadian Borrower, or
other matters related exclusively to a Canadian Borrower, any day (i) other
than a Saturday, Sunday or other day on which commercial banks are
authorized or required to close under the laws of the State of Illinois or
the Province of Ontario, and (ii) on which Agent's Chicago office, Agent's
New York City office and Bank of Montreal's main Toronto office are open
for the transaction of business and (b) in connection with any Loans or
Letter of Credit Accommodations made or provided to US Borrower or as such
term is used herein except as otherwise provided in clause (a)(i) of this
definition, any day (i) other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required to close under the laws
of the State of Illinois or the State of North Carolina, and (ii) on which
Agent's Chicago office, Agent's New York City office and the Reference
Bank's Charlotte office are open for the transaction of business; provided,
that, in any case (whether under clause (a) or (b) of this definition or
otherwise), if a determination of a Business Day shall relate to any
Eurodollar Rate Loans, the term Business Day shall also exclude any day on
which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.
1.15 "Canadian Borrowing Base" shall mean at any time, as to
Canadian Borrowers, the amount equal to:
(a) the lesser of:
(i) the amount equal to: (A) eighty-five (85%) percent
of the Eligible Accounts of Canadian Borrowers plus (B) the sum of: (1) the
lesser of thirty-five (35%) percent multiplied by the Value of the Eligible
Inventory of Canadian Borrowers consisting of piece goods and trim or
eighty-five (85%) percent of the Net Recovery Percentage multiplied by the
Value of such Eligible Inventory, plus (2) the lesser of seventy (70%)
percent multiplied by the Value of the Eligible Inventory of Canadian
Borrowers consisting of finished goods or eighty-five (85%) percent of the
Net Recovery Percentage multiplied by the Value of such Inventory, or
(ii) the Canadian Loan Limit,
minus
(b) Reserves attributable to the Canadian Borrowers.
For purposes only of applying the Inventory Loan Limit, Agent may treat the
then undrawn amounts of outstanding Letter of Credit Accommodations for the
purpose of purchasing Eligible Inventory of Canadian Borrowers as Loans to
the Canadian Borrowers to the extent Agent is in effect basing the issuance
of the Letter of Credit Accommodations on the Value of the Eligible
Inventory of Canadian Borrowers being purchased with such Letter of Credit
Accommodations. In determining the actual amounts of such Letter of Credit
Accommodations to be so treated for purposes of the sublimit, the
outstanding Loans and Reserves shall be attributed first to any components
of the lending formulas set forth above that are not subject to such
sublimit, before being attributed to the components of the lending formulas
subject to such sublimit. The amounts of Eligible Inventory of a Canadian
Borrower shall, at Agent's option, be determined based on the amount of
Inventory set forth in the general ledger of such Borrower or the perpetual
inventory records maintained by such Borrower.
1.16 "Canadian Borrowers" shall mean, collectively, the following
(together with their respective successors and assigns): (a) Xxxxxxx
Apparel Group Limited, an Ontario corporation (b) Royal Shirt Company
Limited, an Ontario corporation; and (c) L'Esprit du Pantalon Canadien,
Inc., an Ontario corporation; each sometimes being referred to herein
individually as a "Canadian Borrower".
1.17 "Canadian Commitment" shall mean, at any time, as to each
Lender, the principal amount set forth below such Lender's signature on the
signatures pages hereto designated as the Canadian Commitment or on
Schedule 1 to the Assignment and Acceptance Agreement pursuant to which
such Lender became a Lender hereunder in accordance with the provisions of
Section 13.7 hereof, as the same may be adjusted from time to time in
accordance with the terms hereof; sometimes being collectively referred to
herein as "Canadian Commitments".
1.18 "Canadian Credit Facility" shall mean the Loans and Letter of
Credit Accommodations provided to or for the benefit of a Canadian Borrower
pursuant to Sections 2.1 and 2.2 hereof.
1.19 "Canadian Dollar Equivalent" shall mean at any time (a) as to
any amount denominated in Canadian Dollars, the amount thereof and (b) as
to any amount denominated in US Dollars or any other currency, the
equivalent amount in Canadian Dollars calculated by Agent at such time
using the then applicable Exchange Rate in effect on the Business Day of
determination.
1.20 "Canadian Dollar Loans" shall mean any Loans or portion thereof
which are denominated in Canadian Dollars.
1.21 "Canadian Dollars" and "C$" shall each mean the lawful currency
of Canada.
1.22 "Canadian Lender" shall mean Congress Financial Corporation
(Canada), an Ontario corporation, and its successors and assigns.
1.23 "Canadian Lender Payment Account" shall mean US Dollar account
no. 00000-0000-000 of Canadian Lender at Bank of Montreal for US Dollars
and Canadian Dollar account no. 00000-0000-000 of Canadian Lender at Bank
of Montreal for Canadian Dollars or such other account of Canadian Lender
as Agent may from time to time designate to US Borrower as the Canadian
Lender Payment Account for purposes of this Agreement and the other
Financing Agreements.
1.24 "Canadian Loan Limit" shall mean $10,000,000.
1.25 "Canadian Pension Plan" shall mean any plan, program or
arrangement (other than the Canada/Quebec Pension Plan) that is a pension
plan for the purposes of any applicable pension benefits legislation or any
tax laws of Canada or a Province thereof, whether or not registered under
any such laws, which is maintained or contributed to by, or to which there
is or may be an obligation to contribute by, any Borrower or Guarantor in
respect of any Person's employment in Canada with such Borrower or
Guarantor.
1.26 "Canadian Prime Rate" shall mean, at any time, the rate from
time to time publicly announced by Bank of Montreal as its prime rate in
effect for determining interest rates on Canadian Dollar denominated
commercial loans in Canada, whether or not such announced rate is the best
rate available at such bank.
1.27 "Canadian Prime Rate Loans" shall mean any Canadian Dollar
Loans or portion thereof on which interest is payable based on the Canadian
Prime Rate in accordance with the terms hereof.
1.28 "Capital Leases" shall mean, as applied to any Person, any
lease of (or any agreement conveying the right to use) any property
(whether real, personal or mixed) by such Person as lessee which in
accordance with GAAP, is required to be reflected as a liability on the
balance sheet of such Person.
1.29 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however
designated) of such Person's capital stock or partnership, limited
liability company or other equity interests at any time outstanding, and
any and all rights, warrants or options exchangeable for or convertible
into such capital stock or other interests (but excluding any debt security
that is exchangeable for or convertible into such capital stock).
1.30 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or
directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof; provided, that, the full faith and
credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers' acceptances with a maturity of ninety
(90) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided
profits of not less than $250,000,000; (c) commercial paper (including
variable rate demand notes) with a maturity of ninety (90) days or less
issued by a corporation (except an Affiliate of any Borrower or Guarantor)
organized under the laws of any State of the United States of America or
the District of Columbia and rated at least A-1 by Standard & Poor's
Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc. or at least
P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the
types described in clause (a) above entered into with any financial
institution having combined capital and surplus and undivided profits of
not less than $250,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within ninety (90) days or
less from the date of acquisition; provided, that, the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others,
as adopted by the Comptroller of the Currency on October 31, 1985; and (f)
investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in
clauses (a) through (e) above.
1.31 "Change of Control" shall mean either (a) the acquisition by
any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) of beneficial ownership, directly or indirectly, of more than
forty (40%) percent of the voting power of the total outstanding Voting
Stock of US Borrower or (b) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of US Borrower (together with any new directors whose election by
such Board of Directors or whose nomination for election by the
stockholders of US Borrower was approved by a vote of at least sixty-six
and two-thirds (66 2/3%) percent of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of US Borrower then still
in office.
1.32 "Code" shall mean the Internal Revenue Code of 1986, as the
same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all governmental rules,
regulations and interpretations thereunder or related thereto.
1.33 "Collateral" shall have the meaning set forth in Section 5
hereof.
1.34 "Collateral Access Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, from any
lessor of premises to any Borrower or Guarantor, or any other person to
whom any Collateral is consigned or who has custody, control or possession
of any such Collateral or is otherwise the owner or operator of any
premises on which any of such Collateral is located, pursuant to which such
lessor, consignee or other person, inter alia, and except as Agent may
otherwise agree, acknowledges the first priority security interest of Agent
in such Collateral, agrees to waive any and all claims such lessor,
consignee or other person may, at any time, have against such Collateral,
whether for processing, storage or otherwise, and agrees to permit Agent
access to, and the right to remain on, the premises of such lessor,
consignee or other person so as to exercise Agent's rights and remedies and
otherwise deal with such Collateral and in the case of any consignee or
other person who at any time has custody, control or possession of any
Collateral, acknowledges that it holds and will hold possession of the
Collateral for the benefit of Agent and Lenders and agrees to follow all
instructions of Agent with respect thereto.
1.35 "Commitment" shall mean, at any time, as to each Lender, the
aggregate amount of its US Commitment and its Canadian Commitment;
sometimes being collectively referred to herein as "Commitments".
1.36 "Concentration Account" shall mean the account of US Borrower
maintained at Bank One identified to Agent prior to the date hereof as the
concentration account into which all available funds at any time in the
Subsidiary Collection Accounts are remitted on a regular basis, which
account shall be a Blocked Account and at all time subject to a Deposit
Account Control Agreement in form and substance satisfactory to Agent, and
any successor deposit account established by US Borrower in accordance with
the terms hereof used for the same purpose.
1.37 "Congress" shall mean Congress Financial Corporation (Central),
a Illinois corporation, in its individual capacity, and its successors and
assigns.
1.38 "Consolidated Net Income" shall mean, with respect to any
Person for any period, the aggregate of the net income (loss) of such
Person and its Subsidiaries, on a consolidated basis, for such period
(excluding to the extent included therein any extraordinary or
non-recurring gains and non-cash impairment charges to any of the
following: property, plant and equipment, goodwill, intangible assets,
stock options, deferred tax assets or the extinguishment or refinancing of
debt and non-cash charges relating to other comprehensive income) after
deducting all charges which should be deducted before arriving at the net
income (loss) for such period and after deducting the Provision for Taxes
for such period, all as determined in accordance with GAAP; provided, that,
(a) the net income of any Person that is not a wholly-owned Subsidiary or
that is accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions paid or
payable to such Person or a wholly-owned Subsidiary of such Person; (b)
except to the extent included pursuant to the foregoing clause, the net
income of any Person accrued prior to the date it becomes a wholly-owned
Subsidiary of such Person or is merged into or consolidated with such
Person or any of its wholly-owned Subsidiaries or that Person's assets are
acquired by such Person or by any of its wholly-owned Subsidiaries shall be
excluded; and (c) the effect of any change in accounting principles adopted
by such Person or its Subsidiaries after the date hereof shall be excluded.
For the purposes of this definition, net income excludes any gain and
non-cash loss (but not any cash loss) together with any related Provision
for Taxes for such gain and non-cash loss (but not any cash loss) realized
upon the sale or other disposition of any assets that are not sold in the
ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any capital stock of
such Person or a Subsidiary of such Person and any net income realized as a
result of changes in accounting principles or the application thereof to
such Person.
1.39 "Credit Facility" shall mean, collectively, the US Credit
Facility and the Canadian Credit Facility.
1.40 "Currency Due" shall have the meaning set forth in Section 11.6
hereof.
1.41 "Customs Brokers" shall mean the persons listed on Schedule
1.41 hereto or such other person or persons as may be selected by a
Borrower after the date hereof and after written notice by such Borrower to
Agent who is reasonably acceptable to Agent to clear Inventory through U.S.
Customs, Canadian Customs or other foreign export control authorities or
otherwise perform port of entry services to process Inventory imported by a
Borrower or Guarantor from outside the United States or Canada, as
applicable, provided, that, as to each such person Agent shall have
received a Notification and Acknowledgment of Security Interest by such
person in favor of Agent (in form and substance reasonably satisfactory to
Agent), such agreement shall be in full force and effect and such person
shall be in compliance in all material respects with the terms thereof.
1.42 "Default" shall mean an act, condition or event which with
notice or passage of time or both would constitute an Event of Default.
1.43 "Defaulting Lender" shall have the meaning set forth in Section
6.10 hereof.
1.44 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, by and
among Agent, the Borrower or Guarantor with a deposit account at any bank
and the bank at which such deposit account is at any time maintained which
provides that such bank will comply with instructions originated by Agent
directing disposition of the funds in the deposit account without further
consent by such Borrower or Guarantor and such other terms and conditions
as Agent may reasonably require, including as to any such agreement with
respect to any Blocked Account, providing that all items received or
deposited in the Blocked Accounts are subject to the security interest of
Agent (as to the US Companies or Canadian Lender, as to Canadian
Borrowers), that the bank has no lien upon, or right to setoff against, the
Blocked Accounts or the items received for deposit therein, or the funds
from time to time on deposit therein (except with respect to payment for
returned items to the extent Agent has received payment in respect thereof
or standard fees related to the deposit account and as Agent may otherwise
agree) and to the extent contemplated in Section 6.3(b) hereof, that the
bank will wire, or otherwise transfer, in immediately available funds, on a
daily basis to the Agent Payment Account (in the case of the US Companies)
and to the Canadian Lender Payment Account (in the case of the Canadian
Borrowers) all available funds received or deposited into the Blocked
Accounts.
1.45 "EBITDA" shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Consolidated Net Income of such Person
for such period, plus (b) depreciation and amortization for such period (to
the extent deducted in the computation of Consolidated Net Income of such
Person), all in accordance with GAAP, plus (c) Interest Expense for such
period (to the extent deducted in the computation of Consolidated Net
Income of such Person), plus (d) the Provision of Taxes for such period (to
the extent deducted in the computation of Consolidated Net Income of such
Person).
1.46 "Eligible Accounts" shall mean as to US Borrower, Accounts
created by US Borrower or a Borrowing Base Guarantor and as to Canadian
Borrowers, Accounts created by a Canadian Borrower, in each case which are
and continue to be eligible based on the criteria set forth below. Accounts
shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale
and delivery of goods by such Borrower or Guarantor or rendition of
services by such Borrower or Guarantor in the ordinary course of its
business which transactions are completed in accordance with the terms and
provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than the earlier of
sixty (60) days after the original due date for them or one hundred twenty
(120) days after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions
contained in Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under
which payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America or
Canada (provided, that, in order for such Account to continue to be an
Eligible Account, at any time promptly upon Agent's request, such Borrower
or Guarantor shall execute and deliver, or cause to be executed and
delivered, such other agreements, documents and instruments as may
reasonably be required by Agent to perfect the security interests of Agent
in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable
laws of the Province of Canada in which such chief executive office or
principal place of business is located and take or cause to be taken such
other and further actions as Agent may reasonably request to enable Agent
as secured party with respect thereto to collect such Accounts under the
applicable Federal or Provincial laws of Canada) or, at Agent's option, if
the chief executive office and principal place of business of the account
debtor with respect to such Accounts is located other than in the United
States of America or Canada, then if either: (i) the account debtor has
delivered to such Borrower or Guarantor an irrevocable letter of credit
issued or confirmed by a bank satisfactory to Agent and payable only in the
United States of America and in U.S. dollars, sufficient to cover such
Account, in form and substance satisfactory to Agent in good faith and if
required by Agent, the original of such letter of credit has been delivered
to Agent or Agent's agent, and the issuer thereof and such Borrower or
Guarantor has complied with the terms of Section 5.2(f) hereof with respect
to the assignment of the proceeds of such letter of credit to Agent or
naming Agent as transferee beneficiary thereunder, as Agent may specify, or
(ii) such Account is subject to credit insurance payable to Agent issued by
an insurer and on terms and in an amount acceptable to Agent, or (iii) such
Account is otherwise acceptable in all respects to Agent (subject to such
lending formula with respect thereto as Agent may determine);
(f) such Accounts do not consist of progress xxxxxxxx (such
that the obligation of the account debtors with respect to such Accounts is
conditioned upon such Borrower's or Guarantor's satisfactory completion of
any further performance under the agreement giving rise thereto), xxxx and
hold invoices or retainage invoices, except as to xxxx and hold invoices,
if Agent shall have received an agreement in writing from the account
debtor, in form and substance reasonably satisfactory to Agent, confirming
the unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and the account debtor with
respect to such Accounts is not owed any amounts that may give rise to any
right of setoff or recoupment against such Accounts (but the portion of the
Accounts of such account debtor in excess of the amount at any time and
from time to time owed by such Borrower or Guarantor to such account debtor
or claimed owed by such account debtor that otherwise satisfy the criteria
for Eligible Accounts shall be deemed Eligible Accounts),
(h) there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of such Accounts;
(i) such Accounts are subject to the first priority, valid
and perfected security interest of Agent as to Accounts of US Borrower and
Borrowing Base Guarantors and first priority, valid and perfected security
interest, lien and first ranking hypothec of Canadian Lender as to Accounts
of Canadian Borrowers and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any claims, liens, security
interests or hypothecs other than in favor of Agent;
(j) the account debtor is not an Affiliate of any Borrower
or Guarantor;
(k) if (i) the account debtor is the United States of
America or any state or local governmental entity, or any department,
agency or instrumentality thereof, such Borrower or Borrowing Base
Guarantor has assigned its rights to payment of such Account to Agent (if
such Account is owing to US Borrower or a Borrowing Base Guarantor) or
Canadian Lender (if such Account is owing to Canadian Borrowers) pursuant
to and in accordance with the Assignment of Claims Act of 1940, as amended,
or pursuant to any similar state or local law, regulation or requirement or
(ii) the account debtor is Her Majesty in right of Canada or any provincial
or local governmental entity, or any ministry, such Borrower or Borrowing
Base Guarantor has assigned its rights to payment of such Account to Agent
(if such Account is owing to US Borrower or a Borrowing Base Guarantor), or
Canadian Lender (if such Account is owing to a Canadian Borrower) pursuant
to and in accordance with the Financial Administration Act, R.S.C. 185,
c.F-11, as amended, or any similar applicable provincial or local law,
regulation or requirement;
(l) there are no proceedings or actions which are threatened
or pending against the account debtors with respect to such Accounts that
Agent determines in good faith could reasonably be expected to result in
any material adverse change in any such account debtor's financial
condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization or similar proceeding);
(m) such Accounts are not evidenced by or arising under any
instrument or chattel paper;
(n) the aggregate amount of such Accounts owing by a single
account debtor (other than Dillard's, Nordstroms, May, Saks, Men's
Wearhouse, Costco and Federated) do not constitute more than ten (10%)
percent of the aggregate amount of all otherwise Eligible Accounts and such
Accounts owing by Dillard's do not constitute more than thirty (30%)
percent of the aggregate amount of all otherwise Eligible Accounts and such
Accounts owing by each of Nordstroms, May, Saks and Men's Wearhouse do not
in each case constitute more than twenty (20%) percent of the aggregate
amount of all otherwise Eligible Accounts, and such Accounts owing by each
of Costco and Federated do not, in each case, constitute more than fifteen
(15%) percent of the aggregate amount of all otherwise Eligible Accounts
(but the portion of the Accounts not in excess of the applicable
percentages that otherwise satisfy the criteria for Eligible Accounts shall
be deemed Eligible Accounts);
(o) such Accounts are not owed by an account debtor who has
Accounts unpaid more than the earlier of sixty (60) days after the original
due date for them or one hundred twenty (120) days after the date of the
original invoice for them which constitute more than fifty (50%) percent of
the total Accounts of such account debtor;
(p) the account debtor is not located in a state requiring
the filing of a Notice of Business Activities Report or similar report in
order to permit such Borrower or Guarantor to seek judicial enforcement in
such State of payment of such Account, unless such Borrower or Guarantor
has qualified to do business in such state or has filed a Notice of
Business Activities Report or equivalent report for the then current year
or such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost;
(q) such Accounts are owed by account debtors whose total
indebtedness to such Borrower or Guarantor does not exceed the credit limit
with respect to such account debtors as determined by such Borrower or
Guarantor from time to time, to the extent such credit limit as to any
account debtor is established consistent with the current practices of such
Borrower as of the date hereof and such credit limit is acceptable to Agent
(but the portion of the Accounts not in excess of such credit limit that
otherwise satisfy the criteria for Eligible Accounts shall be deemed
Eligible Accounts); and
(r) such Accounts are owed by account debtors deemed
creditworthy at all times by Agent in good faith.
1.47 "Eligible Inventory" shall mean, as to US Borrower, Inventory
of US Borrower and the Borrowing Base Guarantors and as to Canadian
Borrowers, Inventory of Canadian Borrowers, in each case consisting of
finished goods held for resale in the ordinary course of the business of
such Borrower or Guarantor and piece goods and trim for such finished
goods, in each case that are acceptable to Agent based on the criteria set
forth below. Eligible Inventory shall not include:
(a) work-in-process;
(b) components which are not part of finished goods;
(c) spare parts for equipment;
(d) packaging and shipping materials;
(e) supplies used or consumed in such Borrower's business;
(f) Inventory at premises other than those owned or leased
and controlled by any Borrower or Guarantor; provided, that, (i) as to
locations which are leased and operated by a Borrower or Guarantor, if
Agent shall not have received a Collateral Access Agreement from the owner
and operator with respect to such location, duly authorized, executed and
delivered by such owner and operator in a form reasonably acceptable to
Agent (or Agent shall determine to accept a Collateral Access Agreement
that does not include all required provisions or provisions in the form
otherwise reasonably acceptable to Agent), Agent may, at its option,
establish such Reserves in respect of amounts at any time due or to become
due to the owner and lessor thereof as Agent shall determine, without
limiting any other rights and remedies of Agent or any Lender under this
Agreement or under the other Financing Agreements with respect to the
establishment of Reserves or otherwise, provided, that, the Reserves
established pursuant to this clause (f) shall not exceed at any time the
aggregate of amounts payable to such owners and lessors for the next three
(3) months from any such time, plus such amounts, if any, then outstanding
and unpaid owed by a Borrower or Guarantor to such owners and lessors and
(ii) as to locations owned and operated by a third person, if Agent shall
not have received a Collateral Access Agreement from the owner and operator
with respect to such location, duly authorized, executed and delivered by
such owner and operator in a form reasonably acceptable to Agent (or Agent
shall determine to accept a Collateral Access Agreement that does not
include all required provisions or provisions in the form otherwise
reasonably acceptable to Agent), Agent may, at its option, establish such
Reserves (but subject to the limitation as to amount set forth in the
proviso to clause (i) above) in respect of amounts at any time due or to
become due to the owner and operator thereof as Agent shall determine,
provided that, in addition, if required by Agent, in order for such
Inventory at locations owned and operated by a third person to be Eligible
Inventory, Agent shall have received: (A) UCC or PPSA financing statements
between the owner and operator, as consignee or bailee and such Borrower,
as consignor or xxxxxx, in form and substance reasonably satisfactory to
Agent, which are duly assigned to Agent and (B) a written notice to any
lender to the owner and operator of the first priority security interest in
such Inventory of Agent;
(g) Inventory subject to a security interest or lien in
favor of any Person other than Agent or Canadian Lender;
(h) xxxx and hold goods;
(i) Inventory which is not subject to the first priority,
valid and perfected security interest of Agent as to Inventory of US
Borrower and Borrowing Base Guarantors or first priority, valid and
perfected security interest, lien and first ranking hypothec of Canadian
Lender as to Inventory of Canadian Borrowers;
(j) returned Inventory that is not readily saleable;
(k) damaged and/or defective Inventory;
(l) Inventory purchased or sold on consignment;
(m) Inventory located outside the United States of America
as to US Borrower and Borrowing Base Guarantors (or Canada as to
Consolidated Apparel Group, Inc.) or located outside Canada as to Canadian
Borrowers; and
(n) Inventory which may become subject to the claims of a
supplier pursuant to Section 81.1 of the Bankruptcy and Insolvency Act
(Canada), R.S.C. 1985, c.B-3, as amended, or any applicable provincial laws
granting revendication or similar rights to unpaid suppliers to the extent
of such claims.
1.48 "Eligible Real Property" shall mean Real Property owned by US
Borrower or a Borrowing Base Guarantor in each case as of the date hereof
in fee simple and included in an appraisal of Real Property received by
Agent after the date hereof in accordance with the requirements of Agent
and in each case acceptable to Agent in good faith based on the criteria
set forth below. Eligible Real Property shall not include: (a) Real
Property which is not owned and operated by a Borrower or a Borrowing Base
Guarantor; (b) Real Property subject to a security interest, lien or
mortgage or other encumbrance in favor of any person other than Agent,
except those permitted hereunder (but not including for the purpose of this
exception (i) any purchase money security interests or liens that may be
permitted under this Agreement, or (ii) other security interests, liens or
other encumbrances upon the Real Property consisting of the fee interest
and improvements thereon to secure either (A) Indebtedness for borrowed
money or the guarantee or other contingent liability with respect thereto
or (B) other Indebtedness or obligations that individually or in the
aggregate exceed five (5%) percent of the appraised fair market value of
the Real Property subject to such security interest, lien or other
encumbrance, provided, that, as to such other Indebtedness or obligations
(1) no action or proceeding has been commenced in respect of such
Indebtedness or other obligation or the security interest, lien or other
encumbrance with respect thereto, (2) without limiting any other rights of
Agent with respect to the establishment of Reserves or otherwise, Reserves
in respect of such Indebtedness or other obligations may be established and
(3) Agent may, at its option, require that funds be placed in escrow in
respect of such Indebtedness or other obligations in the event that there
is a dispute relating thereto; (c) Real Property that is not located in the
continental United States of America; (d) Real Property that is not subject
to the valid and enforceable, first priority (subject to liens permitted
hereunder and as provided in clause (b) above), perfected security
interest, lien and mortgage of Agent; (e) Real Property where Agent
reasonably determines that issues relating to compliance with Environmental
Laws adversely affect in any material respect the value thereof or the
ability of Agent to sell or otherwise dispose thereof (but subject to the
right of Agent to establish Reserves upon the inclusion of such Real
Property as Eligible Real Property in the calculation of the Borrowing Base
to reflect such adverse affect); and (f) Real Property improved with
residential housing. Any Real Property which is not Eligible Real Property
shall nevertheless be part of the Collateral to the extent subject to a
Mortgage.
1.49 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any
person (whether a corporation, partnership, trust or otherwise) that is
engaged in the business of making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary
course of its business and is administered or managed by a Lender or with
respect to any Lender that is a fund which invests in bank loans and
similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor
as such Lender or by an Affiliate of such investment advisor, and in each
case is approved by Agent; (d) any other commercial bank approved by Agent;
and (e) any other financial institution or "accredited investor" (as
defined in Regulation D under the Securities Act of 1933) approved by Agent
that makes loans and provides similar extensions of credit in the ordinary
course of its business and is capable of funding revolving loans; provided,
that, (i) neither any Borrower nor any Guarantor or any Affiliate of any
Borrower or Guarantor shall qualify as an Eligible Transferee and (ii) no
Person to whom any Indebtedness which is in any way subordinated in right
of payment to any other Indebtedness of any Borrower or Guarantor shall
qualify as an Eligible Transferee, except as Agent may otherwise
specifically agree.
1.50 "Environmental Laws" shall mean all foreign, Federal, State,
Provincial and local laws, legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or
Guarantor and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air,
water vapor, surface water, ground water, drinking water, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, (b) relating to the
exposure to, or the use, storage, recycling, treatment, generation,
manufacture, processing, distribution, transportation, handling, labeling,
production, release or disposal, or threatened release, of Hazardous
Materials, or (c) relating to all laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials. The term "Environmental Laws" includes (i) the Federal
Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the
Federal Clean Air Act, the Federal Resource Conservation and Recovery Act
of 1976 (including the Hazardous and Solid Waste Amendments thereto), the
Federal Solid Waste Disposal and the Federal Toxic Substances Control Act,
the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Safe
Drinking Water Act of 1974, the Canadian Environmental Assessment Act, the
Canadian Environmental Protection Act, the Environmental Assessment Act
(Ontario) and the Environmental Protection Act (Ontario) and (ii)
applicable state or provincial counterparts to such laws.
1.51 "Equipment" shall mean, as to each Borrower and Guarantor, all
of such Borrower's and Guarantor's now owned and hereafter acquired
equipment, wherever located, including machinery, data processing and
computer equipment (whether owned or licensed and including embedded
software), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.52 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.53 "ERISA Affiliate" shall mean any person required to be
aggregated with any Borrower, any Guarantor or any of its or their
respective Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of
the Code.
1.54 "ERISA Event" shall mean (a) any "reportable event" described
in Section 4043(b) or 4043(c)(1), (2), (5), (6), (8) or (9) of ERISA or the
regulations issued thereunder, with respect to a Pension Plan or a
Multiemployer Plan; (b) the adoption of any amendment to a Plan that would
require the provision of security pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA; (c) the existence with respect to any Pension
Plan of an "accumulated funding deficiency" (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived; (d) the filing
pursuant to Section 412 of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to
any Pension Plan; (e) the occurrence of a "prohibited transaction" with
respect to which any Borrower, Guarantor or any of its or their respective
Subsidiaries is a "disqualified person" (within the meaning of Section 4975
of the Code) or with respect to which any Borrower, Guarantor or any of its
or their respective Subsidiaries could otherwise be liable; (f) a complete
or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate
from a Multiemployer Plan that results in or has a reasonable likelihood of
resulting in any liability of a Borrower or Guarantor; (g) the receipt by
or on behalf of any Borrower, Guarantor or ERISA Affiliate of a notice that
either: (i) any Multiemployer Plan is in reorganization or insolvent (each
within the meaning of ERISA) or (ii) any Multiemployer Plan is or will or
is likely to be entering reorganization or becoming insolvent or (iii) any
Multiemployer Plan intends to terminate or has been terminated, in the case
of each of clauses (g)(i), (ii) or (iii) that result in or has a reasonable
likelihood of resulting in any liability of a Borrower or Guarantor; (h)
the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Pension Plan or any Borrower or Guarantor receiving a notice of
or otherwise obtaining knowledge of the commencement of proceedings by the
Pension Benefit Guaranty Corporation to terminate a Multiemployer Plan; (i)
the occurrence of an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan or any
Borrower or Guarantor receiving a notice of or otherwise obtaining
knowledge of any such event or condition as to a Multiemployer Plan; (j)
the imposition of any liability under Title IV of ERISA, other than the
Pension Benefit Guaranty Corporation premiums due but not delinquent under
Section 4007 of ERISA, upon any Borrower, Guarantor or any ERISA Affiliate
in excess of $5,000,000.
1.55 "Eurodollar Rate" shall mean with respect to the Interest
Period for a Eurodollar Rate Loan, the interest rate per annum equal to the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by a Borrower
and approved by Agent) on or about 9:00 a.m. (New York time) two (2)
Business Days prior to the commencement of such Interest Period in amounts
substantially equal to the principal amount of the Eurodollar Rate Loans
requested by and available to such Borrower in accordance with this
Agreement, with a maturity of comparable duration to the Interest Period
selected by or on behalf of a Borrower.
1.56 "Eurodollar Rate Loans" shall mean any US Dollar Loans or
portion thereof on which interest is payable based on the Adjusted
Eurodollar Rate in accordance with the terms hereof.
1.57 "Event of Default" shall mean the occurrence or existence of
any event or condition described in Section 10.1 hereof.
1.58 "Excess Availability" shall mean:
(a) as to US Borrower, at any time and without duplication,
the amount calculated at any date, equal to: (i) the lesser of: (A) the US
Borrowing Base and (B) the US Loan Limit (in each case under (A) or (B)
after giving effect to any applicable sublimits and any Reserves
attributable to US Borrower or the Borrowing Base Guarantors other than any
Reserves in respect of Letter of Credit Accommodations), minus (ii) the sum
of: (A) the amount of the then outstanding and unpaid principal amount of
the Loans to US Borrower, plus (B) the amount of all Reserves then
established in respect of Letter of Credit Accommodations issued under the
US Credit Facility, plus (C) the aggregate amount of all then outstanding
and unpaid trade payables and other obligations of US Borrower and
Borrowing Base Guarantors which are outstanding more than sixty (60) days
past due as of such time (other than trade payables or other obligations
being contested or disputed by US Borrower or Borrowing Base Guarantors in
good faith), plus (D) without duplication, the amount of checks issued by
US Borrower and Borrowing Base Guarantors to pay trade payables and other
obligations which are more than sixty (60) days past due as of such time
(other than trade payables or other obligations being contested or disputed
by US Borrower or Borrowing Base Guarantors in good faith), but not yet
sent; and
(b) as to Canadian Borrowers, at any time and without
duplication, the amount calculated at any date, equal to: (i) the lesser
of: (A) the Canadian Borrowing Base and (B) the Canadian Loan Limit (in
each case under (A) or (B) after giving effect to any applicable sublimits
and any Reserves attributable to the Canadian Borrowers other than any
Reserves in respect of Letter of Credit Accommodations issued under the
Canadian Credit Facility), minus (ii) the sum of: (A) the amount of the
then outstanding and unpaid principal amount of the Loans to Canadian
Borrowers, plus (B) the amount of all Reserves then established in respect
of Letter of Credit Accommodations issued under the Canadian Credit
Facility, plus (C) the aggregate amount of all then outstanding and unpaid
trade payables and other obligations of Canadian Borrowers which are
outstanding more than sixty (60) days past due as of such time (other than
trade payables or other obligations being contested or disputed by Canadian
Borrowers in good faith), plus (D) without duplication, the amount of
checks issued by Canadian Borrowers to pay trade payables and other
obligations which are more than sixty (60) days past due as of such time
(other than trade payables or other obligations being contested or disputed
by Canadian Borrowers in good faith), but not yet sent.
1.59 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or
related thereto.
1.60 "Exchange Rate" shall mean the prevailing spot rate of exchange
of Reference Bank or Bank of Montreal or if such rate is not available from
Reference Bank, such other bank as Agent may reasonably select for the
purpose of conversion of one currency to another, at or around 11:00 a.m.
New York City time, on the date on which any such conversion of currency is
to be made under this Agreement.
1.61 "Excluded Real Property" shall mean, collectively, (a) the Real
Property in which a Borrower or Guarantor (as applicable) does not have a
fee simple interest, (b) the Real Property owned by a Borrower or Guarantor
described on Schedule 1.61(a) hereto, so long as (i) such Real Property
secures Indebtedness permitted under Section 9.9(o) hereof pursuant to a
mortgage and lien in favor of the person to whom such Indebtedness is owed
and (ii) the grant to Agent (in the case of Real Property owned by a US
Company) or Canadian Lender (in the case of Real Property owned by a
Canadian Borrower) of a mortgage or lien upon such Real Property is
prohibited under the terms of the mortgage, deed of trust or deed to secure
debt in favor of such person with respect to such Real Property and (c) the
Real Property owned by a Borrower or Guarantor described on Schedule
1.61(b) hereto, so long as (i) Borrowers and Guarantors are diligently
pursuing the sale of such Real Property and (ii) in the event that any of
such Real Property is not sold by February 28, 2003, the Borrower or
Guarantor that is the owner of such Real Property shall promptly upon the
request of Agent, execute and deliver to Agent a mortgage, deed of trust or
deed to secure debt, as Agent may determine, in form and substance
substantially similar to the Mortgages and as to any provisions relating to
specific state laws satisfactory to Agent and in form appropriate for
recording in the real estate records of the jurisdiction in which such Real
Property is located granting to Agent (or Canadian Lender, as Agent may
specify) a first and only lien and mortgage on and security interest in
such Real Property (except as such Borrower or Guarantor would otherwise be
permitted to incur hereunder or under the Mortgages or as otherwise
consented to in writing by Agent) and such other agreements, documents and
instruments as Agent may reasonably require in connection therewith.
1.62 "Existing Lenders" shall mean the lenders party to that certain
Amended and Restated Credit Agreement, dated as of August 18, 1999, among
the US Borrower, such lenders and General Electric Capital Corporation in
its capacity as agent, as amended (and including General Electric Capital
Corporation in its capacity as agent acting for such lenders) and their
respective predecessors, successors and assigns.
1.63 "Existing Letters of Credit" shall mean, collectively, the
letters of credit issued for the account of a Borrower or Guarantor or for
which such Borrower or Guarantor is otherwise liable listed on Schedule
1.63 hereto, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.64 "Fee Letter" shall mean the letter agreement, dated of even
date herewith, by and between US Borrower and Agent, setting forth certain
fees payable by US Borrower to Agent for the benefit of itself and Lenders,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.65 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements, hypothecs, mortgages, deeds
of trust, deeds to secure debt, deposit account control agreements,
investment property control agreements, intercreditor agreements and all
other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by any Borrower or Guarantor in connection with
this Agreement.
1.66 "Funded Debt" shall mean, with respect to any Person, any
Indebtedness of such Person and its Subsidiaries (a) in respect of the
principal amount of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments;
(b) representing the balance deferred and unpaid of the purchase price of
any property or services (except any such balance that constitutes an
account payable to a trade creditor (whether or not an Affiliate) created,
incurred, assumed or guaranteed by such Person in the ordinary course of
business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the
trade payable is being contested in good faith); and (c) all obligations as
lessee under leases which have been, or should be, in accordance with GAAP
recorded as Capital Leases.
1.67 "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board which are
applicable to the circumstances as of the date of determination
consistently applied; provided, that, for purposes of Section 9.17 hereof,
GAAP shall be determined on the basis of such principles in effect on the
date hereof and consistent with those used in the preparation of the most
recent audited financial statements delivered to Agent prior to the date
hereof.
1.68 "Governmental Authority" shall mean any nation or government,
any state, province, or other political subdivision thereof, any central
bank (or similar monetary or regulatory authority) thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.69 "Guarantors" shall mean, collectively, the Subsidiaries of US
Borrower listed on Schedule 1.69 and their respective successors and
assigns; each sometimes being referred to herein individually as a
"Guarantor".
1.70 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, polychlorinated biphenyls, pesticides, herbicides and any other
kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), and including any other substances,
materials or wastes that are or become classified as hazardous or toxic
under any Environmental Law.
1.71 "Indebtedness" shall mean, with respect to any Person, whether
or not contingent, (a) all indebtedness for borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes
an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary
course of business of such Person in connection with obtaining goods,
materials or services that is not overdue by more than ninety (90) days,
unless the trade payable is being contested in good faith); (c) the
principal component of all leases to which it is a lessee which have been,
or should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or
be liable for the payment of any indebtedness described in this definition
of another Person, including, without limitation, any such indebtedness,
directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability
or any security therefor, or to provide funds for the payment or discharge
thereof, or to maintain solvency, assets, level of income, or other
financial condition; (e) all obligations with respect to redeemable stock
and redemption or repurchase obligations under any Capital Stock or other
equity securities issued by such Person (except to the extent that such
obligations are due and payable after the end of the then current term of
this Agreement); (f) all reimbursement obligations and other liabilities of
such Person with respect to surety bonds (whether bid, performance or
otherwise), letters of credit, banker's acceptances, drafts or similar
documents or instruments issued for such Person's account; (g) all
indebtedness of such Person in respect of indebtedness of another Person
for borrowed money or indebtedness of another Person otherwise described in
this definition which is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of
such Person, all as of such time; and (h) all obligations, liabilities and
indebtedness of such Person (marked to market) arising under swap
agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such person against fluctuations in
interest rates or currency or commodity values.
1.72 "Information Certificate" shall mean, collectively, the
Information Certificates of Borrowers and Guarantors constituting Exhibit C
hereto containing material information with respect to Borrowers and
Guarantors, their respective businesses and assets provided by or on behalf
of Borrowers and Guarantors to Agent in connection with the preparation of
this Agreement and the other Financing Agreements and the financing
arrangements provided for herein.
1.73 "Intellectual Property" shall mean, as to each Borrower and
Guarantor, such Borrower's and Guarantor's now owned and hereafter arising
or acquired: patents, patent applications, copyrights, copyright
registrations and applications, trademarks, servicemarks, trade names,
trade styles, trademark and service xxxx applications, and licenses and
rights to use any of the foregoing (including any goodwill associated with
any trademark or servicemark); all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the
foregoing; all rights to xxx for past, present and future infringement of
any of the foregoing; inventions, trade secrets, formulae, processes,
compounds, drawings, designs, blueprints, surveys, reports, manuals, and
operating standards; customer and other lists in whatever form maintained;
trade secret rights, copyright rights, intangible rights in works of
authorship, domain names and domain name registrations; software and
license rights relating to computer software programs, in whatever form
created or maintained.
1.74 "Intercompany Credit Facilities" shall mean, collectively, the
credit facilities provided by US Borrower to Guarantors pursuant to the
Intercompany Loan Agreements; sometimes being referred to herein
individually as an "Intercompany Credit Facility".
1.75 "Intercompany Loan Agreements" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, extended or replaced): (a) the
Intercompany Notes; (b) the Intercompany Security Agreements; and (c) all
agreements, documents and instruments related to any of the foregoing.
1.76 "Intercompany Notes" shall mean, collectively, the promissory
notes issued by each Guarantor payable to US Borrower listed on Schedule
1.76 hereto, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, extended or replaced; each sometimes being
referred to herein individually as an "Intercompany Note".
1.77 "Intercompany Security Agreements" shall mean, collectively,
the security agreements by each Guarantor in favor of US Borrower listed on
Schedule 1.77 hereto, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, extended or replaced; each
sometimes being referred to herein individually as an "Intercompany
Security Agreement".
1.78 "Intercompany Indebtedness" shall mean Indebtedness of any
Guarantor to US Borrower arising pursuant to the Intercompany Credit
Facility of US Borrower with such Guarantor.
1.79 "Interest Expense" shall mean, for any period, as to any
Person, as determined in accordance with GAAP, the total interest expense
of such Person, whether paid or accrued during such period (including the
interest component of Capital Leases for such period), including, without
limitation, discounts in connection with the sale of any Accounts, but
excluding interest paid in property other than cash and any other interest
expense not payable in cash.
1.80 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), three (3) or six (6) months
duration as a Borrower (or US Borrower on behalf of a Canadian Borrower)
may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided,
that, such Borrower (or US Borrower on behalf of a Canadian Borrower) may
not elect an Interest Period which will end after the last day of the then-
current term of this Agreement.
1.81 "Interest Rate" shall mean,
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to US Prime Rate Loans, a rate equal to
one-quarter (1/4%) percent per annum in excess of the Prime Rate,
(ii) as to Eurodollar Rate Loans, a rate equal to two
and one- quarter (2 1/4%) percent per annum in excess of the Adjusted
Eurodollar Rate (in each case, based on the Eurodollar Rate applicable for
the relevant Interest Period, whether such rate is higher or lower than any
rate previously quoted to a Borrower; and
(iii) as to Canadian Prime Rate Loans, a rate of one
and one-quarter (1 1/4%) percent per annum in excess of the Canadian Prime
Rate.
(b) Subject to clause (c) of this definition below,
effective as of the first (1st) day of the second month of each fiscal
quarter (commencing with the fiscal quarter ending on or about November 30,
2002), the Interest Rate payable by each Borrower shall be increased or
decreased, as the case may be, (i) as to US Prime Rate Loans, to the rate
equal to the Applicable Margin for US Prime Rate Loans on a per annum basis
in excess of the Prime Rate, (ii) as to Eurodollar Rate Loans, to the rate
equal to the Applicable Margin for Eurodollar Rate Loans on a per annum
basis in excess of the Adjusted Eurodollar Rate and (iii) as to Canadian
Prime Rate Loans, to the rate equal to the Applicable Margin for Canadian
Prime Rate Loans on a per annum basis in excess of the Canadian Prime Rate.
(c) Notwithstanding anything to the contrary contained in
clauses (a) and (b) of this definition, the Applicable Margin otherwise
used to calculate the Interest Rate for US Prime Rate Loans, Eurodollar
Rate Loans and Canadian Prime Rate Loans shall be the highest percentage
set forth in the definition of the term Applicable Margin for each category
of Loans (without regard to the amount of Quarterly Average Excess
Availability or the Leverage Ratio) plus two (2%) percent per annum, at
Agent's option, (i) for the period (A) from and after the effective date of
termination or non-renewal hereof until Agent and Lenders have received
full and final payment of all outstanding and unpaid Obligations which are
not contingent and cash collateral or letter of credit, as Agent may
specify, in the amounts and on the terms required under Section 13.1 hereof
for contingent Obligations (notwithstanding entry of a judgment against any
Borrower or Guarantor) and (B) from and after the date of the occurrence of
an Event of Default and for so long as such Event of Default is continuing,
(ii) on Loans to US Borrower at any time outstanding in excess of the US
Borrowing Base and (iii) on Loans to Canadian Borrowers at any time
outstanding in excess of the Canadian Borrowing Base (in the case of both
clauses (ii) and (iii), whether or not such excess(es) arise or are made
with or without the knowledge or consent of Agent or any Lender and whether
made before or after an Event of Default).
1.82 "Inventory" shall mean, as to each Borrower and Guarantor, all
of such Borrower's and Guarantor's now owned and hereafter existing or
acquired goods, wherever located, which (a) are leased by such Borrower or
Guarantor as lessor; (b) are held by such Borrower for sale or lease or to
be furnished under a contract of service; (c) are furnished by such
Borrower or Guarantor under a contract of service; or (d) consist of raw
materials, work in process, finished goods or materials used or consumed in
its business.
1.83 "Inventory Loan Limit" shall mean $100,000,000.
1.84 "Investment Property Control Agreement" shall mean an agreement
in writing, in form and substance satisfactory to Agent in good faith, by
and among Agent, any Borrower or Guarantor (as the case may be) and any
securities intermediary, commodity intermediary or other person who has
custody, control or possession of any investment property of such Borrower
or Guarantor acknowledging that such securities intermediary, commodity
intermediary or other person has custody, control or possession of such
investment property on behalf of Agent, that it will comply with
entitlement orders originated by Agent with respect to such investment
property, or other instructions of Agent, or (as the case may be) apply any
value distributed on account of any commodity contract as directed by
Agent, in each case, without the further consent of such Borrower or
Guarantor and including such other terms and conditions as Agent may
reasonably require.
1.85 "Judgment Currency" shall have the meaning set forth in Section
11.6 hereto.
1.86 "Lenders" shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this
Agreement as a Lender in accordance with Section 13.7 hereof, and their
respective successors and assigns; each sometimes being referred to herein
individually as a "Lender".
1.87 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from
time to time either (a) issued or opened by Agent or any Lender for the
account of a Borrower or Guarantor or (b) with respect to which Agent or
Lenders have agreed to indemnify the issuer or guaranteed to the issuer the
performance by a Borrower or Guarantor of its obligations to such issuer;
sometimes being referred to herein individually as "Letter of Credit
Accommodation".
1.88 "Leverage Ratio" shall mean, at any time, the ratio of: (a) the
Funded Debt of US Borrower and its Subsidiaries as of such time (and
including for this purpose, (i) the Indebtedness of US Borrower evidenced
by or arising under the Senior Notes, (ii) all Funded Debt of US Borrower
and any direct or indirect Subsidiary of US Borrower, whether foreign or
domestic and (iii) the Loans) to (b) the EBITDA of US Borrower and its
Subsidiaries for the four (4) immediately preceding fiscal quarters of US
Borrower (treated as a single accounting period).
1.89 "License Agreements" shall have the meaning set forth in
Section 8.11 hereof.
1.90 "Loan Limit" shall mean, as to US Borrower, the US Loan Limit
and as to Canadian Borrowers, the Canadian Loan Limit.
1.91 "Loans" shall mean the loans now or hereafter made by or on
behalf of any Lender or by Agent for the account of any Lender on a
revolving basis pursuant to the Credit Facility (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.92 "Material Adverse Effect" shall mean a material adverse effect
on (a) the financial condition, business, assets or operations of Borrowers
and Guarantors (taken as a whole) or the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements;
(b) the legality, validity, enforceability, perfection or priority of the
security interests and liens of Agent upon the Collateral; (c) the ability
of Borrowers and Guarantors (taken as a whole) to repay the Obligations or
to perform their respective obligations under this Agreement or any of the
other Financing Agreements as and when to be performed; or (d) the rights
and remedies of Agent or any Lender hereunder or under any of the other
Financing Agreements.
1.93 "Material Contract" shall mean (a) any contract or other
agreement (other than the Financing Agreements), written or oral, of any
Borrower or Guarantor involving monetary liability of or to any Person in
an amount in excess of $10,000,000 in any fiscal year and (b) any other
contract or other agreement (other than the Financing Agreements), whether
written or oral, to which any Borrower or Guarantor is a party as to which
the breach, nonperformance, cancellation or failure to renew by any party
thereto would have a Material Adverse Effect.
1.94 "Maturity Date" shall the meaning set forth in Section 13.1
hereof.
1.95 "Maximum Interest Rate" shall have the meaning set forth in
Section 3.1(d) hereof.
1.96 "Maximum Credit" shall mean the amount of $200,000,000.
1.97 "Mortgages" shall mean, collectively, the mortgages, deeds to
secure debt and deeds of trust by a Borrower or Guarantor in favor or for
the benefit of Agent listed on Schedule 1.97 or any other such agreements
at any time after the date hereof executed and delivered to and in favor or
for the benefit of, Agent, as the same now or may hereafter exist or may be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.98 "Multiemployer Plan" shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during
the current year or the immediately preceding six (6) years contributed to
by any Borrower, Guarantor or any ERISA Affiliate.
1.99 "Net Recovery Percentage" shall mean the fraction, expressed as
a percentage, (a) the numerator of which is the amount equal to the amount
of the recovery in respect of the Inventory at such time determined on a
"net orderly liquidation value" basis pursuant to the most recent
acceptable appraisal of Inventory received by Agent in accordance with
Section 7.3, net of operating expenses, liquidation expenses and
commissions likely to be incurred in connection with the liquidation of
such Inventory as set forth in such appraisal, and (b) the denominator of
which is the applicable original cost of the aggregate amount of the
Inventory subject to such appraisal.
1.100 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by any or all of Borrowers to
Agent or any Lender and/or any of their Affiliates, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, in each case arising
under this Agreement or any of the other Financing Agreements, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of
any case with respect to any Borrower or Guarantor under the United States
Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the Companies'
Creditors Arrangement Act (Canada) or any similar statute (including the
payment of interest and other amounts which would accrue and become due but
for the commencement of such case, whether or not such amounts are allowed
or allowable in whole or in part in such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, or secured or unsecured.
1.101 "Other Taxes" shall mean any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
or any of the other Financing Agreements.
1.102 "Participant" shall mean any financial institution that
acquires and holds a participation in the interest of any Lender in any of
the Loans and Letter of Credit Accommodations in conformity with the
provisions of Section 13.7 of this Agreement governing participations.
1.103 "Pension Plan" shall mean a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which any Borrower or
Guarantor sponsors, maintains, or to which any Borrower, Guarantor or ERISA
Affiliate makes, is making, or is obligated to make contributions, other
than a Multiemployer Plan.
1.104 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which
elects subchapter S status under the Code), limited liability company,
limited liability partnership, business trust, unincorporated association,
joint stock corporation, trust, joint venture or other entity or any
government or any agency or instrumentality or political subdivision
thereof.
1.105 "Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which any Borrower or Guarantor sponsors, maintains, or to
which it makes, is making, or is obligated to make contributions, or in the
case of a Multiemployer Plan has made contributions at any time during the
immediately preceding six (6) plan years and to which a Borrower or
Guarantor could have any liability.
1.106 "PPSA" shall mean the Personal Property Security Act as in
effect in the Province of Ontario, the Civil Code of Quebec as in effect in
the Province of Quebec or any other Canadian Federal or Provincial statute
pertaining to the granting, perfecting, priority or ranking of security
interests, liens, hypothecs on personal property, and any successor
statutes, together with any regulations thereunder, in each case as in
effect from time to time. References to sections of the PPSA shall be
construed to also refer to any successor sections.
1.107 "Primary Marks" shall mean, collectively, the trademarks owned
by a US Borrower or any of its Subsidiaries listed on Schedule 1.107
hereto, together with any other trademarks of any Borrower or Guarantor
that at any time after the date hereof are used in the manufacture, sale or
distribution of more than ten (10%) percent of the value of the Inventory
of Borrowers and Guarantors (on a consolidated basis) or Inventory that
accounted for more than ten (10%) percent of the sales of US Borrower and
its Subsidiaries (on a consolidated basis) in the period consisting of the
four (4) immediately preceding fiscal quarters (treated as a single
accounting period); sometimes being referred to herein individually as a
"Primary Xxxx".
1.108 "Primary Product Lines" shall mean, collectively, the types
and categories of Inventory listed on Schedule 1.108 hereto; sometimes
being referred to herein individually as a "Primary Product Line".
1.109 "Prime Rate Loans" shall mean US Dollar Prime Rate Loans and
Canadian Dollar Prime Rate Loans.
1.110 "Priority Payables" shall mean, as to any Borrower or
Guarantor at any time, (a) the full amount of the liabilities of such
Borrower or Guarantor at such time which (i) have a trust imposed to
provide for payment or a security interest, pledge, lien or charge ranking
or capable of ranking senior to or pari passu with security interests,
liens or charges securing the Obligations on any of the Eligible Accounts
or Eligible Inventory of such Borrower or Guarantor under Federal,
Provincial, State, county, district, municipal, or local law in Canada or
(ii) have a right imposed to provide for payment ranking or capable of
ranking senior to or pari passu with the Obligations under local or
national law, regulation or directive, including, but not limited to,
claims for unremitted and/or accelerated rents, taxes, wages, withholding
taxes, VAT and other amounts payable to an insolvency administrator,
employee withholdings or deductions and vacation pay, workers' compensation
obligations, government royalties or pension fund obligations in each case
to the extent such trust, or security interest, lien or charge has been or
may be imposed and (b) the amount equal to the percentage applicable to
Inventory in the calculation of the Borrowing Base multiplied by the
aggregate Value of the Eligible Inventory of such Borrower or Guarantor
which is or may be subject to retention of title by a supplier or a right
of a supplier to recover possession thereof, where such supplier's right
has priority over the security interests, liens or charges securing the
Obligations, including, without limitation, Eligible Inventory subject to a
right of a supplier to repossess goods pursuant to Section 81.1 of the
Bankruptcy and Insolvency Act (Canada) or any applicable laws granting
revendication or similar rights to unpaid suppliers or any similar laws of
Canada or any other applicable jurisdiction (provided, that, to the extent
such Inventory has been identified and has been excluded from Eligible
Inventory, the amount owing to the supplier shall not be considered a
Priority Payable).
1.111 "Pro Rata Share" shall mean, as to any Lender, (a) with
respect to the making or funding of any Loans or providing any Letter of
Credit Accommodations under the US Credit Facility (whether directly or
through Agent, a participation or otherwise), or any payments in respect
thereof (whether of principal, interest, fees or otherwise), the fraction
(expressed as a percentage) the numerator of which is such Lender's US
Commitment and the denominator of which is the aggregate amount of all of
the US Commitments of Lenders, as adjusted from time to time in accordance
with the provisions of Section 13.7 hereof, (b) with respect to the making
or funding of any Loans or providing any Letter of Credit Accommodations
under the Canadian Credit Facility (whether directly or through Agent, a
participation or otherwise) or any payments in respect thereof (whether of
principal, interest, fees or otherwise), the fraction (expressed as a
percentage) the numerator of which is such Lender's Canadian Commitment and
the denominator of which is the aggregate amount of all of the Canadian
Commitments of Lenders, as adjusted from time to time in accordance with
the provisions of Section 13.7 hereof, and (c) as to all other matters, the
fraction (expressed as a percentage) the numerator of which is the
aggregate amount of such Lender's Commitment and the denominator of which
is the aggregate amount of all of the Commitments of Lenders, as adjusted
from time to time in accordance with the provisions of Section 13.7 hereof,
provided, that, if any of the US Commitments of Lenders have been
terminated, as to any Lender, the numerator shall be the unpaid amount of
such Lender's Loans and its interest in the Letter of Credit Accommodations
under the US Credit Facility and the denominator shall be the aggregate
amount of all unpaid Loans and Letter of Credit Accommodations under the US
Credit Facility and if any of the Canadian Commitments of Lenders have been
terminated, as to any Lender, the numerator shall be the unpaid amount of
such Lender's Loans and its interest in the Letter of Credit Accommodations
under the Canadian Credit Facility and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations
under the Canadian Credit Facility and if any Commitments have been
terminated, as to any Lender, the numerator shall be the unpaid amount of
such Lender's Loans and its interest in the Letter of Credit Accommodations
under the Credit Facility and the denominator shall be the aggregate amount
of all unpaid Loans and Letter of Credit Accommodations under the Credit
Facility.
1.112 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income or capital, whether Federal, State,
Provincial, county or local, and whether foreign or domestic, that are paid
or payable by any Person in respect of any period in accordance with GAAP.
1.113 "Quarterly Average Excess Availability" shall mean, at any
time, the daily average of the aggregate amount of the Excess Availability
of Borrowers for the immediately preceding fiscal quarter based on the
books and records of Agent.
1.114 "Real Property" shall mean all now owned and hereafter
acquired real property of each Borrower and Guarantor owned in fee simple,
together with all buildings, structures, and other improvements located
thereon and all licenses, easements and appurtenances relating thereto,
wherever located, including the real property and related assets more
particularly described in the Mortgages.
1.115 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of each Borrower and Guarantor: (a)
all Accounts; (b) all interest, fees, late charges, penalties, collection
fees and other amounts due or to become due or otherwise payable in
connection with any Account; (c) all payment intangibles of such Borrower
or Guarantor; (d) letters of credit, indemnities, guarantees, security or
other deposits and proceeds thereof issued payable to any Borrower or
Guarantor or otherwise in favor of or delivered to any Borrower or
Guarantor in connection with any Account; or (e) all other accounts,
contract rights, chattel paper, instruments, notes, general intangibles and
other forms of obligations owing to any Borrower or Guarantor, whether from
the sale and lease of goods or other property, licensing of any property
(including Intellectual Property or other general intangibles), rendition
of services or from loans or advances by any Borrower or Guarantor or to or
for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower or Guarantor and including all
loans under or pursuant to the Intercompany Loan Agreement or otherwise
associated with any Accounts, Inventory or general intangibles of any
Borrower or Guarantor (including, without limitation, choses in action,
causes of action, tax refunds, tax refund claims, any funds which may
become payable to any Borrower or Guarantor in connection with the
termination of any Plan or other employee benefit plan and any other
amounts payable to any Borrower or Guarantor from any Plan or other
employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds
thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which
any Borrower or Guarantor is a beneficiary).
1.116 "Records" shall mean, as to each Borrower and Guarantor, all
of such Borrower's and Guarantor's present and future books of account of
every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any
account debtor, together with the tapes, disks, diskettes and other data
and software storage media and devices, file cabinets or containers in or
on which the foregoing are stored (including any rights of any Borrower or
Guarantor with respect to the foregoing maintained with or by any other
person).
1.117 "Reference Bank" shall mean Wachovia Bank, National
Association, or any successor thereto or such other major U.S. bank as
Agent may designate. For purposes hereof, a "major U.S. Bank" shall be any
commercial bank organized under the laws of the United States, or any State
thereof, or the District of Columbia that is a member of the Federal
Reserve System and has combined capital and surplus and undivided profits
of not less than $500,000,000.
1.118 "Refinancing Indebtedness" shall have meaning set forth in
Section 9.9 hereof.
1.119 "Register" shall have the meaning set forth in Section 13.7 hereof.
1.120 "Required Lenders" shall mean, at any time, those Lenders
whose Pro Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent
or more of the aggregate of the Commitments of all Lenders, or if the
Commitments shall have been terminated, Lenders to whom at least sixty-six
and two-thirds (66 2/3%) percent of the then outstanding Obligations are
owing.
1.121 "Reserves" shall mean as of any date of determination, such
amounts as Agent may from time to time establish and revise in good faith
reducing the amount of Loans and Letter of Credit Accommodations which
would otherwise be available to any Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or
risks which, as determined by Agent in good faith, adversely affect, or
would have a reasonable likelihood of adversely affecting, either (i) the
Collateral or any other property which is security for the Obligations or
its value or (ii) the business and operations of Borrowers and Guarantors
(taken as a whole) or (iii) the security interests and other rights of
Agent, Canadian Lender or any other Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect Agent's
good faith belief that any collateral report or financial information
furnished by or on behalf of any Borrower or Guarantor to Agent is or may
have been incomplete, inaccurate or misleading in any material respect or
(c) to reflect outstanding Letter of Credit Accommodations as provided in
Section 2.2 hereof or (d) in respect of any state of facts which Agent
determines in good faith constitutes an Event of Default or (e) to reflect
the amounts of the Priority Payables or (f) to reflect Agent's good faith
estimate of the amount necessary to reflect changes in applicable currency
exchange rates or currency exchange markets. Without limiting the
generality of the foregoing, Reserves may be established to reflect: (i)
dilution with respect to the accounts of a Borrower or Guarantor (based on
the ratio of the aggregate amount of non-cash reductions in accounts for
any period to the aggregate dollar amount of the sales of such Borrower or
Guarantor for such period) exceeds or is reasonably anticipated to exceed
five (5%) percent; (ii) a change in the turnover, age or mix of the
categories of Inventory that adversely affects the aggregate value of all
Inventory (other than seasonal changes consistent with the experiences of
Borrowers and Guarantors over the immediately preceding five (5)
consecutive years prior to the date hereof); (iii) material decreases in
the percentage of finished goods Inventory pre-sold against firm purchase
orders; (iv) increases in inventory markdown reserves that are not
otherwise accounted for in the most recent inventory appraisal received by
Agent; (v) amounts due or to become due to owners and licensors of
trademarks and other Intellectual Property used by any Borrower or
Guarantor, but not to exceed the amount of the royalties and other fees and
charges relating to Inventory sold or then existing Inventory to be sold
payable to such owners and licensors by such Borrower or Guarantor; (vi)
the fair market value of any of the Eligible Real Property as set forth in
the most recent acceptable appraisal has declined so that the US Real
Property Availability is greater than the amount equal to sixty (60%)
percent of the fair market value of the Eligible Real Property; and (vii)
the sales, excise or similar taxes to the extent included in the amount of
any Accounts reported to Agent. The amount of any Reserve established by
Agent shall have a reasonable relationship to the event, condition or other
matter which is the basis for such Reserve as determined by Agent in good
faith. To the extent that Agent shall have established a Reserve to address
an event, condition or matter in a manner satisfactory to Agent, the
percentages set forth in the definition of the Borrowing Base shall not be
reduced to address the same event, condition or matter. In the event that
the event, condition or other matter giving rise to the establishment of
any such Reserve shall cease to exist for a period of thirty (30)
consecutive days (unless there is a reasonable prospect that such event,
condition or other matter will occur again within a reasonable period of
time thereafter), the Reserve established pursuant to such event condition
or matter shall be discontinued.
1.122 "Senior Notes" shall mean, collectively, the 12 1/2% Senior
Unsecured Notes due 2003 issued by US Borrower in the original aggregate
principal amount of $25,321,000 pursuant to the Senior Indenture, as the
same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.123 "Senior Indenture" shall mean the Indenture, dated as of
January 16, 2002, by and between US Borrower, as issuer, and Bank One,
Columbus, N.A., as trustee, with respect to the Senior Notes, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.124 "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature
and has (and has a reasonable basis to believe it will continue to have)
sufficient capital (and not unreasonably small capital) to carry on its
business consistent with its practices as of the date hereof, and (b) the
assets and properties of such Person at a fair valuation (and including as
assets for this purpose at a fair valuation all rights of subrogation,
contribution or indemnification arising pursuant to any guarantees given by
such Person) are greater than the Indebtedness of such Person, and
including subordinated and contingent liabilities computed at the amount
which, such person has a reasonable basis to believe, represents an amount
which can reasonably be expected to become an actual or matured liability
(and including as to contingent liabilities arising pursuant to any
guarantee the face amount of such liability as reduced to reflect the
probability of it becoming a matured liability).
1.125 "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.126 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or
other business entity of which an aggregate of at least a majority of the
outstanding Capital Stock or other interests entitled to vote in the
election of the board of directors of such corporation (irrespective of
whether, at the time, Capital Stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency), managers, trustees or other controlling
persons, or an equivalent controlling interest therein, of such Person is,
at the time, directly or indirectly, owned by such Person and/or one or
more subsidiaries of such Person.
1.127 "Subsidiary Collection Accounts" shall mean, collectively, the
deposit accounts of Guarantors listed on Schedule 8.10 to the Information
Certificate designated as accounts into which proceeds of Receivables and
other Collateral are deposited, the available funds from which are remitted
on a regular basis to the Concentration Account, and which are subject to a
Deposit Account Control Agreement, and any successor deposit accounts at
any time hereafter established by any Guarantor in accordance with the
terms hereof for the same purpose
1.128 "Taxes" shall mean any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of Agent or any Lender, such
taxes (including income taxes, franchise taxes or capital taxes) as are
imposed on or measured by such Lender's net income or capital by any
jurisdiction (or any political subdivision thereof).
1.129 "UCC" shall mean the Uniform Commercial Code as in effect in
the State of Illinois, and any successor statute, as in effect from time to
time.
1.130 "US Borrower" shall mean Hartmarx Corporation, a Delaware
corporation, and its successors and assigns.
1.131 "US Borrowing Base" shall mean, at any time, as to US
Borrower, the amount equal to:
(a) the lesser of:
(i) the amount equal to: (A) eighty-five (85%) percent
of the Eligible Accounts of US Borrower and the Borrowing Base Guarantors,
plus (B) the sum of: (1) the lesser of thirty-five (35%) percent multiplied
by the Value of the Eligible Inventory of US Borrower and the Borrowing
Base Guarantors consisting of piece goods and trim or eighty-five (85%)
percent of the Net Recovery Percentage multiplied by the Value of such
Eligible Inventory, plus (2) the lesser of seventy (70%) percent multiplied
by the Value of the Eligible Inventory of US Borrower and the Borrowing
Base Guarantors consisting of finished goods or eighty-five (85%) percent
of the Net Recovery Percentage multiplied by the Value of such Inventory,
plus (C) the US Real Property Availability on and after the date of the
satisfaction of the conditions as set forth in Section 4.3 hereof, or
(ii) the US Loan Limit,
minus
(b) Reserves attributable to US Borrower and Borrowing Base
Guarantors.
For purposes only of applying the Inventory Loan Limit, Agent may treat the
then undrawn amounts of outstanding Letter of Credit Accommodations for the
purpose of purchasing Eligible Inventory of US Borrower and Borrowing Base
Guarantors as Loans to US Borrower to the extent Agent is in effect basing
the issuance of the Letter of Credit Accommodations on the Value of the
Eligible Inventory of US Borrower and Borrowing Base Guarantors being
purchased with such Letter of Credit Accommodations. In determining the
actual amounts of such Letter of Credit Accommodations to be so treated for
purposes of the sublimit, the outstanding Loans and Reserves shall be
attributed first to any components of the lending formulas set forth above
that are not subject to such sublimit, before being attributed to the
components of the lending formulas subject to such sublimit. The amounts of
Eligible Inventory of US Borrower and the Borrowing Base Guarantors shall,
at Agent's option, be determined based on the amount of Inventory set forth
in the general ledger of such Borrower or Guarantor or the perpetual
inventory records maintained by such Borrower or Guarantor.
1.132 "US Commitment" shall mean, at any time, as to each Lender,
the principal amount set forth below such Lender's signature on the
signatures pages hereto designated as the US Commitment or on Schedule 1 to
the Assignment and Acceptance Agreement pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of Section 13.7
hereof, as the same may be adjusted from time to time in accordance with
the terms hereof; sometimes being collectively referred to herein as "US
Commitments".
1.133 "US Companies" shall mean, collectively, US Borrower and
Guarantors; sometimes being referred to herein individually as a "US
Company".
1.134 "US Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of US Borrower or a Guarantor
pursuant to Sections 2.1 and 2.2 hereof.
1.135 "US Dollar Equivalent" shall mean at any time (a) as to any
amount denominated in US Dollars, the amount thereof at such time, and (b)
as to any amount denominated in any other currency, the equivalent amount
in US Dollars calculated by Agent in good faith at such time using the
Exchange Rate in effect on the Business Day of determination.
1.136 "US Dollar Loans" shall mean any Loans or portion thereof
which are denominated in US Dollars.
1.137 "US Dollars", "US$" and "$" shall each mean lawful currency of
the United States of America.
1.138 "US Lenders" shall mean, collectively, all Lenders other than
Canadian Lender; sometimes being referred to herein individually as a "US
Lender".
1.139 "US Loan Limit" shall mean $190,000,000.
1.140 "US Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available
at such bank.
1.141 "US Prime Rate Loans" shall mean any US Dollar Loans or
portion thereof on which interest is payable based on the US Prime Rate in
accordance with the terms thereof.
1.142 "US Real Property Availability" shall mean the amount equal to
the lesser of: (a) $8,000,000 or (b) sixty (60%) percent of the fair market
value of Eligible Real Property as set forth in the most recent acceptable
appraisal of such Real Property received by Agent in accordance with
Section 4.3 or 7.4 hereof; provided, that, the US Real Property
Availability shall be reduced as of the first day of each month, commencing
on the first day of the month after the US Real Property Availability is
included in the calculation of the Borrowing Base, by an amount equal to
the initial US Real Property Availability divided by sixty (60).
1.143 "Value" shall mean the US Dollar Equivalent with respect to
Inventory equal to (a) the lower of cost computed on a first-in first-out
basis in accordance with GAAP or (b) market value, provided, that, for
purposes of the calculation of the Borrowing Base, (i) the Value of the
Inventory shall not include: (A) the portion of the value of Inventory
equal to the profit earned by any Affiliate on the sale thereof to any
Borrower or Guarantor to the extent the same is reflected in the cost of
such Inventory or (B) write-ups or write-downs in value with respect to
currency exchange rates and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory shall be computed in the same
manner and consistent with the most recent appraisal of the Inventory
received and accepted by Agent prior to the date hereof, if any.
1.144 "VAT" shall mean Value Added Tax imposed in Canada or any
other jurisdiction and any equivalent tax applicable in any jurisdiction
and including any goods and services tax.
1.145 "Voting Stock" shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting
powers to elect at least a majority of the board of directors, managers or
trustees of such Person, irrespective of whether at the time Capital Stock
of any other class or classes have or might have voting power by reason of
the happening of any contingency, and (b) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (a) of this
definition.
1.146 "Weighted Average Life to Maturity" shall mean, when applied
to any Indebtedness at any date, the number of years obtained by dividing
(a) the then outstanding principal amount of such Indebtedness into (b) the
total of the product obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (ii) the number of years (calculated to the nearest one-
twelfth) that will elapse between such date and the making of such payment.
SECTION 2. CREDIT FACILITIES.
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2.1 Loans.
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(a) Subject to and upon the terms and conditions
contained herein, each US Lender severally (and not jointly) agrees to make
its Pro Rata Share of US Dollar Loans to US Borrower from time to time in
amounts requested by such Borrower up to the amount outstanding at any time
equal to the lesser of: (A) the US Borrowing Base at such time or (ii) the
US Loan Limit at such time.
(b) Subject to and upon the terms and conditions
contained herein, Canadian Lender agrees to make US Dollar Loans or
Canadian Dollar Loans to Canadian Borrowers from time to time in amounts
and denominated in the currency requested by such Borrower (or US Borrower
on behalf of such Borrower) up to the amount outstanding at any time equal
to the lesser of: (i) the Canadian Borrowing Base at such time or (ii) the
Canadian Loan Limit at such time.
(c) Except as Agent may otherwise agree (but only with
the consent of all Lenders), or as otherwise provided herein, (i) the
aggregate principal amount of the Loans and the Letter of Credit
Accommodations outstanding at any time shall not exceed the Maximum Credit,
(ii) the aggregate principal amount of the Loans and Letter of Credit
Accommodations outstanding at any time to US Borrower shall not exceed the
lesser of the US Borrowing Base or the US Loan Limit, (iii) the aggregate
principal amount of the Loans and Letter of Credit Accommodations
outstanding at any time to Canadian Borrowers shall not exceed the lesser
of the Canadian Borrowing Base or the Canadian Loan Limit, and (iv) the
aggregate principal amount of the Loans and Letter of Credit Accommodations
outstanding at any time to Borrowers based on the Eligible Inventory of
Borrowers shall not exceed the Inventory Loan Limit. Except as Agent may
otherwise agree (with or without the consent of Lenders), the aggregate
principal amount of the Loans and Letter of Credit Accommodations
outstanding at any time to Borrowers based on the Eligible Inventory
consisting of piece goods and trim shall not exceed the US Dollar
Equivalent of $20,000,000, and the aggregate principal amount of the Loans
and Letter of Credit Accommodations outstanding at any time to Borrowers
based on the Eligible Inventory consisting of trim shall not exceed the US
Dollar Equivalent of $3,000,000.
(d) In the event that (i) the aggregate principal amount
of the Loans and Letter of Credit Accommodations outstanding to US Borrower
exceeds the US Borrowing Base or the US Loan Limit, or (ii) the aggregate
principal amount of the Loans and Letter of Credit Accommodations
outstanding to Canadian Borrowers exceeds the Canadian Borrowing Base or
the Canadian Loan Limit, or (iii) the aggregate principal amount of Loans
and Letter of Credit Accommodations outstanding to Borrowers based on the
Eligible Inventory of Borrowers exceeds the Inventory Loan Limit, or (iv)
the aggregate principal amount of Loans and Letter of Credit Accommodations
based on the Eligible Inventory consisting of piece goods and trim exceeds
either of the applicable sublimits with respect thereto set forth in
Section 2.1(c) above, or (v) the aggregate amount of the Loans and Letter
of Credit Accommodations exceed the Maximum Credit, any such event shall
not limit, waive or otherwise affect any rights of Agent or Lenders in such
circumstances or on any future occasions and US Borrower shall, upon demand
by Agent, which may be made at any time or from time to time, immediately
repay to Agent and Canadian Borrowers shall, upon demand by Agent which may
be made at any time or from time to time immediately repay to Canadian
Lender, the entire amount of any such excess(es) for which payment is
demanded.
2.2 Letter of Credit Accommodations.
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(a) Subject to and upon the terms and conditions
contained herein, (i) at the request of US Borrower or a Borrowing Base
Guarantor, Agent agrees, for the ratable risk of each US Lender according
to its Pro Rata Share, to provide or arrange for Letter of Credit
Accommodations denominated in US Dollars, Canadian Dollars, Euros, Japanese
Yen, British Pounds, Hong Kong Dollars and other foreign currencies
available from the issuer of such Letter of Credit Accommodations for the
account of such Borrower containing terms and conditions acceptable to
Agent and the issuer thereof and (ii) at the request of a Canadian Borrower
(or US Borrower on behalf of such Borrower), Canadian Lender agrees to
provide or arrange for Letter of Credit Accommodations denominated in US
Dollars, Canadian Dollars, Euros, Japanese Yen, British Pounds, Hong Kong
Dollars and other foreign currencies available from the issuer of such
Letter of Credit Accommodations as a Canadian Borrower (or US Borrower on
behalf of such Borrower) may specify, for the account of such Borrower
containing terms and conditions acceptable to Agent (in the case of US
Borrower) or Canadian Lender (in the case of a Canadian Borrower) and the
issuer thereof. Any payments made by Agent or any Lender to any issuer
thereof and/or related parties in connection with the Letter of Credit
Accommodations shall constitute additional Loans to the applicable Borrower
pursuant to this Section 2 (or Special Agent Advances as the case may be).
Letter of Credit Accommodations issued at the request of a Borrowing Base
Guarantor shall be deemed requested by and for the account of US Borrower
for purposes hereof and for the account of such Borrowing Base Guarantor
for purposes of the issuer of such Letter of Credit Accommodation.
(b) In addition to any charges, fees or expenses charged
by any issuer (or any correspondent of any issuer or any bank or other
person used by any beneficiary, if any) in connection with the Letter of
Credit Accommodations, US Borrower shall pay to Agent for the benefit of US
Lenders a letter of credit fee in respect of Letter of Credit
Accommodations issued for the account of US Borrower or any Guarantor and
Canadian Borrowers shall pay to Agent for the benefit of Canadian Lender a
letter of credit fee in respect of Letter of Credit Accommodations issued
for the account of a Canadian Borrower, in each case at a rate equal to two
(2%) percent per annum, on the daily outstanding balance of the Letter of
Credit Accommodations for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding month,
except that Agent may, and upon the written direction of Required Lenders
shall, require US Borrower to pay to Agent for the ratable benefit of US
Lenders, and Canadian Lender may require Canadian Borrowers to pay to Agent
for the benefit of Canadian Lender, such letter of credit fee at a rate
equal to four (4%) percent per annum on such daily outstanding balance for:
(i) the period from and after the date of termination hereof until Agent
and Lenders have received full and final payment of all Obligations
(notwithstanding entry of a judgment against any Borrower) and (ii) the
period from and after the date of the occurrence of an Event of Default for
so long as such Event of Default is continuing. Such letter of credit fee
shall be calculated on the basis of a three hundred sixty-five (365) day
year as to Letter of Credit Accommodations denominated in Canadian Dollars
and a three hundred sixty (360) day year as to Letter of Credit
Accommodations denominated in US Dollars, and in each case, actual days
elapsed and the obligation of Borrowers to pay such fee as set forth in
this Section 2.2(b) shall survive the termination or non-renewal of this
Agreement.
(c) The Borrower or Borrowing Base Guarantor requesting
such Letter of Credit Accommodation (or US Borrower on behalf of a Canadian
Borrower) shall give Agent two (2) Business Days' prior written notice of
such Borrower's or Guarantor's request for the issuance of a Letter of
Credit Accommodation. Such notice shall be irrevocable and shall specify
the original face amount of the Letter of Credit Accommodation requested,
the effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit Accommodation, whether such Letter of Credit
Accommodations may be drawn in a single or in partial draws, the date on
which such requested Letter of Credit Accommodation is to expire (which
date shall be a Business Day and in no event shall the expiration date of
any Letter of Credit Accommodation be a date less than five (5) Business
Days prior to the Maturity Date ), the purpose for which such Letter of
Credit Accommodation is to be issued, the beneficiary of the requested
Letter of Credit Accommodation and the currency in which the Letter of
Credit Accommodation is to be denominated. The Borrower or Borrowing Base
Guarantor requesting the Letter of Credit Accommodation (or US Borrower on
behalf of such Borrower or Guarantor) shall attach to such notice the
proposed terms of the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of
the applicable conditions precedent contained in Section 4 hereof and the
other terms and conditions contained herein, no Letter of Credit
Accommodations shall be available unless each of the following conditions
precedent have been satisfied in a manner satisfactory to Agent: (i) the
Borrower or Borrowing Base Guarantor requesting such Letter of Credit
Accommodation (or US Borrower on behalf of a Canadian Borrower) shall have
delivered to the proposed issuer of such Letter of Credit Accommodation at
such times and in such manner as such proposed issuer may require, an
application, in form and substance satisfactory to such proposed issuer and
Agent (but which shall not require Borrowers to breach the terms of this
Agreement), for the issuance of the Letter of Credit Accommodation and such
other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of
issuance, no order of any court, arbitrator or other Governmental Authority
shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of
the proposed Letter of Credit Accommodation, and no law, rule or regulation
applicable to money center banks generally and no request or directive
(whether or not having the force of law) from any Governmental Authority
with jurisdiction over money center banks generally shall prohibit, or
request that the proposed issuer of such Letter of Credit Accommodation
refrain from, the issuance of letters of credit generally or the issuance
of such Letters of Credit Accommodation; (iii) after giving effect to the
issuance of such Letter of Credit Accommodations, the aggregate amount of
Letter of Credit Accommodations denominated in foreign currencies shall not
exceed the US Dollar Equivalent of $20,000,000 and the aggregate amount of
Letter of Credit Accommodations denominated in foreign currencies other
than Euros, Yen, British Pounds, Canadian Dollars and Hong Kong Dollars
shall not exceed the US Dollar Equivalent of $5,000,000 and (iv) the Excess
Availability of the Borrower requesting such Letter of Credit Accommodation
(or in the case of a Borrowing Base Guarantor requesting such Letter of
Credit Accommodation, the Excess Availability of US Borrower), prior to
giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of
Credit Accommodations, shall be equal to or greater than: (A) if the
proposed Letter of Credit Accommodation is for the purpose of purchasing
Eligible Inventory and the documents of title with respect thereto are
consigned to the issuer or to a Borrower or Borrowing Base Guarantor (and
the importing of the goods being purchased is handled by a Customs Broker
that has satisfied the requirements set forth in the definition thereof),
the sum of (1) the percentage equal to one hundred (100%) percent minus the
then applicable percentage with respect to Eligible Inventory set forth in
the definition of the term Borrowing Base multiplied by the Value of such
Eligible Inventory, plus (2) freight, taxes, duty and other amounts which
Agent estimates must be paid in connection with such Inventory upon arrival
and for delivery to one of such Borrower's locations for Eligible Inventory
within the United States of America or Canada and (B) if the proposed
Letter of Credit Accommodation is for any other purpose or the documents of
title are not consigned to the issuer or to a Borrower or Borrowing Base
Guarantor (or the importing of any goods subject thereto is not handled by
a customs broker or other third party that has satisfied the requirements
for a Customs Broker set forth in the definition thereof) in connection
with a Letter of Credit Accommodation for the purpose of purchasing
Inventory, an amount equal to one hundred (100%) percent of the face amount
thereof and all other commitments and obligations made or incurred by Agent
with respect thereto. Effective on the issuance of each Letter of Credit
Accommodation, a Reserve shall be established in the applicable amount set
forth in Section 2.2(d)(iv)(A) or Section 2.2(d)(iv)(B).
(e) Except in Agent's discretion, with the consent of all
Lenders, the undrawn face amount of all outstanding Letter of Credit
Accommodations and all other commitments and obligations made or incurred
by Agent or any Lender in connection therewith (including pursuant to
steamship and airway guarantees, indemnities or delivery orders) shall not
at any time exceed the US Dollar Equivalent of $50,000,000.
(f) Borrowers and Guarantors shall indemnify and hold
Agent and Lenders harmless from and against any and all losses, claims,
damages, liabilities, costs and expenses which Agent or any Lender may
suffer or incur in connection with any Letter of Credit Accommodations and
any documents, drafts or acceptances relating thereto, including any
losses, claims, damages, liabilities, costs and expenses due to any action
taken by any issuer or correspondent with respect to any Letter of Credit
Accommodation, except for such losses, claims, damages, liabilities, costs
or expenses that are a direct result of the gross negligence or wilful
misconduct of Agent or such Lender, as the case may be, as determined
pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Borrower and Guarantor assumes all risks with respect to
the acts or omissions of the drawer under or beneficiary of (as opposed to
the issuer) any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower
and Guarantor assumes all risks for, and agrees to pay, all foreign,
Federal, State, Provincial and local taxes, duties and levies relating to
any goods subject to any Letter of Credit Accommodations or any documents,
drafts or acceptances thereunder. Each Borrower and Guarantor hereby
releases and holds Agent and Lenders harmless from and against any acts,
waivers, errors, delays or omissions, whether caused by any Borrower,
Guarantor, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation, except for the gross
negligence or wilful misconduct of Agent or any Lender as determined
pursuant to a final, non-appealable order of a court of competent
jurisdiction. The provisions of this Section 2.2(f) shall survive the
payment of Obligations and the termination of this Agreement.
(g) In connection with Inventory purchased pursuant to
Letter of Credit Accommodations, (i) in the case of a Letter of Credit
Accommodation for the account of the US Borrower or any Guarantor,
Borrowers and Guarantors shall, and (ii) in the case of a Canadian
Borrower, Canadian Borrowers shall, in each case at Agent's request,
instruct all suppliers, carriers, forwarders, customs brokers, warehouses
or others receiving or holding cash, checks, Inventory, documents or
instruments in which Agent holds a security interest to deliver them to
Agent and/or subject to Agent's order, and if they shall come into such
Borrower's or Guarantor's possession, to deliver them, upon Agent's
request, to Agent in their original form; provided, that, Agent shall not
exercise its rights under this clause (g) to have such persons deliver any
cash, checks, documents or instruments (so long as such documents or
instruments are held by a Customs Broker) or Inventory to Agent unless a
Default or Event of Default shall exist or have occurred and be continuing.
At any time that a Default or Event of Default exists or has occurred and
is continuing, Borrowers and Guarantors shall also, at Agent's request,
designate Agent (or the issuer of the Letter of Credit Accommodation with
respect thereto as Agent may specify) as the consignee on all bills of
lading and other negotiable and non-negotiable documents.
(h) Each Borrower and Guarantor hereby irrevocably
authorizes and directs any issuer of a Letter of Credit Accommodation to
name such Borrower or Guarantor as the account party therein and to deliver
to Agent all instruments, documents and other writings and property
received by issuer pursuant to the Letter of Credit Accommodations
(provided that to the extent that the originals of such instruments,
documents, and other writings and property may be delivered to a Customs
Broker, only copies thereof shall be provided to Agent) and to accept and
rely upon Agent's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit Accommodations or the
applications therefor (provided, that, such rights of Agent to provide such
instructions and agreements shall be subject to the rights of Borrowers to
provide instructions and agreements with respect to certain matters arising
in connection therewith as set forth below). Nothing contained herein shall
be deemed or construed to grant any Borrower or Guarantor any right or
authority to pledge the credit of Agent or any Lender in any manner. Agent
and Lenders shall have no liability of any kind with respect to any Letter
of Credit Accommodation provided by an issuer other than Agent or any
Lender unless Agent has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to
such Letter of Credit Accommodation. Borrowers and Guarantors shall be
bound by any reasonable interpretation made in good faith by Agent, or any
other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of any Borrower or Guarantor.
(i) At any time an Event of Default exists or has
occurred and is continuing, Agent shall have the right and authority to,
and on and after written notice from Agent to US Borrower, Borrowers and
Guarantors shall not, without the prior written consent of Agent, (i)
approve or resolve any questions of non-compliance of documents, (ii) give
any instructions as to acceptance or rejection of any documents or goods,
(iii) execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders, (iv) grant any extensions of maturity of,
time of payment for or time of presentation of, any drafts, acceptances, or
documents, and (v) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions
acceptances thereunder. Agent may take such actions either in its own name
or in any Borrower's or Guarantor's name.
(j) At any time, so long as no Event of Default exists or
has occurred and is continuing, a Borrower may, with Agent's consent, (i)
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents, and (ii) agree to
any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letter of Credit Accommodations, or documents, drafts or acceptances
thereunder. A Borrower may approve or resolve any questions of
non-compliance of documents or give instructions as to acceptance or
rejection of any goods with Agent's consent.
(k) Any rights, remedies, duties or obligations granted
or undertaken by any Borrower or Guarantor to any issuer or correspondent
in any application for any Letter of Credit Accommodation, or any other
agreement in favor of any issuer or correspondent relating to any Letter of
Credit Accommodation, shall be deemed to have been granted or undertaken by
such Borrower or Guarantor to Agent for the ratable benefit of Lenders. Any
duties or obligations undertaken by Agent to any issuer or correspondent in
any application for any Letter of Credit Accommodation, or any other
agreement by Agent in favor of any issuer or correspondent to the extent
relating to any Letter of Credit Accommodation, shall be deemed to have
been undertaken by Borrowers and Guarantors to Agent for the ratable
benefit of Lenders and to apply in all respects to Borrowers and
Guarantors.
(l) Immediately upon the issuance or amendment of any
Letter of Credit Accommodation for or on behalf of US Borrower or a
Borrowing Base Guarantor, each US Lender shall be deemed to have
irrevocably and unconditionally purchased and received, without recourse or
warranty, an undivided interest and participation to the extent of such
Lender's Pro Rata Share of the liability with respect to such Letter of
Credit Accommodation (including, without limitation, all Obligations with
respect thereto).
(m) Each Borrower is irrevocably and unconditionally
obligated, without presentment, demand or protest, to pay to Agent any
amounts paid by an issuer of a Letter of Credit Accommodation with respect
to such Letter of Credit Accommodation (whether through the borrowing of
Loans in accordance with Section 2.2(a) or otherwise). In the event that US
Borrower fails to pay Agent on the date of any payment under a Letter of
Credit Accommodation in an amount equal to the amount of such payment,
Agent (to the extent it has actual notice thereof) shall promptly notify
each US Lender of the unreimbursed amount of such payment and each US
Lender agrees, upon one (1) Business Day's notice, to fund to Agent the
purchase of its participation in such Letter of Credit Accommodation
provided to US Borrower in an amount equal to its Pro Rata Share of the
unpaid amount The obligation of each US Lender to deliver to Agent an
amount equal to its respective participation pursuant to the foregoing
sentence is absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuance of any Event of Default, the
failure to satisfy any other condition set forth in Section 4 or any other
event or circumstance. If such amount is not made available by a US Lender
when due, Agent shall be entitled to recover such amount on demand from
such US Lender with interest thereon, for each day from the date such
amount was due until the date such amount is paid to Agent at the interest
rate then payable by US Borrower in respect of Loans that are Prime Rate
Loans as set forth in Section 3.1(a) hereof.
(n) Notwithstanding anything to the contrary contained in
this Section 2.2, no Canadian Borrower shall have any obligation to any
person with respect to a Letter of Credit Accommodation issued for the
account of US Borrower or any Guarantor.
2.3 Commitments. The aggregate amount of each Lender's Pro Rata
Share of the Loans and Letter of Credit Accommodations shall not exceed the
amount of such Lender's Commitment, as the same may from time to time be
amended in accordance with the provisions hereof.
2.4 Additional Borrowing Base Guarantors.
------------------------------------
(a) At any time after the date hereof, US Borrower may,
at its option, upon prior written notice to Agent request that a Guarantor
be deemed to be a Borrowing Base Guarantor. The Guarantor specified by US
Borrower in such request shall be deemed a Borrowing Base Guarantor on the
Business Day after each of the following conditions precedent have been
satisfied: (i) Agent shall have conducted a field examination with respect
to the assets, business and operations of such Guarantor in nature and
scope reasonably acceptable to Agent (and at Agent's option, at Borrowers'
expense, obtained an appraisal of such Inventory by an appraiser acceptable
to Agent and in form, scope and methodology to Agent and addressed to Agent
and upon which Agent is expressly permitted to rely, which appraisal shall
be in addition to any appraisals which Agent may obtain pursuant to its
rights under Section 7.3 hereof), the results of which shall be
satisfactory to Agent and ten (10) Business Days shall have elapsed after
the completion of Agent's final written report of such field examination
(and receipt by Agent of the final appraisal of the Inventory of such
Guarantor in the event Agent exercises its option to require such an
appraisal) and any Accounts and Inventory of such Guarantor shall only be
Eligible Accounts and Eligible Inventory to the extent the criteria for
Eligible Accounts and Eligible Inventory set forth herein are satisfied
with respect thereto (or such other or additional criteria as Agent may
establish with respect thereto and subject to such Reserves as Agent may
establish in accordance with this Agreement) and (ii) no Default or Event
of Default shall exist or have occurred and be continuing.
(b) On or about the date that a Guarantor shall become a
Borrowing Base Guarantor, proceeds of Loans shall be used by US Borrower to
make loans to such Guarantor under the Intercompany Credit Facility of such
Guarantor with US Borrower.
SECTION 3. INTEREST AND FEES
-----------------
3.1 Interest.
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(a) US Borrower shall pay to Agent, for the ratable
benefit of US Lenders, and Canadian Borrowers shall pay to Agent, for the
benefit of Canadian Lender, interest on the outstanding principal amount of
the Loans at the then applicable Interest Rate. All interest accruing
hereunder on and after the date of any Event of Default or termination
hereof shall be payable on demand.
(b) Each Borrower (or US Borrower on behalf of a Canadian
Borrower) may from time to time request Eurodollar Rate Loans or may
request that Prime Rate Loans be converted to Eurodollar Rate Loans or that
any existing Eurodollar Rate Loans continue for an additional Interest
Period. Such request from a Borrower (or US Borrower on behalf of a
Canadian Borrower) shall specify the amount of the Eurodollar Rate Loans or
the amount of the Prime Rate Loans to be converted to Eurodollar Rate Loans
or the amount of the Eurodollar Rate Loans to be continued (subject to the
limits set forth below) and the Interest Period to be applicable to such
Eurodollar Rate Loans. Subject to the terms and conditions contained
herein, three (3) Business Days after receipt by Agent of such a request
from a Borrower (or US Borrower on behalf of Borrower), such Eurodollar
Rate Loans shall be made or Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the
case may be, provided, that, (i) no Default or Event of Default shall exist
or have occurred and be continuing, (ii) such Borrower (or US Borrower on
behalf of such Borrower) shall have complied with such customary procedures
as are established by Agent and specified by Agent to US Borrower from time
to time for requests by Borrowers for Eurodollar Rate Loans, (iii) no more
than eight (8) Interest Periods may be in effect at any one time, (iv) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less
than $5,000,000 or an integral multiple of $1,000,000 in excess thereof,
and (v) Agent and each Lender shall have determined that the Interest
Period or Adjusted Eurodollar Rate is available to Agent and such Lender
and can be readily determined as of the date of the request for such
Eurodollar Rate Loan by such Borrower. Any request by or on behalf of a
Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans
shall be irrevocable. Notwithstanding anything to the contrary contained
herein, Agent and Lenders shall not be required to purchase United States
Dollar deposits in the London interbank market or
other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans,
but the provisions hereof shall be deemed to apply as if Agent and Lenders
had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert
to US Prime Rate Loans in the case of US Dollar Loans or to Canadian Prime
Rate Loans in the case of Canadian Dollar Loans upon the last day of the
applicable Interest Period, unless Agent has received and approved a
request to continue such Eurodollar Rate Loan at least three (3) Business
Days prior to such last day in accordance with the terms hereof. Any
Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent to US
Borrower, be subsequently converted to US Prime Rate Loans in the case of
US Dollar Loans or to Canadian Prime Rate Loans in the case of Canadian
Dollar Loans in the event that this Agreement shall terminate or not be
renewed. US Borrower shall pay to Agent, for the benefit of US Lenders, and
Canadian Borrowers shall pay to Agent, for the benefit of Canadian Lender,
in each case upon demand by Agent (or Agent may, at its option, charge any
loan account of any Borrower) any amounts required to compensate any such
Lender or Participant for any loss (including loss of anticipated profits),
cost or expense incurred by such person, as a result of the conversion of
Eurodollar Rate Loans to Prime Rate Loans (other than at the end of an
Interest Period) pursuant to any of the foregoing.
(d) Interest shall be payable by US Borrower to Agent,
for the account of US Lenders, and by Canadian Borrowers to Agent, for the
account of Canadian Lender, monthly in arrears in the currency in which
such Loans are denominated not later than the first day of each calendar
month and shall be calculated on the basis of (i) a three hundred
sixty-five (365) day year in the case of Canadian Dollar Loans and (ii) a
three hundred sixty (360) day year in the case of US Dollars Loans, and in
each case based on actual days elapsed. The interest rate shall increase or
decrease by an amount equal to each increase or decrease in the Canadian
Prime Rate or US Prime Rate, as applicable, effective on the first day of
the month after any such change occurs. No agreements, conditions,
provisions or stipulations contained in this Agreement or any of the other
Financing Agreements or any Event of Default, or the exercise by Agent or
any Lender of the right to accelerate the payment or the maturity of all or
any portion of the Obligations, or the exercise by Agent or any Lender of
any option whatsoever contained in this Agreement or any of the other
Financing Agreements, or the prepayment by or on behalf of a Borrower of
any of the Obligations, or the occurrence of any event or contingency
whatsoever, shall entitle Agent or any Lender to contract for, charge or
receive, in any event, interest exceeding the maximum non-usurious rate of
interest under applicable Federal, State or Provincial Law as in effect
from time to time that may be contracted for, taken, reserved, charged or
received in respect of Indebtedness of a Borrower to Agent or any Lender
(the "Maximum Interest Rate"). In no event shall a Borrower be obligated to
pay interest exceeding such Maximum Interest Rate. All agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel such Borrower to pay a rate
of interest exceeding the Maximum Interest Rate shall be without binding
force or effect, at law or in equity, to the extent of the excess of
interest over such Maximum Interest Rate. In the event any interest is
contracted for, charged or received in excess of the Maximum Interest Rate
("Excess"), each Borrower and Guarantor acknowledges and stipulates that
any such contract, charge or receipt is not intended, and that any Excess
received by Agent or any Lender shall be applied, first, to the payment of
the then outstanding and unpaid principal hereunder; second, to the payment
of the other Obligations then outstanding and unpaid; and third, returned
to such Borrower (or US Borrower on behalf of such Borrower), it being the
intent of the parties hereto not to enter at any time into a usurious or
otherwise illegal relationship. Each Borrower and Guarantor recognizes
that, with fluctuations in the rate of interest set forth in this Section
3.1 and the Maximum Interest Rate, such an unintentional result could
inadvertently occur. By the execution of this Agreement, each Borrower
agrees that (A) the credit or return of any Excess shall constitute the
acceptance by such Borrower of such Excess, and (B) each Borrower shall not
seek or pursue any other remedy, legal or equitable, against Agent or any
Lender, based in whole or in part upon contracting for, charging or
receiving of any interest in excess of the Maximum Interest Rate. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by Agent or any Lender, all interest at any time
contracted for, charged or received by Agent or any Lender in connection
with this Agreement or any of the other Financing Agreements shall be
amortized, prorated, allocated and spread in equal parts during the entire
term of this Agreement.
(e) For purposes of disclosure under the Interest Act
(Canada), where interest is calculated pursuant thereto at a rate based
upon a three hundred sixty (360) day year or three hundred sixty-five (365)
day year (the "First Rate"), the rate or percentage of interest on a yearly
basis is equivalent to such First Rate multiplied by the actual number of
days in the year divided by three hundred sixty (360) or three hundred
sixty-five (365), as applicable.
(f) Notwithstanding the provisions of this Section 3 or
any other provision of this Agreement, in no event shall the aggregate
"interest" (as that term is defined in Section 347 of the Criminal Code
(Canada)) with respect to any Loans by or on behalf of Canadian Lender
exceed the effective annual rate of interest on the "credit advanced" (as
defined therein) lawfully permitted under Section 347 of the Criminal Code
(Canada). The effective annual rate of interest for such purpose shall be
determined in accordance with generally accepted actuarial practices and
principles over the term of the applicable Loan by or on behalf of Canadian
Lender, and in the event of a dispute, a certificate of a Fellow of the
Canadian Institute of Actuaries appointed by Agent will be conclusive for
the purposes of such determination.
(g) A certificate of an authorized signing officer of
Agent as to each rate of interest payable hereunder from time to time
absent manifest error shall be conclusive evidence of such rate.
(h) For greater certainty, unless otherwise specified in
this Agreement or any of the other Financing Agreements, as applicable,
whenever any amount is payable under this Agreement or any of the other
Financing Agreements by Borrowers as interest or as a fee which requires
the calculation of an amount using a percentage per annum, each party to
this Agreement acknowledges and agrees that such amount shall be calculated
as of the date payment is due without application of the "deemed
reinvestment principle" or the "effective yield method." As an example,
when interest is calculated and payable monthly, the rate of interest
payable per month is one twelfth (1/12) of the stated rate of interest per
annum.
3.2 Fees.
----
(a) US Borrower shall pay to Agent for the ratable
benefit of Lenders monthly an unused line fee at a rate equal to the
percentage (on a per annum basis) set forth below calculated upon the
amount by which the Maximum Credit as then in effect exceeds the average
daily principal balance of the outstanding Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof)
while this Agreement is in effect and for so long thereafter as any
Obligations are outstanding. Such fee shall be payable on the first day of
each month in arrears. The percentage used for determining the unused line
fee shall be three-eighths (3/8%) percent, provided, that, effective as of
the first (1st) day of the second month of each fiscal quarter (commencing
with the fiscal quarter ending on or about November 30, 2002), the
percentage used for determining the unused line fee shall be as set forth
below if either the Quarterly Average Excess Availability for the
immediately preceding fiscal quarter is at or within the amounts indicated
for such percentage or the Leverage Ratio as of the last day of the
immediately preceding fiscal quarter (which ratio for this purpose shall be
calculated based on the four (4) immediately preceding fiscal quarters) is
at or within the levels indicated for such percentage:
Quarterly Average Unused Line
Excess Availability Leverage Ratio Fee Percentage
------------------------------ -------------- --------------
(i) $45,000,000 or more 2.00 to 1.00 or less 3/8%
(ii) Greater than or equal Greater than 2.00 to 1.00 3/8%
to $30,000,000 and but equal to or less
less than $45,000,000 than 3.00 to 1.00
(iii) Greater than or equal Greater than 3.00 to 1.00 3/8%
to $15,000,000 and but equal to or less
less than $30,000,000 than 4.00 to 1.00
(iv) Less than $15,000,000 Greater than 4.00 to 1.00 1/2%
provided, that, (A) the unused line fee percentage shall be calculated and
established once each fiscal quarter (commencing with the fiscal quarter
ending on or about November 30, 2002) and (B) the unused line fee
percentage shall be the lower percentage set forth above based on the
Quarterly Average Excess Availability or the Leverage Ratio.
(b) US Borrower agrees to pay to Agent the other fees and
amounts set forth in the Fee Letter in the amounts and at the times
specified therein.
3.3 Changes in Laws and Increased Costs of Loans.
--------------------------------------------
(a) Other than with respect to the indemnification
obligations of Borrowers and Guarantors to Agent and Lenders that are
subject to Section 6.12 hereof, if after the date hereof, either (i) any
change in, or in the interpretation of, any law or regulation is
introduced, including, without limitation, with respect to reserve
requirements, applicable to a Lender or any banking or financial
institution from whom Lender borrows funds or obtains credit (a "Funding
Bank"), which Funding Bank is a commercial bank or other financial
institution having combined capital and surplus and undivided profits of
not less than $500,000,000 or (ii) a Funding Bank or any Lender complies
with any future guideline or request from any central bank or other
Governmental Authority or (iii) a Funding Bank or any Lender determines
that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof has or would have the effect described below, or a
Funding Bank or any Lender complies with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event
set forth in this clause (iii), such adoption, change or compliance has or
would have the direct or indirect effect of reducing the rate of return on
any Lender's capital as a consequence of its obligations hereunder to a
level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration the Funding Bank's or
Lender's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, and the result of any of the foregoing events
described in clauses (i), (ii) or (iii) is or results in an increase in the
cost to any Lender of funding or maintaining the Loans, the Letter of
Credit Accommodations or its Commitment, then Borrowers and Guarantors
shall from time to time upon demand by Agent pay to Agent additional
amounts sufficient to indemnify Lenders against such increased cost (after
taking into account applicable deductions and credits in respect of the
amount indemnified). A certificate as to the amount of such increased cost
setting forth in reasonable detail the basis for such increased cost and
the calculation of the amount thereof shall be submitted to US Borrower by
or on behalf of the Lender seeking indemnification therefor or by Agent on
its behalf and shall be conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i)
Agent shall have determined in good faith (which determination shall be
conclusive and binding upon Borrowers and Guarantors) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for such Interest Period,
(ii) Agent has received notice from the Required Lenders that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to Lenders of making or
maintaining Eurodollar Rate Loans during such Interest Period, or (iii)
Dollar deposits in the principal amounts of the Eurodollar Rate Loans to
which such Interest Period is to be applicable are not generally available
in the London interbank market, Agent shall give telecopy or telephonic
notice thereof to US Borrower as soon as practicable thereafter, and will
also give prompt written notice to US Borrower when such conditions no
longer exist. If such notice is given (A) any Eurodollar Rate Loans
requested to be made on the first day of such Interest Period shall be made
as Prime Rate Loans, (B) any Loans that were to have been converted on the
first day of such Interest Period to or continued as Eurodollar Rate Loans
shall be converted to or continued as Prime Rate Loans and (C) each
outstanding Eurodollar Rate Loan shall be converted, on the last day of the
then-current Interest Period thereof, to Prime Rate Loans. Until such
notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall
be made or continued as such, nor shall a Borrower (or US Borrower on
behalf of a Canadian Borrower) have the right to convert Prime Rate Loans
to Eurodollar Rate Loans.
(c) Notwithstanding any other provision herein, if the
adoption of or any change in any law, treaty, rule or regulation or final,
non-appealable determination of an arbitrator or a court or other
Governmental Authority or in the interpretation or application thereof
occurring after the date hereof shall make it unlawful for Agent or any
Lender to make or maintain Eurodollar Rate Loans as contemplated by this
Agreement, (i) Agent or such Lender shall promptly give written notice of
such circumstances to US Borrower (which notice shall be withdrawn whenever
such circumstances no longer exist), (ii) the commitment of such Lender
hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as
such and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith
be canceled and, until such time as it shall no longer be unlawful for such
Lender to make or maintain Eurodollar Rate Loans, such Lender shall then
have a commitment only to make a Prime Rate Loan when a Eurodollar Rate
Loan is requested and (iii) such Lender's Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime
Rate Loans on the respective last days of the then current Interest Periods
with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Rate Loan occurs on a day which
is not the last day of the then current Interest Period with respect
thereto, Borrowers and Guarantors shall pay to such Lender such amounts, if
any, as may be required pursuant to Section 3.3(d) below.
(d) Borrowers and Guarantors shall indemnify each Lender and
hold each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence of (i) default by a Borrower
in making a borrowing of, conversion into or extension of Eurodollar Rate
Loans after such Borrower (or US Borrower on behalf of such Borrower) has
given a notice requesting the same in accordance with the provisions of
this Loan Agreement, (ii) default by a Borrower in making any prepayment of
a Eurodollar Rate Loan after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement, and (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of
an Interest Period with respect thereto. With respect to Eurodollar Rate
Loans, such indemnification may include an amount equal to the excess, if
any, of (A) the amount of interest which would have accrued on the amount
so prepaid, or not so borrowed, converted or extended, for the period from
the date of such prepayment or of such failure to borrow, convert or extend
to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or extend, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate
of interest for such Eurodollar Rate Loans provided for herein over (B) the
amount of interest (as determined by such Agent or such Lender) which would
have accrued to Agent or such Lender on such amount by placing such amount
on deposit for a comparable period with leading banks in the interbank
Eurodollar market as set forth in a certificate from or on behalf of Agent
or such Lender to US Borrower setting forth the calculation of such amount.
This covenant shall survive the termination or non-renewal of this Loan
Agreement and the payment of the Obligations.
(e) If a Borrower is required to pay additional amounts to
any US Lender pursuant to Section 3.3(a) that increase the effective
lending rate of such Lender with respect to its share of the Loans to
greater than one-eighth (1/8%) percent in excess of the percentage of the
effective lending rate of the other US Lenders, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its lending office with respect to making
Eurodollar Rate Loans so as to eliminate any such additional payment by US
Borrower which may thereafter accrue, if such change in the judgment of
such Lender is not otherwise disadvantageous to such Lender. In the event
that any one or more US Lenders, pursuant to Section 3.3(a) hereof, incur
any increased costs (other than increased costs to the extent such
increased costs are not a recurring cost) for which any such Lender demands
compensation pursuant to Section 3.3(a) hereof which increases the
effective lending rate of such Lender with respect to its share of the
Loans to greater than one-eighth (1/8%) percent in excess of the percentage
of the effective lending rate of the other US Lenders and such Lender has
not mitigated such costs within sixty (60) days after receipt by such
Lender from US Borrower of a written notice that such Lender's effective
lending rate has so exceeded the effective lending rate of the other US
Lenders, then and in any such event, US Borrower may substitute another
financial institution which is an Eligible Transferee acceptable to Agent
for such US Lender to assume the Commitment of such Lender and to purchase
the Loans of such Lender hereunder, without recourse to or warranty by, or
expense to, such Lender for a purchase price equal to the outstanding
principal amount of the Loans owing to such Lender plus any accrued but
unpaid interest on such Loans and accrued but unpaid fees and other amounts
in respect of such Lender's Commitment and share of the Loans (other than
any early termination fee). Upon such purchase such Lender shall no longer
be a party hereto or have any rights or benefits hereunder (except for
rights or benefits that such Lender would retain hereunder and under the
other Financing Agreements upon payment in full of all of the Obligations
other than as to any early termination fee) and the replacement Lender
shall succeed to the rights and benefits, and shall assume the obligations,
of such Lender hereunder and thereunder. Agent and Lenders shall cooperate
with US Borrower to amend the Financing Agreements to reflect such
substitution. In no event may US Borrower replace a Lender that is also
Agent or an issuer of a Letter of Credit Accommodation.
SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all releases, terminations and such other
documents as Agent may reasonably request to evidence and effectuate the
termination by the Existing Lenders of their respective financing
arrangements with Borrowers and Guarantors and the termination and release
by it or them, as the case may be, of any interest in and to any assets and
properties of each Borrower and Guarantor, duly authorized, executed and
delivered by it or each of them, including, but not limited to, (i) the
authorization to prepare and file UCC termination statements for all UCC
financing statements previously filed by it or any of them or their
predecessors, as secured party and any Borrower or Guarantor, as debtor,
(ii) PPSA terminations or hypothec discharges for all PPSA financing
statements or hypothecs previously filed or registered by it or them or
their predecessors, as secured party and any Borrower or Guarantor, as
debtor, and (iii) satisfactions and discharges of any mortgages, deeds of
trust or deeds to secure debt by any Borrower or Guarantor in favor of it
or any of them, in form acceptable for recording with the appropriate
Governmental Authority;
(b) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Agent, and Agent shall have received
all information and copies of all documents, including records of requisite
corporate action and proceedings which Agent may have reasonably requested
in connection therewith, such documents where requested by Agent or its
counsel to be certified by appropriate corporate officers or Governmental
Authority (and including a copy of the certificate of incorporation of each
Borrower and Guarantor certified by the Secretary of State (or equivalent
Governmental Authority) which shall set forth the same complete corporate
name of such Borrower or Guarantor as is set forth herein and such document
as shall set forth the organizational identification number of each
Borrower or Guarantor, if one is issued in its jurisdiction of
incorporation);
(c) no act, condition or event shall have occurred since the
date of Agent's latest field examination (not including for this purpose
the field review referred to in clause (d) below) that has or is reasonably
likely to have Material Adverse Effect;
(d) Agent shall have completed a field review of the Records
and such other information with respect to the Collateral as Agent may
require to determine the amount of Loans available to Borrowers (including,
without limitation, current perpetual inventory records and/or
roll-forwards of Accounts and Inventory through the date of closing and
test counts of the Inventory in a manner satisfactory to Agent, together
with such supporting documentation as may be necessary or appropriate, and
other documents and information that will enable Agent to accurately
identify and verify the Collateral), the results of which in each case
shall not be inconsistent with the reviews performed by or on behalf of
Agent or Lenders prior to such review, not more than three (3) Business
Days prior to the date hereof and in addition, Agent shall have received
the results of the most recent physical counts of inventory of Borrowers
and Guarantors and any adjustments to standard costs as a result of such
physical counts;
(e) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all consents, waivers, acknowledgments
and other agreements from third persons (other than Deposit Account Control
Agreements not required to be obtained under clause (h) below) which Agent
may deem necessary or desirable in order to permit, protect and perfect its
security interests in and liens upon the Collateral of the US Borrowers
Companies in favor of Agent and the hypothecs, the security interests in
and liens of Canadian Lender upon the Collateral of the Canadian Borrowers,
or to effectuate the provisions or purposes of this Agreement and the other
Financing Agreements, provided, that, the failure to deliver a Collateral
Access Agreement as to a specific leased location shall not be a condition
of closing, so long as all other conditions are met after giving effect to
any Reserves established by Agent in respect of amounts due or to become
due to the owner or lessor thereof as provided for in the definition of
Eligible Inventory herein;
(f) the aggregate amount of the Excess Availability of
Borrowers, as of the date hereof, shall be not less than $25,000,000 after
giving effect to the initial Loans made or to be made and Letter of Credit
Accommodations issued or to be issued in connection with the initial
transactions hereunder and after provision for payment of all fees and
expenses of the transaction;
(g) Agent shall have received a Borrowing Base Certificate
setting forth the Loans available to Borrowers as completed in a manner
reasonably satisfactory to Agent and duly authorized, executed and
delivered on behalf of US Borrower;
(h) Agent shall have received, in form and substance
reasonably satisfactory to Agent, Deposit Account Control Agreements by and
among Agent, each Borrower and Guarantor, as the case may be and each bank
where such Borrower or Guarantor has a deposit account (other than as to
those deposit accounts for which Agent is not requiring a Deposit Account
Control Agreement as of the date hereof), in each case, duly authorized,
executed and delivered by such bank and Borrower or Guarantor, as the case
may be;
(i) Agent shall have received evidence, in form and
substance satisfactory to Agent, that Agent has valid perfected and first
priority security interests in and liens upon the Collateral of the US
Companies and Canadian Lender has a valid perfected and first priority
security interests in, and liens and first ranking hypothec upon, the
Collateral of the Canadian Borrowers subject only to the security interests
and liens permitted herein or in the other Financing Agreements (and in
each case other than as to such deposit accounts or such other assets for
which Agent has not required that its security interests and/or liens be
perfected as of the date hereof);
(j) Agent shall have received and reviewed lien and judgment
search results for the jurisdiction of incorporation of each Borrower and
Guarantor, the jurisdiction of the chief executive office of each Borrower
and Guarantor and all jurisdictions in which assets of Borrowers and
Guarantors are located, which search results shall be in form and substance
satisfactory to Agent;
(k) Agent shall have received, in form and substance
satisfactory to Agent, a valid and effective title insurance policy issued
by a company and agent acceptable to Agent: (i) insuring the priority,
amount and sufficiency of the Mortgages and (ii) containing any legally
available endorsements, assurances or affirmative coverage reasonably
requested by Agent for protection of its interests;
(l) Agent shall have received originals of the shares of the
stock certificates representing all of the issued and outstanding shares of
the Capital Stock of any Borrower and Guarantor (other than US Borrower)
organized under the laws of any State of the United States of America and
stock certificates representing sixty-five (65%) percent of the issued and
outstanding shares of any Borrower or Guarantor organized under the laws of
any jurisdiction outside the United States of America and in each case
owned by any Borrower or Guarantor, in each case together with stock powers
duly executed in blank with respect thereto;
(m) Agent shall have received the originals of each of the
Intercompany Loan Agreements as duly authorized, executed and delivered by
the parties thereto and the terms and conditions thereof shall be in form
and substance satisfactory to Agent in good faith and evidence that the
Intercompany Loan Agreements are valid and enforceable and in full force
and effect, and the terms and conditions thereof shall be reasonably
satisfactory to Agent and Agent shall have perfected, first priority
security interests in and liens upon all rights, remedies and benefits of
US Borrower thereunder, and such security interests and liens shall be
acknowledged and agreed to by Guarantors, in each case in form and
substance reasonably satisfactory to Agent and the obligations of
Guarantors to US Borrower pursuant to such intercompany arrangements and
the security interests and liens securing such obligations shall be subject
and subordinate in right of payment and in priority to the rights and liens
of Agent and Lenders pursuant to a subordination agreement, in form and
substance satisfactory to Agent in good faith, by and among US Borrower,
Guarantors and Agent;
(n) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing
Agreements, in form and substance satisfactory to Agent, and certificates
of insurance policies and/or endorsements naming Agent as loss payee;
(o) Agent shall have received, in form and substance
satisfactory to Agent, such opinion letters of counsel(s) to Borrowers with
respect to the Financing Agreements, the Intercompany Loan Agreements, the
security interests, liens and hypothecs of Agent and Canadian Lender with
respect to the Collateral, the security interests and liens of US Borrower
with respect to the assets and properties of Borrowing Base Guarantors
pursuant to the Intercompany Loan Agreements and such other matters as
Agent may reasonably request (and including opinion letters of US counsel
and Canadian counsel to Borrowers and Guarantors); and
(p) the other Financing Agreements shall have been duly
executed and delivered to Agent, in form and substance satisfactory to
Agent.
4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations.
-----------------------------------------------
(a) Each of the following is an additional conditions
precedent to the Loans and/or providing Letter of Credit Accommodations to
Borrowers, including the initial Loans and Letter of Credit Accommodations
and any future Loans and Letter of Credit Accommodations (other than the
conversion of Eurodollar Rate Loans to Prime Rate Loans in accordance with
the terms hereof):
(i) all representations and warranties contained
herein and in the other Financing Agreements shall be true and correct in
all material respects with the same effect as though such representations
and warranties had been made on and as of the date of the making of each
such Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as
of such earlier date);
(ii) no law, regulation, order, judgment or decree of
any Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or
before any arbitrator or Governmental Authority, which purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or
providing the Letter of Credit Accommodations, or (B) the consummation of
the transactions contemplated pursuant to the terms hereof or the other
Financing Agreements; and
(iii)no Default or Event of Default shall exist or
have occurred and be continuing on and as of the date of the making of such
Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto.
(b) In addition to the other conditions precedent to Agent
and Lenders making Loans and/or providing Letter of Credit Accommodations
to Canadian Borrowers, the conditions to such Loans and Letter of Credit
Accommodations by or on behalf of Canadian Lender shall also include that
no requirement of the Minister of National Revenue for payment pursuant to
Section 224, or any successor section, of the Income Tax Act (Canada) or
Section 317, or any successor section of the Excise Act (Canada) or any
comparable provision of similar legislation shall have been received by
Agent or any other Person in respect of a Canadian Borrower or otherwise
issued in respect of a Canadian Borrower.
4.3 Conditions Precedent to US Real Property Availability. Upon
the written request of US Borrower, the US Real Property Availability shall
be included in the calculation of the US Borrowing Base on the Business Day
after each of the following conditions precedent have been satisfied:
(a) Agent shall have received environmental audits of the
Real Property subject to the Mortgages conducted by an independent
environmental engineering firm acceptable to Agent, and in form, scope and
methodology reasonably satisfactory to Agent, confirming (A) such Borrower
or Guarantor is in compliance with all material applicable Environmental
Laws and (ii) the absence of any material environmental problems (provided,
that, to the extent that the results of such environmental audits disclose
any condition, event or circumstance that would adversely affect the value
of the Real Property or the ability of Agent to realize thereon, Agent may
upon the US Real Property Availability being included in the calculation of
the Borrowing Base establish Reserves to reflect such adverse affect (and
the amount of any Reserve established by Agent shall have a reasonable
relationship to the event, condition or other matter which is the basis for
such Reserve as determined by Agent in good faith) or if material as to a
particular property determine that such property should not be considered
Eligible Real Property);
(b) Agent shall have received evidence, in form and
substance reasonably satisfactory to Agent, that Agent has valid and
enforceable, first priority (subject to liens permitted hereunder or under
the other Financing Agreements) mortgage and lien upon, and security
interest in, the Real Property of US Borrower and Guarantors that are
subject to the Mortgages;
(c) Agent shall have received a written appraisal as to the
owned Real Property of Borrowers and Guarantors subject to the Mortgages,
at the expense of Borrowers, by an appraiser acceptable to Agent, addressed
to Agent and on which Agent and Lenders are expressly permitted to rely, in
form, scope and methodology reasonably satisfactory to Agent;
(d) Agent shall have received ALTA certified surveys of the
Real Property subject to the Mortgages, completed not more than ninety (90)
days prior to the date that the US Real Property Availability is included
in the Borrowing Base by a registered land surveyor certified by such
surveyor to Agent and the title insurance company indicating, among other
things, exterior boundary lines, measurements of the distance between
buildings and boundary lines, locations of fences, drives, utility and
other easements, encroachments, existing buildings, ingress and egress and
with a legal description, together with endorsements or amendments to the
title insurance policies with respect to the Mortgages deleting all survey
exceptions to the insurance coverage provided to Agent thereunder and
adding such additional endorsements to the insurance coverage available
based on the survey of the Real Property subject to the Mortgages being
available;
(e) Agent shall have received evidence, in form and
substance reasonably satisfactory to Agent, that each Borrowing Base
Guarantor that is an owner of Real Property subject to a Mortgage has
executed and delivered a valid, binding and enforceable mortgage in favor
of US Borrower with respect to such Real Property and that US Borrower has
a valid and enforceable, second priority mortgage and lien upon, and
security interest in, the Real Property of each of such Borrowing Base
Guarantors that are subject to the Mortgages (subject to the first priority
mortgage and lien of Agent);
(f) no Default or Event of Default shall exist or have
occurred and be continuing;
(g) Agent shall have received, in form and substance
reasonably satisfactory to Agent, opinion letters of counsel to Borrowers
and Guarantors with respect to the enforceability of Mortgages for the Real
Property (including, as to each Mortgage, that the Mortgage is in proper
form under the applicable state law, that the Mortgage creates a valid
mortgage lien on the Real Property described therein, that it is valid,
binding and enforceable and such other matters as Agent may reasonably
require) from counsel licensed to practice law in each of the jurisdictions
where such Real Property is located; and
(h) each of the conditions set forth above shall have been
satisfied by no later than October 31, 2003.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
-----------------------------------------
5.1 Grant of Security Interest.
--------------------------
(a) To secure payment and performance of its Obligations,
each US Company hereby grants to Agent, for itself and the ratable benefit
of Lenders, a continuing security interest in, a lien upon, and a right of
set off against, and each Canadian Borrower hereby grants to Canadian
Lender a continuing security interest in, a lien upon, and a right of set
off against, all personal property and fixtures, and interests in personal
property and fixtures, of each such Borrower and Guarantor, whether now
owned or hereafter acquired or existing, and wherever located (together
with all other collateral security for the Obligations at any time granted
to or held or acquired by Agent or any Lender, collectively, the
"Collateral"), including:
(i) all Accounts;
(ii) all general intangibles, including, without
limitation, all Intellectual Property;
(iii)all goods, including, without limitation,
Inventory and Equipment;
(iv) all chattel paper, including, without limitation,
all tangible and electronic chattel paper;
(v) all instruments, including, without limitation,
all promissory notes;
(vi) all documents;
(vii) all deposit accounts;
(viii) all letters of credit, banker's acceptances and
similar instruments and including all letter-of-credit rights;
(ix) all supporting obligations and all present and
future liens, security interests, rights, remedies, title and interest in,
to and in respect of Receivables and other Collateral, including (A) rights
and remedies under or relating to guaranties, contracts of suretyship,
letters of credit and credit and other insurance related to the Collateral,
(B) rights of stoppage in transit, replevin, repossession, reclamation and
other rights and remedies of an unpaid vendor, lienor or secured party, (C)
goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Receivables or other
Collateral, including returned, repossessed and reclaimed goods, and (D)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
(x) all (A) investment property (including securities,
whether certificated or uncertificated, securities accounts, security
entitlements, commodity contracts or commodity accounts) and (B) monies,
credit balances, deposits and other property of any Borrower or Guarantor
now or hereafter held or received by or in transit to Agent, any Lender or
its Affiliates or at any other depository or other institution from or for
the account of any Borrower or Guarantor, whether for safekeeping, pledge,
custody, transmission, collection or otherwise;
(xi) all commercial tort claims, including, without
limitation, those identified in the Information Certificate;
(xii) to the extent not otherwise described above, all
Receivables;
(xiii) all Records;
(xiv) all products and proceeds of the foregoing, in
any form, including insurance proceeds (other than business interruption
insurance proceeds) and all claims against third parties for loss or damage
to or destruction of or other involuntary conversion of any kind or nature
of any or all of the other Collateral; and
(xv) as to Canadian Borrowers only, a hypothec to and
in favor of Canadian Lender (as agent for itself and US Lender) to the
extent of the sum of C$30,000,000 in lawful money of Canada with interest
thereon at the rate of twenty-five (25%) percent, with respect to all of
its rights and interests to the Collateral.
(b) Notwithstanding anything to the contrary set forth in
Section 5.1(a) above, the types or items of Collateral described in such
Section shall not include:
(i) any rights or interests in any contract, lease,
permit, license, charter or license agreement covering real or personal
property, as such, if under the terms of such contract, lease, permit,
license, charter or license agreement, or applicable law with respect
thereto, the valid grant of a security interest or lien therein to Agent is
prohibited and such prohibition has not been or is not waived or the
consent of the other party to such contract, lease, permit, license,
charter or license agreement has not been or is not otherwise obtained or
under applicable law such prohibition cannot be waived; provided, that, the
foregoing exclusion shall in no way be construed (A) to apply if any such
prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the
UCC or other applicable law or (B) so as to limit, impair or otherwise
affect Agent's unconditional continuing security interests in and liens
upon any rights or interests of a Borrower or Guarantor in or to monies due
or to become due under any such contract, lease, permit, license, charter
or license agreement (including any Receivables);
(ii) the Capital Stock of Canadian Borrowers in excess
of sixty-five (65%) percent of all of the issued and outstanding shares of
Capital Stock of such Canadian Borrower;
(iii) the Capital Stock of Xxxxxx-Xxxx, Inc.;
(iv) the rights of Borrowers and Guarantors to
business interruption insurance;
(v) the Excluded Real Property;
(vi) the last day of the term of any lease or
agreement to which the Canadian Borrower is a party therefor but upon
enforcement of the security interest the applicable Canadian Borrower shall
stand possessed of such last day in trust to assign the same to any person
acquiring the term of the lease or agreement therefor.
(c) Nothing contained in Section 5.1 hereof shall be
construed to mean that the Collateral of Canadian Borrowers secures,
directly or indirectly, the Obligations of US Borrower and Guarantors or to
establish any obligations of Canadian Guarantors in respect of such
Obligations of US Borrower and Guarantors. Nothing contained herein shall
be construed to affect the security interest in, pledge of and lien upon,
the Capital Stock of Canadian Borrowers granted to Agent by US Borrower.
5.2 Perfection of Security Interests.
--------------------------------
(a) Each Borrower and Guarantor irrevocably and
unconditionally authorizes Agent (or its agent) to file at any time and
from time to time such financing statements with respect to the Collateral
naming Agent or its designee (in the case of Collateral of US Borrowers and
Guarantors) or Canadian Lender or its designee (in the case of Collateral
of Canadian Borrowers) as the secured party and such Borrower or Guarantor
as debtor, as Agent may require, and including any other information with
respect to such Borrower or Guarantor or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction or under the
PPSA as Agent may determine, together with any amendment and continuations
with respect thereto, which authorization shall apply to all financing
statements filed on, prior to or after the date hereof. Each Borrower and
Guarantor hereby ratifies and approves all financing statements naming
Agent or its designee or Canadian Lender as secured party and such Borrower
or Guarantor, as the case may be, as debtor with respect to the Collateral
(and any amendments with respect to such financing statements) filed by or
on behalf of Agent and Canadian Lender prior to the date hereof and
ratifies and confirms the authorization of Agent and Canadian Lender to
file such financing statements (and amendments, if any). Each Borrower and
Guarantor hereby authorizes Agent to adopt on behalf of such Borrower and
Guarantor any symbol required for authenticating any electronic filing. In
the event that the description of the collateral in any financing statement
naming Agent or its designee or Canadian Lender as the secured party and
any Borrower or Guarantor as debtor includes assets and properties of such
Borrower or Guarantor that do not at any time constitute Collateral,
whether hereunder, under any of the other Financing Agreements or
otherwise, the filing of such financing statement shall nonetheless be
deemed authorized by such Borrower or Guarantor to the extent of the
Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise
affect the financing statement as it applies to any of the Collateral. In
no event shall any Borrower or Guarantor at any time file, or permit or
cause to be filed, any correction statement or termination statement with
respect to any financing statement (or amendment or continuation with
respect thereto) naming Agent or its designee or Canadian Lender as secured
party and such Borrower or Guarantor as debtor, without the express prior
written consent of Agent.
(b) Each Borrower and Guarantor does not have any chattel
paper (whether tangible or electronic) or instruments as of the date
hereof, except as set forth in the Information Certificate and except for
checks deposited or to be deposited for collection in the ordinary course
of business. In the event that any Borrower or Guarantor shall receive any
chattel paper or instrument in excess of $100,000 after the date hereof
(except for checks deposited or to be deposited for collection in the
ordinary course of business), Borrowers and Guarantors shall promptly
notify Agent thereof in writing. Promptly upon the receipt thereof by or on
behalf of any Borrower or Guarantor, such Borrower or Guarantor shall
deliver, or cause to be delivered to Agent, all tangible chattel paper and
instruments (except for checks deposited or to be deposited for collection
in the ordinary course of business) that such Borrower or Guarantor has or
may at any time acquire, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may from time to time specify,
in each case except as Agent may otherwise agree, provided, that, so long
as no Default or Event of Default shall exist or have occurred and be
continuing, Borrowers and Guarantors shall not be required to deliver to
Agent any tangible chattel paper or instrument received after the date
hereof until the aggregate amount of the monetary obligations evidenced
thereby exceed $250,000. Upon Agent's request, each Borrower and Guarantor
shall, or Agent may at any time on behalf of any Borrower or Guarantor,
cause the original of any such instrument or chattel paper to be
conspicuously marked in a form and manner acceptable to Agent with the
following legend referring to chattel paper or instruments as applicable:
"This [chattel paper][instrument] is subject to the security interest of
[Congress Financial Corporation as Agent][Congress Financial Corporation
(Canada)] and any sale, transfer, assignment or encumbrance of this
[chattel paper][instrument] violates the rights of such secured party."
(c) In the event that any Borrower or Guarantor shall at any
time hold or acquire an interest in any electronic chattel paper or any
"transferable record" (as such term is defined in Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction), such Borrower or Guarantor shall promptly notify
Agent thereof in writing. Promptly upon Agent's request, such Borrower or
Guarantor shall take, or cause to be taken, such actions as Agent may
reasonably request to give Agent control of such electronic chattel paper
under Section 9-105 of the UCC and control of such transferable record
under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as in effect in such jurisdiction.
(d) Each Borrower and Guarantor does not have any deposit
accounts as of the date hereof having or reasonably anticipated to have a
balance in excess of $50,000 (or the US Dollar Equivalent thereof), except
as set forth in the Information Certificate (provided, that, the aggregate
amount of the balances in all of those deposit accounts having a balance of
less than $50,000 (or the US Dollar Equivalent thereof) does not, and shall
not, exceed $250,000 or the US Dollar Equivalent thereof). Borrowers and
Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Agent shall have received not less than five
(5) Business Days prior written notice of the intention of any Borrower or
Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the bank at
which such account is to be opened or established, the individual at such
bank with whom such Borrower or Guarantor is dealing and the purpose of the
account, (ii) the bank where such account is opened or maintained shall be
reasonably acceptable to Agent, and (iii) on or before the opening of such
deposit account or so long as no Default or Event of Default shall exist or
have occurred and be continuing, promptly thereafter, such Borrower or
Guarantor shall deliver to Agent a Deposit Account Control Agreement with
respect to such deposit account duly authorized, executed and delivered by
such Borrower or Guarantor and the bank at which such deposit account is
opened and maintained, except, that, Borrowers and Guarantors shall not be
required to comply with clauses (i), (ii) or (iii) of this subsection (d)
as to any deposit account which at all times has a balance of less than
$50,000 so long as the aggregate amount of all deposits in all such
accounts is less than $250,000 and no Default of Event of Default shall
exist or have occurred and be continuing. The terms of this subsection (d)
shall not apply to deposit accounts specifically and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of any Borrower's or Guarantor's salaried employees.
(e) No Borrower or Guarantor owns or holds, directly or
indirectly, beneficially or as record owner or both, any investment
property, as of the date hereof, or have any investment account, securities
account, commodity account or other similar account with any bank or other
financial institution or other securities intermediary or commodity
intermediary as of the date hereof, in each case except as set forth in the
Information Certificate.
(i) In the event that any Borrower or Guarantor shall
be entitled to or shall at any time after the date hereof hold or acquire
any certificated securities, such Borrower or Guarantor shall promptly
endorse, assign and deliver the same to Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as Agent may
from time to time specify; provided, that, if such certificated securities
constitute shares of Capital Stock of a corporation constituting a
"controlled foreign corporation" (as such term is defined in Section 957(a)
of the Code or a successor provision thereof), then neither US Borrower nor
any Guarantor shall be required to endorse, assign or deliver to Agent
those certificates representing the number of shares of the issuer thereof
exceeding sixty-five (65%) percent of the voting power of all classes of
Capital Stock of such issuer entitled to vote. If any securities, now or
hereafter acquired by any Borrower or Guarantor are uncertificated and are
issued to such Borrower or Guarantor or its nominee directly by the issuer
thereof, such Borrower or Guarantor shall immediately notify Agent thereof
and shall subject to the proviso contained in the immediately preceding
sentence, as Agent may specify, either (A) cause the issuer to agree to
comply with instructions from Agent as to such securities, without further
consent of any Borrower or Guarantor or such nominee, or (B) arrange for
Agent to become the registered owner of the securities.
(ii) Borrowers and Guarantors shall not, directly or
indirectly, after the date hereof open, establish or maintain any
investment account, securities account, commodity account or any other
similar account (other than a deposit account) with any securities
intermediary or commodity intermediary unless each of the following
conditions is satisfied: (A) Agent shall have received not less than five
(5) Business Days prior written notice of the intention of such Borrower or
Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be
opened or established, the individual at such intermediary with whom such
Borrower or Guarantor is dealing and the purpose of the account, (B) the
securities intermediary or commodity intermediary (as the case may be)
where such account is opened or maintained shall be reasonably acceptable
to Agent, and (C) on or before the opening of such investment account,
securities account or other similar account with a securities intermediary
or commodity intermediary, such Borrower or Guarantor shall as Agent may
specify either (1) execute and deliver, and cause to be executed and
delivered to Agent, an Investment Property Control Agreement with respect
thereto duly authorized, executed and delivered by such Borrower or
Guarantor and such securities intermediary or commodity intermediary or (2)
arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(f) Borrowers and Guarantors are not the beneficiary or
otherwise entitled to any right to payment under any letter of credit,
banker's acceptance or similar instrument as of the date hereof, except as
set forth in the Information Certificate. In the event that any Borrower or
Guarantor shall receive any right to payment under any letter of credit,
banker's acceptance or any similar instrument having a face amount of
excess of $250,000 in any one case or $500,000 in the aggregate (or after
notice by Agent to US Borrower, at any time after a Default or Event of
Default shall exist or have occurred and for so long as the same is
continuing, regardless of the amount thereof), whether as beneficiary
thereof or otherwise after the date hereof, such Borrower or Guarantor
shall promptly notify Agent thereof in writing. At any time that the
aggregate amount of the Excess Availability of Borrowers is less than
$25,000,000 or a Default or an Event of Default exists or has occurred and
is continuing, such Borrower or Guarantor shall promptly, as Agent may
specify, either (i) use all commercially reasonable efforts (including the
payment of reasonable attorneys' fees and expenses of any person in
connection therewith) to deliver, or cause to be delivered to Agent, with
respect to any such letter of credit, banker's acceptance or similar
instrument, the written agreement of the issuer and any other nominated
person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance reasonably
satisfactory to Agent, consenting to the assignment of the proceeds of the
letter of credit to Agent by such Borrower or Guarantor and agreeing to
make all payments thereon directly to Agent or as Agent may otherwise
direct or (ii) cause Agent to become, at Borrowers' expense, the transferee
beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be), provided, that, upon Agent's request,
Borrowers and Guarantors shall use their commercially reasonable efforts
(without having to pay more than the customary fees of the applicable bank
but including the payment of reasonable attorneys' fees and expenses of any
person in connection therewith) to have such letter of credit, banker's
acceptance or similar instrument be transferable.
(g) Borrowers and Guarantors do not have any commercial tort
claims as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower or Guarantor shall at any time
after the date hereof have any commercial tort claims in excess of
$250,000, such Borrower or Guarantor shall promptly notify Agent thereof in
writing, which notice shall (i) set forth in reasonable detail the basis
for and nature of such commercial tort claim and (ii) include the express
grant by such Borrower or Guarantor to Agent of a security interest in such
commercial tort claim (and the proceeds thereof). In the event that such
notice does not include such grant of a security interest, the sending
thereof by such Borrower or Guarantor to Agent shall be deemed to
constitute such grant to Agent. Upon the sending of such notice, any
commercial tort claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of Agent provided in Section 5.2(a) hereof or otherwise
arising by the execution by such Borrower or Guarantor of this Agreement or
any of the other Financing Agreements, Agent is hereby irrevocably
authorized from time to time and at any time to file such financing
statements naming Agent or its designee as secured party and such Borrower
or Guarantor as debtor, or any amendments to any financing statements,
covering any such commercial tort claim as Collateral. In addition, each
Borrower and Guarantor shall promptly upon Agent's request, execute and
deliver, or cause to be executed and delivered, to Agent such other
agreements, documents and instruments as Agent may require in order to
perfect its security interest in such commercial tort claim.
(h) Borrowers and Guarantors do not have any goods,
documents of title or other Collateral in the custody, control or
possession of a third party as of the date hereof, except as set forth in
the Information Certificate and except for goods located in the United
States or Canada in transit to a location of a Borrower or Guarantor
permitted herein in the ordinary course of business of such Borrower or
Guarantor in the possession of the carrier transporting such goods. In the
event that any goods, documents of title or other Collateral are at any
time after the date hereof in the custody, control or possession of any
other person not referred to in the Information Certificate or such
carriers, Borrowers and Guarantors shall promptly notify Agent thereof in
writing. Promptly upon Agent's request, Borrowers and Guarantors shall
deliver to Agent a Collateral Access Agreement duly authorized, executed
and delivered by such person and the Borrower or Guarantor that is the
owner of such Collateral.
(i) Borrowers and Guarantors shall take any other actions
reasonably requested by Agent from time to time to cause the attachment,
perfection and (subject to liens permitted hereunder) first priority of,
and the ability of Agent and Canadian Lender to enforce, the security
interests of Agent or Canadian Lender in any and all of the Collateral,
including, without limitation, (i) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto
under the UCC, the PPSA or other applicable law, to the extent, if any,
that any Borrower's or Guarantor's signature thereon is required therefor,
(ii) causing Agent's name to be noted as secured party on any certificate
of title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security
interest of Agent in such Collateral, except that so long as no Default or
Event of Default shall exist or have occurred and be continuing, Agent
shall not exercise the rights under this clause (ii), (iii) complying with
any provision of any statute, regulation or treaty of the United States or
Canada as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of Agent and
Canadian Lender to enforce, the security interest of Agent or Canadian
Lender in such Collateral, (iv) using its commercially reasonable efforts
(but including the payment of reasonable attorneys' fees and expenses of
any person in connection therewith) to obtain the consents and approvals of
any Governmental Authority or third party, including, without limitation,
any consent of any licensor, lessor or other person obligated on
Collateral, and (v) taking all actions required by any law, as applicable
in any relevant jurisdiction (but not including the laws of any
jurisdiction outside the United States of America or Canada as may be
required with respect to trademarks registered in such jurisdiction).
SECTION 6. COLLECTION AND ADMINISTRATION
-----------------------------
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more
loan account(s) on its books in which shall be recorded (a) all Loans,
Letter of Credit Accommodations and other Obligations and the Collateral,
(b) all payments made by or on behalf of any Borrower or Guarantor and (c)
all other appropriate debits and credits as provided in this Agreement,
including fees, charges, costs, expenses and interest. All entries in the
loan account(s) shall be made in accordance with Agent's customary
practices as in effect from time to time.
6.2 Statements. Agent shall render to US Borrower each month a
statement setting forth the balance in the Borrowers' loan account(s)
maintained by Agent for Borrowers pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each
such statement shall be subject to subsequent adjustment by Agent but
shall, absent manifest errors or omissions, be considered correct and
deemed accepted by Borrowers and Guarantors and conclusively binding upon
Borrowers and Guarantors as an account stated except to the extent that
Agent receives a written notice from US Borrower of any specific exceptions
of US Borrower thereto within thirty (30) days after the date such
statement has been received by US Borrower. Until such time as Agent shall
have rendered to US Borrower a written statement as provided above, the
balance in any Borrower's loan account(s) shall be presumptive evidence of
the amounts due and owing to Agent and Lenders by Borrowers and Guarantors.
6.3 Collection of Accounts.
----------------------
(a) Borrowers and Guarantors shall establish and maintain,
at their expense, lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), with such banks as are reasonably acceptable to Agent
into which Borrowers and Guarantors shall promptly deposit and direct their
respective account debtors and other obligors to directly remit all
payments on Receivables and all payments constituting proceeds of Inventory
or other Collateral in the identical form in which such payments are made,
whether by cash, check or other manner. Borrowers and Guarantors shall
deliver, or cause to be delivered, to Agent a Deposit Account Control
Agreement duly authorized, executed and delivered by each bank where a
Blocked Account is maintained as provided in Section 5.2 hereof. The
Subsidiary Collection Accounts shall be the Blocked Accounts to which
Guarantors shall deposit and direct their respective account debtors and
other obligors to directly remit such payments as provided above. The
amounts received in the lockboxes of each Guarantor shall be deposited in
the Subsidiary Collection Accounts of such Guarantor and then as available
transferred to the Concentration Account each Business Day. The
Concentration Account shall be the Blocked Account to which US Borrower
shall deposit and direct its account debtors and other obligors to directly
remit such payments as provided above. The amounts received in the lockbox
of a Canadian Borrower shall be deposited in a Blocked Account held in the
name of such Canadian Borrower.
(b) The Deposit Account Control Agreements with the
depository banks at which the Blocked Accounts constituting the Subsidiary
Collection Accounts are maintained shall provide that the items received
for deposit therein, or the available funds from time to time on deposit
therein will be transferred, each Business Day (or as to any such
Subsidiary Collection Account until the balance of available funds therein
is more than $25,000 then once each week) only to the Concentration
Account. The Deposit Account Control Agreement of US Borrower with respect
to the Concentration Account and all other Deposit Account Control
Agreements with any US Company shall provide that the items received for
deposit therein, or the available funds from time to time on deposit
therein, will be transferred, upon written notice from Agent, only to the
Agent Payment Account. The Deposit Account Control Agreements with the
depository banks at which the Blocked Accounts of the Canadian Borrowers
are maintained shall provide that the items received for deposit therein,
or the available funds from time to time on deposit therein, will be
transferred, upon written notice from Agent, to the Canadian Lender Payment
Account. Until such time as Agent shall notify the depository bank at which
the Concentration Account is maintained otherwise, such depository bank
shall transfer the funds on deposit in the Blocked Accounts to such
operating bank account of the applicable Borrower or Guarantor as US
Borrower shall specify in writing to Agent. Agent will only instruct the
depository bank at which the Concentration Account is maintained (or any of
the other Deposit Account Control Agreements with a US Company other than
those with respect to the Subsidiary Collection Accounts) to transfer all
funds received or deposited into such Blocked Accounts to the Agent Payment
Account (in the case of US Borrower and Guarantors) or to the Canadian
Lender Payment Account (in the case of the Canadian Borrowers) at any time
that either: (i) an Event of Default shall exist or have occurred and be
continuing, or (ii) the aggregate amount of the Excess Availability of
Borrowers shall be less than $25,000,000. In the event that at any time
after Agent has instructed such depository banks to transfer such funds to
the Agent Payment Account or the Canadian Lender Payment Account (as the
case may be), each of the conditions set forth in clauses (i) and (ii)
above do not exist or have not occurred and are not continuing for a period
of not less than thirty (30) consecutive days, upon US Borrower's written
request, Agent shall instruct such depository banks to transfer the funds
on deposit in such accounts to such operating bank account of the
applicable Borrower or Guarantor as US Borrower may specify in writing to
Agent until such time as Agent is entitled to notify and shall notify the
depository bank otherwise as provided above. Each Borrower and Guarantor
agrees that, on and after the time that Agent has instructed the depository
banks to transfer such funds to the Agent Payment Account or the Canadian
Lender Payment Account (as the case may be) and for so long as such
instructions are in effect, all payments made to such Blocked Accounts or
other funds received and collected by Agent or any Lender, whether in
respect of the Receivables, as proceeds of Inventory or other Collateral or
otherwise shall be treated as payments to Agent and Lenders in respect of
the Obligations and therefore shall constitute the property of Agent and
Lenders to the extent of the then outstanding Obligations.
(c) For purposes of calculating the amount of the Loans
available to each Borrower, such payments will be applied (conditional upon
final collection) to the Obligations on the Business Day of receipt by
Agent of immediately available funds in the Agent Payment Account (in the
case of the US Companies) or the Canadian Lender Payment Account (in the
case of the Canadian Borrowers) provided such payments and notice thereof
are received in accordance with Agent's usual and customary practices as in
effect from time to time and within sufficient time to credit such
Borrower's loan account on such day, and if not, then on the next Business
Day.
(d) Each Borrower and Guarantor shall deposit or cause to be
deposited in the Blocked Accounts, or remit or cause to be remitted, in
kind, to Agent any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Accounts or other Collateral which come into
their possession or under their control and immediately upon receipt
thereof. In no event shall the same be commingled with any Borrower's or
Guarantor's own funds until such time as such funds may be transferred to
an operating account of a Borrower or Guarantor prior to the exercise by
Agent of its right under Section 6.3(b) to have funds remitted to the Agent
Payment Account or Canadian Lender Payment Account, as the case may be.
Borrowers agree to reimburse Agent on demand for any amounts owed or paid
to any bank at which a Blocked Account or any other deposit account is
established or any other bank or person involved in the transfer of funds
to or from the Blocked Accounts arising out of Agent's payments to or
indemnification of such bank or person. The obligations of Borrowers to
reimburse Agent for such amounts pursuant to this Section 6.3 shall survive
the termination of this Agreement.
6.4 Payments.
--------
(a) All Obligations of US Borrower and Guarantors shall be
payable to the Agent Payment Account and all Obligations of Canadian
Borrowers shall be payable to the Canadian Lender Payment Account as
provided in Section 6.3 or such other place as Agent may designate from
time to time. Agent shall apply payments received or collected from any
Borrower or Guarantor or for the account of any Borrower or Guarantor
(including the monetary proceeds of collections or of realization upon any
Collateral) as follows: first, to pay any fees, indemnities or expense
reimbursements then due to Agent and Lenders from any Borrower or
Guarantor; second, to pay interest due in respect of any Loans (and
including any Special Agent Advances); third, to pay or prepay principal in
respect of Special Agent Advances; fourth, to pay principal due in respect
of the Loans; fifth, to pay or prepay any other Obligations whether or not
then due, in such order and manner as Agent determines.
(b) Notwithstanding anything to the contrary contained in
this Agreement, unless so directed by US Borrower, or unless an Event of
Default shall exist or have occurred and be continuing, Agent shall not
apply any payments which it receives to any Eurodollar Rate Loans, except
on the expiration date of the Interest Period applicable to any such
Eurodollar Rate Loans or in the event that there are no outstanding Prime
Rate Loans, except that if there are no Prime Rate Loans outstanding, Agent
may instead hold any payments received by Agent or any Lender as cash
collateral for the Obligations rather than apply such amounts to any
Eurodollar Rate Loans prior to the expiration of the Interest Period
applicable thereto. Such cash collateral shall constitute part of the
Collateral and shall be held by Agent in an account designated by Agent for
such purposes in its books and records and may be commingled with Agent's
own funds. So long as no Default or Event of Default shall exist or have
occurred and be continuing and there is Excess Availability, amounts
received by Agent from Borrowers pursuant to the foregoing which are not
applied to the Obligations or are held as cash collateral pursuant to the
provisions of this Section 6.4 shall, upon the request of US Borrower
received by Agent on or before 12:00 noon Chicago time on any Business Day,
be remitted to US Borrower.
(c) Notwithstanding anything to the contrary contained in
this Agreement, (i) all payments by or on behalf of a Canadian Borrower
shall be applied only to pay Obligations of Canadian Borrowers, (ii) all
payments by or on behalf of a US Company shall be applied first to pay
Obligations of US Borrower, (iii) all payments in respect of the
Obligations of a Canadian Borrower shall be applied first to Obligations
denominated in the same currency as the payments received, provided that,
with respect to this clause (iii), (A) payments and collections received in
any currency other than the currency in which any outstanding Obligations
are denominated will be accepted and/or applied at the discretion of Agent,
(B) in the event that Agent elects to accept and apply such amounts when
there are no Obligations (other than Letter of Credit Accommodations or
other contingent Obligations) then outstanding in the same currency, Agent
may, at its option (but is not obligated to), convert such currency
received to the currency in which the Obligations are denominated at the
Exchange Rate on such date (regardless of whether such rate is the best
available rate) and (C) in such event, Borrowers shall pay the costs of
such conversion (or Agent may, at its option, charge such costs to the loan
account of any Borrower maintained by Agent) and (iv) to the extent any
Borrower or Guarantor, directly or indirectly, uses any proceeds of the
Loans or Letter of Credit Accommodations to acquire rights in or the use of
any Collateral or to repay any Indebtedness used to acquire rights in or
the use of any Collateral, payments in respect of the Obligations shall be
deemed applied first to the Obligations arising from Loans and Letter of
Credit Accommodations that were not used for such purposes and second to
the Obligations arising from Loans and Letter of Credit Accommodations the
proceeds of which were used to acquire rights in or the use of any
Collateral in the chronological order in which such Borrower acquired such
rights in or the use of such Collateral.
(d) At Agent's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other
Financing Agreements may be charged when due directly to the loan
account(s) of any Borrower maintained by Agent. Except as otherwise
specifically provided in Section 6.12 hereof, Borrowers and Guarantors
shall make all payments to Agent and Lenders on the Obligations free and
clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment
of, any of the Obligations, Agent or any Lender is required to surrender or
return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Agent or
such Lender. Borrowers and Guarantors shall be liable to pay to Agent, and
do hereby indemnify and hold Agent and Lenders harmless for the amount of
any payments or proceeds surrendered or returned. This Section 6.4(d) shall
remain effective notwithstanding any contrary action which may be taken by
Agent or any Lender in reliance upon such payment or proceeds. This Section
6.4 shall survive the payment of the Obligations and the termination of
this Agreement.
6.5 Authorization to Make Loans.
---------------------------
(a) Agent and Lenders are authorized to make the Loans and
provide the Letter of Credit Accommodations based upon telephonic or other
instructions received from anyone purporting to be (and believed by Agent
or Canadian Lender to be) an officer of US Borrower or a Canadian Borrower
or other authorized person or, at the discretion of Agent, if such Loans
are necessary to satisfy any Obligations. All requests for Loans or Letter
of Credit Accommodations hereunder shall specify the date on which the
requested advance is to be made or Letter of Credit Accommodations
established (which day shall be a Business Day) and the amount of the
requested Loan. Requests received after 12:00 noon Chicago time on any day
shall be deemed to have been made as of the opening of business on the
immediately following Business Day. All Loans and Letter of Credit
Accommodations under this Agreement shall be conclusively presumed to have
been made to, and at the request of and for the benefit of, any Borrower or
Guarantor when deposited to the credit of any Borrower or Guarantor or
otherwise disbursed or established in accordance with the instructions of
any Borrower or Guarantor or in accordance with the terms and conditions of
this Agreement.
(b) All Loans provided to US Borrower shall be in or
denominated in US Dollars and shall be disbursed only to bank accounts in
the United States of America and all Loans provided to Canadian Borrowers
shall be in or denominated in either Canadian Dollars or US Dollars as US
Borrower or a Canadian Borrower may specify, except as Canadian Lender may
otherwise specifically agree in writing and shall be disbursed only to bank
accounts in Canada. Set forth on Schedule 8.10 to the Information
Certificate are the bank accounts of each Borrower used by such Borrower
for making payments of its Indebtedness and other obligations to which, as
of the date hereof, proceeds of Loans may be disbursed.
6.6 Use of Proceeds; Intercompany Loans.
-----------------------------------
(a) US Borrower shall use the initial proceeds of the Loans
made by or on behalf of US Lenders to US Borrower hereunder on the day such
Loans are made only for loans by US Borrower to the Borrowing Base
Guarantors under the Intercompany Credit Facilities in the amounts set
forth in the disbursement direction letter furnished by US Borrower to
Agent on the date hereof, provided, that, each such Guarantor shall use the
proceeds of the loans received by such Guarantor from US Borrower to repay
Indebtedness of such Guarantor to US Borrower outstanding under the
Intercompany Credit Facilities immediately prior thereto. US Borrower shall
use the proceeds of the repayments it receives from Borrowing Base
Guarantors to repay all of the Indebtedness of US Borrower to the Existing
Lenders and for the other payments to the persons listed in the
disbursement direction letter furnished by US Borrower to Agent on or about
the date hereof.
(b) Canadian Borrowers shall use the initial proceeds of the
Loans made by or on behalf of Canadian Lender to Canadian Borrowers
hereunder on the day such Loans are made only for payments to each of the
persons listed in the disbursement direction letter furnished by US
Borrower to Agent on or about the date hereof.
(c) US Borrower shall only use the proceeds of all Loans
after the date hereof either: (i) to make a substantially contemporaneous
loan to a Guarantor pursuant to the Intercompany Credit Facility of US
Borrower with such Guarantor to the extent permitted under Section 9.10(h)
hereof, (ii) to make a substantially contemporaneous payment in respect of
the Indebtedness of US Borrower evidenced by the Senior Notes to the extent
permitted under Section 9.9 hereof, (iii) to make the loans or investments
permitted under Section 9.10 hereof, (iv) to repurchase the shares of
Capital Stock of US Borrower consisting of common stock to the extent
permitted under Section 9.11 hereof, or (v) to make a substantially
contemporaneous payment for legal and accounting, insurance, marketing,
corporate management, payroll and similar types of services incurred or
paid for by US Borrower on behalf of itself or any of its Subsidiaries in
the ordinary course of their respective businesses or as the same may be
directly attributable to any such Subsidiary (and in each case in
accordance with current practices as of the date hereof) and for the
payment of taxes by or on behalf of US Borrower or (vi) for other proper
corporate purposes not otherwise prohibited by the terms hereof.
(d) All loans made by US Borrower to any Guarantor or Letter
of Credit Accommodations provided by Lender for the benefit of, or in
connection with the business of, any Guarantor pursuant to the provisions
hereof shall only be used by such Guarantor for general operating, working
capital and other proper corporate purposes of such Guarantor not otherwise
prohibited by the terms hereof.
(e) None of the proceeds of the Loans or the Letter of
Credit Accommodations or the loans by US Borrower to any Guarantor pursuant
to the Intercompany Loan Agreements or otherwise shall be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security
or for the purposes of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Loans or such intercompany loans
to be considered a "purpose credit" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System, as amended.
(f) All proceeds of Loans to US Borrower shall be disbursed
by Agent or US Lenders to one of the depository accounts of US Borrower or
the Borrowing Base Guarantors listed on Schedule 8.10 to the Information
Certificate which US Borrower shall designate to Agent at such time as US
Borrower requests such Loan and an intercompany loan by US Borrower to such
Borrowing Base Guarantor pursuant to the Intercompany Loan Agreements of US
Borrower with such Borrowing Base Guarantor shall have been deemed made
upon such disbursement of the proceeds of the Loan to such Guarantor;
provided, that, except as Agent may elect, Agent and US Lenders shall not
disburse proceeds of Loans to or for the benefit of any Borrowing Base
Guarantor if after giving effect thereto any of the conditions with respect
to any such loan set forth in Section 9.10(h) hereof are not satisfied.
6.7 Appointment of US Borrower as Agent for Requesting Loans and
Receipts of Loans and Statements.
(a) Each Borrower and Guarantor hereby irrevocably appoints
and constitutes US Borrower as its agent to request and receive Loans and
Letter of Credit Accommodations pursuant to this Agreement and the other
Financing Agreements from Agent or any Lender in the name or on behalf of
such Borrower and to request and receive intercompany loans pursuant to the
Intercompany Loan Agreements in the name or on behalf of any Guarantor.
Agent and Lenders may disburse the Loans to such bank account of a Borrower
or a Guarantor or otherwise make such Loans to a Borrower or Guarantor and
provide such Letter of Credit Accommodations to a Borrower or Guarantor as
US Borrower may designate or direct, without notice to any other Borrower
or Guarantor. Notwithstanding anything to the contrary contained herein, at
any time on or after a Default or Event of Default shall exist or have
occurred and be continuing, Agent may at any time and from time to time
require that Loans to or for the account of any Borrower be disbursed
directly to an operating account of such Borrower or that any intercompany
loans to be made with the proceeds of any Loans be disbursed directly to an
operating account of the Guarantor that is to receive the proceeds of such
intercompany loans.
(b) US Borrower hereby accepts the appointment by Borrowers
and Guarantors to act as the agent of Borrowers and Guarantors pursuant to
this Section 6.7. US Borrower shall ensure that the disbursement of any
Loans to US Borrower the proceeds of which are to be used to make an
intercompany loan to a Guarantor pursuant to the Intercompany Credit
Facility of US Borrower with such Guarantor are paid to or for the account
of such Guarantor.
(c) Each other Borrower and Guarantor hereby irrevocably
appoints and constitutes US Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty,
agreement or undertaking by or on behalf of any other Borrower or any
Guarantor by US Borrower shall be deemed for all purposes to have been made
by such Borrower or Guarantor, as the case may be, and shall be binding
upon and enforceable against such Borrower or Guarantor to the same extent
as if made directly by such Borrower of Guarantor.
(e) No purported termination of the appointment of US
Borrower as agent as aforesaid shall be effective, except after ten (10)
days' prior written notice to Agent.
6.8 Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement: (a) the making and conversion of Loans shall be made among
the US Lenders based on their respective Pro Rata Shares as to the Loans
under the US Credit Facility and (b) each payment on account of any
Obligations to or for the account of one or more of US Lenders in respect
of any Obligations under the US Credit Facility due on a particular day
shall be allocated among the US Lenders under such Credit Facility entitled
to such payments based on their respective Pro Rata Shares and shall be
distributed accordingly.
6.9 Sharing of Payments, Etc.
------------------------
(a) Each Borrower and Guarantor agrees that, in addition to
(and without limitation of) any right of setoff, banker's lien or
counterclaim Agent or any Lender may otherwise have, each Lender shall be
entitled, at its option (but subject, as among Agent and Lenders, to the
provisions of Section 12.3(b) hereof), to offset balances held by it for
the account of such Borrower or Guarantor at any of its offices, in dollars
or in any other currency, against any principal of or interest on any Loans
owed to such Lender or any other amount payable to such Lender hereunder,
that is not paid when due (regardless of whether such balances are then due
to such Borrower or Guarantor), in which case it shall promptly notify US
Borrower and Agent thereof; provided, that, (i) such Lender's failure to
give such notice shall not affect the validity thereof and (ii) the
balances of a Canadian Borrower shall not be offset against interest or
principal owed by US Borrower or any Guarantor.
(b) If any US Lender (including Agent) shall obtain from US
Borrower or any Guarantor payment of any principal of or interest on any
Loan owing to it or payment of any other amount under this Agreement or any
of the other Financing Agreements through the exercise of any right of
setoff, banker's lien or counterclaim or similar right or otherwise (other
than from Agent as provided herein), and, as a result of such payment, such
Lender shall have received more than its Pro Rata Share of the principal of
the Loans made to US Borrower or more than its share of such other amounts
then due hereunder or thereunder by US Borrower or any Guarantor to such US
Lender than the percentage thereof received by any other US Lender, it
shall promptly pay to Agent, for the benefit of US Lenders, the amount of
such excess and simultaneously purchase from such other US Lenders a
participation in the Loans made to the US Borrower or such other amounts,
respectively, owing to such other US Lenders (or such interest due thereon,
as the case may be) in such amounts, and make such other adjustments from
time to time as shall be equitable, to the end that all US Lenders shall
share the benefit of such excess payment (net of any expenses that may be
incurred by such US Lender in obtaining or preserving such excess payment)
in accordance with their respective Pro Rata Shares or as otherwise agreed
by US Lenders. To such end all US Lenders shall make appropriate
adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) US Borrower and each Guarantor agrees that any Lender
purchasing a participation (or direct interest) as provided in this Section
may exercise, in a manner consistent with this Section, all rights of
setoff, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or
other amounts (as the case may be) owing to such Lender in the amount of
such participation.
(d) Nothing contained herein shall require any Lender to
exercise any right of setoff, banker's lien, counterclaims or similar
rights or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other
Indebtedness or obligation of any Borrower or Guarantor. If, under any
applicable bankruptcy, insolvency or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, assign such rights to Agent for
the benefit of Lenders and, in any event, exercise its rights in respect of
such secured claim in a manner consistent with the rights of Lenders
entitled under this Section to share in the benefits of any recovery on
such secured claim.
6.10 Settlement Procedures.
---------------------
(a) In order to administer the US Credit Facility in an
efficient manner and to minimize the transfer of funds between Agent and US
Lenders, Agent may, at its option, subject to the terms of this Section,
make available, on behalf of US Lenders, the full amount of the Loans
requested or charged to US Borrower's loan account(s) or otherwise to be
advanced by US Lenders pursuant to the terms hereof, without requirement of
prior notice to US Lenders of the proposed Loans.
(b) With respect to all Loans made by Agent on behalf of US
Lenders under the US Credit Facility as provided in this Section, the
amount of each US Lender's Pro Rata Share of the outstanding Loans shall be
computed weekly, and shall be adjusted upward or downward on the basis of
the amount of the outstanding Loans as of 5:00 p.m. Chicago time on the
Business Day immediately preceding the date of each settlement computation;
provided, that, Agent retains the absolute right at any time or from time
to time to make the above described adjustments at intervals more frequent
than weekly, but in no event more than twice in any week. Agent shall
deliver to each of the US Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of
the amount of outstanding Loans under the US Credit Facility for such
period (such week or lesser period or periods being hereinafter referred to
as a "Settlement Period"). If the summary statement is sent by Agent and
received by a US Lender prior to 12:00 noon Chicago time, then such US
Lender shall make the settlement transfer described in this Section by no
later than 3:00 p.m. Chicago time on the same Business Day and if received
by a Lender after 12:00 noon Chicago time, then such Lender shall make the
settlement transfer by not later than 3:00 p.m. Chicago time on the next
Business Day following the date of receipt. If, as of the end of any
Settlement Period, the amount of a US Lender's Pro Rata Share of the
outstanding Loans under the US Credit Facility is more than such US
Lender's Pro Rata Share of the outstanding Loans under the US Credit
Facility as of the end of the previous Settlement Period, then such Lender
shall forthwith (but in no event later than the time set forth in the
preceding sentence) transfer to Agent by wire transfer in immediately
available funds the amount of the increase. Alternatively, if the amount of
a Lender's Pro Rata Share of the outstanding Loans under the US Credit
Facility in any Settlement Period is less than the amount of such Lender's
Pro Rata Share of the outstanding Loans under the US Credit Facility for
the previous Settlement Period, Agent shall forthwith transfer to such
Lender by wire transfer in immediately available funds the amount of the
decrease. The obligation of each of the US Lenders to transfer such funds
and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Agent and each US Lender agrees
to xxxx its books and records at the end of each Settlement Period to show
at all times the dollar amount of its Pro Rata Share of the outstanding
Loans and Letter of Credit Accommodations under the US Credit Facility.
Each US Lender shall only be entitled to receive interest on its Pro Rata
Share of the Loans to the extent such Loans have been funded by such
Lender. Because the Agent on behalf of US Lenders may be advancing and/or
may be repaid Loans prior to the time when US Lenders will actually advance
and/or be repaid such Loans, interest with respect to Loans shall be
allocated by Agent in accordance with the amount of Loans actually advanced
by and repaid to each US Lender and the Agent and shall accrue from and
including the date such Loans are so advanced to but excluding the date
such Loans are either repaid by or on behalf of US Borrower or actually
settled with the applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred,
upon repayment of any Loans by or on behalf of US Borrower, Agent may apply
such amounts repaid directly to any amounts made available by Agent
pursuant to this Section. In lieu of weekly or more frequent settlements,
Agent may, at its option, at any time require each US Lender to provide
Agent with immediately available funds representing its Pro Rata Share of
each Loan, prior to Agent's disbursement of such Loan to US Borrower. In
such event, all Loans under this Agreement shall be made by the US Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender
shall be responsible for any default by any other Lender in the other
Lender's obligation to make a Loan requested hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of the
default by any other Lender in the other Lender's obligation to make a Loan
hereunder.
(d) If Agent is not funding a particular Loan to US Borrower
pursuant to this Section on any day, Agent may assume that each US Lender
will make available to Agent such Lender's Pro Rata Share of the Loan
requested or otherwise made under the US Credit Facility on such day and
Agent may, in its discretion, but shall not be obligated to, cause a
corresponding amount to be made available to or for the benefit of US
Borrower on such day. If Agent makes such corresponding amount available to
or for the benefit of US Borrower and such corresponding amount is not in
fact made available to Agent by such Lender, Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon for each day from the date such payment was due until the
date such amount is paid to Agent at the Federal Funds Rate for each day
during such period (as published by the Federal Reserve Bank of New York or
at Agent's option based on the arithmetic mean determined by Agent of the
rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent)
and if such amounts are not paid within three (3) days of Agent's demand,
at the highest Interest Rate provided for in Section 3.1 hereof applicable
to Prime Rate Loans. During the period in which such Lender has not paid
such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing
Agreements, the amount so advanced by Agent to or for the benefit of US
Borrower shall, for all purposes hereof, be a Loan made by Agent under the
US Credit Facility for its own account. Upon any such failure by a US
Lender to pay Agent, Agent shall promptly thereafter notify US Borrower of
such failure and US Borrower shall pay or cause to be paid such
corresponding amount to Agent for its own account within five (5) Business
Days of US Borrower's receipt of such notice. A Lender who fails to pay
Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender's behalf, or any Lender who fails to pay any other amount owing by
it to Agent, is a "Defaulting Lender". Agent shall not be obligated to
transfer to a Defaulting Lender any payments received by Agent for the
Defaulting Lender's benefit, nor shall a Defaulting Lender be entitled to
the sharing of any payments hereunder (including any principal, interest or
fees). Amounts payable to a Defaulting Lender shall instead be paid to or
retained by Agent. Agent may hold and, in its discretion, relend to a
Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Lender. For purposes of voting or consenting to
matters with respect to this Agreement and the other Financing Agreements
and determining Pro Rata Shares, such Defaulting Lender shall be deemed not
to be a "Lender" and such Lender's Commitment shall be deemed to be zero
(0). This Section shall remain effective with respect to a Defaulting
Lender until such default is cured. The operation of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender,
or relieve or excuse the performance by any Borrower or Guarantor of their
duties and obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement
or the other Financing Agreements shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights
that any Borrower may have against any Lender as a result of any default by
any Lender hereunder in fulfilling its Commitment.
6.11 Obligations Several; Independent Nature of Lenders' Rights.
The obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing
Agreements and no action taken by the Lenders pursuant hereto or thereto
shall be deemed to constitute the Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts
payable at any time hereunder to each Lender shall be a separate and
independent debt, and subject to Section 12.3 hereof, each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement
and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
6.12 Taxes.
-----
(a) Any and all payments by or on behalf of a Borrower
hereunder and under any other Financing Agreement shall be made, in
accordance with Section 6.4, free and clear of and without deduction for
any and all Taxes, excluding the following (collectively, "Excluded
Taxes"): (i) income taxes imposed on the net income of Agent or any Lender
(or any transferee or assignee of such Lender, including any Participant,
any such transferee or assignee being referred to as a "Transferee") in the
jurisdiction of Agent's or such Lender's applicable lending office or
jurisdiction of organization or any political subdivision thereof and (ii)
franchise or similar taxes imposed on or determined by reference to the net
income of Agent or any Lender (or Transferee), in each case by the United
States of America or by the jurisdiction under the laws of which such
Lender (or Transferee) (A) is organized or any political subdivision
thereof, (B) has its applicable lending office located or (C) is otherwise
doing business. In addition, Borrowers and Guarantors agree to pay to the
relevant Governmental Authority in accordance with applicable law any Other
Taxes; provided, that, no Canadian Borrower shall pay Other Taxes with
respect to payments by or for US Borrower.
(b) If a Borrower or Guarantor shall be required by law to
deduct or withhold in respect of any Taxes or Other Taxes (other than
Excluded Taxes) from or in respect of any sum payable hereunder to Agent or
any Lender, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Lender (or Agent on behalf of such Lender or itself, as
the case may be) receives an amount equal to the sum it would have received
had no such deductions or withholdings been made;
(ii) such Borrower or Guarantor shall make such
deductions and withholdings;
(iii) such Borrower or Guarantor shall pay the full
amount deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) to the extent not paid to Agent and Lenders
pursuant to clause (i) above, Borrowers and Guarantors shall also pay to
Agent or any Lender, at the time interest is paid, all additional amounts
which Agent or any Lender specifies as necessary to preserve the after-tax
yield such Lender would have received if such Taxes or Other Taxes had not
been imposed.
(c) Within thirty (30) days after the date of any payment by
a Borrower or Guarantor of Taxes or Other Taxes, upon Agent's request, US
Borrower shall furnish to Agent the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment reasonably
satisfactory to Agent.
(d) Borrowers and Guarantors will indemnify Agent and each
Lender (or Transferee) for the full amount of Taxes and Other Taxes paid by
Agent or such Lender (or Transferee, as the case may be); provided, that,
no Canadian Borrower shall indemnify Agent or any Lender for Taxes and
Other Taxes relating to US Borrower. If Agent or such Lender (or
Transferee) receives a refund in respect of any Taxes or Other Taxes for
which Agent or such Lender (or Transferee) has received payment from a
Borrower or Guarantor hereunder, so long as no Event of Default shall exist
or have occurred and be continuing, Agent or such Lender (as the case may
be) shall credit to the loan account of the applicable Borrower the amount
of such refund plus any interest received (but only to the extent of
indemnity payments made, or additional amounts paid, by or on behalf of
such Borrower under this Section 6.12 with respect to the Taxes or Other
Taxes giving rise to such refund). If a Lender (or any Transferee) claims a
tax credit in respect of any Taxes for which it has been indemnified by a
Borrower or Guarantor pursuant to this Section 6.12, such Lender will apply
the amount of the actual dollar benefit received by such Lender as a result
thereof, as reasonably calculated by such Lender and net of all expenses
related thereto, to the Loans made by such Lender. If Taxes or Other Taxes
were not correctly or legally asserted, Agent or such Lender shall, upon US
Borrower's request and at the expense of US Borrower and Guarantors,
provide such documents to US Borrower in form and substance satisfactory to
Agent, as US Borrower may reasonably request, to enable such Borrower or
Guarantor to contest such Taxes or Other Taxes pursuant to appropriate
proceedings then available to such Borrower or Guarantor (so long as
providing such documents shall not, in the good faith determination of
Agent or the Lender, have a reasonable likelihood of resulting in any
liability of Agent or such Lender for which Agent has not established a
Reserve). The indemnity provided for herein shall survive the payment of
the Obligations and the termination of this Agreement. A certificate as to
the amount of such payment or liability and setting forth in reasonable
detail the calculation and basis for such payment or liability delivered to
US Borrower by a Lender or by Agent on its own behalf or on behalf of a
Lender, shall be conclusive, absent manifest error.
(e) Each Transferee of a US Lender or Agent that is not a
United States person within the meaning of Section 7701(a)(30) of the Code
and that is a US Lender or claims indemnification or additional amounts
under this Section 6.12 (a "Non-U.S. Person") shall deliver to US Borrower
two (2) copies of the applicable United States Internal Revenue Service
Form W-8 wherein such Transferee claims entitlement to a complete exemption
from U.S. federal income withholding tax on all payments by or on behalf of
US Borrower under this Agreement and the other Financing Agreements. Such
forms shall be delivered by any Non-U.S. Person receiving payments by or on
behalf of US Borrower on or before the date it becomes a party to this
Agreement (or, in the case of a Transferee that is a Participant, on or
before the date such Participant becomes a Transferee hereunder) and on or
before the date, if any, such Non-U.S. Person changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, a Non-U.S. Person shall upon written notice from US
Borrower promptly deliver such new forms as are required by the relevant
Governmental Authority to claim exemption from, or reduction in the rate
of, U.S. Federal withholding tax upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Person. Each Lender and Agent
that is a United States Person (other than a Lender or Agent that is a
corporation or otherwise exempt from United States backup withholding Tax)
shall deliver at the time(s) and in the manner(s) if and to the extent such
delivery is required under applicable law, to US Borrower and Agent (as
applicable), a properly completed and duly executed United States Internal
Revenue From W-9 or any successor form, certifying that such Person is
exempt from United States backup withholding Tax on payments made by US
Borrower hereunder. Notwithstanding any other provision of this Section
6.12(e), no Non-U.S. Person, Agent or any Lender shall be required to
deliver any form pursuant to this Section 6.12(e) that such Non-U.S.
Person, Agent or Lender is not legally able to deliver.
(f) Borrowers shall not be required to indemnify any Person
or to pay any additional amounts to any Person pursuant to subsections (a)
or (d) above to the extent that the (i) the Tax was applicable on the date
such Person became a party to this Agreement (or, in the case of a
Transferee that is a Participant, on the date such Participant became a
Transferee hereunder) or, with respect to payments to a New Lending Office,
the date such Person designated such New Lending Office with respect to a
Loan; provided, that, this subsection (f) shall not apply (A) to any
Transferee or New Lending Office that becomes a Transferee or New Lending
Office as a result of an assignment, participation, transfer or designation
made at the request or with the approval of any Borrower or Guarantor and
(B) to the extent the indemnity payment or additional amounts any
Transferee, acting through a New Lending Office, would be entitled to
receive (without regard to this subsection (f)) do not exceed the indemnity
payment or additional amounts that the person making the assignment,
participation or transfer to such Transferee making the designation of such
New Lending Office, would have been entitled to receive in the absence of
such assignment, participation, transfer or designation or (ii) the
obligation to pay such additional amounts would not have arisen but for a
failure by such Person to comply with the provisions of subsection (e)
above or the gross negligence or wilful misconduct of such Person as
determined pursuant to a final, non- appealable order of a court of
competent jurisdiction.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
----------------------------------
7.1 Collateral Reporting.
--------------------
(a) Borrowers shall provide Agent with the following
documents in a form satisfactory to Agent:
(i) as soon as possible after the end of every other
week (but in any event by the close of business in Chicago on the third
(3rd) Business Day after the end of each such period), or in the event that
the aggregate amount of the Excess Availability of Borrowers is less than
$25,000,000, at Agent's option, as soon as possible after the end of each
week (but in any event by the close of business in Chicago on the third
(3rd) Business Day after the end of each such period), a Borrowing Base
Certificate setting forth the calculation of the Borrowing Base as of the
last Business Day of the immediately preceding period as to the Accounts
and as of the last day of the month immediately prior to the delivery of
such Borrowing Base Certificate as to Inventory (if the reports as to
Inventory for such month have been required to be delivered pursuant to
clause (ii) below) or as of the last day of the second month prior to the
delivery of such Borrowing Base Certificate (if the reports as to the
immediately preceding month have not been required to be delivered pursuant
to clause (ii) below), duly completed and executed by the chief financial
officer, treasurer, assistant treasurer, controller or other financial or
senior officer of US Borrower, together with all schedules required
pursuant to the terms of the Borrowing Base Certificate duly completed
(including a schedule of all Accounts created, collections received and
credit memos issued for each day of the immediately preceding period) or at
any time a Default or Event of Default exists or has occurred and is
continuing, at Agent's option, schedules of Accounts created, collections
received and credit memos issued on a daily basis;
(ii) as soon as possible after the end of each month
(but in any event within ten (10) Business Days after the end thereof), on
a monthly basis or in the event that the aggregate amount of the Excess
Availability of Borrowers is less than $25,000,000 or a Default or Event of
Default shall exist or have occurred and be continuing, in each case at
Agent's option, as soon as possible after the end of each week, (A) reports
as to the inventory of Borrowers and Guarantors in such form as Agent may
specify, and including inventory reports by location, age and mix (and
including the amounts of Inventory and the value thereof at any leased
locations and at premises of warehouses, processors or other third
parties), (B) agings of accounts receivable (together with a reconciliation
to the previous month's aging and general ledger) and (C) reports of
accounts payable based on due date (and including information indicating
the amounts owing to owners and lessors of leased premises, warehouses,
processors and other third parties from time to time in possession of any
Collateral) or such other reports of inventory and accounts payable
maintained in the ordinary course of business consistent with the current
practices of Borrowers and Guarantors as of the date hereof;
(iii) upon Agent's reasonable request, (A) copies of
such customer statements and credit memos, remittance advices and reports,
and copies of such deposit slips and bank statements as Agent may specify
pursuant to such a request, (B) copies of such shipping and delivery
documents as to Inventory or Equipment as Agent may specify pursuant to
such a request, and (C) copies of such purchase orders, invoices and
delivery documents for Inventory and Equipment as Agent may specify
pursuant to such a request;
(iv) such other reports as to the Collateral as Agent
shall reasonably request from time to time (and including information of
Inventory of Borrowers and Guarantors on hand as it relates to firm advance
orders).
(b) Nothing contained in any Borrowing Base Certificate
shall be deemed to limit, impair or otherwise affect the rights of Agent or
any Lender contained herein and in the event of any conflict or
inconsistency between the calculation of a Borrowing Base as set forth in
any Borrowing Base Certificate and as determined by Agent in good faith,
the reasonable determination of Agent shall govern and be conclusive and
binding upon Borrowers and Guarantors, absent manifest error. Without
limiting the foregoing, Borrowers shall furnish to Agent any information
which Agent may reasonably request regarding the determination and
calculation of any of the amounts set forth in any Borrowing Base
Certificate.
(c) All of the documents, reports and schedules provided by
Borrowers and Guarantors to Agent hereunder for Receivables payable in any
currency other than US Dollars and Inventory located outside the United
States of America shall set forth the US Dollar Equivalent for the amount
of the Receivables and Value of the Inventory included in any such
documents, reports or schedules. For purposes hereof, Agent may, at its
option, provide to US Borrower, at least five (5) Business Day prior to the
date any such documents, reports or schedules are required to be provided
by Borrowers to Agent hereunder, the Exchange Rates required to set forth
the US Dollar Equivalent in such documents, reports and schedules and in
the event Agent does not do so, Borrowers shall use such rates of exchange
with respect to the applicable currencies as Borrowers use for such purpose
in the ordinary course of business consistent with current practices as of
the date hereof and shall identify such rates of exchange in any such
documents, reports and schedules.
(d) If any Borrower's or Guarantor's records or reports of
the Collateral are prepared or maintained by an accounting service,
contractor, shipper or other agent, such Borrower and Guarantor hereby
irrevocably authorizes such service, contractor, shipper or agent to
deliver such records, reports, and related documents to Agent and to follow
Agent's instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
------------------
(a) Borrowers shall notify Agent promptly of: (i) any
material delay in any Borrower's performance of any of its material
obligations to any account debtor named in clause (n) of the definition of
the term Eligible Accounts with respect to any material order or the
assertion of any material claims, offsets, defenses or counterclaims by any
account debtor, or any material disputes with account debtors, or any
settlement, adjustment or compromise thereof, (ii) all material adverse
information known to any Borrower or Guarantor relating to the financial
condition of any account debtor and (iii) any event or circumstance (other
than account agings) which, to the best of any Borrower's or Guarantor's
knowledge, would result in any then existing Accounts as no longer
constituting Eligible Accounts. No credit, discount, allowance or extension
or agreement for any of the foregoing shall be granted to any account
debtor without Agent's consent, except in the ordinary course of a
Borrower's or Guarantor's business in accordance with practices and
policies previously disclosed in writing to Agent and except as set forth
in the schedules delivered to Agent pursuant to Section 7.1(a) above. So
long as no Event of Default exists or has occurred and is continuing,
Borrowers and Guarantors shall settle, adjust or compromise any claim,
offset, counterclaim or dispute with any account debtor. At any time that
an Event of Default exists or has occurred and is continuing, Agent may, at
its option, notify US Borrower that Agent intends to have the exclusive
right to settle, adjust or compromise any claim, offset, counterclaim or
dispute with account debtors or grant any credits, discounts or allowances
and on and after such notice from Agent to US Borrower, Agent shall have
such exclusive right, until such time as Agent may notify US Borrower
otherwise.
(b) With respect to each Account: (i) the amounts shown on
any invoice delivered to Agent or schedule thereof delivered to Agent shall
be true and complete, (ii) there shall be no setoffs, deductions, contras,
defenses, counterclaims or disputes existing or asserted with respect
thereto except as reported to Agent in accordance with the terms
of this Agreement, (iii) none of the transactions giving rise thereto will
violate any applicable foreign, Federal, State, Provincial or local laws or
regulations in any material respect.
(c) Agent shall have the right at any time or times, but
subject to reasonable intervals consistent with Agent's customary
practices, in Agent's name or in the name of a nominee of Agent, to verify
the validity, amount or any other matter relating to any Receivables or
other Collateral, by mail, telephone, facsimile transmission or otherwise.
7.3 Inventory Covenants. With respect to the Inventory: (a) each
Borrower and Guarantor shall at all times maintain inventory records
consistent with the current practices of such Borrower and Guarantor as of
the date hereof, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, such
Borrower's or Guarantor's cost therefor and daily withdrawals therefrom and
additions thereto; (b) Borrowers and Guarantors shall conduct a physical
count of the Inventory at least twice each year but at any time or times as
Agent may request on or after an Event of Default and for so long as the
same is continuing, and promptly following such physical inventory shall
supply Agent with a report in the form and with such specificity as may be
satisfactory to Agent concerning such physical count; (c) Borrowers and
Guarantors shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Agent, except for
sales of Inventory in the ordinary course of its business and except to
move Inventory directly from one location set forth or permitted herein to
another such location and except for Inventory shipped from the
manufacturer thereof to such Borrower or Guarantor which is in transit to
the locations set forth or permitted herein; (d) upon Agent's request,
Borrowers shall, at their expense, no more than two (2) times in any twelve
(12) month period, but at any time or times as Agent may request on or
after an Event of Default and for so long as the same is continuing,
deliver or cause to be delivered to Agent written appraisals as to the
Inventory in form, scope and methodology acceptable to Agent and by an
appraiser acceptable to Agent, addressed to Agent and Lenders and upon
which Agent and Lenders are expressly permitted to rely (provided, that,
any appraisal requested at such time as an Event of Default exists or has
occurred and is continuing shall not be considered for purposes of the
limitation on the number of appraisals provided for herein); (e) Borrowers
and Guarantors shall produce, use, store and maintain the Inventory with
all reasonable care and caution and in accordance with applicable standards
of any insurance in all material respects and in conformity with applicable
laws in all material respects (including the requirements of the Federal
Fair Labor Standards Act of 1938, as amended and all rules, regulations and
orders related thereto); (f) none of the Inventory or other Collateral
constitutes farm products or the proceeds thereof; (g) each Borrower and
Guarantor assumes all responsibility and liability arising from or relating
to the production, use, sale or other disposition of the Inventory; (h)
Borrowers and Guarantors shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate any Borrower or Guarantor to repurchase such Inventory other than
the right of customers to return defective or non-conforming goods in the
ordinary course of business; (i) Borrowers and Guarantors shall keep the
Inventory generally in good and marketable condition; and (j) Borrowers and
Guarantors shall not, without prior written notice to Agent or the specific
identification of such Inventory in a report with respect thereto provided
by US Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or
accept any Inventory on consignment or approval.
7.4 Equipment and Real Property Covenants. With respect to the
Equipment and Real Property: (a) upon Agent's request, Borrowers and
Guarantors shall, at their expense, no more than once in any twelve (12)
month period, but at any time or times as Agent may request on or after an
Event of Default exists or has occurred and is continuing, deliver or cause
to be delivered to Agent written appraisals as to the Equipment and/or the
Real Property in form, scope and methodology acceptable to Agent and by an
appraiser acceptable to Agent, addressed to Agent and upon which Agent is
expressly permitted to rely (provided, that, any appraisal requested at
such time as an Event of Default exists or has occurred and is continuing
shall not be considered for purposes of the limitation on the number of
appraisals provided for herein); (b) Borrowers and Guarantors shall keep
the Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted and except for worn-out or obsolete
Equipment or Equipment no longer used or useful in the business of any
Borrower or Guarantor); (c) Borrowers and Guarantors shall use the
Equipment and Real Property with all reasonable care and caution and in
accordance with applicable standards of any insurance in all material
respects and in conformity with all applicable laws in all material
respects; (d) the Equipment is and shall be used in the business of
Borrowers and Guarantors and not for personal, family, household or farming
use; (e) Borrowers and Guarantors shall not remove any Equipment from the
locations set forth or permitted herein, except to the extent necessary to
have any Equipment repaired or maintained in the ordinary course of its
business or to move Equipment directly from one location set forth or
permitted herein to another such location and except for the movement of
motor vehicles and trailers used by or for the benefit of such Borrower or
Guarantor in the ordinary course of business; and (f) each Borrower and
Guarantor assumes all responsibility and liability arising from the use of
the Equipment and Real Property.
7.5 Power of Attorney. Each Borrower and Guarantor hereby
irrevocably designates and appoints Agent (and all persons designated by
Agent) as such Borrower's and Guarantor's true and lawful attorney-in-fact,
and authorizes Agent (and all persons designated by Agent), in such
Borrower's, Guarantor's or Agent's name, to: (a) at any time an Event of
Default exists or has occurred and is continuing (i) demand payment on
Receivables or other Collateral, (ii) enforce payment of Receivables by
legal proceedings or otherwise, (iii) exercise all of such Borrower's or
Guarantor's rights and remedies to collect any Receivable or other
Collateral, (iv) sell or assign any Receivable upon such terms, for such
amount and at such time or times as the Agent deems advisable, (v) settle,
adjust, compromise, extend or renew an Account, (vi) discharge and release
any Receivable, (vii) prepare, file and sign such Borrower's or Guarantor's
name on any proof of claim in bankruptcy or other similar document against
an account debtor or other obligor in respect of any Receivables or other
Collateral, (viii) notify the post office authorities to change the address
for delivery of remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such
Borrower or Guarantor and handle and store all mail relating to the
Collateral; (ix) clear Inventory the purchase of which was financed with
Letter of Credit Accommodations through U.S. Customs, Canadian Customs or
other foreign export control authorities in such Borrower's or Guarantor's
name, Agent's name or the name of Agent's designee, and to sign and deliver
to customs officials powers of attorney in such Borrower's or Guarantor's
name for such purpose, and to complete in such Borrower's or Guarantor's or
Agent's name, any order, sale or transaction, obtain the necessary
documents in connection therewith and collect the proceeds thereof, and (x)
do all acts and things which are necessary, in Agent's determination, to
fulfill such Borrower's or Guarantor's obligations under this Agreement and
the other Financing Agreements and (b) at any time to (i) take control in
any manner of any item of payment in respect of Receivables or constituting
Collateral or otherwise received in or for deposit in the Blocked Accounts
(provided, that, at such time either a Default or Event of Default shall
exist or have occurred and be continuing or Agent shall have notified the
applicable depository bank to remit funds in the Blocked Accounts to the
Agent Payment Account (or the Canadian Lender Payment Account, as the case
may be) pursuant to Agent's rights under Section 6.3 hereof) or that are
otherwise received by Agent or any Lender, (ii) have access to any lockbox
or postal box into which remittances from account debtors or other obligors
in respect of Receivables or other proceeds of Collateral are sent or
received (provided, that, at such time either a Default or Event of Default
shall exist or have occurred and be continuing or Agent shall have notified
the applicable depository bank to remit funds in the Blocked Accounts to
the Agent Payment Account (or the Canadian Lender Payment Account, as the
case may be) pursuant to Agent's rights under Section 6.3 hereof), (iii)
endorse such Borrower's or Guarantor's name upon any items of payment in
respect of Receivables or constituting Collateral received in or for
deposit in the Blocked Accounts, provided, that, at such time either a
Default or Event of Default shall exist or have occurred and be continuing
or Agent shall have notified the applicable depository bank to remit funds
in the Blocked Accounts to Agent Payment Account (or the Canadian Lender
Payment Account, as the case may be) pursuant to Agent's rights under
Section 6.3 hereof) or otherwise received by Agent or any Lender, (iv)
endorse such Borrower's or Guarantor's name upon any chattel paper,
document, instrument, invoice, or similar document or agreement relating to
any Receivable or any goods pertaining thereto or any other Collateral,
including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, and (v) sign such Borrower's or
Guarantor's name on any verification of Receivables and notices thereof to
account debtors or any secondary obligors or other obligors in respect
thereof. Each Borrower and Guarantor hereby releases Agent and Lenders and
their respective officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result
of Agent's or any Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable judgment of a court of
competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to US
Borrower, (a) cure any default by any Borrower or Guarantor under any
material agreement with a third party that affects the Collateral, its
value or the ability of Agent to collect, sell or otherwise dispose of the
Collateral or the rights and remedies of Agent or any Lender therein or the
ability of any Borrower or Guarantor to perform its obligations hereunder
or under any of the other Financing Agreements, at any time on or after a
Default or Event of Default exists or has occurred and is continuing, or if
after giving effect to any Reserve in respect of such default the aggregate
amount of the Excess Availability of Borrowers is less than $5,000,000; (b)
pay or bond on appeal any judgment entered against any Borrower or
Guarantor, at any time on or after a Default or Event of Default exists or
has occurred and is continuing, or if after giving effect to any Reserve in
respect of such judgment the aggregate amount of the Excess Availability of
Borrowers is less than $5,000,000; (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with
respect to the Collateral and pay any amount, incur any expense or perform
any act which, in Agent's judgment, is necessary or appropriate to
preserve, protect, insure or maintain the Collateral and the rights of
Agent and Lenders with respect thereto, provided, that, Agent shall not
exercise its right pursuant to this Section 7.6(c) to discharge such taxes,
liens, security interest or other encumbrances that are permitted under
Section 9.8 hereof, unless either (i) a Default or Event of Default shall
exist or have occurred and be continuing, or (ii) with respect to liens,
security interests or other encumbrances, the beneficiary or holder of such
lien, security interest or other encumbrance has the right to take action
against or with respect to the Collateral which right is not subject to an
effective stay pursuant to applicable law. Agent may add any amounts so
expended to the Obligations and charge any Borrower's account therefor,
such amounts to be repayable by Borrowers on demand. Agent and Lenders
shall be under no obligation to effect such cure, payment or bonding and
shall not, by doing so, be deemed to have assumed any obligation or
liability of any Borrower or Guarantor. Any payment made or other action
taken by Agent or any Lender under this Section shall be without prejudice
to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.7 Access to Premises. From time to time as requested by Agent,
at the cost and expense of Borrowers, (a) Agent or its designee shall have
complete access to all of each Borrower's and Guarantor's premises during
normal business hours and after notice to US Borrower, or at any time and
without notice to US Borrower if an Event of Default exists or has occurred
and is continuing, for the purposes of inspecting, verifying and auditing
the Collateral and all of each Borrower's and Guarantor's books and
records, including the Records, and (b) each Borrower and Guarantor shall
promptly furnish to Agent such copies of such books and records or extracts
therefrom as Agent may reasonably request, and Agent or any Lender or
Agent's designee may use during normal business hours such of any
Borrower's and Guarantor's personnel, equipment, supplies and premises as
may be reasonably necessary for the foregoing and if an Event of Default
exists or has occurred and is continuing for the collection of Receivables
and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
------------------------------
Each Borrower and Guarantor hereby represents and warrants to
Agent and Lenders the following (which shall survive the execution and
delivery of this Agreement), the truth and accuracy of which are a
continuing condition of the making of Loans and providing Letter of Credit
Accommodations to Borrowers:
8.1 Corporate Existence, Power and Authority. Each Borrower and
Guarantor is a corporation duly organized and in good standing under the
laws of its jurisdiction of organization and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where
the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions
in which the failure to so qualify would not have a Material Adverse Effect
(provided, that, the foregoing shall not be construed to limit the rights
of Borrowers and Guarantors with respect to transactions permitted under
Section 9.7 hereof). The execution, delivery and performance of this
Agreement, the other Financing Agreements and the transactions contemplated
hereunder and thereunder (a) are all within each Borrower's and each
Guarantor's corporate powers, (b) have been duly authorized, (c) are not in
contravention of law or the terms of any Borrower's or Guarantor's
certificate of incorporation, by-laws, or other organizational
documentation, or any indenture, agreement or undertaking to which any
Borrower or Guarantor is a party or by which any Borrower or Guarantor or
its property are bound and (d) will not result in the creation or
imposition of, or require or give rise to any obligation to grant, any
lien, security interest, charge or other encumbrance upon any property of
any Borrower or Guarantor except in favor of Agent pursuant to this
Agreement and the other Financing Agreements. This Agreement and the other
Financing Agreements to which any Borrower or Guarantor is a party
constitute legal, valid and binding obligations of such Borrower and
Guarantor enforceable in accordance with their respective terms, except as
such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar law affecting creditors'
rights generally and by general principles of equity.
8.2 Name; State of Organization; Chief Executive Office;
Collateral Locations.
----------------------------------------------------
(a) The exact legal name of each Borrower and Guarantor is
as set forth on the signature page of this Agreement and in the Information
Certificate. No Borrower or Guarantor has, during the past five years, been
known by or used any other corporate or fictitious name or been a party to
any merger or consolidation, or acquired all or substantially all of the
assets of any Person, except as set forth in the Information Certificate.
(b) Each Borrower and Guarantor is an organization of the
type and organized in the jurisdiction set forth in the Information
Certificate. The Information Certificate accurately sets forth the
organizational identification number of each Borrower and Guarantor or
accurately states that such Borrower or Guarantor has none and accurately
sets forth the federal employer identification number of each Borrower and
Guarantor.
(c) The chief executive office and mailing address of each
Borrower and Guarantor and each Borrower's and Guarantor's Records
concerning Accounts are located only at the addresses identified as such in
Schedule 8.2 to the Information Certificate and its only other places of
business and the only other locations of Collateral, if any, are the
addresses set forth in Schedule 8.2 to the Information Certificate, subject
to the rights of any Borrower or Guarantor to establish new locations in
accordance with Section 9.2 below. The Information Certificate correctly
identifies any of such locations which are not owned by a Borrower or
Guarantor and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All
consolidated financial statements relating to Borrowers and Guarantors
which have been or may hereafter be delivered by any Borrower or Guarantor
to Agent and Lenders have been prepared in accordance with GAAP (except as
to any interim financial statements, to the extent such statements are
subject to normal year-end adjustments and do not include any notes) and
fairly present in all material respects the consolidated financial
condition and the results of operation of such Borrower and Guarantor as at
the dates and for the periods set forth therein. Except as disclosed in any
interim financial statements furnished by Borrowers and Guarantors to Agent
prior to the date of this Agreement, there has been no act, condition or
event which has had or is reasonably likely to have a Material Adverse
Effect since the date of the most recent audited financial statements of
any Borrower or Guarantor furnished by any Borrower or Guarantor to Agent
prior to the date of this Agreement.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Agent and the hypothecs, security interests and liens
granted to Canadian Lender under this Agreement and the other Financing
Agreements constitute valid and perfected first ranking hypothec and first
priority liens and security interests in and upon the Collateral (other
than as to specific items of Collateral as to which the security interests
and liens of Agent are not required to be perfected as of the date hereof
consisting of motor vehicles, cash in certain deposit accounts, certain
deposit accounts, commercial tort claims that are not set forth on the
Information Certificate, Real Property that is not subject to a Mortgage
and Intellectual Property that is registered in a jurisdiction outside the
United States of America or Canada) subject only to the liens indicated on
Schedule 8.4 to the Information Certificate and the other liens permitted
under Section 9.8 hereof. Each Borrower and Guarantor has good and
marketable fee simple title to or valid leasehold interests in all of its
Real Property and good, valid and merchantable title to all of its other
properties and assets subject to no liens, hypothecs, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those
granted to Agent and such others as are specifically listed on Schedule 8.4
to the Information Certificate or permitted under Section 9.8 hereof.
8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused
to be filed, in a timely manner all Federal and other material tax returns,
reports and declarations which are required to be filed by it. All
information in such tax returns, reports and declarations is complete and
accurate in all material respects. Each Borrower and Guarantor has paid or
caused to be paid all material taxes due and payable or claimed due and
payable in any assessment received by it, except taxes the validity of
which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower or Guarantor and with
respect to which adequate reserves have been set aside on its books to the
extent required by GAAP. Adequate provision has been made for the payment
of all material accrued and unpaid Federal, State, Provincial, county,
local, foreign and other taxes whether or not yet due and payable and
whether or not disputed.
8.6 Litigation. Except as set forth on Schedule 8.6 to the
Information Certificate, (a) there is no investigation by any Governmental
Authority pending, or to the best of any Borrower's or Guarantor's
knowledge threatened, against or affecting any Borrower or Guarantor, its
or their assets or business and (b) there is no action, suit, proceeding or
claim by any Person pending, or to the best of any Borrower's or
Guarantor's knowledge threatened, against any Borrower or Guarantor or its
or their assets, or against or affecting any transactions contemplated by
this Agreement, in each case as to clauses (a) and (b), which has or could
reasonably be expected to have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
----------------------------------------------------
(a) Borrowers and Guarantors are not in default in any
respect under, or in violation in any respect of the terms of, any
agreement, contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound where such default or
violation has or could reasonably be expected to have a Material Adverse
Effect. Borrowers and Guarantors are in compliance with the requirements of
all applicable laws, rules, regulations and orders of any Governmental
Authority relating to their respective businesses where the failure to so
comply has or could reasonably be expected to have a Material Adverse
Effect.
(b) Borrowers and Guarantors have obtained all material
permits, licenses, approvals, consents, certificates, orders or
authorizations of any Governmental Authority required for the lawful
conduct of its business (the "Permits"). All of the Permits are valid and
subsisting and in full force and effect. There are no actions, claims or
proceedings pending or to the best of any Borrower's or Guarantor's
knowledge, threatened that seek the revocation, cancellation, suspension or
modification of any of the Permits which has or could reasonably be
expected to have a Material Adverse Effect.
8.8 Environmental Compliance.
------------------------
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantors and any Subsidiary of any Borrower or
Guarantor have not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on
or off its premises (whether or not owned by it) in any manner which at any
time violates in any material respect any applicable Environmental Law or
Permit, and the operations of Borrowers, Guarantors and any Subsidiary of
any Borrower or Guarantor complies in all material respects with all
Environmental Laws and all Permits.
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, there is no pending, active, or to the best of any Borrower's
or Guarantor's knowledge, threatened investigation, proceeding, complaint,
order, directive, claim, citation or notice by any Governmental Authority
or any other person with respect to any non-compliance with or violation of
the requirements of any Environmental Law or the release, spill or
discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials by any Borrower or
Guarantor or any Subsidiary of any Borrower or Guarantor and there are no
other environmental, health or safety matters, which in any case could
reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantors and their Subsidiaries have no material
liability (contingent or otherwise) in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.
(d) Borrowers, Guarantors and their Subsidiaries have all
Permits required to be obtained or filed in connection with the operations
of Borrowers and Guarantors under any Environmental Law and all of such
licenses, certificates, approvals or similar authorizations and other
Permits are valid and in full force and effect.
8.9 Employee Benefits.
-----------------
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other Federal or State
law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the Internal
Revenue Service and to the best of any Borrower's or Guarantor's knowledge,
nothing has occurred which would cause the loss of such qualification. Each
Borrower and each ERISA Affiliate has fulfilled all of its obligations
related to the minimum funding standards as described in Section 412 of the
Code and Section 302 of ERISA.
(b) There are no pending, or to the best of any Borrower's
or Guarantor's knowledge, threatened material claims, actions or lawsuits,
or action by any Governmental Authority, with respect to any Plan.
(c) (i) No ERISA Event has occurred, or is reasonably
expected to occur, for which any Borrower or Guarantor has or is reasonably
likely to have any liability; (ii) based on the latest valuation of each
Pension Plan (which in each case occurred within twelve (12) months of the
date of this representation) and on the actuarial methods and assumptions
employed for such valuation, the aggregate present value of accumulated
benefits of such Pension Plan does not exceed the aggregate value of the
assets of such Pension Plan, except to the extent set forth in the
financial statements of US Borrower for the period ended May 31, 2002
provided to Agent prior to the date hereof; and (iii) each Borrower and
Guarantor, and their ERISA Affiliates, have not engaged in a transaction
that would be subject to Section 4069 or 4212(c) of ERISA.
(d) With respect to any Canadian Pension Plan, if and to the
extent that any such Canadian Pension Plan exists or has not been
terminated, (i) the Canadian Pension Plans are duly registered under all
applicable Federal and Provincial pension benefits legislation, (ii) all
obligations of any Borrower or Guarantor (including fiduciary, funding,
investment and administration obligations) required to be performed in
connection with the Canadian Pension Plans or the funding agreements
therefor have been performed in a timely fashion and there are no
outstanding disputes concerning the assets held pursuant to any such
funding agreement, (iii) all contributions or premiums required to be made
by any Borrower or Guarantor to the Canadian Pension Plans have been made
in a timely fashion in accordance with the terms of the Canadian Pension
Plans and applicable laws and regulations, (iv) all employee contributions
to the Canadian Pension Plans required to be made by way of authorized
payroll deduction have been properly withheld by any Borrower or Guarantor
and fully paid into the Canadian Pension Plans in a timely fashion, (v) all
reports and disclosures relating to the Canadian Pension Plans required by
any applicable laws or regulations have been filed or distributed in a
timely fashion, (vi) there have been no improper withdrawals, or
applications of, the assets of any of the Pension Plans, (vii) no amount is
owing by any of the Canadian Pension Plans under the Income Tax Act
(Canada) or any provincial taxation statute, (viii) the Canadian Pension
Plans are fully funded both on an ongoing basis and on a solvency basis
(using actuarial assumptions and methods which are consistent with the
valuations last filed with the applicable governmental authorities and
which are consistent with generally accepted actuarial principles), except
that (A) the most recent valuation for the Pension Plan for Employees of
Xxxxxxx Apparel Group Limited, dated August 2002, discloses a funding
deficiency as of December 31, 2001 in the amount set forth in the
information with respect thereto prior to Agent prior to the date hereof
and (B) the most recent valuation for the Pension Plan for Executive
Employees of Xxxxxxx Apparel Group Limited, dated July 2001, discloses a
funding deficiency as of December 31, 2000 in the amount set forth in the
information with respect thereto prior to Agent prior to the date hereof
(collectively, the "Plan Deficiencies") and each Canadian Borrower is
taking all action required by all applicable laws, rules, regulations and
orders of any Governmental Authority in a timely fashion to eliminate such
Plan Deficiencies, and (ix) to the best of the knowledge of each Borrower
and Guarantor, none of the Canadian Pension Plans is the subject of an
investigation, any other proceeding, an action or a claim and there exists
no state of facts which after notice or lapse of time or both could
reasonably be expected to give rise to any such proceeding, action or claim.
8.10 Bank Accounts. All of the deposit accounts, investment
accounts or other accounts in the name of or used by any Borrower or
Guarantor maintained at any bank or other financial institution are set
forth on Schedule 8.10 to the Information Certificate, subject to the right
of each Borrower and Guarantor to establish new accounts in accordance with
Section 5.2 hereof.
8.11 Intellectual Property. Each Borrower and Guarantor owns or
licenses or otherwise has the right to use all Intellectual Property
necessary in all material respects for the operation of its business as
presently conducted. As of the date hereof, Borrowers and Guarantors do not
have any Intellectual Property registered, or subject to pending
applications, in the United States Patent and Trademark Office, the
Canadian Intellectual Property Office or any similar office or agency in
the United States or Canada, any State or Province thereof, any political
subdivision thereof other than those described in Schedule 8.11 to the
Information Certificate or in any other country other than as set forth in
the list thereof provided to Agent prior to the date hereof and has not
granted any material licenses with respect thereto other than as set forth
in Schedule 8.11 to the Information Certificate. As of the date hereof, no
Borrower or Guarantor has received any notice that any slogan or other
advertising device or other Intellectual Property or product bearing or
embodying any Intellectual Property presently contemplated to be sold by or
employed by any Borrower or Guarantor infringes any patent, trademark,
servicemark, tradename, copyright, license or other intellectual property
owned by any other Person presently and as of the date hereof, no claim or
litigation is pending or to the best of any Borrower's or Guarantor's
knowledge, threatened against any Borrower or Guarantor contesting its
right to sell any such product or use any such Intellectual Property.
Schedule 8.11 to the Information Certificate sets forth all of the
agreements or other arrangements of each Borrower and Guarantor pursuant to
which such Borrower or Guarantor has obtained a license or other right to
use any trademarks or other intellectual property owned by another person
as in effect on the date hereof and the dates of the expiration of such
agreements of such Borrower or Guarantor as in effect on the date hereof
(collectively, together with such agreements or other arrangements as may
be entered into by any Borrower or Guarantor after the date hereof,
collectively, the "License Agreements" and individually, a "License
Agreement"). All trademarks and other Intellectual Property used by any
Borrower or Guarantor that are owned by another person are being used all
material respects in accordance with the terms of the License Agreement
applicable thereto.
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
--------------------------------------------------
(a) As of the date hereof, each Borrower and Guarantor does
not have any direct or indirect Subsidiaries or Affiliates and is not
engaged in any joint venture or partnership except as set forth in Schedule
8.12 to the Information Certificate.
(b) As of the date hereof, each Borrower and Guarantor is
the record and beneficial owner of all of the issued and outstanding shares
of Capital Stock of each of the Subsidiaries listed on Schedule 8.12 to the
Information Certificate as being owned by such Borrower or Guarantor and
there are no proxies, irrevocable or otherwise, with respect to such shares
(other than the proxies in favor of the Existing Lenders which are being
cancelled by or on behalf of the Existing Lenders as of the date hereof)
and no equity securities of any of the Subsidiaries are or may become
required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any
Subsidiary is or may become bound to issue additional shares of it Capital
Stock or securities convertible into or exchangeable for such shares.
(c) As of the date hereof, the issued and outstanding shares
of Capital Stock of each Borrower (other than US Borrower) and Guarantor
are directly and beneficially owned and held by the persons indicated in
the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of
all claims, liens, pledges and encumbrances of any kind, except as
disclosed in writing to Agent prior to the date hereof.
(d) Each Borrower and Guarantor is Solvent and will continue
to be Solvent after the creation of the Obligations, the security interests
of Agent and the other transaction contemplated hereunder.
(e) Each of the Subsidiaries of US Borrower identified in
item 3 of the Information Certificate as "inactive" (i) is not engaged in
any business or commercial activity, (ii) does not own any assets having a
book value of more than $1,000,000 (other than as to two of such
Subsidiaries the Indebtedness owing to such Subsidiaries by US Borrower as
set forth in the Information Certificate) and (iii) is not obligated or
liable, directly or indirectly, contingently or otherwise, in respect of
any Indebtedness or other obligations (other than as set forth on Schedule
8.12 to the Information Certificate), except for the indemnification
obligations in favor of the Existing Lenders which survive by their terms
the termination of the arrangements of Borrowers and Guarantors with the
Existing Lenders.
8.13 Labor Disputes.
--------------
(a) Set forth on Schedule 8.13 to the Information
Certificate is a list (including dates of termination) of all collective
bargaining or similar agreements between or applicable to each Borrower and
Guarantor and any union, labor organization or other bargaining agent in
respect of the employees of any Borrower or Guarantor on the date hereof.
(b) There is (i) no significant unfair labor practice
complaint pending against any Borrower or Guarantor or, to the best of any
Borrower's or Guarantor's knowledge, threatened against it, before the
National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is pending on the date hereof against any Borrower or Guarantor
or, to best of any Borrower's or Guarantor's knowledge, threatened against
it which has or could reasonably be expected to have a Material Adverse
Effect, and (ii) no significant strike, labor dispute, slowdown or stoppage
is pending against any Borrower or Guarantor or, to the best of any
Borrower's or Guarantor's knowledge, threatened against any Borrower or
Guarantor which has or could reasonably be expected to have a Material
Adverse Effect.
8.14 Restrictions on Subsidiaries. Except for restrictions
contained in this Agreement or any other agreement with respect to
Indebtedness of any Borrower or Guarantor permitted hereunder as in effect
on the date hereof, there are no contractual or consensual restrictions on
any Borrower or Guarantor or any of its Subsidiaries in effect on the date
hereof which prohibit or otherwise restrict (a) the transfer of cash or
other assets (i) between any Borrower or Guarantor and any of its or their
Subsidiaries or (ii) between any Subsidiaries of any Borrower or Guarantor
or (b) the ability of any Borrower or Guarantor or any of its or their
Subsidiaries to incur Indebtedness or grant security interests to Agent or
any Lender in the Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information
Certificate sets forth all Material Contracts to which any Borrower or
Guarantor is a party or is bound as of the date hereof. Borrowers and
Guarantors have delivered true, correct and complete copies of such
Material Contracts to Agent on or before the date hereof. Borrowers and
Guarantors are not in breach or in default in any material respect of or
under any Material Contract and have not received any notice of the
intention of any other party thereto to terminate any Material Contract.
8.16 Payable Practices. Each Borrower and Guarantor have not made
any material change in the historical accounts payable practices from those
in effect immediately prior to the date hereof.
8.17 Intercompany Credit Facilities.
------------------------------
(a) The outstanding principal balance of the Intercompany
Indebtedness of each Guarantor to US Borrower under the Intercompany Credit
Facility of US Borrower with such Guarantor is as set forth in Schedule
8.17 hereto as of the last day of the month identified in such Schedule.
(b) Each of the Intercompany Loan Agreements constitutes the
legal, valid and binding obligations of each of the parties thereto,
enforceable in accordance with their respective terms. The forms, terms and
execution of each of the Intercompany Loan Agreements is in compliance with
all applicable laws and regulations and each of the Intercompany Loan
Agreements has been executed by the duly authorized and acting officers of
the parties thereto who signatures are indicated thereon. Borrowers and
Guarantors have no notice of any facts which impairs or may impair the
validity or enforceability of the Intercompany Loan Agreements or the
Indebtedness evidenced by or arising pursuant thereto. The Indebtedness of
each Guarantor to US Borrower under the Intercompany Credit Facilities is
and shall be valid and enforceable. There are no defaults existing under
the Intercompany Loan Agreements and there exists no state of facts which,
with the giving of notice or passage of time or both, would constitute a
default under the Intercompany Loan Agreements.
(c) US Borrower has and at all times shall continue to have
good title to all of the Indebtedness arising under the Intercompany Loan
Agreements, free and clear of all claims, liens, pledges, encumbrances and
other assignments of any kind, nature or description, except for the
security interests and liens of Agent.
(d) The obligations, liabilities and indebtedness of
Guarantors to US Borrower evidenced by or arising pursuant to the
Intercompany Loan Agreements are owed free and clear of all offsets,
deductions, defenses and counterclaims of every kind and nature and are not
now nor will at any time become contingent upon the fulfillment of any
contract or condition whatsoever.
8.18 Accuracy and Completeness of Information. All information
furnished by or on behalf of any Borrower or Guarantor in writing to Agent
or any Lender in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby,
including all information on the Information Certificate is true and
correct in all material respects on the date as of which such information
is dated or certified and does not omit any material fact necessary in
order to make such information not misleading. No event or circumstance has
occurred which has had or could reasonably be expected to have a Material
Adverse Affect, which has not been fully and accurately disclosed to Agent
in writing prior to the date hereof.
8.19 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Agent and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall
be conclusively presumed to have been relied on by Agent and Lenders
regardless of any investigation made or information possessed by Agent or
any Lender. The representations and warranties set forth herein shall be
cumulative and in addition to any other representations or warranties which
any Borrower or Guarantor shall now or hereafter give, or cause to be
given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
9.1 Maintenance of Existence.
------------------------
(a) Each Borrower and Guarantor shall (i) at all times
preserve, renew and keep in full force and effect its corporate existence
and rights and franchises with respect thereto except as to any Guarantor
as permitted in Section 9.7 hereof and (ii) maintain in full force and
effect all licenses, trademarks, tradenames, approvals, authorizations,
leases, contracts and Permits necessary to carry on the business as
presently conducted, except as to any Guarantor as permitted in Section 9.7
hereto or to the extent that the failure to maintain the same has or could
reasonably be expected to have a Material Adverse Effect.
(b) No Borrower or Guarantor shall change its name unless
each of the following conditions is satisfied: (i) Agent shall have
received not less than ten (10) Business Days' prior written notice from US
Borrower of such proposed change in its corporate name, which notice shall
accurately set forth the new name; and (ii) Agent shall have received a
copy of the amendment to the Certificate of Incorporation of such Borrower
or Guarantor providing for the name change certified by the Secretary of
State, or the appropriate Governmental Authority of the Province, of the
jurisdiction of incorporation or organization of such Borrower or Guarantor
as soon as it is available.
(c) No Borrower or Guarantor shall change its chief
executive office or its mailing address or organizational identification
number unless Agent shall have received not less than ten (10) Business
Days' prior written notice from US Borrower of such proposed change, which
notice shall set forth such information with respect thereto as Agent may
require and Agent shall have received such agreements as Agent may
reasonably require in connection therewith. No Borrower or Guarantor shall
change its type of organization, jurisdiction of organization or other
legal structure unless Agent shall have received not less than ten (10)
Business Days' prior written notice from US Borrower of such proposed
change, which notice shall set forth such information with respect thereto
as Agent may require and Agent shall have received such agreements as Agent
may reasonably require in connection therewith; provided, that, in no event
shall any Borrower or Guarantor change its type of organization so that it
is other than a registered organization or change its jurisdiction to a
jurisdiction outside the United States of America in the case of a US
Company or outside Canada in the case of a Canadian Borrower.
9.2 New Collateral Locations. Each Borrower and Guarantor may (a)
only open any new location within the continental United States or Canada
provided such Borrower or Guarantor (i) gives Agent ten (10) Business Days'
prior written notice of the intended opening of any such new location and
(ii) executes and delivers, or causes to be executed and delivered, to
Agent such agreements, documents, and instruments as Agent may deem
reasonably necessary or desirable to protect its interests in the
Collateral at such location, provided Agent may establish such Reserves, if
any, as Agent determines are reasonably necessary or desirable to protect
its interests in the Collateral at such location (but as to any Reserves in
respect of the rights of the owner or lessor of leased premises subject to
the limit on the amount thereof set forth in the definition of the term
Eligible Inventory) and (b) only open any new location outside the
continental United States or Canada so long as such location is used solely
as a sales office and no Collateral shall at any time be at such location
other than a reasonable and necessary quantity of samples and such Borrower
or Guarantor gives Agent prior written notice of the intended opening of
any such new location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, comply in all material respects with all laws,
rules, regulations, licenses, approvals, orders and other Permits
applicable to it and duly observe all requirements of any foreign, Federal,
State, Provincial or local Governmental Authority where the failure to so
comply or observe has or could reasonably be expected to have a Material
Adverse Effect.
(b) Borrowers and Guarantors shall give written notice to
Agent immediately upon any Borrower's or Guarantor's receipt of any notice
of, or any Borrower's or Guarantor's otherwise obtaining knowledge of, (i)
the occurrence of any event involving the release, spill or discharge,
threatened or actual, of any Hazardous Material in violation of any
applicable Environmental Law or (ii) any investigation, proceeding,
complaint, order, directive, claims, citation or notice with respect to:
(A) any material non-compliance with or violation of any Environmental Law
by any Borrower or Guarantor or (B) any material release, spill or
discharge, threatened or actual, of any Hazardous Material other than in
the ordinary course of business and other than as permitted under any
applicable Environmental Law. Unless otherwise agreed by US Borrower and
Agent, copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations shall be
promptly furnished, or caused to be furnished, by such Borrower or
Guarantor to Agent. Each Borrower and Guarantor shall take prompt action to
respond to any material non-compliance with any of the Environmental Laws
and shall regularly report to Agent on such response.
(c) Without limiting the generality of the foregoing,
whenever Agent reasonably determines that there is material non-compliance,
or any condition which requires any action by or on behalf of any Borrower
or Guarantor in order to avoid any material non-compliance, with any
Environmental Law, Borrowers shall, at Agent's reasonable request and
Borrowers' expense: (i) cause an independent environmental engineer
reasonably acceptable to Agent to conduct such tests of the site where such
material non-compliance or alleged material non-compliance with such
Environmental Laws has occurred as to such material non-compliance and
prepare and deliver to Agent a report as to such material non-compliance
setting forth the results of such tests, a proposed plan for responding to
any environmental problems described therein, and an estimate of the costs
thereof and (ii) provide to Agent a supplemental report of such engineer
whenever the scope of such material non-compliance, or such Borrower's or
Guarantor's response thereto or the estimated costs thereof, shall change
in any material respect.
(d) Each Borrower and Guarantor shall indemnify and hold
harmless Agent and Lenders and their respective directors, officers,
employees, agents, invitees, representatives, successors and assigns, from
and against any and all losses, claims, damages, liabilities, costs, and
expenses (including reasonable attorneys' fees and expenses) directly or
indirectly arising out of or attributable to the use, generation,
manufacture, reproduction, storage, release, threatened release, spill,
discharge, disposal or presence of a Hazardous Material, including the
costs of any required or necessary repair, cleanup or other remedial work
with respect to any property of any Borrower or Guarantor and the
preparation and implementation of any closure, remedial or other required
plans, except that Borrowers and Guarantors shall not have any obligation
under this Section 9.3(d) to indemnify a person otherwise to be indemnified
pursuant to the terms hereof with respect to a matter covered hereby
resulting solely from the gross negligence or wilful misconduct of such
indemnitee as determined pursuant to a final, non-appealable order of a
court of competent jurisdiction (but without limiting the obligations of
Borrowers or Guarantors as to any other person hereunder). All
representations, warranties, covenants and indemnifications in this Section
9.3 shall survive the payment of the Obligations and the termination of
this Agreement.
9.4 Payment of Taxes and Claims. Each Borrower and Guarantor
shall, and shall cause any Subsidiary to, duly pay and discharge all
material taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets, except for taxes the validity of
which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower, Guarantor or Subsidiary,
as the case may be, and with respect to which adequate reserves have been
set aside on its books to the extent required by GAAP.
9.5 Insurance. Each Borrower and Guarantor shall, and shall cause
any Subsidiary to, at all times, maintain with financially sound and
reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated. Said
policies of insurance shall be reasonably satisfactory to Agent as to form,
amount and insurer. Borrowers and Guarantors shall furnish certificates,
policies or endorsements to Agent as Agent shall reasonably require as
proof of such insurance, and, if any Borrower or Guarantor fails to do so,
Agent is authorized, but not required, to obtain such insurance at the
expense of Borrowers. All policies shall provide for at least thirty (30)
days prior written notice to Agent of any cancellation or reduction of
coverage and that Agent may act as attorney for each Borrower and Guarantor
in obtaining, and at any time an Event of Default exists or has occurred
and is continuing, adjusting, settling, amending and canceling such
insurance. Borrowers and Guarantors shall cause Agent to be named as a loss
payee and an additional insured (but without any liability for any
premiums) under such insurance policies (other than business interruption
insurance) and Borrowers and Guarantors shall obtain non-contributory
lender's loss payable endorsements to all insurance policies in form and
substance reasonably satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be
payable to Agent as its interests may appear and further specify that Agent
and Lenders shall be paid regardless of any act or omission by any
Borrower, Guarantor or any of its or their Affiliates. Without limiting any
other rights of Agent or Lenders, any insurance proceeds received by Agent
at any time may be applied to payment of the Obligations in accordance with
the terms of Section 6.4 hereof. Upon application of such proceeds to the
Obligations, nothing contained in this Section 9.5 shall be construed to
limit the use of any subsequent Loans for the costs of repair or
replacement of the Collateral lost or damaged resulting in the payment of
such insurance proceeds.
9.6 Financial Statements and Other Information.
------------------------------------------
(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, keep proper books and records in which true and complete
entries shall be made of all dealings or transactions of or in relation to
the Collateral and the business of such Borrower, Guarantor and its
Subsidiaries in accordance with GAAP. Borrowers and Guarantors shall
promptly furnish to Agent and Lenders all such financial and other
information as Agent shall reasonably request relating to the Collateral
and the assets, business and operations of Borrowers and Guarantors, and US
Borrower shall notify the auditors and accountants of Borrowers and
Guarantors that Agent is authorized to obtain such information directly
from them provided that, so long as no Default or Event of Default shall
exist or have occurred and be continuing, and Agent shall have otherwise
received such information hereunder as it may have requested, Agent shall
not exercise its right under this Section 9.6 to contact the accountants
and auditors directly to obtain information from them not relating to the
Collateral without the prior approval of US Borrower, which approval shall
not be unreasonably withheld, conditioned or delayed. Without limiting the
foregoing, Borrowers and Guarantors shall furnish or cause to be furnished
to Agent, the following: (i) within thirty (30) days after the end of each
fiscal month (except that in the case of any fiscal month (other than
November) that is the last month of a fiscal quarter, forty-five (45) days
after the end of such month and in the case of any November, sixty (60)
days after the end of such month), monthly unaudited consolidated financial
statements, and unaudited consolidating financial statements (including in
each case balance sheets and statements of income and loss), all in
reasonable detail, fairly presenting the financial position and the results
of the operations of US Borrower and its Subsidiaries as of the end of and
through such fiscal month, certified to be correct by the chief financial
officer, controller, treasurer, assistant treasurer or other appropriate
financial or senior officer of US Borrower, subject to normal year-end
adjustments and no footnotes and accompanied by a compliance certificate
substantially in the form of Exhibit D hereto, along with a schedule in a
form satisfactory to Agent of the calculations used in determining, as of
the end of such month, whether Borrowers and Guarantors are in compliance
with the covenant set forth in Section 9.17 of this Agreement for such
month and (ii) within ninety (90) days after the end of each fiscal year,
audited consolidated financial statements and unaudited consolidating
financial statements of US Borrower and its Subsidiaries (including in each
case as to such consolidated financial statements, balance sheets,
statements of income and loss, statements of cash flow, and statements of
shareholders' equity and as to such consolidating financial statements,
balance sheets and statements of income and loss), and the accompanying
notes thereto, all in reasonable detail, fairly presenting the financial
position and the results of the operations of US Borrower and its
Subsidiaries as of the end of and for such fiscal year, together with the
unqualified opinion of independent certified public accountants with
respect to the audited consolidated financial statements, which accountants
shall be an independent accounting firm selected by Borrowers and
reasonably acceptable to Agent, that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly
the results of operations and financial condition of US Borrower and its
Subsidiaries as of the end of and for the fiscal year then ended.
(b) Borrowers and Guarantors shall promptly notify Agent in
writing of the details of (i) any loss, damage, investigation, action,
suit, proceeding or claim relating to Collateral having a value of more
than $1,000,000 or which if adversely determined would result in any
Material Adverse Effect, (ii) any Material Contract being terminated or
amended or any new Material Contract entered into (in which event Borrowers
and Guarantors shall provide Agent with a copy of such Material Contract),
(iii) any order, judgment or decree in excess of $1,000,000 shall have been
entered against any Borrower or Guarantor any of its or their properties or
assets, (iv) any notification of a material violation of laws or
regulations received by any Borrower or Guarantor, (v) any ERISA Event, and
(vi) the occurrence of any Default or Event of Default.
(c) Promptly after the sending or filing thereof, Borrowers
shall send to Agent copies of (i) all reports which US Borrower or any of
its Subsidiaries sends to its security holders generally, (ii) all Form
10-K, Form 10-Q, Form 8-K, proxy statements, all amendments and supplements
thereto or equivalent reports and registration statements which US Borrower
or any of its Subsidiaries files with the Securities Exchange Commission,
any national or foreign securities exchange or the National Association of
Securities Dealers, Inc., and such other reports as Agent may hereafter
specifically identify to US Borrower that Agent will require be provided to
Agent, (iii) all press releases and (iv) all other statements concerning
material changes or developments in the business of a Borrower or Guarantor
made available by any Borrower or Guarantor to the public.
(d) Borrowers and Guarantors shall furnish or cause to be
furnished to Agent such budgets, forecasts and projections with respect to
the businesses of Borrowers and Guarantors as Agent may from time to time
reasonably request prepared on a basis consistent with such budgets,
forecasts and projections as are currently prepared by Borrowers and
Guarantors, together with such other information respecting the Collateral,
as Agent may, from time to time, reasonably request, or such other budgets,
forecasts and projections with respect to the businesses of Borrowers and
Guarantors as Agent may otherwise require at any time that either a Default
or Event of Default shall exist or have occurred and be continuing or in
connection with any transaction permitted under Section 9.7(a) or
9.7(b)(vi) or any request by a Borrower or Guarantor for any amendment,
waiver or consent hereunder or under any of the other Financing Agreements.
Agent is hereby authorized to deliver a copy of any financial statement or
any other information relating to the business of Borrowers and Guarantors
to any court or other Governmental Authority or to any Lender or
Participant or prospective Lender or Participant or any Affiliate of any
Lender or Participant, subject to Section 13.5 hereof. Each Borrower and
Guarantor hereby irrevocably authorizes and directs all accountants or
auditors to deliver to Agent, at Borrowers' expense, copies of the
financial statements of any Borrower and Guarantor and any reports or
management letters prepared by such accountants or auditors on behalf of
any Borrower or Guarantor and to disclose to Agent and Lenders such
information as they may have regarding the business of any Borrower and
Guarantor. So long as no Default or Event of Default shall exist or have
occurred and be continuing, and Agent shall have otherwise received such
information hereunder as it may have requested, Agent shall not exercise
its right under this Section 9.6 to contact the accountants and auditors
directly to obtain information from them not relating to the Collateral
without the prior approval of US Borrower, which approval shall not be
unreasonably withheld, conditioned or delayed. Any documents, schedules,
invoices or other papers delivered to Agent or any Lender may be destroyed
or otherwise disposed of by Agent or such Lender one (1) year after the
same are delivered to Agent or such Lender, except as otherwise designated
by US Borrower to Agent or such Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each
Borrower and Guarantor shall not, and shall not permit any Subsidiary to,
directly or indirectly,
(a) merge into or with or consolidate or amalgamate with any
other Person or permit any other Person to merge into or with or
consolidate or amalgamate with it except that any wholly-owned Subsidiary
of US Borrower or a Guarantor that is incorporated in a jurisdiction in the
United States of America may merge with and into or consolidate with US
Borrower or any Guarantor that is incorporated in a jurisdiction in the
United States of America and any wholly-owned Subsidiary of US Borrower
that is incorporated in a jurisdiction in Canada may merge with and into or
consolidate or amalgamate with any other wholly-owned Subsidiary of US
Borrower that is incorporated in a jurisdiction in Canada, provided, that,
each of the following conditions is satisfied: (i) Agent shall have
received not less than ten (10) Business Days' prior written notice of the
intention of such Subsidiaries to so merge, consolidate or amalgamate,
which notice shall set forth in reasonable detail, the persons that are
merging, consolidating or amalgamating, which person will be the surviving
entity, the locations of the assets of the persons that are merging,
consolidating or amalgamating, together with such other information with
respect to such merger, consolidation or amalgamation as Agent may
reasonably request, (ii) as of the effective date of the merger,
consolidation or amalgamation and after giving effect thereto, no Default
or Event of Default shall exist or have occurred, (iii) Agent shall have
received, true, correct and complete copies of all material agreements,
documents and instruments relating to such merger, consolidation or
amalgamation, including, but not limited to, when available the certificate
or certificates of merger to be filed with each appropriate Secretary of
State or other Governmental Authority of the appropriate Province or
Provinces, as the case may be (with a copy as filed promptly after such
filing), (iv) the surviving corporation shall expressly confirm, ratify and
assume the Obligations and the Financing Agreements to which it is a party
in writing, in form and substance reasonably satisfactory to Agent, and
Borrowers and Guarantors shall execute and deliver such other agreements,
documents and instruments as Agent may reasonably request in connection
therewith, (v) if US Borrower is one of the parties to such merger or
consolidation, US Borrower shall be the surviving corporation, and if a
Borrowing Base Guarantor is one of the parties to such merger or
consolidation and the other party is a Subsidiary other than Borrowing Base
Guarantor, then the Borrowing Base Guarantor shall be the surviving
corporation and if a Canadian Borrower is one of the parties to such
amalgamations and the other party is not a Canadian Borrower, then the
amalgamated corporation shall continue under the name of the Canadian
Borrower, and (vi) if a Subsidiary other than a Borrowing Base Guarantor is
one of the parties to such merger, consolidation or amalgamation, and US
Borrower, a Borrowing Base Guarantor or a Canadian Borrower is the other
party, US Borrower, such Borrowing Base Guarantor or Canadian Borrower, as
the case may be, shall not acquire any material liabilities (whether
contingent or otherwise, and including liabilities in connection with any
pending litigation or under any Environmental Law) as a result of such
merger, consolidation or amalgamation (other than any Intercompany
Indebtedness) ;
(b) sell, issue, assign, lease, license, transfer, abandon
or otherwise dispose of any Capital Stock or Indebtedness to any other
Person or any of its assets to any other Person, except for
(i) sales of Inventory in the ordinary course of
business,
(ii) the sale or other disposition of Equipment
(including worn-out or obsolete Equipment or Equipment no longer used or
useful in the business of any Borrower or Guarantor) so long as such sales
or other dispositions do not involve Equipment having an aggregate fair
market value in excess of $1,000,000 for all such Equipment disposed of in
any fiscal year of Borrowers or as Agent may otherwise agree, and
(iii) the issuance and sale by US Borrower of Capital
Stock of US Borrower after the date hereof; provided, that, as to any such
issuance and sale, each of the following conditions is satisfied: (A) Agent
shall have received not less than ten (10) Business Days' prior written
notice of such issuance and sale by such Borrower, which notice shall
specify the parties to whom such shares are to be sold, the terms of such
sale, the number of shares to be issued and sold, the total amount which it
is anticipated will be realized from the issuance and sale of such stock,
the net cash proceeds which it is anticipated will be received by such
Borrower or Guarantor from such sale, together with such other information
with respect thereto as Agent may in good faith request, (B) such Borrower
shall not be required to pay any cash dividends or repurchase or redeem
such Capital Stock or make any other payments in respect thereof, except as
otherwise permitted in Section 9.11 hereof, (C) the terms of such Capital
Stock, and the terms and conditions of the purchase and sale thereof, shall
not include any terms that include any limitation on the right of any
Borrower to request or receive Loans or Letter of Credit Accommodations or
the right of any Borrower and Guarantor to amend or modify any of the terms
and conditions of this Agreement or any of the other Financing Agreements
or are more restrictive or burdensome to any Borrower or Guarantor than the
terms of any Capital Stock in effect on the date hereof, (D) except as
Agent may otherwise agree in writing, all of the proceeds of the sale and
issuance of such Capital Stock shall be remitted to Agent for application
to the principal amount of the Obligations and such other Obligations then
due and payable; in such order and manner as Agent may determine, and (E)
as of the date of such issuance and sale and after giving effect thereto,
no Default or Event of Default shall exist or have occurred,
(iv) the issuance of Capital Stock of any Borrower or
Guarantor consisting of common stock pursuant to an employee stock option,
restricted stock award or grant or similar equity plan or 401(k) plans of
such Borrower or Guarantor for the benefit of its employees, directors and
consultants, provided, that, in no event shall such Borrower or Guarantor
be required to issue, or shall such Borrower or Guarantor issue, Capital
Stock pursuant to such stock plans or 401(k) plans which would result in a
Change of Control or other Event of Default,
(v) the sale after the date hereof of any of the
Excluded Real Property; provided, that, as to any such sale each of the
following conditions is satisfied: (A) Agent shall have received not less
than ten (10) Business Days' prior written notice of the proposed sale of
such Real Property, which notice shall set forth in reasonable detail, the
parties to such sale or other disposition, the assets to be sold or
otherwise disposed of, the purchase price and the manner of payment
thereof, together with such other information with respect thereto as Agent
may in good faith request, (B) such Borrower or Guarantor shall have
received such consents and approvals required for it to sell such Real
Property and such consents and approvals shall be in full force and effect
and all conditions thereto satisfied, (C) all proceeds are remitted to
Agent for application to the principal amount of the Obligations and such
other Obligations then due and payable in such order and manner as Agent
may determine, net of direct costs incurred in connection with such sale
consisting of legal and accounting fees, sales commissions and title and
recording tax expenses and other reasonable and customary expenses directly
related to such sale, and net of all payments required to be made by such
Borrower or Guarantor on any Indebtedness permitted hereunder secured by a
valid and perfected security interest in, mortgage and lien upon the assets
so sold under the terms of the agreements with respect to such Indebtedness
as in effect on the date hereof, (D) each such sale shall be on
commercially reasonable prices and terms in a bona fide arms'-length
transaction with a person that is not an Affiliate, (E) any consideration
received by any Borrower or Guarantor (other than cash that is applied to
the payment of Indebtedness permitted hereunder secured by the assets sold
or applied to directs costs incurred in connection with such sale, in each
case as provided above), and all rights and interests of any Borrower or
Guarantor under any agreements with respect to such sale or other
disposition, are and shall be subject to the security interest and lien of
Agent, (F) Borrowers and Guarantors shall take such other and further
actions as may be required hereunder with respect to any such
consideration, (G) the net cash proceeds received by Borrowers and
Guarantors constituting the cash portion of the purchase price received
upon the date of the effectiveness of such sale shall be not less than
seventy-five (75%) percent of the value of the total consideration to be
given to Borrowers and Guarantors in respect of such sale, and (H) as of
the date of such sale and after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing,
(vi) the sale by US Borrower after the date hereof of
all of the then existing shares of Capital Stock of a wholly-owned
Subsidiary of US Borrower to any person that is not an Affiliate of any
Borrower or Guarantor; provided, that, as to any such sale, each of the
following conditions is satisfied: (A) Agent shall have received not less
than ten (10) Business Days' prior written notice of such sale by US
Borrower, which notice shall specify the parties to whom such shares are to
be sold, the total amount that it is anticipated will be realized from the
sale of such stock, the net cash proceeds that it is anticipated will be
received by US Borrower from such sale, together with such other
information with respect thereto as Agent may reasonably request, (B) US
Borrower shall have received such consents and approvals required for it to
sell such shares and such consents and approvals shall be in full force and
effect and all conditions thereto satisfied, (C) US Borrower shall receive
consideration at the time of such sale at least equal to the fair market
value, as determined in good faith by the Board of Directors (or any
committee of the Board of Directors), of the shares subject to such sale,
(D) each such sale shall be in a bona fide arms'-length transaction, (E) on
and after the date of the sale of such shares, the assets and properties of
the Subsidiary whose shares are sold shall no longer be considered in the
calculation of the applicable Borrowing Base, (F) as of the date of such
sale, the aggregate amount of the Excess Availability of Borrowers for each
of the immediately preceding ten (10) consecutive days shall have been not
less than $25,000,000 and as of the date of such sale and after giving
effect to the reduction in the applicable Borrowing Base as a result of the
assets and properties of the Subsidiary whose shares are sold no longer
being included in the applicable Borrowing Base (and the amount of the net
cash proceeds from such sale received by Agent on the date of such sale),
the aggregate amount of the Excess Availability of Borrowers shall be not
less than $25,000,000, (G) in no event shall all of the Subsidiaries whose
shares are so sold have accounted for, in the aggregate, more than
$30,000,000 of the aggregate amount of the Borrowing Base (determined as of
the close of business on the date immediately prior to the date of such
sale), (H) except as Agent may otherwise agree in writing, all of the
proceeds of the sale of such Capital Stock shall be remitted to Agent for
application to the principal amount of the Obligations and such other
Obligations then due and payable in such order and manner as Agent may
determine, (I) any consideration received by any Borrower or Guarantor and
all rights and interests of any Borrower or Guarantor under any agreements
with respect to such sale or other disposition, are and shall be subject to
the security interest and lien of Agent, (J) Borrowers and Guarantors shall
take such other and further actions as may be required hereunder with
respect to any such consideration, (K) the net cash proceeds received by US
Borrower constituting the cash portion of the purchase price received upon
the date of the effectiveness of such sale shall be not less than
seventy-five (75%) percent of the value of the total consideration to be
given to US Borrower and (L) as of the date of such sale and after giving
effect thereto, no Default or Event of Default shall exist or have
occurred,
(vii) the transfer of property by a Borrower or
Guarantor to another Borrower or Guarantor to the extent permitted under
Section 9.10 hereof,
(viii) the transfer of monies of a Guarantor from its
Subsidiary Collection Account to the Concentration Account consistent with
the terms of Section 6.3 hereof,
(ix) the grant by any Borrower or Guarantor of a
non-exclusive license or an exclusive license after the date hereof to any
person that is not an Affiliate for the use of any Intellectual Property
consisting of trademarks owned by such Borrower or Guarantor; provided,
that, as to any such license, each of the following conditions is
satisfied: (A) Agent shall have received not less than ten (10) Business
Days' prior written notice of such license, which notice shall specify the
party to whom such trademark is being licensed, the term of such license,
the trademark that is the subject of such license, the products that are
the subject of such license, the total amount that is contractually
required to be paid in any year to such Borrower or Guarantor pursuant to
such license, together with such other information with respect thereto as
Agent may reasonably request, (B) Borrowers and Guarantors shall have
received such consents and approvals required for it to license such
trademark and such consents and approvals shall be in full force and effect
and all conditions thereto satisfied, (C) each such license shall be in a
bona fide arms'-length transaction, (D) such license shall only be for the
use of trademarks in the manufacture, distribution or sale of products
outside the United States of America and Canada or if such license is for
the use of such trademarks in the manufacture, distribution or sale of
products within the United States of America or Canada, such license shall
not apply to or otherwise grant the right to use any of the Primary Marks
for the categories or types of Inventory constituting Primary Product
Lines, on which such Primary Marks are used on the date hereof, (E) such
license shall not include any limitations or restrictions on the use of
such trademarks that would affect the ability of Agent or Canadian Lender
to use such trademarks in order to sell or otherwise realize upon any of
the Inventory, or if such license does include any such limitations or
restrictions, any Inventory bearing the trademark that is subject to such
license or for which such trademark is used in the manufacture,
distribution or sale thereof shall cease to be Eligible Inventory to the
extent that it can no longer be sold using such trademark or is not
reasonably anticipated to be sold during the remaining period that such
Borrower or Guarantor may use such trademark prior to the termination
of its rights to do so in accordance with the terms of the applicable
agreement or US Borrower may, at its option, obtain an appraisal by an
appraiser acceptable to Agent (addressed to Agent and upon which Agent is
expressly permitted to rely) in scope and methodology acceptable to Agent,
to determine if such Inventory may be sold upon removal of such trademark
and the Net Recovery Percentage with respect thereto after such removal,
and the Borrowing Base may be adjusted accordingly or Reserves established
to reflect the value of such Inventory without such trademark based on such
appraisal, (F) as of the date of such license and after giving effect to
the reduction in the applicable Borrowing Base as a result of Eligible
Inventory using such licensed trademark ceasing to be Eligible Inventory,
the aggregate amount of the Excess Availability of Borrowers shall be not
less than $25,000,000, (G) Agent shall have received, true, correct and
complete copies of the executed license agreement, promptly upon the
execution thereof, and (H) at the time of the grant of the license and
after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing,
(x) the licensing by a Borrower or Guarantor of
Intellectual Property owned by it to another Borrower or Guarantor;
provided, that, as to any such license: (A) any rights of such Borrower or
Guarantor shall be subject to the rights of Agent in such Intellectual
Property (including the rights of Agent to use such Intellectual Property
upon an Event of Default), and (B) such license shall not impair, hinder or
otherwise adversely affect the rights of Agent;
(xi) the abandonment or cancellation of Intellectual
Property consisting of trademarks that are not material or are no longer
used or useful in any material respect in the business of any Borrower,
Guarantor or their Subsidiaries and have a minimal value;
(c) wind up, liquidate or dissolve except that any Guarantor
(other than a Borrowing Base Guarantor) may wind up, liquidate and
dissolve, provided, that, each of the following conditions is satisfied,
(i) the winding up, liquidation and dissolution of such Guarantor shall not
violate any law or any order or decree of any court or other Governmental
Authority in any material respect and shall not conflict with or result in
the breach of, or constitute a default under, any indenture, mortgage, deed
of trust, or any other agreement or instrument to which any Borrower or
Guarantor is a party or may be bound, (ii) such winding up, liquidation or
dissolution shall be done in accordance with the requirements of all
applicable laws and regulations, (iii) effective upon such winding up,
liquidation or dissolution, all of the assets and properties of such
Guarantor shall be duly and validly transferred and assigned to its
shareholders, (iv) Agent shall have received all documents and agreements
that any Borrower or Guarantor has filed with any Governmental Authority or
as are otherwise required to effectuate such winding up, liquidation or
dissolution, (v) no Borrower or Borrowing Base Guarantor, as the case may
be, shall acquire any material liabilities (whether contingent or
otherwise, and including liabilities in connection with any pending
litigation or under any Environmental Law) as a result of such winding up,
liquidation or dissolution, (vi) Agent shall have received not less than
ten (10) Business Days prior written notice of the intention of such
Guarantor to wind up, liquidate or dissolve, and (vii) as of the date of
such winding up, liquidation or dissolution and after giving effect
thereto, no Default or Event of Default shall exist or have occurred; or
(d) agree to do any of the foregoing.
9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall
not permit any Subsidiary to, create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge, hypothecation or other
encumbrance of any nature whatsoever on any of its assets or properties,
including the Collateral, except:
(a) the security interests and liens of Agent for itself and
the benefit of Lenders and the security interests, liens and hypothecs of
Canadian Lender;
(b) liens securing the payment of taxes, assessments or
other governmental charges or levies either not yet overdue or the validity
of which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower, Guarantor or Subsidiary,
as the case may be and with respect to which adequate reserves have been
set aside on its books in accordance with GAAP;
(c) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of such
Borrower's, Guarantor's or Subsidiary's business (including such liens in
favor of landlords, warehouses, mechanics, and customs and revenue
authorities in connection with the importing of goods and similar liens) to
the extent: (i) such liens secure Indebtedness which is not overdue or (ii)
such liens secure Indebtedness relating to claims or liabilities which are
fully insured (subject to customary deductibles) and being defended at the
sole cost and expense and at the sole risk of the insurer or being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower, Guarantor or such Subsidiary, in each case
prior to the commencement of foreclosure or other similar proceedings and
with respect to which adequate reserves have been set aside on its books in
accordance with GAAP;
(d) zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of Real Property which do not
interfere in any material respect with the use of such Real Property or
ordinary conduct of the business of such Borrower, Guarantor or such
Subsidiary as presently conducted thereon or materially impair the value of
the Real Property which may be subject thereto;
(e) purchase money security interests in Equipment
(including Capital Leases) and purchase money mortgages on Real Property
(including Capital Leases) to secure Indebtedness permitted under Section
9.9(b) hereof;
(f) pledges and deposits of cash by any Borrower or
Guarantor in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
benefits consistent with the current practices of such Borrower or
Guarantor as of the date hereof;
(g) pledges and deposits of cash by any Borrower or
Guarantor in the ordinary course of business with any financial institution
at which a deposit account of such Borrower or Guarantor is maintained to
secure obligations of such Borrower or Guarantor to such financial
institution in connection with such deposit account and the cash management
services provided by such financial institution for which such deposit
account is used consistent with the current practices of such Borrower or
Guarantor as of the date hereof;
(h) pledges and deposits of cash or Cash Equivalents by US
Borrower after the date hereof with the trustee under the Senior Indenture
in connection with any repurchase or redemption by US Borrower of Senior
Notes permitted under Section 9.9(e) hereof, provided, that, (i) such
pledges and deposits shall only apply to such cash and Cash Equivalents,
(ii) such cash and Cash Equivalents shall not be pledged and deposited with
the trustee prior to the time required under the terms of the Senior
Indenture as in effect on the date hereof, (iii) such cash and Cash
Equivalents shall only be pledged and deposited with the trustee in the
amounts required under the terms of the Senior Indenture as in effect on
the date hereof and (iv) the amounts so pledged shall not exceed the
amounts permitted to be paid hereunder in connection with such repurchase
or redemption;
(i) pledges and deposits of cash by any Borrower or
Guarantor to secure the performance of tenders, bids, leases, trade
contracts (other than for the repayment of Indebtedness), statutory
obligations, and other similar obligations in each case in the ordinary
course of business of such Borrower or Guarantor; provided, that, in
connection with any performance bonds issued by a surety or other person,
the issuer of such bond shall not have any rights in or to, or other
interest in (whether contingent or otherwise), any of the Collateral
(except that to the extent that such cash is pledged and delivered prior to
Agent notifying the applicable depository bank to remit funds in the
Blocked Accounts to the Agent Payment Account (or Canadian Lender Payment
Account, as the case may be), the cash which is so pledged may be proceeds
of other Collateral and proceeds of Loans shall not be deemed Collateral
for purposes of this clause (i));
(j) pledges and deposits of cash by any Borrower or
Guarantor to secure the obligation of such Borrower or Guarantor under a
bond issued as required for an appeal, stay or discharge in the course of
legal proceedings involving such Borrower or Guarantor;
(k) security interests and liens on the property of a person
immediately prior to such person becoming a Subsidiary of any Borrower or
Guarantor after the date hereof; provided, that, (i) no such security
interest was created or assumed in contemplation of such person becoming a
Subsidiary, whether as security for the payment of any consideration due in
connection with such transaction or otherwise, (ii) each such security
interest or lien shall only cover the property of such Subsidiary, and if
required by the terms of the agreements originally creating such security
interest or lien, property which is an improvement to or is required for
specific use in connection with such acquired property, (iii) such security
interest or lien shall not encumber or apply to any assets or properties
constituting Collateral and (iv) the property subject to such security
interest or lien is segregated from, and otherwise capable of being
separately identified from, any of the Collateral and is not included in
any report to Agent with respect to the Collateral;
(l) liens arising from (i) operating leases and the
precautionary UCC and PPSA financing statement filings in respect thereof
and (ii) equipment or other materials which are not owned by any Borrower
or Guarantor located on the premises of such Borrower or Guarantor (but not
in connection with, or as part of, the financing thereof) from time to time
in the ordinary course of business and consistent with current practices of
such Borrower or Guarantor and the precautionary UCC or PPSA financing
statement filings in respect thereof;
(m) judgments and other similar liens arising in connection
with court proceedings that do not constitute an Event of Default,
provided, that, (i) such liens are being contested in good faith and by
appropriate proceedings diligently pursued, (ii) adequate reserves or other
appropriate provision, if any, as are required by GAAP have been made
therefor, (iii) a stay of enforcement of any such liens is in effect and
(iv) to the extent that the same relates to Eligible Inventory, Eligible
Accounts or on and after US Borrower has requested that the Real Property
Availability be included in the calculation of the US Borrowing Base,
Eligible Real Property, Agent may establish a Reserve with respect thereto;
(n) the security interests and liens to secure Refinancing
Indebtedness to the extent permitted under Section 9.9 below;
(o) the mortgage and liens upon Real Property of a Borrower
or Guarantor arising after the date hereof to secure Indebtedness permitted
under Section 9.9(i) hereof in connection with the financing of such Real
Property;
(p) the security interests and liens of US Borrower pursuant
to the Intercompany Loan Agreements; provided, that, (i) such security
interests and liens secure only the Intercompany Indebtedness arising
pursuant to loans by US Borrower to Guarantors permitted under Section
9.10(h) hereof, (ii) such security interests and liens are and shall be
subject and subordinate to the security interests and liens of Agent and
Canadian Lender, and (iii) such security interests and liens have been
validly assigned by US Borrower to Agent as part of the Collateral; and
(q) the security interests and liens set forth on Schedule
8.4 to the Information Certificate.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall
not permit any Subsidiary to, incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any Indebtedness, or
guarantee, assume, endorse, or otherwise become responsible for (directly
or indirectly), the Indebtedness, performance, obligations or dividends of
any other Person, except:
(a) the Obligations;
(b) purchase money Indebtedness (including purchase money
Capital Leases) arising after the date hereof to the extent secured by
purchase money security interests in Equipment (including Capital Leases)
and purchase money mortgages on Real Property not to exceed $4,000,000 in
any fiscal year of Borrowers or Guarantors or $16,000,000 in the aggregate
(in each case including both purchase money Indebtedness secured by
Equipment and Real Property) so long as such security interests and
mortgages do not apply to any property of such Borrower, Guarantor or
Subsidiary other than the Equipment or Real Property so acquired, and the
Indebtedness secured thereby does not exceed the cost of the Equipment or
Real Property so acquired, as the case may be;
(c) guarantees by any Borrower or Guarantor of the
Obligations of the other Borrowers or Guarantors in favor of Agent for the
benefit of Lenders;
(d) Indebtedness of any Borrower or Guarantor under swap
agreements, cap agreements, collar agreements, exchange agreements,
options, futures or forward hedging contracts, derivative instruments or
similar contractual arrangements intended to protect a Person against
fluctuations in interest rates, currency exchange rates or the price of raw
materials and other products used or produced in the business of any
Borrower or Guarantor; provided, that, such arrangements are either with a
Lender or an Affiliate thereof or with banks or other financial
institutions that have combined capital and surplus and undivided profits
of not less than $250,000,000 and are not for speculative purposes and such
Indebtedness shall be unsecured;
(e) Indebtedness of US Borrower evidenced by the Senior
Notes as in effect on the date hereof or as permitted to be amended
pursuant to the terms hereof, provided, that:
(i) the aggregate amount of such Indebtedness
shall not exceed $25,321,000 less the aggregate amount of all repayments or
redemptions, whether optional or mandatory, in respect thereof, plus
interest thereon at the rate provided for in the Senior Notes as in effect
on the date hereof,
(ii) the Obligations are and shall at all times
continue to be "Bank Debt" and the "Designated Senior Debt" as each of such
terms is defined in the Senior Indenture as in effect on the date hereof
and are and shall be entitled to all of the rights and benefits thereof
under the Senior Indenture as in effect on the date hereof and there is
not, and shall not be, any other Designated Senior Debt except with the
prior written consent of Agent,
(iii) Borrowers and Guarantors shall not,
directly or indirectly, make any payments in respect of such Indebtedness,
except that they may make (A) regularly scheduled payments of interest and
fees, if any, in respect of such Indebtedness when due in accordance with
the terms of the Senior Notes and the Senior Indenture, in each case as in
effect on the date hereof and (B) payments of principal in respect of such
Indebtedness when scheduled to mature in accordance with the terms of the
Senior Indenture as in effect on the date hereof and earlier to the extent
permitted under Section 9.9(e)(v) below,
(iv) Borrowers and Guarantors shall not,
directly or indirectly, amend, modify, alter or change in any material
respect any terms of such Indebtedness or any of the Senior Notes or the
Senior Indenture or any related agreements, documents and instruments,
except that US Borrower may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof so as to extend the maturity
thereof or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness other than pursuant to
payments thereof, or to reduce the interest rate or any fees in connection
therewith, or to make any covenant less restrictive,
(v) Borrowers and Guarantors shall not, directly
or indirectly, redeem, retire, defease, purchase or otherwise acquire such
Indebtedness other than at maturity (as set forth in the Senior Indenture
as in effect on the date hereof or as extended after the date hereof), or
set aside or otherwise deposit or invest any sums for such purpose, except
that (A) US Borrower may redeem or purchase such Indebtedness, provided,
that, as of the date of any such redemption or purchase or any payment in
respect thereof and after giving effect thereto, (1) Agent shall have
received prior written notice of the intention of US Borrower to so redeem
or purchase such Indebtedness no later than 12:00 noon Chicago time on the
Business Day prior to any such purchase or redemption, which notice shall
specify the time period within which US Borrower will redeem or purchase
such Indebtedness (which shall be no earlier than the next Business Day and
no later than five (5) Business Days after the receipt by Agent of the
notice), the maximum amount that US Borrower will pay in respect thereof
and the range of the principal amount of the Senior Notes US Borrower
anticipates will be so redeemed or purchased, (2) the aggregate amount of
the Excess Availability of Borrowers for each of the immediately preceding
ten (10) consecutive days shall have been not less than $25,000,000 and as
of the date of any such payment and after giving effect thereto, the
aggregate amount of the Excess Availability of Borrowers shall be not less
than $25,000,000, (3) as of the date of any such payment and after giving
effect thereto, no Default or Event of Default shall exist or have occurred
and be continuing and (B) US Borrower may redeem or purchase such
Indebtedness with Refinancing Indebtedness with respect thereto to the
extent permitted under Section 9.9(n) hereof, and
(vi) Borrowers and Guarantors shall furnish to
Agent all material written notices or demands in connection with such
Indebtedness either received by any Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by any Borrower or Guarantor or
on its behalf, concurrently with the sending thereof, as the case may be;
(f) guarantees by a Borrower or Guarantor of the
obligations of a Guarantor or in the case of Canadian Borrowers, of the
obligations of another Canadian Borrower arising pursuant to a lease or
license by such Guarantor or Canadian Borrower, as the case may be, of real
or personal property in the ordinary course of the business of such
Guarantor or Canadian Borrower, provided, that, the person issuing such
guarantee is permitted hereunder to incur directly the obligation that is
being guaranteed;
(g) the Indebtedness of a Canadian Borrower to US
Borrower arising after the date hereof pursuant to loans by US Borrower to
such Canadian Borrower permitted under Section 9.10(g) hereof;
(h) the Intercompany Indebtedness owing by each Guarantor
to US Borrower arising pursuant to loans by US Borrower to such Guarantor
under the Intercompany Credit Facility of such Guarantor with US Borrower
to the extent such loans are permitted under Section 9.10(h) hereof;
(i) Indebtedness of a Borrower or Guarantor arising at
any time after the date hereof pursuant to a loan in cash by a financial
institution to such Borrower or Guarantor, as the case may be, secured by
any of the Real Property of such Borrower or Guarantor (other than any
Excluded Real Property subject to a mortgage in favor of a person other
than Agent as of the date hereof), provided, that:
(i) as to any such Indebtedness, (A) Agent shall
have received not less than ten (10) Business Days' prior written notice of
the intention of such Borrower or Guarantor to incur such Indebtedness,
which notice shall set forth in reasonable detail, the amount of such
proposed Indebtedness, the person to whom such Indebtedness is proposed to
be owed, the proposed interest rate, schedule of repayments and maturity
date with respect thereto, together with such other information with
respect thereto as Agent may reasonably request, (B) Agent shall have
received true, correct and complete copies of all material agreements,
documents and instruments evidencing or otherwise related to such
Indebtedness, as duly authorized, executed and delivered by the parties
thereto and such other agreements, documents or instruments related thereto
as Agent may request, (C) if any Collateral is or may be located at the
Real Property securing such Indebtedness, Agent shall have received a
Collateral Access Agreement with respect to such Real Property from the
person to whom such Indebtedness is owed, duly authorized, executed and
delivered by such person, in form and substance reasonably satisfactory to
Agent, (D) such Indebtedness shall be incurred by such Borrower or
Guarantor in a bona fide arm's length transaction with a person that is not
an Affiliate, (E) except as Agent may otherwise agree in writing, all of
the proceeds of the loans or other accommodations giving rise to such
Indebtedness shall be remitted to Agent for application to the principal
amount of the Obligations and other Obligations then due and payable in
such order and manner as Agent may determine, (F) in no event shall any
Borrower or Guarantor make, or be required to make, payments during the
then current term of this Agreement in respect of the principal balance of
such Indebtedness in any twelve (12) consecutive month period that in the
aggregate exceed the amount equal to twenty (20%) percent of the original
principal amount of such Indebtedness, (G) the Real Property, the value of
which is the basis for such loan, shall be the only collateral for such
Indebtedness, (H) as of the date of incurring such Indebtedness, US
Borrower shall not have requested that the US Real Property Availability be
included in the calculation of the US Borrowing Base and the US Real
Property Availability shall not have been included in the calculation of
the US Borrowing Base, (I) as of the date of incurring such Indebtedness
and after giving effect thereto, no Default or Event of Default shall exist
or have occurred, and (J) Borrowers and Guarantors shall furnish to Agent
all material notices or demands in connection with such Indebtedness either
received by any Borrower or Guarantor or on its behalf promptly after the
receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be,
(ii) so long as each of the conditions set forth
in clause (i) above are satisfied, Agent shall, upon the request of US
Borrower and at the expense of Borrowers and Guarantors, if required by the
person to whom such Indebtedness is owed, execute and deliver to US
Borrower a discharge and satisfaction of the Mortgage with respect to such
Real Property which is the collateral for such Indebtedness;
(j) unsecured Indebtedness of any Borrower or Guarantor
arising after the date hereof to any third person (but not to any other
Borrower or Guarantor) pursuant to loans in cash by such person to such
Borrower or Guarantor, provided, that, each of the following conditions is
satisfied: (i) Agent shall have received not less than ten (10) Business
Days' prior written notice of the intention of such Borrower or Guarantor
to incur such Indebtedness, which notice shall set forth in reasonable
detail, the amount of such Indebtedness, the person or persons to whom such
Indebtedness will be owed, the interest rate, the schedule of repayments
and maturity date with respect thereto, together with such other
information with respect thereto as Agent may reasonably request, (ii)
Agent shall have received true, correct and complete copies of all material
agreements, documents and instruments evidencing or otherwise related to
such Indebtedness and such other agreements, documents or instruments
related thereto as Agent may request, (iii) except as Agent may otherwise
agree in writing, all of the proceeds of the loans or other accommodations
giving rise to such Indebtedness shall be remitted to Agent for application
to the principal amount of the Obligations and such other Obligations then
due and payable in such order and manner as Agent may determine, (iv) as of
the date of incurring such Indebtedness and after giving effect thereto, no
Default or Event of Default shall exist or have occurred, (v) such
Indebtedness shall be incurred by such Borrower or Guarantor in a bona fide
arm's length transaction to a person that is not an Affiliate, or if to a
person that is an Affiliate on terms and conditions no less favorable to
such Borrower or Guarantor than such Borrower or Guarantor would obtain in
a comparable arm's length transaction with a person that is not an
Affiliate, (vi) in no event shall any Borrower or Guarantor make, or be
required to make, payments in respect of the principal balance of such
Indebtedness (or any fees other than reasonably and customary fees) during
the then current term of this Agreement, (vii) the aggregate principal
amount of all such Indebtedness incurred by Borrowers and Guarantors shall
not exceed $25,000,000, (viii) the agreements with respect to such
Indebtedness shall not include terms and conditions that affect or limit
the ability of Borrowers or Guarantors to borrow from Agent and Lenders
(except that the terms and conditions may provide that the principal amount
of the Indebtedness of Borrowers to Lenders shall not exceed the greater of
(A) $225,000,000 or (B) the sum of eighty-five (85%) percent of the book
value of the accounts receivable of US Borrower and its wholly-owned
Subsidiaries plus seventy (70%) percent of the book value of the inventory
of US Borrower and its wholly-owned Subsidiaries, in each case as
determined in accordance with GAAP plus sixty (60%) percent of the greater
of the fair market value or the book value of the owned Real Property of US
Borrower and its wholly owned Subsidiaries), to amend, supplement or extend
any of the terms of the financing arrangements of Agent and Lenders with
Borrowers and Guarantors pursuant to the terms hereof and of the other
Financing Agreements) or contain any other terms and conditions that are
more restrictive or burdensome with respect to Borrowers and Guarantors in
any material respect than those included in any other Indebtedness existing
as of the date hereof, (ix) such Borrower and Guarantor shall not, directly
or indirectly, redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose during the then current term of this Agreement, and (x) Borrowers
and Guarantors shall furnish to Agent all notices or demands in connection
with such Indebtedness either received by any Borrower or Guarantor or on
its behalf promptly after the receipt thereof, or sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the
case may be;
(k) unsecured contingent Indebtedness of a Borrower or
Guarantor arising after the date hereof in respect of reasonable and
customary indemnification obligations and purchase price adjustments in
favor of the purchaser of assets from such Borrower or Guarantor in
connection with the sale by such Borrower or Guarantor to such purchaser of
any of such assets permitted under Section 9.7 hereof;
(l) contingent Indebtedness of a Borrower or Guarantor
arising after the date hereof to reimburse the issuer of a bond issued in
each case in the ordinary course of business consistent with the current
practices of such Borrower or Guarantor as of the date hereof required for:
(i) the performance of tenders, bids, leases, trade contracts (other than
for the repayment of Indebtedness), statutory obligations, and other
similar obligations; provided, that, in connection with any performance
bonds issued by a surety or other person, the issuer of such bond shall not
have any rights in or to, or other interest in (whether contingent or
otherwise), any of the Collateral (except that to the extent that such cash
is pledged and delivered prior to Agent notifying the applicable depository
bank to remit funds in the Blocked Accounts to the Agent Payment Account
(or Canadian Lender Payment Account, as the case may be), the cash which is
so pledged may be proceeds of other Collateral and proceeds of Loans shall
not be deemed Collateral for purposes of this clause (l)); and (ii) an
appeal, stay or discharge in the course of legal proceedings involving such
Borrower or Guarantor;
(m) contingent Indebtedness of a person that becomes a
Subsidiary of US Borrower after the date hereof to the extent permitted
under Section 9.10(j) hereof that exists immediately prior to such person
becoming a Subsidiary of US Borrower; provided, that, such contingent
Indebtedness shall not have been created or assumed in contemplation of
such person becoming a Subsidiary of US Borrower and in no event shall any
then existing Borrower or Guarantor have any liability in connection with
such contingent Indebtedness;
(n) Indebtedness of a Borrower or Guarantor arising after
the date hereof issued in exchange for, or the proceeds of which are used
to refinance, replace or substitute for all or any portion of the
Indebtedness permitted under Section 9.9(b), Section 9.9(d), Section
9.9(e), Section 9.9(i), Section 9.9(j) or Section 9.9(o) hereof (the
"Refinancing Indebtedness"); provided, that, as to any such Refinancing
Indebtedness, each of the following conditions is satisfied: (i) Agent
shall have received not less than ten (10) Business Days' prior written
notice from US Borrower of the intention of a Borrower or Guarantor to
incur such Indebtedness, which notice shall set forth in reasonable detail,
the amount of such proposed Indebtedness, the person to whom such
Indebtedness is proposed to be owed, the proposed interest rate and fees,
schedule of repayments and maturity date with respect thereto, the
collateral for such Indebtedness (if any), together with such other
information with respect thereto as Agent may reasonably request, (ii)
promptly upon Agent's request, Agent shall have received true, correct and
complete copies of all material agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, as duly authorized,
executed and delivered by the parties thereto and such other agreements,
documents or instruments related thereto as Agent may request, (iii) the
Refinancing Indebtedness shall have a Weighted Average Life to Maturity and
a final maturity equal to or greater than the Weighted Average Life to
Maturity and the final maturity, respectively, of the Indebtedness being
refinanced, replaced, or substituted for, (iv) the Refinancing Indebtedness
shall rank in right of payment no more senior than, and be at least
subordinated (if subordinated) to, the Obligations as the Indebtedness
being refinanced, replaced or substituted for, (v) the Refinancing
Indebtedness shall not (A) limit the principal amount of the Indebtedness
of US Borrower to Lenders to an amount less than the greater of (1)
$225,000,000 or (2) the sum of eighty-five (85%) percent of the book value
of the accounts receivable of US Borrower and its wholly-owned Subsidiaries
plus seventy (70%) percent of the book value of the inventory of US
Borrower and its wholly-owned Subsidiaries, in each case as determined in
accordance with GAAP plus sixty (60%) percent of the greater of the fair
market value or the book value of the owned Real Property of US Borrower
and its wholly owned Subsidiaries or (B) include terms and conditions that
otherwise affect or limit the ability of Borrowers or Guarantors to borrow
from Agent and Lenders or to amend, supplement or extend any of the terms
of the financing arrangements of Agent and Lenders with Borrowers and
Guarantors pursuant to the terms hereof and of the other Financing
Agreements, (vi) such Indebtedness shall be incurred by such Borrower or
Guarantor in a bona fide arm's length transaction to a person that is not
an Affiliate, or if to a person that is an Affiliate on terms and
conditions no less favorable to such Borrower or Guarantor than such
Borrower or Guarantor would obtain in a comparable arm's length transaction
with a person that is not an Affiliate, (vii) as of the date of incurring
such Indebtedness and after giving effect thereto, no Default or Event of
Default shall exist or have occurred and be continuing, (viii) the
principal amount of such Refinancing Indebtedness shall not exceed the
principal amount of the Indebtedness so refinanced, replaced or substituted
for, plus the amount of reasonable and customary costs and expenses
incurred in connection with such refinancing, except that Refinancing
Indebtedness with respect to Indebtedness permitted under Section 9.9(e)
hereof may exceed the then outstanding principal amount of such
Indebtedness provided that: (A) all of the proceeds of the loans or other
accommodations giving rise to such Refinancing Indebtedness in excess of
the Indebtedness refinanced, replaced or substituted for shall be remitted
to Agent for application to the principal amount of the Obligations and
such other Obligations then due and payable in such order and manner as
Agent may determine and (B) the aggregate principal amount of such
Refinancing Indebtedness shall not exceed $25,321,000, (ix) the Refinancing
Indebtedness shall be unsecured if the Indebtedness so refinanced, replaced
or substituted for is unsecured or secured by substantially the same assets
(or fewer assets) if the Indebtedness so refinanced, replaced or
substituted for is secured, (x) Borrowers and Guarantors may only make
payments of principal, interest and fees, if any, in respect of such
Indebtedness to the extent such payments would have been permitted
hereunder in respect of the Indebtedness so refinanced, replaced or
substituted for (including with Refinancing Indebtedness), except that no
payments of principal shall be made or required to be made during the then
current term of this Agreement under the terms of Refinancing Indebtedness
with respect to Indebtedness permitted under Section 9.9(e) hereof, (xi)
Borrowers and Guarantors shall not, directly or indirectly, redeem, retire,
defease, purchase or otherwise acquired such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose (other than with
Refinancing Indebtedness to the extent permitted herein and to the extent
permitted with respect to the Indebtedness so refinanced, replaced or
substituted for), and (xii) Borrowers and Guarantors shall furnish to Agent
copies of all material notices or demands in connection with Indebtedness
received by any Borrower or Guarantor or on its behalf promptly after the
receipt thereof or sent by any Borrower or Guarantor or on its behalf
concurrently with the sending thereof, as the case may be;
(o) the Indebtedness existing on the date hereof set
forth on Schedule 9.9 to the Information Certificate; provided, that, with
respect to the Indebtedness listed in Section 1 of such Schedule 9.9, (i)
Borrowers and Guarantors may only make regularly scheduled payments of
principal and interest in respect of such Indebtedness in accordance with
the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof, except as otherwise provided
in clause (ii)(B) below, (ii) Borrowers and Guarantors shall not, directly
or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof except, that, Borrowers and Guarantors may, after
prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or to make any covenant
less restrictive, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any
sums for such purpose, except with the proceeds of Refinancing Indebtedness
with respect thereto to the extent permitted under Section 9.9(n) hereof
and (iii) Borrowers and Guarantors shall furnish to Agent all notices or
demands in connection with such Indebtedness either received by any
Borrower or Guarantor or on its behalf, promptly after the receipt thereof,
or sent by any Borrower or Guarantor or on its behalf, concurrently with
the sending thereof, as the case may be.
9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall
not, and shall not permit any Subsidiary to, directly or indirectly, make
any loans or advance money or property to any person, or invest in (by
capital contribution, dividend or otherwise) or purchase or repurchase the
Capital Stock or Indebtedness or all or a substantial part of the assets or
property of any person, or form or acquire any Subsidiaries, or agree to do
any of the foregoing, except:
(a) the endorsement of instruments for collection or
deposit in the ordinary course of business;
(b) investments in cash or Cash Equivalents, provided,
that, (i) in the event that Agent has exercised its rights under Section
6.3(b) hereof so that funds in the Blocked Accounts are to be remitted to
the Agent Payment Account or the Canadian Lender Payment Account, as
applicable, then only if no Loans are then outstanding and (ii) to the
extent required hereunder, the terms and conditions of Section 5.2 hereof
shall have been satisfied with respect to the deposit account, investment
account or other account in which such cash or Cash Equivalents are held;
(c) the existing equity investments of each Borrower and
Guarantor as of the date hereof in its Subsidiaries, provided, that, no
Borrower or Guarantor shall have any further obligations or liabilities to
make any capital contributions or other additional investments or other
payments to or in or for the benefit of any of such Subsidiaries (but
without limiting the right of any Borrower or Guarantor to make such
capital contributions, additional investments or other payments to the
extent otherwise permitted herein);
(d) loans and advances by any Borrower or Guarantor to
employees of such Borrower or Guarantor not to exceed the principal amount
of $1,000,000 in the aggregate at any time outstanding for: (i) reasonably
and necessary work-related travel or other ordinary business expenses to be
incurred by such employee in connection with their work for such Borrower
or Guarantor and (ii) reasonable and necessary relocation expenses of such
employees (including home mortgage financing for relocated employees);
(e) stock or obligations issued to any Borrower or
Guarantor by any Person (or the representative of such Person) in respect
of indebtedness of such Person owing to such Borrower or Guarantor in
connection with the insolvency, bankruptcy, receivership or reorganization
of such Person or a composition or readjustment of the debts of such Person
or in connection with the settlement of disputes or trade payables;
provided, that, the original of any such stock or instrument evidencing
such obligations shall be promptly delivered to Agent, upon Agent's
request, together with such stock power, assignment or endorsement by such
Borrower or Guarantor as Agent may request;
(f) obligations of account debtors to any Borrower or
Guarantor arising from Accounts which are past due whether or not evidenced
by a promissory note made by such account debtor payable to such Borrower
or Guarantor; provided, that, promptly upon the receipt of the original of
any such promissory note by such Borrower or Guarantor, such promissory
note shall be endorsed to the order of Agent by such Borrower or Guarantor
and promptly delivered to Agent as so endorsed;
(g) loans of money or property (other than Collateral
except that to the extent that such loan is made prior to Agent notifying
the applicable depository bank to remit funds in the Blocked Accounts to
the Agent Payment Account (or Canadian Lender Payment Account, as the case
may be), the loans may be made using proceeds of other Collateral) after
the date hereof by US Borrower to a Canadian Borrower or investments by
capital contribution after the date hereof by US Borrower to a Canadian
Borrower (which investments may be in the form of cancellation or
forgiveness of Indebtedness owing by a Canadian Borrower to US Borrower);
provided, that, as to any such loans or investments, each of the following
conditions is satisfied:
(i) as of the date of such loan or investment
and after giving effect thereto, no Default or Event of Default shall exist
or have occurred and be continuing,
(ii) as of the date of any such loan or
investment and after giving effect thereto, the Excess Availability of US
Borrower shall have been not less than $5,000,000 for each of the
immediately preceding ten (10) consecutive days and as of the date of any
such loan or investment and after giving effect thereto, the Excess
Availability of US Borrower shall be not less than $5,000,000,
(iii) in no event shall the aggregate amount of
all such loans and investments by US Borrower to the Canadian Borrowers
exceed $7,000,000 at any time outstanding,
(iv) in the case of an investment by capital
contribution to the extent a new stock certificate or instrument are issued
in connection therewith, at Agent's option, the original stock certificate
or other instrument evidencing such capital contribution (or such other
evidence as may be issued in the case of a limited liability company) shall
be promptly delivered to Agent, together with such stock power, assignment
or endorsement as Agent may reasonably request, and promptly upon Agent's
request, US Borrower shall execute and deliver to Agent a pledge and
security agreement (or an amendment to one or more than existing Financing
Agreements with respect to the pledge of shares of stock by such Borrower
in favor of Agent), in form and substance reasonably satisfactory to Agent,
granting to Agent a first priority pledge of, security interest in and lien
upon all of the issued and outstanding shares of such stock or other
instrument or interest (and in the case of a limited liability company take
such other actions as Agent shall reasonably require with respect to
Agent's security interests therein), subject to the limitation set forth in
Section 5.1(b)(ii) hereof,
(v) in the case of loans, the Indebtedness of
such Canadian Borrower to US Borrower arising pursuant to such loan by US
Borrower to such Canadian Borrower shall be evidenced by a single original
promissory note issued by such Canadian Borrower payable to US Borrower,
which shall evidence a valid and legally enforceable Indebtedness of such
Canadian Borrower to US Borrower (and to Agent as secured party)
unconditionally owing to US Borrower, without offset, defense or
counterclaim of any kind, nature or description whatsoever and the original
of such promissory note issued by such Canadian Borrower to US Borrower
shall be delivered or caused to be delivered to, and held by, Agent as part
of the Collateral accompanied by such instruments of transfer or assignment
duly executed in blank as Agent may specify,
(vi) within thirty (30) days after the end of
each fiscal month (except in the case of a fiscal month (other than
November) that is the last day of a fiscal quarter, forty-five (45) days
after the end of such month and in the case of any November, sixty (60)
days after the end of such fiscal month), Borrowers and Guarantors shall
provide to Agent a report in form and substance reasonably satisfactory to
Agent of the outstanding amount of such loans and investments as of the
last day of the immediately preceding month and indicating any loans or
investments made and payments received during the immediately preceding
month;
(h) loans by US Borrower to each Guarantor under the
Intercompany Credit Facility of US Borrower with such Guarantor; provided,
that, as to any such loan, each of the following conditions is satisfied:
(i) the Indebtedness of such Guarantor to US
Borrower arising in connection with such loan by US Borrower to such
Guarantor shall be evidenced by a single original Intercompany Note issued
by such Guarantor to US Borrower, which shall evidence a valid and legally
enforceable Indebtedness of such Guarantor to US Borrower (and to Agent as
secured party) unconditionally owing to US Borrower, without offset,
defense or counterclaim of any kind, nature or description whatsoever,
(ii) the original of the Intercompany Note
issued by such Guarantor to US Borrower shall be delivered to, and held by,
Agent as part of the Collateral, accompanied by such instruments of
transfer or assignment duly executed in blank as Agent may specify,
(iii) all of the representations and warranties
set forth in Section 8.17 shall be true and correct with respect to the
Intercompany Indebtedness arising pursuant to such loan,
(iv) any payment by a Guarantor under its
guarantee of the Obligations shall be deemed a payment in respect of the
Intercompany Indebtedness of such Guarantor to US Borrower under the
Intercompany Credit Facility of US Borrower with such Guarantor and shall
reduce the amount of the Intercompany Indebtedness of such Guarantor to US
Borrower by the amount of such payment under its guarantee of the
Obligations,
(v) the Intercompany Indebtedness arising
pursuant to such loan is and shall at all times continue to be subject and
subordinate in right of payment to the right of Agent and Lenders to
receive the prior indefeasible payment and satisfaction in full payment of
all of the Obligations on terms and conditions acceptable to Agent,
(vi) all payments by a Guarantor in respect of
the Intercompany Indebtedness arising pursuant to such loan shall be used
by US Borrower for the same purposes for which Loans and Letter of Credit
Accommodations are permitted to be used under Section 6.6(c) hereof,
(vii) in no event shall the aggregate amount of
all such loans to Guarantors other than Borrowing Base Guarantors made
after the date hereof, together with the aggregate amount of all
investments by US Borrower made in Guarantors other than Borrowing Base
Guarantors after the date hereof, exceed $2,000,000 at any time
outstanding,
(viii) Agent shall have received true, correct
and complete copies of all of the Intercompany Loan Agreements,
(ix) Borrowers and Guarantors shall not directly
or indirectly, amend, modify, alter or change the terms of the Intercompany
Loan Agreements, the Intercompany Indebtedness arising pursuant to such
loans or any agreement, document or instrument related thereto,
(x) within thirty (30) days after the end of
each fiscal month (except in the case of a fiscal month (other than
November) that is the last day of a fiscal quarter, forty-five (45) days
after the end of such month and in the case of November, sixty (60) days
after the end of such month), Borrowers and Guarantors shall provide to
Agent a report in form and substance reasonably satisfactory to Agent of
the outstanding amount of such loans as of the last day of the immediately
preceding month and indicating any loans made and payments received during
the immediately preceding month;
(i) investments by capital contribution after the date
hereof by US Borrower to a Guarantor (which investments may be in the form
of cancellation or forgiveness of Indebtedness owing by such Guarantor to
US Borrower); provided, that, as to any such loans or investments, each of
the following conditions is satisfied:
(i) as of the date of such investment and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing,
(ii) in no event shall the aggregate amount of
all such investments made in Guarantors other than Borrowing Base
Guarantors after the date hereof, together with the aggregate amount of all
loans by US Borrower to Guarantors other than Borrowing Base Guarantors
made after the date hereof, exceed $2,000,000 at any time outstanding,
(iii) US Borrower shall only make any such
investments in a Borrowing Base Guarantor to either (A) increase the equity
of such Borrowing Base Guarantor to the extent required in order to
maintain the treatment of the interest expense in respect of the
Intercompany Indebtedness of such Borrowing Base Guarantor under applicable
state tax law in a manner consistent with such treatment as of the end of
the tax year of such Borrowing Base Guarantor under such state law ending
immediately prior to the date hereof or (B) to maintain the Solvency of
such Borrowing Base Guarantor, provided, that, in no event shall the
aggregate amount of all such investments made in Borrowing Base Guarantors
in any fiscal year after the date hereof exceed $5,000,000,
(iv) to the extent a new stock certificate or
instrument is issued in connection therewith, at Agent's option, the
original stock certificate or other instrument evidencing such capital
contribution (or such other evidence as may be issued in the case of a
limited liability company) shall be promptly delivered to Agent, together
with such stock power, assignment or endorsement as Agent may reasonably
request, and promptly upon Agent's request, US Borrower shall execute and
deliver to Agent a pledge and security agreement (or an amendment to one or
more than existing Financing Agreements with respect to the pledge of
shares of stock by such Borrower in favor of Agent), in form and substance
reasonably satisfactory to Agent, granting to Agent a first priority pledge
of, security interest in and lien upon all of the issued and outstanding
shares of such stock or other instrument or interest (and in the case of a
limited liability company take such other actions as Agent shall reasonably
require with respect to Agent's security interests therein),
(v) within thirty (30) days after the end of
each fiscal month (except in the case of a fiscal month (other than
November) that is the last day of a fiscal quarter, forty-five (45) days
after the end of such month and in the case of November, sixty (60) days
after the end of such month), Borrowers and Guarantors shall provide to
Agent a report in form and substance reasonably satisfactory to Agent of
the outstanding amount of such investments as of the last day of the
immediately preceding month and indicating any investments made and
payments received during the immediately preceding month;
(j) loans of money or property (other than Collateral
except that to the extent that such loan is made prior to Agent notifying
the applicable depository bank to remit funds in the Blocked Accounts to
the Agent Payment Account (or Canadian Lender Payment Account, as the case
may be) the loans may be made using the proceeds of other Collateral) after
the date hereof by any Borrower or Guarantor to any Person (other than an
existing Affiliate of any Borrower or Guarantor as of the date hereof),
including non- cash consideration received by any Borrower or Guarantor in
connection with the sale of any of its assets to the extent otherwise
permitted under Section 9.7 hereof, or investments after the date hereof by
any Borrower or Guarantor by capital contribution in any Person (other than
an existing Affiliate of any Borrower or Guarantor as of the date hereof),
or the formation or acquisition after the date hereof by any Borrower or
Guarantor of any direct wholly-owned Subsidiary of such Borrower or
Guarantor organized under the laws of the United States or Canada (or any
political subdivision of either) after the date hereof; provided, that, as
to any such loans or investments, or the formation or acquisition of any
such Subsidiary, each of the following conditions is satisfied:
(i) as of the date of any such loan or
investment, or the formation or acquisition of such Subsidiary or any
payments in connection with the formation or acquisition of such
Subsidiary, and in each case after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing,
(ii) as of the date of any such loan or
investment, or the formation or acquisition of such Subsidiary or any
payments in connection with the formation or acquisition of such
Subsidiary, and in each case after giving effect thereto, the aggregate
amount of the Excess Availability of Borrowers shall have been not less
than $25,000,000 for each of the immediately preceding ten (10) consecutive
days and as of the date of any such loan or investment or formation or
acquisition or any payment in connection therewith and after giving effect
thereto, the aggregate amount of the Excess Availability of Borrowers shall
be not less than $25,000,000,
(iii) the Person receiving such loan or
investment or the Subsidiary formed or acquired, as the case may be, shall
be engaged in a business related, ancillary or complimentary to the
business of Borrowers permitted in this Agreement,
(iv) in the case of an investment by capital
contribution to the extent a new stock certificate or instrument is issued
in connection therewith, at Agent's option, the original stock certificate
or other instrument evidencing such capital contribution (or such other
evidence as may be issued in the case of a limited liability company) shall
be promptly delivered to Agent, together with such stock power, assignment
or endorsement as Agent may reasonably request, and promptly upon Agent's
request, the Borrower or Guarantor making such investment shall execute and
deliver to Agent a pledge and security agreement (or an amendment to one or
more than existing Financing Agreements with respect to the pledge of
shares of stock by such Borrower or Guarantor in favor of Agent), in form
and substance reasonably satisfactory to Agent, granting to Agent a first
priority pledge of, security interest in and lien upon all of the issued
and outstanding shares of such stock or other instrument or interest owned
by a Borrower or Guarantor (and in the case of a limited liability company
take such other actions as Agent shall reasonably require with respect to
Agent's security interests therein),
(v) in the case of loans, the Indebtedness of
such Person to such Borrower or Guarantor arising pursuant to such loan, if
evidenced by a note shall be evidenced by a single original promissory note
issued by such Person payable to the Borrower or Guarantor making such
loan, which shall evidence a valid and legally enforceable Indebtedness of
such Person to such Borrower or Guarantor unconditionally owing to such
Borrower or Guarantor, without offset, defense or counterclaim of any kind,
nature or description whatsoever and the original of such promissory note
issued by such Person to such Borrower or Guarantor shall be delivered to,
and held by, Agent as part of the Collateral, accompanied by such
instruments of transfer or assignment duly executed in blank as Agent may
specify,
(vi) in the case of the formation or acquisition
by a Borrower or Guarantor of any wholly-owned Subsidiary organized under
the laws of the United States or Canada (or any political subdivision of
either), as to any such wholly-owned Subsidiary, (A) the Borrower or
Guarantor forming such Subsidiary shall cause any such Subsidiary to
execute and deliver to Agent, the following (each in form and substance
satisfactory to Agent), (1) a guarantee of payment of the Obligations of US
Borrower (in the case of any such wholly-owned Subsidiary organized under
the laws of the United States or any political subdivision thereof) or of
Canadian Borrowers (in the case of any such wholly-owned Subsidiary
organized under the laws of Canada or any political subdivision thereof),
(2) a security agreement granting to Agent (or Canadian Lender in the case
of such wholly-owned Subsidiary organized under the laws of Canada or any
political subdivision thereof) a first security interest and lien (except
as otherwise permitted hereunder or consented to in writing by Agent) upon
substantially all of the assets of any such Subsidiary to secure the
obligations of such Subsidiary under the guarantee by such Subsidiary
required under clause (A)(1) of this subsection, and (3) such other
agreements, documents and instruments as Agent may reasonably require to
subject such Subsidiary to the provisions of the Financing Agreements
applicable to Guarantors or as may otherwise be reasonably required by
Agent in the context of the nature and circumstances of the business and
assets of such Subsidiary, including, but not limited to, supplements and
amendments hereto and other loan agreements or instruments evidencing
Indebtedness of such new Subsidiary to Agent, (B) the Borrower or Guarantor
forming such Subsidiary shall (1) execute and deliver to Agent, a pledge
and security agreement, in form and substance reasonably satisfactory to
Agent, granting to Agent (or Canadian Lender in the case of such
wholly-owned Subsidiary organized under the laws of Canada or any political
subdivision thereof) a first pledge of and lien on all of the issued and
outstanding shares of Capital Stock of any such Subsidiary, and (2) deliver
the original stock certificates evidencing such shares of Capital Stock (or
such other evidence as may be issued in the case of a limited liability
company), together with stock powers with respect thereto duly executed in
blank (or the equivalent thereof in the case of a limited liability company
in which such interests are certificated, or otherwise take such actions as
Agent shall reasonably require with respect to Agent's security interests
therein) and (C) such Subsidiary (in the case of a Subsidiary of US
Borrower) shall be deemed to be a party hereto as a Guarantor and bound by
the terms and conditions hereof applicable to Guarantors,
(vii) Agent shall have received (A) not less
than ten (10) Business Days' prior written notice thereof setting forth in
reasonable detail the nature and terms thereof, (B) true, correct and
complete copies of all agreements, documents and instruments relating
thereto and (C) such other information with respect thereto as Agent may
reasonably request;
(k) loans by a Guarantor to US Borrower after the date
hereof, provided, that, (i) the Indebtedness arising pursuant to such loan
shall be subject to, and subordinate in right of payment to, the right of
Agent and Lenders to receive the prior final payment and satisfaction in
full of all of the Obligations on terms and conditions acceptable to Agent,
and (ii) if such loans are by a Guarantor other than a Borrowing Base
Guarantor, US Borrower shall not, directly or indirectly make, or be
required to make, any payments in respect of such Indebtedness prior to the
end of the then current term of this Agreement or so long as any
Obligations are outstanding, except as Agent may otherwise agree;
(l) the loans, advances and investments set forth on
Schedule 9.10 to the Information Certificate; provided, that, Borrowers and
Guarantors shall furnish to Agent all material notices or demands in
connection with such loans and advances either received by any Borrower or
Guarantor or on its behalf, promptly after the receipt thereof, or sent by
any Borrower or Guarantor or on its behalf, concurrently with the sending
thereof, as the case may be.
9.11 Dividends and Redemptions. Each Borrower and Guarantor shall
not, directly or indirectly, declare or pay any dividends on account of any
shares of class of any Capital Stock of such Borrower or Guarantor now or
hereafter outstanding, or set aside or otherwise deposit or invest any sums
for such purpose, or redeem, retire, defease, purchase or otherwise acquire
any shares of any class of Capital Stock (or set aside or otherwise deposit
or invest any sums for such purpose) for any consideration or apply or set
apart any sum, or make any other distribution (by reduction of capital or
otherwise) in respect of any such shares or agree to do any of the
foregoing, except that:
(a) US Borrower may from time to time pay dividends in
respect of its outstanding shares of Capital Stock consisting of common
stock or repurchase outstanding shares of Capital Stock consisting of its
common stock; provided, that,
(i) as of the date of the payment for any such
dividend or repurchase and after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing,
(ii) as of the date of the payment for any such
dividend or repurchase and after giving effect thereto, the aggregate
amount of the Excess Availability of Borrowers shall have been not less
than $25,000,000 for each of the immediately preceding ten (10) consecutive
days and the aggregate amount of the Excess Availability of Borrowers shall
be not less than $25,000,000,
(iii) such dividend or repurchase shall not
violate any law or regulation or the terms of any indenture, agreement or
undertaking to which any Borrower or Guarantor or its or their property are
bound,
(iv) such dividend or repurchase shall be paid
out of legally available funds therefor, and
(v) Agent shall have received not less than ten
(10) Business Days' prior written notice thereof setting forth in
reasonable detail the amount of the dividend or the shares to be
repurchased and the amount that US Borrower anticipates that it will be
required to pay for such repurchase and such other information with respect
thereto as Agent may request;
(b) any Borrower or Guarantor may declare and pay such
dividends or redeem, retire, defease, purchase or otherwise acquire any
shares of any class of Capital Stock for consideration in the form of
shares of common stock (so long as after giving effect thereto no Change of
Control or other Default or Event of Default shall exist or occur);
(c) any Subsidiary of US Borrower may pay dividends and
distributions to its shareholders (and in the case of Xxxxxx Xxxxxxxx
Apparel Inc. to the extent such Subsidiary is not wholly owned by US
Borrower to its shareholders in proportion to their shareholdings); and
(d) Borrowers and Guarantors may pay dividends to the
extent permitted in Section 9.12 below.
9.12 Transactions with Affiliates. Each Borrower and Guarantor
shall not, directly or indirectly:
(a) purchase, acquire or lease any property from, or
sell, transfer or lease any property to, any officer, director or other
Affiliate of such Borrower or Guarantor, except in the ordinary course of
and pursuant to the reasonable requirements of such Borrower's or
Guarantor's business (as the case may be) and upon fair and reasonable
terms no less favorable to such Borrower or Guarantor than such Borrower or
Guarantor would obtain in a comparable arm's length transaction with a
person that is not an Affiliate (provided, that, this clause (a) shall not
apply to such transactions between US Borrower and Borrowing Base
Guarantors or between Borrowing Base Guarantors) or
(b) make any payments (whether by dividend, loan or
otherwise) of management, consulting or other fees for management or
similar services, or of any Indebtedness owing to any officer, employee,
shareholder, director or any other Affiliate of such Borrower or Guarantor
(other than a Borrower or Guarantor), except (i) reasonable compensation
and reimbursement of expenses to officers, employees and directors in each
case for or in connection with services rendered to such Borrower or
Guarantor in the ordinary course of business and (ii) dividends permitted
under Section 9.11 hereof.
9.13 Compliance with ERISA.
---------------------
(a) Each Borrower and Guarantor shall, and shall cause
each of its ERISA Affiliates, to: (i) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other Federal and State law; (ii) cause each Plan which is intended to be
qualified under Section 401(a) of the Code to maintain such qualification;
(iii) not terminate any Pension Plan so as to incur any material liability
to the Pension Benefit Guaranty Corporation; (iv) not allow or suffer to
exist any prohibited transaction involving any Plan or any trust created
thereunder which would subject such Borrower, Guarantor or such ERISA
Affiliate to a material tax or penalty or other material liability on
prohibited transactions imposed under Section 4975 of the Code or ERISA;
(v) make all required contributions to any Pension Plan which it is
obligated to pay under Section 302 of ERISA, Section 412 of the Code or the
terms of such Pension Plan and make all required contributions under any
other Plan to the extent that the failure to do so may result in liability
of more than $1,000,000; (vi) not allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any Pension
Plan; or (vii) not allow or suffer to exist any occurrence of a reportable
event or any other event or condition that presents a material risk of an
ERISA Event that results in or has a reasonable likelihood of resulting in
any liability in excess of $5,000,000.
(b) Borrower and Guarantors shall cause the Canadian
Pension Plan to be administered in accordance with the requirements of the
applicable pension plan texts, funding agreements, the Income Tax Act
(Canada) and applicable provincial pension benefits legislation. Each of
the Canadian Borrowers shall take all action in a timely fashion as
required by all applicable laws, rules, regulations and orders of any
Governmental Authority to eliminate any Plan Deficiencies (as defined in
Section 8.9(d)(viii) hereof). Upon Agent's request, Borrowers and
Guarantors shall use their best efforts to deliver to Agent an undertaking
of the funding agent for the Canadian Pension Plan stating that the funding
agent will notify Agent within seven (7) days of the failure of any
Borrower or Guarantor to make any required contribution to the Canadian
Pension Plan. Borrowers and Guarantors shall not accept payment of any
amount from the Canadian Pension Plan (other than amounts on account of
expenses reasonably incurred in connection with the operations of such
Canadian Pension Plan) without the prior written consent of Agent. Without
the prior written consent of Agent, Borrowers and Guarantors shall not
terminate, or cause to be terminated, the Canadian Pension Plan, if such
plan would have a solvency deficiency on termination. Borrowers and
Guarantors shall promptly provide Agent with any documentation relating to
the Canadian Pension Plan as Agent may reasonably request. Borrowers and
Guarantors shall notify Agent within thirty (30) days of (i) a material
increase in the liabilities of the Canadian Pension Plan, (ii) the
establishment of a new registered pension plan, (iii) commencing payment of
contributions to the Canadian Pension Plan to which any Borrower or
Guarantor had not previously been contributing.
9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and
Guarantor shall, for financial reporting purposes, cause its, and each of
its Subsidiaries' (a) fiscal years to end on November 30 of each year and
(b) fiscal quarters to end on February 28, May 31, August 31 and November
30 of each year.
9.15 Change in Business. Each Borrower and Guarantor shall not
engage in any business other than the business of a Borrower or Guarantor
on the date hereof and any business reasonably related, ancillary or
complimentary to the business in which any Borrower or Guarantor is engaged
on the date hereof.
9.16 Limitation of Restrictions Affecting Subsidiaries. Each
Borrower and Guarantor shall not, directly, or indirectly, create or
otherwise cause or suffer to exist any encumbrance or restriction which
prohibits or limits the ability of any Subsidiary of such Borrower or
Guarantor to (a) pay dividends or make other distributions or pay any
Indebtedness owed to such Borrower or Guarantor or any Subsidiary of such
Borrower or Guarantor; (b) make loans or advances to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor, (c) transfer any
of its properties or assets to such Borrower or Guarantor or any Subsidiary
of such Borrower or Guarantor; or (d) create, incur, assume or suffer to
exist any lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, other than encumbrances and restrictions
arising under (i) applicable law, (ii) this Agreement, (iii) customary
provisions in leases, licenses or other contractual obligations governing
leasehold interests, licenses or contractual rights and entered into in the
ordinary course of the business of such Borrower or Guarantor to the extent
such provisions restrict the transfer of the lease, license or contractual
rights, (iv) customary restrictions in agreements for the sale of assets
(to the extent such sale is permitted hereunder) on the transfer of such
assets (and in the case of the sale of assets consisting of shares of
Capital Stock of a Subsidiary of US Borrower, the making of loans, the
payment of dividends and the granting of liens, in each case, by the
Subsidiary whose shares are subject to such sale) during an interim period
prior to the closing of the sale of such assets, (v) customary restrictions
on dispositions of real property interests found in reciprocal easement
agreements of such Borrower or Guarantor or any Subsidiary of such Borrower
or Guarantor, (vi) customary restrictions in agreements relating to
purchase money financing arrangements of Subsidiaries or contained in
security agreements providing for the grant of a security interest to
secure other Indebtedness owing to a person that is not an Affiliate (in
each case to the extent such purchase money financing or other Indebtedness
is permitted hereunder) to the extent such restrictions restrict the
transfer of, or the granting of liens on, the property subject to such
purchase money financing arrangements or security agreements, (vii) any
agreement relating to permitted Indebtedness incurred by a Subsidiary of
such Borrower or Guarantor prior to the date on which such Subsidiary was
acquired by such Borrower or such Guarantor and outstanding on such
acquisition date, (viii) customary restrictions on the incurrence of
Indebtedness or liens or transfers of assets by a Subsidiary of US Borrower
or a Borrowing Base Guarantor that is a special purpose single asset entity
formed for the sole purpose of financing real property and is engaged in no
business or operations other than the financing, operation and lease to US
Borrower or one of its Subsidiaries of the real property owned by such
special purpose single asset entity, and (ix) the contractual restrictions
in existence on the date hereof (including such restrictions set forth in
any of the mortgages securing Indebtedness permitted hereunder as in effect
on the date hereof and in the Senior Indenture as in effect on the date
hereof); provided, that, any such encumbrances or restrictions contained in
such extension or continuation are no less favorable to Agent and Lenders
than those encumbrances and restrictions under or pursuant to the
contractual obligations so extended or continued.
9.17 Adjusted Net Worth. At any time that the aggregate amount of
the Excess Availability of Borrowers is less than $25,000,000, the US
Borrower and its Subsidiaries shall, at all times have, and shall maintain,
Adjusted Net Worth of not less than $174,000,000.
9.18 License Agreements.
------------------
(a) With respect to a License Agreement applicable to
Intellectual Property that is affixed to or otherwise used in connection
with the sale or distribution of any Inventory, each Borrower and Guarantor
shall:
(i) give Agent prior written notice of its
intention to not renew or to terminate, cancel, surrender or release its
rights under any such License Agreement which notice shall be given to
Agent promptly after the earliest of: (A) the date that such Borrower or
Guarantor determines that it does not intend to renew or intends to so
terminate, cancel, surrender or release its rights, (B) the date that such
Borrower or Guarantor is required to give notice to the other party to the
License Agreement under the terms thereof of the intention of such Borrower
or Guarantor not to renew or to so terminate, cancel, surrender or release
its rights, (C) the date thirty (30) days prior to the end of the then
current term of the License Agreement or (D) the date ninety (90) days
prior to the date that such Borrower's or Guarantor's right to use the
trademarks or other Intellectual Property terminates (after giving effect
to any rights of such Borrower or Guarantor to continue to use such
Intellectual Property after the end of the term during any applicable
"sell-off" period, to the extent such period is or is reasonably
anticipated to be available to such Borrower or Guarantor),
(ii) give Agent prior written notice of its
intention to enter into any amendment to any such License Agreement or
related arrangements that would limit the scope in any material respect of
the right of such Borrower or Guarantor to use the Intellectual Property
subject to such License Agreement, either with respect to product,
territory, term or otherwise, or to increase in any material respect the
fees or royalty percentages or similar provisions relating to the amounts
required to be paid by such Borrower or Guarantor thereunder or in
connection therewith, which notice shall be given to Agent promptly after
the earliest of: (A) the date of the request by such Borrower or Guarantor
to the other party to such License Agreement for such amendment, (B) the
date of the receipt by such Borrower or Guarantor of the request for such
amendment from the other party to such License Agreement, (C) if the
amendment reduces the types of products or the territory for which such
Borrower or Guarantor may use the Intellectual Property subject thereto,
the date ninety (90) days prior to the date that such Borrower's or
Guarantor's right to use the Intellectual Property for such product or
territory terminates (after giving effect to any rights of such Borrower or
Guarantor to continue to use such Intellectual Property after the
effectiveness of such amendment pursuant to the applicable "sell-off"
period provided for in such amendment, if any, to the extent such period is
or is reasonably anticipated to be available to such Borrower or
Guarantor),
(iii) give Agent prompt written notice of any
such License Agreement entered into by such Borrower or Guarantor after the
date hereof, or any material amendment to any such License Agreement
existing on the date hereof, in each case together with a true, correct and
complete copy thereof and such other information with respect thereto as
Agent may reasonably request,
(iv) give Agent prompt written notice of any
material breach of any obligation, or any default, by any party under any
such License Agreement, and deliver to Agent (promptly upon the receipt
thereof by such Borrower or Guarantor in the case of a notice to such
Borrower or Guarantor and concurrently with the sending thereof in the case
of a notice from such Borrower or Guarantor) a copy of each notice of
default and any other material notice received or delivered by such
Borrower or Guarantor in connection with any such a License Agreement that
relates to the scope of the right, or the continuation of the right, of
such Borrower or Guarantor to use the Intellectual Property subject to such
License Agreement.
(b) With respect to a License Agreement applicable to
Intellectual Property that is affixed to or otherwise used in connection
with the manufacture, sale or distribution of any Inventory, at any time an
Event of Default exists or has occurred and is continuing, if at the time
that notice or other action is required by a Borrower or Guarantor to renew
or extend the right of such Borrower or Guarantor to use the Intellectual
Property subject to such License Agreement all of the Inventory using such
Intellectual Property is not reasonably anticipated to be sold during the
then remaining period that such Borrower or Guarantor is entitled to use
such Intellectual Property under the terms of the applicable License
Agreement (including giving effect to any rights of such Borrower or
Guarantor to continue to use such Intellectual Property after the end of
the term of the applicable License Agreement during any "sell-off" period,
if such sell-off period is and is reasonably anticipated to be available to
such Borrower or Guarantor under the terms of the License Agreement), Agent
shall have, and is hereby granted, the irrevocable right and authority, at
its option, to renew or extend the right to use such Intellectual Property
under the terms of the applicable License Agreement, whether in its own
name and behalf, or in the name and behalf of a designee or nominee of
Agent or in the name and behalf of such Borrower or Guarantor. Agent may,
but shall not be required to, perform any or all of such obligations of
such Borrower or Guarantor under any of the License Agreements, including,
but not limited to, the payment of any or all sums due from such Borrower
or Guarantor thereunder. Any sums so paid by Agent shall constitute part of
the Obligations.
(c) With respect to a License Agreement applicable to
Intellectual Property that is affixed to or otherwise used in connection
with the manufacture, sale or distribution of any Inventory, in connection
with the termination of the rights of a Borrower or Guarantor as provided
in Section 9.18(a) above or an amendment to limit the scope of the rights
of a Borrower or Guarantor as provided in Section 9.18(b), without limiting
any other rights of Agent with respect to the establishment of Reserves or
otherwise, Agent may establish such Reserves as a result thereof or any
Inventory bearing the trademark that is subject to such license or for
which such trademark is used in the manufacture, distribution or sale shall
cease to be Eligible Inventory to the extent that it can no longer be sold
using such trademark or is not reasonably anticipated to be sold during the
remaining period that such Borrower or Guarantor may use such trademark
prior to the termination of its rights to do so in accordance with the
terms of the applicable License Agreement or US Borrower may, at its
option, obtain an appraisal by an appraiser acceptable to Agent (addressed
to Agent and upon which Agent is expressly permitted to rely) in scope and
methodology acceptable to Agent, to determine if such Inventory may be sold
upon removal of such trademark and the Net Recovery Percentage with respect
thereto after such removal, and the Borrowing Base may be adjusted
accordingly or Reserves established to reflect the value of such Inventory
without such trademark based on such appraisal.
9.19 After Acquired Real Property. If any Borrower or Guarantor
hereafter acquires a fee interest in any Real Property and such Real
Property is adjacent to, contiguous with or necessary or related to or used
in connection with any Real Property then subject to a Mortgage, or if such
Real Property is not adjacent to, contiguous with or related to or used in
connection with such Real Property, then if such Real Property at any
location (or series of adjacent, contiguous or related locations, and
regardless of the number of parcels) has a fair market value in an amount
equal to or greater than $250,000, without limiting any other rights of
Agent or any Lender, or duties or obligations of any Borrower or Guarantor,
promptly upon Agent's request, such Borrower or Guarantor shall execute and
deliver to Agent a mortgage, deed of trust or deed to secure debt, as Agent
may determine, in form and substance substantially similar to the Mortgages
and as to any provisions relating to specific state or provincial laws
reasonably satisfactory to Agent and in form appropriate for recording in
the real estate records of the jurisdiction in which such Real Property or
other property is located granting to Agent a first and only lien and
mortgage on and security interest in such Real Property (except as such
Borrower or Guarantor would otherwise be permitted to incur hereunder or
under the Mortgages or as otherwise consented to in writing by Agent) and
such other agreements, documents and instruments as Agent may reasonably
require in connection therewith; provided, that, as to any such Real
Property that is not adjacent, contiguous or related to Real Property then
subject to a Mortgage, if the purchase price for such Real Property is paid
with the initial proceeds of a loan from a financial institution giving
rise to Indebtedness permitted under Section 9.9(b) hereof, then such
Borrower or Guarantor shall not be required to execute and deliver such
mortgage, deed of trust or deed to secure debt in favor of Agent with
respect to such Real Property.
9.20 Applications under Insolvency Statutes. Each Borrower and
Guarantor acknowledges that its business and financial relationships with
Agent and Lenders are unique from its relationship with any other of its
creditors, and agrees that it shall not file any plan of arrangement under
the Companies' Creditors Arrangement Act (Canada) or make any proposal
under the Bankruptcy and Insolvency Act (Canada) which provides for, or
would permit directly or indirectly, Agent or any Lender to be classified
with any other creditor for purposes of such plan or proposal or otherwise.
9.21 Costs and Expenses. Borrowers and Guarantors jointly and
severally agree to pay to Agent on demand all costs, expenses and filing
fees paid or payable in connection with the preparation, negotiation,
execution, delivery, recording, administration, collection, liquidation,
enforcement and defense of the Obligations, Agent's or Canadian Lender's
rights in the Collateral, this Agreement, the other Financing Agreements
and all other documents related hereto or thereto, including any
amendments, supplements or consents which may hereafter be contemplated
(whether or not executed) or entered into in respect hereof and thereof,
including: (a) all out-of-pocket costs and expenses of filing or recording
(including Uniform Commercial Code financing statement, PPSA financing
statements, filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all reasonable
out-of-pocket costs and expenses and fees for insurance premiums,
environmental audits, title insurance premiums, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees; (c)
out-of-pocket costs and expenses of remitting loan proceeds, collecting
checks and other items of payment, and establishing and maintaining the
Blocked Accounts, together with Agent's customary charges and fees with
respect thereto; (d) charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations; (e) costs
and expenses of preserving and protecting the Collateral; (f) costs and
expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Agent or
Canadian Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other
Financing Agreements or defending any claims made or threatened against
Agent or any Lender arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (g) any VAT incurred by Agent or any Lender; (h) all
out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Agent during the course of periodic field examinations of the
Collateral and such Borrower's or Guarantor's operations, plus a per diem
charge at Agent's then standard rate for Agent's examiners in the field and
office (which rate as of the date hereof is $750 per person per day);
provided, that, so long as no Default or Event of Default shall exist or
have occurred and be continuing, Borrowers and Guarantors shall not be
required to pay such per diem charge for more than three (3) such field
examinations in any twelve (12) month period (and any field examinations
conducted at such time as a Default or Event of Default shall exist or have
occurred and be continuing shall not be deemed to constitute a field
examination for purposes of such limitation); and (i) the fees and
disbursements of counsel (including legal assistants and agents outside
Ontario) to Agent in connection with any of the foregoing. Nothing
contained in this Section 9.21 shall be construed to require that Borrowers
and Guarantors pay to Agent any taxes (including taxes, franchise taxes or
capital taxes) imposed on or measured by Agent's or any Lender's net income
or capital by any jurisdiction.
9.22 Further Assurances. Upon the reasonable request of Agent at
any time and from time to time, Borrowers and Guarantors shall promptly, at
their expense, duly execute and deliver, or cause to be duly executed and
delivered, such further agreements, documents and instruments, and do or
cause to be done such further acts as may be necessary or proper to
evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the
provisions or purposes of this Agreement or any of the other Financing
Agreements.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
------------------------------
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an
"Event of Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations
when due within three (3) Business Days or (ii) any Borrower or Guarantor
fails to perform any of the covenants contained in Sections 9.1, 9.2, 9.3,
9.4, 9.5, 9.6, 9.13, 9.14, 9.15, 9.16, 9.18 and 9.19 of this Agreement and
such failure shall continue for ten (10) Business Days; provided, that,
such ten (10) Business Day period shall not apply in the case of any
failure to observe any such covenant which is not capable of being cured at
all or (iii) any Borrower or Guarantor fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or any of
the other Financing Agreements other than those described in Sections
10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact
made by any Borrower or Guarantor to Agent in this Agreement, the other
Financing Agreements or any other written agreement, schedule, confirmatory
assignment or otherwise shall when made or deemed made be false or
misleading in any material respect;
(c) any Guarantor revokes or terminates or purports to
revoke or terminate any of the other Financing Agreements to which it is a
party;
(d) any judgment or judgments for the payment of money is
rendered against any Borrower or Guarantor in excess of $5,000,000 in any
one case or in the aggregate at any time outstanding (to the extent not
covered by insurance where the insurer has assumed responsibility for the
defense of the action resulting in such judgment and the insurer has not
notified any Borrower or Guarantor or otherwise taken any action to
indicate that it does not intend to pay such judgment) and shall remain
undischarged or unvacated for a period in excess of sixty (60) days or
execution shall at any time not be effectively stayed, or any judgment
other than for the payment of money, or injunction, attachment, garnishment
or execution is rendered against any Borrower or Guarantor that has or is
reasonably likely to have a Material Adverse Effect or any of the
Collateral having a value in excess of $5,000,000;
(e) any Borrower or Guarantor dissolves or suspends or
discontinues doing business, except as permitted under Section 9.7 hereof;
(f) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect, or a petition, case,
application or proceeding under any bankruptcy or insolvency laws of Canada
(including the Bankruptcy and Insolvency Act (Canada) and the Companies'
Creditors Arrangement Act (Canada)) or any similar law now or hereafter in
effect in any jurisdiction or under any insolvency, arrangements,
reorganization, moratorium, receivership, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction now or hereafter in
effect (whether at law or in equity) is filed against any Borrower or
Guarantor or all or any part of its properties and such petition or
application is not dismissed within forty-five (45) days after the date of
its filing or any Borrower or Guarantor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect, or a petition, case,
application or proceeding under any bankruptcy or insolvency laws of Canada
(including the Bankruptcy and Insolvency Act (Canada)) and the Companies'
Creditors Arrangement Act (Canada) or any similar law now or hereafter in
effect in any jurisdiction or under any insolvency, arrangement,
reorganization, moratorium, receivership, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction now or hereafter in
effect (whether at a law or equity) is filed, taken or commenced after the
date hereof by any Borrower or Guarantor or for all or any part of its
property, and including, without limitation, if any Borrower or Guarantor
shall: (i) apply for, request or consent to the appointment of a receiver,
administrative receiver, receiver and manager, examiner, judicial
custodian, trustee, liquidator official manager, administrator or any other
similar official of it or of all or a substantial part of its property and
assets, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they become due, or commit any other act of bankruptcy, (iii)
make a general assignment for the benefit of creditors, (iv) file a
voluntary petition or assignment in bankruptcy or a proposal seeking a
reorganization, compromise, moratorium or arrangement with its creditors,
(v) take advantage of any insolvency or other similar law pertaining to
arrangements, moratoriums, compromises or reorganizations, or admit the
material allegations of a petition or application filed in respect of it in
any bankruptcy, reorganization or insolvency proceeding, or (vi) take any
corporate action for the purpose of effecting any of the foregoing;
(h) any default in respect of any Indebtedness of any
Borrower or Guarantor (other than Indebtedness owing to Agent and Lenders
hereunder), in any case in an amount in excess of $10,000,000, which
default continues for more than the applicable cure period, if any, with
respect thereto;
(i) (i) any material provision hereof or of any of the
other Financing Agreements shall for any reason cease to be valid, binding
and enforceable with respect to any party hereto or thereto (other than
Agent) in accordance with its terms, or (ii) any such party shall challenge
the enforceability hereof or thereof, or shall assert in writing, or take
any action or fail to take any action based on the assertion that any such
provision hereof or of any of the other Financing Agreements has ceased to
be or is otherwise not valid, binding or enforceable in accordance with its
terms, or (iii) any security interest provided for herein or in any of the
other Financing Agreements shall cease to be a valid and perfected priority
security interest in any of the Collateral purported to be subject thereto
(except as otherwise permitted herein or therein) with the priority
contemplated herein or therein, unless after giving effect to any reduction
in the Borrowing Base or establishment of any Reserves as a result of such
security interest ceasing to be valid and so perfected with such priority,
the aggregate amount of the Excess Availability of Borrowers is greater
than $25,000,000;
(j) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of any Borrower in an
aggregate amount in excess of $5,000,000;
(k) any Change of Control;
(l) there shall be an act, condition or event that has a
Material Adverse Effect after the date hereof;
(m) a requirement from the Minister of National Revenue
for payment pursuant to Section 224 or any successor section of the Income
Tax Act (Canada) or Section 317, or any successor section in respect of any
Borrower or Guarantor of the Excise Tax Act (Canada) or any comparable
provision of similar legislation shall have been received by Agent or any
Lender or any other Person in respect of any Borrower or Guarantor or
otherwise issued in respect of any Borrower or Guarantor involving an
amount in excess of the US Dollar Equivalent of US$5,000,000; or
(n) there shall be an event of default under any of the
other Financing Agreements.
10.2 Remedies.
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(a) At any time an Event of Default exists or has
occurred and is continuing, Agent and Lenders shall have all rights and
remedies provided in this Agreement, the other Financing Agreements, the
UCC, the PPSA and other applicable law, all of which rights and remedies
may be exercised without notice to or consent by any Borrower or Guarantor,
except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to
Agent and Lenders hereunder, under any of the other Financing Agreements,
the UCC, the PPSA or other applicable law, are cumulative, not exclusive
and enforceable, in Agent's discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Guarantor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, at any time or times, proceed directly against any
Borrower or Guarantor to collect the Obligations without prior recourse to
the Collateral.
(b) Without limiting the generality of the foregoing, at
any time an Event of Default exists or has occurred and is continuing,
Agent shall upon the direction of the Required Lenders, (i) accelerate the
payment of all Obligations and demand immediate payment thereof to Agent
for itself and the ratable benefit of Lenders (provided, that, upon the
occurrence of any Event of Default described in Sections 10.1(f) and
10.1(g), all Obligations shall automatically become immediately due and
payable), and (ii) terminate the Commitments and this Agreement (provided,
that, upon the occurrence of any Event of Default described in Sections
10.1(f) and 10.1(g), the Commitment and any other obligation of the Agent
or a Lender hereunder shall automatically terminate).
(c) Without limiting the generality of the foregoing, at
any time an Event of Default exists or has occurred and is continuing,
Agent may, in its discretion, (i) with or without judicial process or the
aid or assistance of others, enter upon any premises on or in which any of
the Collateral may be located and take possession of the Collateral or
complete processing, manufacturing and repair of all or any portion of the
Collateral, (ii) require any Borrower or Guarantor, at Borrowers' expense,
to assemble and make available to Agent (or Canadian Lender in the case of
a Canadian Borrower) any part or all of the Collateral at any place and
time designated by Agent (or Canadian Lender in the case of a Canadian
Borrower), (iii) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (iv) remove any or all of the
Collateral from any premises on or in which the same may be located for the
purpose of effecting the sale, foreclosure or other disposition thereof or
for any other purpose, (v) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Agent or elsewhere) at such prices or
terms as Agent (or Canadian Lender in the case of a Canadian Borrower) may
deem reasonable, for cash, upon credit or for future delivery, with the
Agent (or Canadian Lender in the case of a Canadian Borrower) having the
right to purchase the whole or any part of the Collateral at any such
public sale, all of the foregoing being free from any right or equity of
redemption of any Borrower or Guarantor, which right or equity of
redemption is hereby expressly waived and released by Borrowers and
Guarantors. If any of the Collateral is sold or leased by Agent (or
Canadian Lender in the case of a Canadian Borrower) upon credit terms or
for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Agent. If notice of
disposition of Collateral is required by law, ten (10) days prior notice by
Agent (or Canadian Lender in the case of a Canadian Borrower) to US
Borrower designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral is
to be made, shall be deemed to be reasonable notice thereof and Borrowers
and Guarantors waive any other notice. In the event Agent (or Canadian
Lender in the case of a Canadian Borrower) institutes an action to recover
any Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, each Borrower and Guarantor waives the posting of any bond which
might otherwise be required. At any time an Event of Default exists or has
occurred and is continuing, upon Agent's request, Borrowers will either, as
Agent shall specify, furnish cash collateral to the issuer to be used to
secure and fund Agent's reimbursement obligations to the issuer in
connection with any Letter of Credit Accommodations or furnish cash
collateral to Agent for the Letter of Credit Accommodations. Such cash
collateral shall be in the amount equal to one hundred five (105%) percent
of the amount of the Letter of Credit Accommodations plus the amount of any
fees and expenses payable in connection therewith through the end of the
latest expiration date of such Letter of Credit Accommodations.
(d) At any time or times that an Event of Default exists
or has occurred and is continuing, Agent may, in its discretion, enforce
the rights of any Borrower or Guarantor against any account debtor,
secondary obligor or other obligor in respect of any of the Accounts or
other Receivables. Without limiting the generality of the foregoing, at any
time or times that an Event of Default exists or has occurred and is
continuing, Agent (or Canadian Lender in the case of a Canadian Borrower)
may, in its discretion, at such time or times (i) notify any or all account
debtors, secondary obligors or other obligors in respect thereof that the
Receivables have been assigned to Agent (or Canadian Lender in the case of
a Canadian Borrower) and that Agent (or Canadian Lender in the case of a
Canadian Borrower) has a security interest therein and Agent may direct any
or all accounts debtors, secondary obligors and other obligors to make
payment of Receivables directly to Agent (or Canadian Lender in the case of
a Canadian Borrower), (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and
upon any terms or conditions, any and all Receivables or other obligations
included in the Collateral and thereby discharge or release the account
debtor or any secondary obligors or other obligors in respect thereof
without affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Receivables or such other obligations, but without any duty
to do so, and Agent and Lenders shall not be liable for any failure to
collect or enforce the payment thereof nor for the negligence of its agents
or attorneys with respect thereto and (iv) take whatever other action Agent
(or Canadian Lender in the case of a Canadian Borrower) may deem necessary
or desirable for the protection of its interests and the interests of
Lenders. At any time that an Event of Default exists or has occurred and is
continuing, at Agent's (or Canadian Lender in the case of a Canadian
Borrower) request, all invoices and statements sent to any account debtor
shall state that the Accounts and such other obligations have been assigned
to Agent (or Canadian Lender in the case of a Canadian Borrower) and are
payable directly and only to Agent (or Canadian Lender in the case of a
Canadian Borrower) and Borrowers and Guarantors shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent (or Canadian
Lender in the case of a Canadian Borrower) may require. In the event any
account debtor returns Inventory when an Event of Default exists or has
occurred and is continuing, Borrowers shall, upon Agent's (or Canadian
Lender in the case of a Canadian Borrower) request, hold the returned
Inventory in trust for Agent (or Canadian Lender in the case of a Canadian
Borrower), segregate all returned Inventory from all of its other property,
dispose of the returned Inventory solely according to Agent's instructions,
and not issue any credits, discounts or allowances with respect thereto
without Agent's (or Canadian Lender in the case of a Canadian Borrower)
prior written consent.
(e) To the extent that applicable law imposes duties on
Agent or any Lender to exercise remedies in a commercially reasonable
manner (which duties cannot be waived under such law), each Borrower and
Guarantor acknowledges and agrees that it is not commercially unreasonable
for Agent or any Lender (i) to fail to incur expenses reasonably deemed
significant by Agent or any Lender to prepare Collateral for disposition or
otherwise to complete raw material or work in process into finished goods
or other finished products for disposition, (ii) to fail to obtain third
party consents for access to Collateral to be disposed of, or to obtain or,
if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove liens or encumbrances on
or any adverse claims against Collateral, (iv) to exercise collection
remedies against account debtors and other persons obligated on Collateral
directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral
is of a specialized nature, (vi) to contact other persons, whether or not
in the same business as any Borrower or Guarantor, for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire
one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature,
(viii) to dispose of Collateral by utilizing Internet sites that provide
for the auction of assets of the types included in the Collateral or that
have the reasonable capability of doing so, or that match buyers and
sellers of assets, (ix) to dispose of assets in wholesale rather than
retail markets, (x) to disclaim disposition warranties, (xi) to purchase
insurance or credit enhancements to insure Agent or Lenders against risks
of loss, collection or disposition of Collateral or to provide to Agent or
Lenders a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain
the services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of
the Collateral. Each Borrower and Guarantor acknowledges that the purpose
of this Section is to provide non-exhaustive indications of what actions or
omissions by Agent or any Lender would not be commercially unreasonable in
the exercise by Agent or any Lender of remedies against the Collateral and
that other actions or omissions by Agent or any Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section. Without limitation of the foregoing, nothing contained in this
Section shall be construed to grant any rights to any Borrower or Guarantor
or to impose any duties on Agent or Lenders that would not have been
granted or imposed by this Agreement or by applicable law in the absence of
this Section.
(f) For the purpose of enabling Agent to exercise the
rights and remedies hereunder, each Borrower and Guarantor hereby grants to
Agent and Canadian Lender, to the extent assignable, an irrevocable,
non-exclusive license and sublicense (to the extent permitted under the
applicable License Agreement) exercisable at any time an Event of Default
shall exist or have occurred and for so long as the same is continuing,
without payment of royalty or other compensation to any Borrower or
Guarantor, to use or sublicense any of the Intellectual Property now owned
or hereafter acquired by any Borrower or Guarantor, wherever the same may
be located, including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof; provided,
that the products or services to which the licensed Intellectual Property
is applied shall be of a substantially similar type as those then being
sold under any trademarks or servicemarks covered by this license or as is
otherwise permitted under such license as then in effect and the quality of
such products and services shall be maintained at a level of quality that
is at least substantially comparable to that then prevailing quality.
(g) Agent may apply the cash proceeds of Collateral
actually received by Agent from any sale, lease, foreclosure or other
disposition of the Collateral to payment of the Obligations, in whole or in
part and in such order as Agent may elect, whether or not then due.
Borrowers and Guarantors shall remain liable to Agent and Lenders for the
payment of any deficiency with interest at the highest rate provided for
herein and all costs and expenses of collection or enforcement, including
attorneys' fees and expenses.
(h) Without limiting the foregoing, upon the occurrence
of a Default or an Event of Default and for so long as the same is
continuing, at the direction of the Required Lenders, Agent and Lenders
shall, without notice, cease making Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Loans and
Letter of Credit Accommodations available to Borrowers and/or terminate any
provision of this Agreement providing for any future Loans or Letter of
Credit Accommodations to be made by Agent and Lenders to Borrowers.
(i) Canadian Lender may appoint or reappoint by
instrument in writing, any person or persons, whether an officer or
officers or any employee or employees of Canadian Lender or not, to be a
receiver or receivers (hereinafter called a "Receiver", which term when
used herein shall include a receiver and manager) of any Collateral of any
Canadian Borrower (including any interest, income or profits therefrom) and
may remove any Receiver so appointed and appoint another in his/her stead.
Any such Receiver shall, so far as concerns responsibility for his/her
acts, be deemed the agent of the Canadian Borrower and not Canadian Lender,
and Canadian Lender shall not be in any way responsible for any misconduct,
negligence or non-feasance on the part of any such Receiver, his/her
servants, agents or employees. Subject to the provisions of the instrument
appointing him/her, any such Receiver shall have power to take possession
of Collateral, to preserve Collateral or its value, to carry on or concur
in carrying on all or any part of the business of the applicable Canadian
Borrower and to sell, lease, license or otherwise dispose of or concur in
selling, leasing, licensing or otherwise disposing of Collateral. To
facilitate the foregoing powers, any such Receiver may, to the exclusion of
all others, including the applicable Canadian Borrower, enter upon, use and
occupy all premises owned or occupied by the applicable Canadian Borrower
wherein Collateral may be situate, maintain Collateral upon such premises,
borrow money on a secured or unsecured basis and use Collateral directly in
carrying on the applicable Canadian Borrower's business or as security for
loans or advances to enable the Receiver to carry on applicable Canadian
Borrower's business or otherwise, as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by Canadian
Lender, all proceeds of Collateral received from time to time by such
Receiver in carrying out his/her appointment shall be received in trust for
and paid over to Canadian Lender (or upon Canadian Lender's direction,
Agent on behalf of Canadian Lender). Every such Receiver may, in the
discretion of the Canadian Lender be vested with all or any of the rights
and powers of the Agent or Canadian Lender, as applicable. Canadian Lender
may, either directly or through its agents or nominees, exercise any or all
powers and rights given to a Receiver by virtue of the foregoing provisions
of this paragraph.
(j) On and after an Event of Default and for so long as
the same is continuing, Borrowers shall pay all costs, charges and expenses
incurred by Agent, any Lender or any Receiver or any nominee or agent of
Agent, whether directly or for services rendered (including, without
limitation, solicitor's costs on a solicitor and his own client basis,
auditor's costs, other legal expenses and Receiver remuneration) in
enforcing this Agreement or any other Financing Agreement and in enforcing
or collecting Obligations and all such expenses together with any money
owing as a result of any borrowing permitted hereby shall be a charge on
the proceeds of realization and shall be secured hereby.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
--------------------------------
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of
the relationship between the parties hereto, whether in contract, tort,
equity or otherwise, shall be governed by the internal laws of the State of
Illinois but excluding any principles of conflicts of law or other rule of
law that would cause the application of the law of any jurisdiction other
than the laws of the State of Illinois unless otherwise expressly provided
in a Financing Agreement.
(b) Borrowers, Guarantors, Agent and Lenders irrevocably
consent and submit to the non-exclusive jurisdiction of the Circuit Court
of Xxxx County, Illinois and the United States District Court for the
Northern District of Illinois, whichever Agent may elect, and in addition,
Canadian Borrowers irrevocably consent and submit to the non-exclusive
jurisdiction of the Ontario Superior Court of Justice, in each case,
whichever Agent may elect and waive any objection based on venue or forum
non conveniens with respect to any action instituted therein arising under
this Agreement or any of the other Financing Agreements or in any way
connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above except for
matters relating to Real Property in another jurisdiction (and provided,
that nothing contained herein shall prevent Agent and Lenders from bringing
any action or proceeding against any Borrower or Guarantor or its or their
property in the courts of any other jurisdiction which Agent deems
necessary or appropriate in order to realize on the Collateral or to
otherwise enforce its rights against any Borrower or Guarantor or its or
their property).
(c) Each Borrower and Guarantor hereby waives personal
service of any and all process upon it and consents that all such service
of process may be made by registered or certified mail (return receipt
requested) directed to its address set forth herein and service so made
shall be deemed to be completed five (5) days after the same shall have
been so deposited in the U.S. mails, or, at Agent's option, by service upon
any Borrower or Guarantor (or US Borrower on behalf of such Borrower or
Guarantor) in any other manner provided under the rules of any such courts.
(d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE
OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT AND
LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
ANY BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
(e) Agent and Lenders shall not have any liability to any
Borrower or Guarantor (whether in tort, contract, equity or otherwise) for
losses suffered by such Borrower or Guarantor in connection with, arising
out of, or in any way related to the transactions or relationships
contemplated by this Agreement or any of the other Financing Agreements, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Agent and such Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. Each Borrower and
Guarantor: (i) certifies that neither Agent, any Lender nor any
representative, agent or attorney acting for or on behalf of Agent or any
Lender has represented, expressly or otherwise, that Agent and Lenders
would not, in the event of litigation, seek to enforce any of the waivers
provided for in this Agreement or any of the other Financing Agreements and
(ii) acknowledges that in entering into this Agreement and the other
Financing Agreements, Agent and Lenders are relying upon, among other
things, the waivers and certifications set forth in this Section 11.1 and
elsewhere herein and therein.
11.2 Waiver of Notices. Each Borrower and Guarantor hereby
expressly waives demand, presentment, protest and notice of protest and
notice of dishonor with respect to any and all instruments and chattel
paper, included in or evidencing any of the Obligations or the Collateral,
and any and all other demands and notices of any kind or nature whatsoever
with respect to the Obligations, the Collateral and this Agreement, except
such as are expressly provided for herein. No notice to or demand on any
Borrower or Guarantor which Agent or any Lender may elect to give shall
entitle such Borrower or Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
11.3 Amendments and Waivers.
----------------------
(a) Neither this Agreement nor any other Financing
Agreement nor any terms hereof or thereof may be amended, waived,
discharged or terminated unless such amendment, waiver, discharge or
termination is in writing signed by Agent and the Required Lenders or at
Agent's option, by Agent with the authorization of the Required Lenders,
and as to amendments to any of the Financing Agreements (other than with
respect to any provision of Section 12 hereof), by any Borrower or
Guarantor against whom enforcement is sought; except, that, no such
amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or
extend the time of scheduled payments of principal, interest or any fees or
reduce the principal amount of any Loan or Letter of Credit Accommodations,
in each case without the consent of each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over
the amount thereof then in effect or provided hereunder, in each case
without the consent of the Lender directly affected thereby,
(iii) release any Collateral (except as
expressly required or permitted hereunder or under any of the other
Financing Agreements or applicable law and except as permitted under
Section 12.11(b) hereof), without the consent of Agent and all of Lenders,
(iv) reduce any percentage specified in the
definition of Required Lenders, without the consent of Agent and all of
Lenders,
(v) consent to the assignment or transfer by any
Borrower or Guarantor of any of their rights and obligations under this
Agreement, without the consent of Agent and all of Lenders,
(vi) amend, modify or waive any terms of this
Section 11.3(a) hereof, without the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting
part of the Borrowing Base, without the consent of Agent and all of
Lenders.
(b) Agent and Lenders shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any
of its or their rights, powers and/or remedies unless such waiver shall be
in writing and signed as provided herein. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A waiver by
Agent or any Lender of any right, power and/or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Agent or any Lender would otherwise have on any future
occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in
Section 11.3(a) above, in connection with any amendment, waiver, discharge
or termination, in the event that any Lender whose consent thereto is
required shall fail to consent or fail to consent in a timely manner (such
Lender being referred to herein as a "Non-Consenting Lender"), but the
consent of any other Lenders to such amendment, waiver, discharge or
termination that is required are obtained, if any, then Congress shall have
the right, but not the obligation, at any time thereafter, and upon the
exercise by Congress of such right, such Non-Consenting Lender shall have
the obligation, to sell, assign and transfer to Congress or such Eligible
Transferee as Congress may specify, the Commitment of such Non-Consenting
Lender and all rights and interests of such Non-Consenting Lender pursuant
thereto. Congress shall provide the Non-Consenting Lender with prior
written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall
occur. Such purchase and sale shall be pursuant to the terms of an
Assignment and Acceptance (whether or not executed by the Non-Consenting
Lender), except that on the date of such purchase and sale, Congress, or
such Eligible Transferee specified by Congress, shall pay to the
Non-Consenting Lender the amount equal to: (i) the principal balance of the
Loans held by the Non-Consenting Lender outstanding as of the close of
business on the business day immediately preceding the effective date of
such purchase and sale, plus (ii) amounts accrued and unpaid in respect of
interest and fees payable to the Non-Consenting Lender to the effective
date of the purchase (but in no event shall the Non-Consenting Lender be
deemed entitled to any early termination fee), minus (iii) the amount of
the closing fee received by the Non- Consenting Lender pursuant to the
terms hereof or of any of the other Financing Agreements multiplied by the
fraction, the numerator of which is the number of months remaining in the
then current term of the Credit Facility and the denominator of which is
the number of months in the then current term thereof. Such purchase and
sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.
(d) The consent of Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of Agent
hereunder or under any of the other Financing Agreements, in addition to
the consent of the Lenders otherwise required by this Section and the
exercise by Agent of any of its rights hereunder with respect to Reserves,
Eligible Accounts, Eligible Inventory or Eligible Real Property or the
sublimit for Loans based on piece and trim goods shall not be deemed an
amendment to the advance rates or otherwise deemed an amendment, waiver,
discharge or termination requiring the consent of any Lender.
(e) Notwithstanding anything to the contrary contained in
Section 11.3(a) above, (i) in the event that Agent shall agree that any
items otherwise required to be delivered to Agent as a condition of the
initial Loans and Letter of Credit Accommodations hereunder may be
delivered after the date hereof, Agent may, in its discretion, agree to
extend the date for delivery of such items or take such other action as
Agent may deem appropriate as a result of the failure to receive such items
as Agent may determine or may waive any Event of Default as a result of the
failure to receive such items, in each case without the consent of any
Lender and (ii) Agent may consent to any change in the type of
organization, jurisdiction of organization or other legal structure of any
Borrower, Guarantor or any of their Subsidiaries and amend the terms hereof
or of any of the other Financing Agreements as may be necessary or
desirable to reflect any such change, in each case without the approval of
any Lender.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives
all rights to interpose any claims, deductions, setoffs or counterclaims of
any nature (other then compulsory counterclaims) in any action or
proceeding with respect to this Agreement, the Obligations, the Collateral
or any matter arising therefrom or relating hereto or thereto.
11.5 Indemnification. Other than with respect to taxes (for which
the indemnification obligations of Borrowers and Guarantors to Agent and
Lenders are subject to Section 6.12 hereof), each Borrower and Guarantor
shall, jointly and severally, indemnify and hold Agent and each Lender, and
its officers, directors, agents, employees, advisors and counsel and their
respective Affiliates (each such person being an "Indemnitee"), harmless
from and against any and all losses, claims, damages, liabilities, costs or
expenses (including reasonable attorneys' fees and expenses) imposed on,
incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing
Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court
costs, and the reasonable fees and expenses of counsel except that
Borrowers and Guarantors shall not have any obligation under this Section
11.5 to indemnify an Indemnitee with respect to a matter covered hereby
resulting from the gross negligence or wilful misconduct of such Indemnitee
as determined pursuant to a final, non-appealable judgment of a court of
competent jurisdiction (but without limiting the obligations of Borrowers
or Guarantors as to any other Indemnitee). To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section
may be unenforceable because it violates any law or public policy,
Borrowers and Guarantors shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction
of indemnified matters under this Section. To the extent permitted by
applicable law, no Borrower or Guarantor shall assert, and each Borrower
and Guarantor hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any of the other
Financing Agreements or any undertaking or transaction contemplated hereby.
All amounts due under this Section shall be payable upon demand. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
11.6 Currency Indemnity. If, for the purposes of obtaining
judgment in any court in any jurisdiction with respect to this Agreement or
any of the other Financing Agreements, it becomes necessary to convert into
the currency of such jurisdiction (the "Judgment Currency") any amount due
under this Agreement or under any of the other Financing Agreements in any
currency other than the Judgment Currency (the "Currency Due"), then
conversion shall be made at the rate of exchange prevailing on the Business
Day before the day on which judgment is given. For this purpose, "rate of
exchange" means the rate at which Agent is able, on the relevant date, to
purchase the Currency Due with the Judgment Currency in accordance with its
normal practice. In the event that there is a change in the rate of
exchange prevailing between the Business Day before the day on which the
judgment is given and the date of receipt by Agent of the amount due,
Borrowers and Guarantors will, on the date of receipt by Agent, pay such
additional amounts, if any, or be entitled to receive reimbursement of such
amount, if any, as may be necessary to ensure that the amount received by
Agent and Lenders on such date is the amount in the Judgment Currency which
when converted at the rate of exchange prevailing on the date of receipt by
Agent is the amount then due under this Agreement or such other of the
Financing Agreements in the Currency Due. If the amount of the Currency Due
which Agent is able to purchase is less than the amount of the Currency Due
originally due to it, Borrowers and Guarantors shall indemnify and save
Agent and Lenders harmless from and against loss or damage arising as a
result of such deficiency. The indemnity contained herein shall constitute
an obligation separate and independent from the other obligations contained
in this Agreement and the other Financing Agreements, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by Agent from time to time and shall continue in full
force and effect notwithstanding any judgment or order for a liquidated sum
in respect of an amount due under this Agreement or any of the other
Financing Agreements or under any judgment or order.
SECTION 12. THE AGENT
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12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and
under the other Financing Agreements with such powers as are specifically
delegated to Agent by the terms of this Agreement and of the other
Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities
except those expressly set forth in this Agreement and in the other
Financing Agreements, and shall not by reason of this Agreement or any
other Financing Agreement be a trustee or fiduciary for any Lender; (b)
shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the
other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this
Agreement or any other Financing Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
or any other Financing Agreement or any other document referred to or
provided for herein or therein or for any failure by any Borrower or any
Guarantor or any other Person to perform any of its obligations hereunder
or thereunder; and (c) shall not be responsible to Lenders for any action
taken or omitted to be taken by it hereunder or under any other Financing
Agreement or under any other document or instrument referred to or provided
for herein or therein or in connection herewith or therewith, except for
its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected
by it in good faith. Agent may deem and treat the payee of any note as the
holder thereof for all purposes hereof unless and until the assignment
thereof pursuant to an agreement (if and to the extent permitted herein) in
form and substance satisfactory to Agent shall have been delivered to and
acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Agent. As to any
matters not expressly provided for by this Agreement or any other Financing
Agreement, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with
instructions given by the Required Lenders or all of Lenders as is required
in such circumstance, and such instructions of such Agents and any action
taken or failure to act pursuant thereto shall be binding on all Lenders.
12.3 Events of Default.
-----------------
(a) Agent shall not be deemed to have knowledge or notice
of the occurrence of a Default or an Event of Default or other failure of a
condition precedent to the Loans and Letter of Credit Accommodations
hereunder, unless and until Agent has received written notice from a
Lender, or a Borrower specifying such Event of Default or any unfulfilled
condition precedent, and stating that such notice is a "Notice of Default
or Failure of Condition". In the event that Agent receives such a Notice of
Default or Failure of Condition, Agent shall give prompt notice thereof to
the Lenders. Agent shall (subject to Section 12.7) take such action with
respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders; provided, that, unless and until
Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to or by reason of such Event of Default or failure of condition
precedent, as it shall deem advisable in the best interest of Lenders.
Without limiting the foregoing, and notwithstanding the existence or
occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 4 of this
Agreement to the contrary, Agent may, but shall have no obligation to,
continue to make Loans and issue or cause to be issued Letter of Credit
Accommodations for the ratable account and risk of Lenders from time to
time if Agent believes making such Loans or issuing or causing to be issued
such Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no
Lender may assert or exercise any enforcement right or remedy in respect of
the Loans, Letter of Credit Accommodations or other Obligations, as against
any Borrower or Guarantor or any of the Collateral or other property of any
Borrower or Guarantor.
12.4 Congress in its Individual Capacity. With respect to its
Commitment and the Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), so long as
Congress shall be a Lender hereunder, it shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it
were not acting as Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates, include Congress in its individual
capacity as Lender hereunder. Congress (and any successor acting as Agent)
and its Affiliates may (without having to account therefor to any Lender)
lend money to, make investments in and generally engage in any kind of
business with Borrowers (and any of its Subsidiaries or Affiliates) as if
it were not acting as Agent, and Congress and its Affiliates may accept
fees and other consideration from any Borrower or Guarantor and any of its
Subsidiaries and Affiliates for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrowers hereunder and without limiting any
obligations of Borrowers hereunder) ratably, in accordance with their Pro
Rata Shares, for any and all claims of any kind and nature whatsoever that
may be imposed on, incurred by or asserted against Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Financing
Agreement or any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby (including the
costs and expenses that Agent is obligated to pay hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other
documents, provided, that, no Lender shall be liable for any of the
foregoing to the extent it arises from the gross negligence or willful
misconduct of the party to be indemnified as determined by a final
non-appealable judgment of a court of competent jurisdiction. The foregoing
indemnity shall survive the payment of the Obligations and the termination
or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on Agent or other Lender,
and based on such documents and information as it has deemed appropriate,
made its own credit analysis of Borrowers and Guarantors and has made its
own decision to enter into this Agreement and that it will, independently
and without reliance upon Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Financing Agreements. Agent
shall not be required to keep itself informed as to the performance or
observance by any Borrower or Guarantor of any term or provision of this
Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties
or books of any Borrower or Guarantor. Agent will use reasonable efforts to
provide Lenders with any information received by Agent from any Borrower or
Guarantor which is required to be provided to Lenders hereunder and with a
copy of any Notice of Default or Failure of Condition received by Agent
from any Borrower or any Lender; provided, that, Agent shall not be liable
to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent's own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent hereunder, Agent
shall not have any duty or responsibility to provide any Lender with any
other credit or other information concerning the affairs, financial
condition or business of any Borrower or Guarantor that may come into the
possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all
cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction
from Lenders of their indemnification obligations under Section 12.5 hereof
against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Loans or provide
any Letter of Credit Accommodations to any Borrower on behalf of Lenders
intentionally and with actual knowledge that such Loans or Letter of Credit
Accommodations would cause the aggregate amount of the total outstanding
Loans and Letter of Credit Accommodations to such Borrower to exceed the
Borrowing Base of such Borrower, without the prior consent of all Lenders,
except, that, Agent may make such additional Loans or provide such
additional Letter of Credit Accommodations on behalf of Lenders,
intentionally and with actual knowledge that such Loans or Letter of Credit
Accommodations will cause the total outstanding Loans and Letter of Credit
Accommodations to such Borrower to exceed the Borrowing Base of such
Borrower, as Agent may deem necessary or advisable in its discretion,
provided, that: (a) the total principal amount of the additional Loans or
additional Letter of Credit Accommodations to any Borrower which Agent may
make or provide after obtaining such actual knowledge that the aggregate
principal amount of the Loans equal or exceed the Borrowing Bases of
Borrowers, plus the amount of Special Agent Advances made pursuant to
Section 12.11(a)(ii) hereof then outstanding, shall not exceed the
aggregate amount equal to $10,000,000 outstanding at any time and shall not
cause the total principal amount of the Loans and Letter of Credit
Accommodations to exceed the Maximum Credit and (b) no such additional
Revolving Loan or Letter of Credit Accommodation shall be outstanding more
than ninety (90) days after the date such additional Revolving Loan or
Letter of Credit Accommodation is made or issued (as the case may be),
except as the Required Lenders may otherwise agree. Each Lender shall be
obligated to pay Agent the amount of its Pro Rata Share of any such
additional Loans or Letter of Credit Accommodations.
12.9 Concerning the Collateral and the Related Financing
Agreements. Each Lender authorizes and directs Agent to enter into this
Agreement and the other Financing Agreements. Each Lender agrees that any
action taken by Agent or Required Lenders in accordance with the terms of
this Agreement or the other Financing Agreements and the exercise by Agent
or Required Lenders of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report and a report with respect to the Borrowing Base prepared
by Agent based on the Borrowing Base Certificates from time to time
provided to Agent by US Borrower hereunder (each field audit or examination
report and monthly report with respect to the Borrowing Base being referred
to herein as a "Report" and collectively, "Reports");
(b) expressly agrees and acknowledges that Agent (i) does
not make any representation or warranty as to the accuracy of any Report,
or (ii) shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that Agent or any other party
performing any audit or examination will inspect only specific information
regarding Borrowers and Guarantors and will rely significantly upon
Borrowers' and Guarantors' books and records, as well as on representations
of Borrowers' and Guarantors' personnel; and
(d) agrees to keep all Reports confidential and strictly
for its internal use in accordance with the terms of Section 13.5 hereof,
and not to distribute or use any Report in any other manner.
12.11 Collateral Matters.
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(a) Agent may, at its option, from time to time, at any
time on or after an Event of Default and for so long as the same is
continuing or upon any other failure of a condition precedent to the Loans
and Letter of Credit Accommodations hereunder, make such disbursements and
advances ("Special Agent Advances") which Agent, in its sole discretion,
(i) deems necessary or desirable either to preserve or protect the
Collateral or any portion thereof or (ii) to enhance the likelihood or
maximize the amount of repayment by Borrowers and Guarantors of the Loans
and other Obligations, provided, that, the aggregate principal amount of
the Special Agent Advances pursuant to this clause (ii), plus the then
outstanding principal amount of the additional Loans and Letter of Credit
Accommodations which Agent may make or provide as set forth in Section 12.8
hereof, shall not exceed the aggregate amount of $10,000,000 outstanding at
any time or (iii) to pay any other amount chargeable to any Borrower or
Guarantor pursuant to the terms of this Agreement or any of the other
Financing Agreements consisting of costs, fees and expenses and payments to
any issuer of Letter of Credit Accommodations. Special Agent Advances shall
be repayable on demand and be secured by the Collateral. Special Agent
Advances shall not constitute Loans but shall otherwise constitute
Obligations hereunder. Agent shall notify each Lender and US Borrower in
writing of each such Special Agent Advance, which notice shall include a
description of the purpose of such Special Agent Advance. Without
limitation of its obligations pursuant to Section 6.10, each Lender agrees
that it shall make available to Agent, upon Agent's demand, in immediately
available funds, the amount equal to such Lender's Pro Rata Share of each
such Special Agent Advance. If such funds are not made available to Agent
by such Lender, such Lender shall be deemed a Defaulting Lender and Agent
shall be entitled to recover such funds, on demand from such Lender
together with interest thereon for each day from the date such payment was
due until the date such amount is paid to Agent at the Federal Funds Rate
for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent's option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that day by each of the
three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days
of Agent's demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its
option and in its discretion to release any security interest in, mortgage
or lien upon, any of the Collateral (i) upon termination of the Commitments
and payment and satisfaction of all of the Obligations and delivery of cash
collateral to the extent required under Section 13.1 below, or (ii)
constituting property being sold or disposed of if US Borrower or any
Borrower or Guarantor certifies to Agent that the sale or disposition is
made in compliance with Section 9.7 hereof as the same may be amended from
time to time (and Agent may rely conclusively on any such certificate,
without further inquiry), or (iii) constituting property in which any
Borrower or Guarantor did not own an interest at the time the security
interest, mortgage or lien was granted or at any time thereafter, or (iv)
having a value in the aggregate in any twelve (12) month period of less
than $2,500,000, or (v) if required or permitted under the terms of any of
the other Financing Agreements, including any intercreditor agreement, or
(vi) approved, authorized or ratified in writing by all of Lenders. Except
as otherwise provided or permitted above, Agent will not release any
security interest in, mortgage or lien upon, any of the Collateral without
the prior written authorization of all of Lenders. Upon request by Agent at
any time, Lenders will promptly confirm in writing Agent's authority to
release particular types or items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Required
Lenders, each Lender agrees to confirm in writing, upon request by Agent,
the authority to release Collateral conferred upon Agent under this
Section. Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of the
security interest, mortgage or liens granted to Agent upon any Collateral
to the extent set forth above; provided, that, (i) Agent shall not be
required to execute any such document on terms which, in Agent's opinion,
would expose Agent to liability or create any obligations or entail any
consequence other than the release of such security interest, mortgage or
liens without recourse or warranty and (ii) such release shall not in any
manner discharge, affect or impair the Obligations or any security
interest, mortgage or lien upon (or obligations of any Borrower or
Guarantor in respect of) the Collateral retained by such Borrower or
Guarantor.
(d) Agent shall have no obligation whatsoever to any
Lender or any other Person to investigate, confirm or assure that the
Collateral exists or is owned by any Borrower or Guarantor or is cared for,
protected or insured or has been encumbered, or that any particular items
of Collateral meet the eligibility criteria applicable in respect of the
Loans or Letter of Credit Accommodations hereunder, or whether any
particular reserves are appropriate, or that the liens and security
interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any
duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this
Agreement or in any of the other Financing Agreements, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate, in
its discretion, given Agent's own interest in the Collateral as a Lender
and that Agent shall have no duty or liability whatsoever to any other
Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and
each other Lender as agent and bailee for the purpose of perfecting the
security interests in and liens upon the Collateral of Agent in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession (or where the security interest of a secured party with
possession has priority over the security interest of another secured
party) and Agent and each Lender hereby acknowledges that it holds
possession of any such Collateral for the benefit of Agent as secured
party. Should any Lender obtain possession of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30)
days' notice to Lenders and US Borrower. If Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for Lenders, which successor agent shall be subject to the
approval of US Borrower if no Default or Event of Default shall exist or
have occurred and be continuing, provided, that, (a) such approval shall
not be unreasonably withheld, conditioned or delayed and (b) unless Agent
shall have received written notice from US Borrower that US Borrower does
not approve such successor agent within five (5) Business Days after
receipt by US Borrower of the notice from Agent that it is resigning, US
Borrower shall be deemed to have given such approval. If no successor agent
is appointed prior to the effective date of the resignation of Agent
(whether as a result of the failure of US Borrower to approve a successor
agent or otherwise), Agent may appoint, after consulting with Lenders and
US Borrower, a successor agent from among Lenders (and the approval of US
Borrower shall not be required for such successor agent). Upon the
acceptance by the Lender so selected of its appointment as successor agent
hereunder, such successor agent shall succeed to all of the rights, powers
and duties of the retiring Agent and the term "Agent" as used herein and in
the other Financing Agreements shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 12 shall inure to its benefit as to any actions
taken or omitted by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is
thirty (30) days after the date of a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nonetheless thereupon
become effective and Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.
12.14 Co-Agent. The Lender identified on the facing page or
signature pages of this Agreement as a "co-agent" shall have no right,
power, obligation, liability, responsibility or duty under this Agreement
or any of the other Financing Agreements other than those applicable to all
Lenders as such. Without limiting the foregoing, the Lender so identified
shall not have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely,
on the Lender so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
--------------------------------
13.1 Term.
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(a) This Agreement and the other Financing Agreements
shall become effective as of the date set forth on the first page hereof
and shall continue in full force and effect for a term ending on February
28, 2006 (the "Maturity Date"), unless sooner terminated pursuant to the
terms hereof provided, that, Borrowers may, at their option, after prior
notice to Agent as set forth below (which notice shall be irrevocable)
extend the term of this Agreement for up to one (1) year period, provided,
that, as to such extension, each of the following conditions is satisfied:
(i) Agent shall have received prior written notice from US Borrower of the
intention of Borrowers to so extend the term of this Agreement not less
than ninety (90) days prior to the Maturity Date, (ii) no Default or Event
of Default shall exist or have occurred and be continuing on the Maturity
Date, and (iii) US Borrower shall have paid to Agent for the account of
Lenders on the Maturity Date all fees as required in the Fee Letter.
(b) In addition, Borrowers may terminate this Agreement
at any time upon ten (10) days prior written notice to Agent (which notice
shall be irrevocable) and Agent shall, at the direction of Required Lenders
received by Agent at any time an Event of Default exists or has occurred
and is continuing, terminate this Agreement.
(c) Upon the Maturity Date or any other effective date of
termination of the Financing Agreements, all Obligations shall be
immediately due and payable (other than contingent Obligations as described
herein). Upon the Maturity Date or any other effective date of termination
of the Financing Agreements:
(i) US Borrower shall (A) pay to Agent all
outstanding and unpaid Obligations then due and payable by US Borrower, (B)
furnish cash collateral to Agent (or at Agent's option, a letter of credit
issued for the account of US Borrowers or any Guarantor and at the expense
of US Borrower and Guarantors, in form and substance satisfactory to Agent,
by an issuer acceptable to Agent and payable to Agent as beneficiary in the
amount equal to one hundred five (105%) percent of the amount of the Letter
of Credit Accommodations under the US Credit Facility plus the amount of
any fees and expenses payable in connection therewith through the end of
the latest expiration date of such Letter of Credit Accommodations ) plus
such amounts as Agent determines are reasonably necessary to secure Agent
and Lenders from loss, cost, damage or expense, including reasonable
attorneys' fees and expenses, in connection with checks or other payments
provisionally credited to the Obligations of US Borrower or Guarantors
and/or as to which Agent or any Lender has not yet received final and
indefeasible payment and (C) (unless Agent shall elect to receive a letter
of credit as provided above), execute and deliver to Agent a cash
collateral pledge agreement, in form and substance reasonably satisfactory
to Agent; and
(ii) Canadian Borrowers shall (A) pay to Agent
all outstanding and unpaid Obligations then due and payable by Canadian
Borrowers, (B) furnish cash collateral to Agent (or at Agent's option, a
letter of credit issued for the account of a Canadian Borrower and at the
expense of Canadian Borrowers, in form and substance satisfactory to Agent,
by an issuer acceptable to Agent and payable to Agent as beneficiary in the
amount equal to one hundred five (105%) percent of the amount of the Letter
of Credit Accommodations under the Canadian Credit Facility plus the amount
of any fees and expenses payable in connection therewith through the end of
the latest expiration date of such Letter of Credit Accommodations) plus
such amounts as Agent determines are reasonably necessary to secure Agent
and Lenders from loss, cost, damage or expense, including reasonable
attorneys' fees and expenses, in connection with checks or other payments
provisionally credited to the Obligations of a Canadian Borrower and/or as
to which Agent or any Lender has not yet received final and indefeasible
payment and (C) (unless Agent shall elect to receive a letter of credit as
provided above), execute and deliver to Agent a cash collateral pledge
agreement, in form and substance reasonably satisfactory to Agent.
(iii) Such payments in respect of the
Obligations of US Borrower and Guarantors and cash collateral of US
Borrower and Guarantors shall be remitted by wire transfer in Federal funds
to the Agent Payment Account and such payments in respect of the
Obligations of Canadian Borrowers and cash collateral of Canadian Borrowers
shall be remitted by wire transfer to the Canadian Lender Payment Account,
and in any event to such other bank account of Agent, as Agent may, in its
discretion, designate in writing to US Borrower for such purpose. Interest
shall be due until and including the next Business Day, if the amounts so
paid by Borrowers to the Agent Payment Account (or Canadian Lender Payment
Account as applicable) or other bank account designated by Agent are
received in such bank account later than 1:00 p.m., Chicago time.
(d) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge any Borrower or Guarantor
of its respective duties, obligations and covenants under this Agreement or
the other Financing Agreements until all Obligations (other than certain
contingent Obligations as described in clause (a) above) have been fully
and finally discharged and paid (and as to contingent Obligations described
in clause (a) above, Agent shall have received such cash collateral (or
letter of credit as Agent may determine) as is required pursuant to the
terms hereof) and Agent's continuing security interest in the Collateral
and the rights and remedies of Agent and Lenders hereunder, under the other
Financing Agreements and applicable law, shall remain in effect until all
such Obligations (other than certain contingent Obligations as described in
clause (a) above) have been fully and finally discharged and paid (and as
to contingent Obligations described in clause (a) above, Agent shall have
received such cash collateral (or letter of credit as Agent may determine)
as is required pursuant to the terms hereof). Accordingly, each Borrower
and Guarantor waives any rights it may have under the UCC or PPSA to demand
the filing of termination statements with respect to the Collateral and
Agent shall not be required to send such termination statements to
Borrowers or Guarantors, or to file them with any filing office, unless and
until this Agreement shall have been terminated in accordance with its
terms and all Obligations (other than certain contingent Obligations as
described in clause (a) above) paid and satisfied in full in immediately
available funds and as to such contingent Obligations, Agent shall have
received such cash collateral (or letter of credit as Agent may determine)
as is required pursuant to the terms hereof.
(e) If for any reason this Agreement is terminated prior
to the Maturity Date, in view of the impracticality and extreme difficulty
of ascertaining actual damages and by mutual agreement of the parties as to
a reasonable calculation of Agent's and each Lender's lost profits as a
result thereof, Borrowers agree to pay to Agent for itself and the ratable
benefit of Lenders, upon the effective date of such termination, an early
termination fee in the amount equal to
Amount Period
------ ------
(i) 1/2% of Maximum Credit From the date hereof to and including the
first anniversary of the date hereof
(ii) 1/4% of Maximum Credit From and after the first anniversary of the
date hereof to and including the second
anniversary of the date hereof
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers and Guarantors agree that it is reasonable under the
circumstances currently existing. The early termination fee provided for in
this Section 13.1 shall be deemed included in the Obligations.
13.2 Interpretative Provisions.
-------------------------
(a) All terms used herein which are defined in Article 1,
Article 8 or Article 9 of the UCC shall have the meanings given therein
unless otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to any Borrower, Guarantor, Agent and
Lenders pursuant to the definitions set forth in the recitals hereto, or to
any other person herein, shall include their respective successors and
assigns.
(d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not any particular provision of this
Agreement and as this Agreement now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall
mean "including, without limitation".
(f) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section
11.3 or is cured, if such Event of Default is capable of being cured.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to
the contrary contained herein or in the UCC, honesty in fact in the conduct
or transaction concerned. All references to the term "reasonable" or
"reasonably" as applied to any conduct or determination by Agent shall be
based on how an asset based lender with similar rights providing a credit
facility of the type set forth herein would act in similar circumstances.
(h) Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder
shall be computed unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the financial statements
of US Borrower most recently received by Agent prior to the date hereof.
(i) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including",
the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including".
(j) Unless otherwise expressly provided herein, (i)
references herein to any agreement, document or instrument shall be deemed
to include all subsequent amendments, modifications, supplements,
extensions, renewals, restatements or replacements with respect thereto,
but only to the extent the same are not prohibited by the terms hereof or
of any other Financing Agreement, and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, recodifying, supplementing
or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of
this Agreement.
(l) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same
or similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are
the result of negotiations among and have been reviewed by counsel to Agent
and the other parties, and are the products of all parties. Accordingly,
this Agreement and the other Financing Agreements shall not be construed
against Agent or Lenders merely because of Agent's or any Lender's
involvement in their preparation.
13.3 Notices. All notices, requests and demands hereunder shall be
in writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices,
requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in
accordance with this Section):
If to any Borrower or Guarantor: Hartmarx Corporation
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Executive Vice
President and
Chief Financial Officer
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to: Hartmarx Corporation
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
If to Agent: Congress Financial Corporation
(Central)
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Portfolio Manager
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
13.4 Partial Invalidity. If any provision of this Agreement is
held to be invalid or unenforceable, such invalidity or unenforceability
shall not invalidate this Agreement as a whole, but this Agreement shall be
construed as though it did not contain the particular provision held to be
invalid or unenforceable and the rights and obligations of the parties
shall be construed and enforced only to such extent as shall be permitted
by applicable law.
13.5 Confidentiality.
---------------
(a) Agent and each Lender shall keep confidential, in
accordance with its customary procedures for handling confidential
information and safe and sound lending practices and consistent with its
practices with respect to its own confidential information, any non-public
written information supplied to it by any Borrower pursuant to this
Agreement, provided, that, nothing contained herein shall limit the
disclosure of any such information: (i) to the extent required by statute,
rule, regulation, subpoena or court order, (ii) to bank examiners and other
regulators, auditors and/or accountants, in connection with any litigation
to which Agent or such Lender is a party, (iii) to any Lender or
Participant (or prospective Lender or Participant) or to any Affiliate of
any Lender so long as such information has been delivered to such Lender or
Participant (or prospective Lender or Participant) or Affiliate subject to
the written condition that such information shall be treated as
confidential or such Lender or Participant (or prospective Lender or
Participant) shall have otherwise agreed to treat such information as
confidential in accordance with this Section 13.5, or (iv) to counsel for
Agent or any Lender or Participant (or prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a
request or demand to disclose any confidential information pursuant to any
subpoena or court order, Agent or such Lender, as the case may be, agrees
(i) to the extent permitted by applicable law, Agent or such Lender will
promptly notify US Borrower of such request so that US Borrower may seek a
protective order or other appropriate relief or remedy and (ii) if
disclosure of such information is required, disclose such information and,
subject to reimbursement by Borrowers of Agent's or such Lender's expenses,
cooperate with US Borrower in the reasonable efforts to obtain an order or
other reliable assurance that confidential treatment will be accorded to
such portion of the disclosed information which US Borrower so designates.
(c) In no event shall this Section 13.5 or any other
provision of this Agreement, any of the other Financing Agreements or
applicable law be deemed: (i) to apply to or restrict disclosure of
information that has been or is made public by any Borrower, Guarantor or
any third party or otherwise becomes generally available to the public
other than as a result of a disclosure in violation hereof, (ii) to apply
to or restrict disclosure of information that was or becomes available to
Agent or any Lender (or any Affiliate of any Lender) on a non-confidential
basis from a person other than: (A) a Borrower or Guarantor or (B) a person
known to Agent or such Lender, as the case may be, to have obtained such
information on a confidential basis pursuant to an agreement with a
Borrower or Guarantor, (iii) to require Agent or any Lender to return any
materials furnished by a Borrower or Guarantor to Agent or a Lender. The
obligations of Agent and Lenders under this Section 13.5 shall supersede
and replace the obligations of Agent and Lenders under any confidentiality
letter signed prior to the date hereof.
13.6 Successors. This Agreement, the other Financing Agreements
and any other document referred to herein or therein shall be binding upon
and inure to the benefit of and be enforceable by Agent, Lenders,
Borrowers, Guarantors and their respective successors and assigns, except
that Borrower may not assign its rights under this Agreement or any of the
other Financing Agreements without the prior written consent of Agent and
Lenders. Any such purported assignment without such express prior written
consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.7 below. The terms and provisions of this Agreement
and the other Financing Agreements are for the purpose of defining the
relative rights and obligations of Borrowers, Guarantors, Agent and Lenders
with respect to the transactions contemplated hereby and there shall be no
third party beneficiaries of any of the terms and provisions of this
Agreement or any of the other Financing Agreements.
13.7 Assignments; Participations.
---------------------------
(a) Each Lender may, with the prior written consent of
Agent, assign all or, if less than all, a portion equal to at least
$10,000,000 in the aggregate for the assigning Lender, of such rights and
obligations under this Agreement to one or more Eligible Transferees (but
not including for this purpose any assignments in the form of a
participation), each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment and Acceptance;
provided, that, (i) such transfer or assignment will not be effective until
recorded by Agent on the Register, (ii) Agent shall have received for its
sole account payment of a processing fee from the assigning Lender or the
assignee in the amount of $5,000 and (iii) the prior written consent of
Agent shall not be required in the event of an assignment to a Person that
is an Eligible Transferee under Section 1.49(a) or (b) hereof. Upon receipt
by Agent of any notice from a Lender of the intention of such Lender to
assign all or a portion of its rights and obligations under this Agreement
to a specified Eligible Transferee, Agent shall promptly notify US Borrower
of such Eligible Transferee.
(b) Agent shall maintain a register of the names and
addresses of Lenders, their Commitments and the principal amount of their
Loans (the "Register"). Agent shall also maintain a copy of each Assignment
and Acceptance delivered to and accepted by it and shall modify the
Register to give effect to each Assignment and Acceptance. The entries in
the Register shall be conclusive and binding for all purposes, absent
manifest error, and any Borrowers, Guarantors, Agent and Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by US Borrower and any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment
and Acceptance, the assignee thereunder shall be a party hereto and to the
other Financing Agreements and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations (including, without limitation,
the obligation to participate in Letter of Credit Accommodations) of a
Lender hereunder and thereunder and the assigning Lender shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and
Acceptance, the assignor and assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Agreement or any of the other Financing Agreements or the execution,
legality, enforceability, genuineness, sufficiency or value of this
Agreement or any of the other Financing Agreements furnished pursuant
hereto, (ii) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any
Borrower, Guarantor or any of their Subsidiaries or the performance or
observance by any Borrower or Guarantor of any of the Obligations; (iii)
such assignee confirms that it has received a copy of this Agreement and
the other Financing Agreements, together with such other documents and
information it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (iv) such assignee
will, independently and without reliance upon the assigning Lender, Agent
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Financing Agreements, (v) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other
Financing Agreements as are delegated to Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto,
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender.
Subject to Section 13.5 hereof, Agent and Lenders may furnish any
information concerning any Borrower or Guarantor in the possession of Agent
or any Lender from time to time to assignees and Participants.
(e) Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of its rights and
obligations under this Agreement and the other Financing Agreements
(including, without limitation, all or a portion of its Commitments and the
Loans owing to it and its participation in the Letter of Credit
Accommodations, without the consent of Agent or the other Lenders);
provided, that, (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment hereunder) and the other
Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other
Financing Agreements, and (iii) the Participant shall not have any rights
under this Agreement or any of the other Financing Agreements (the
Participant's rights against such Lender in respect of such participation
to be those set forth in the agreement executed by such Lender in favor of
the Participant relating thereto) and all amounts payable by any Borrower
or Guarantor hereunder shall be determined as if such Lender had not sold
such participation.
(f) Nothing in this Agreement shall prevent or prohibit
any Lender from pledging its Loans hereunder to a Federal Reserve Bank in
support of borrowings made by such Lenders from such Federal Reserve Bank.
(g) Borrowers and Guarantors shall assist Agent or any
Lender permitted to sell assignments or participations under this Section
13.7 in whatever manner reasonably necessary in order to enable or effect
any such assignment or participation, including (but not limited to) the
execution and delivery of any and all agreements, notes and other documents
and instruments as shall be reasonably requested, and the participation of
relevant management in meetings and conference calls with, potential
Lenders or Participants.
13.8 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the subject
matter hereof and thereof between the parties hereto, and supersede all
other prior agreements, understandings, negotiations and discussions,
representations, warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written. In the event
of any inconsistency between the terms of this Agreement and any schedule
or exhibit hereto, the terms of this Agreement shall govern.
13.9 Counterparts, Etc. This Agreement or any of the other
Financing Agreements may be executed in any number of counterparts, each of
which shall be an original, but all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart
of this Agreement or any of the other Financing Agreements by telefacsimile
shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other Financing
Agreements. Any party delivering an executed counterpart of any such
agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
13.10 Choice of Language. The parties hereto confirm that they
have requested that this Agreement and all documents related hereto be
drafted in English. Les parties aux presentes ont exige que cette
convention ainsi que tout document connexe soient rediges en anglais.
13.11 Code Section 956 Override. Notwithstanding anything to the
contrary contained herein or in any of the other Financing Agreements
(including any provision that provides that it applies notwithstanding
contrary provisions), in no event shall any provision hereof or of any of
the other Financing Agreements be construed to provide that (a) any
Subsidiary of US Borrower incorporated under the laws of a jurisdiction
outside the United States of America that is a "controlled foreign
corporation" (as such term is defined in Section 957(a) of the Code),
referred to herein as a "non-US Subsidiary", has any obligation to make any
payments for or on behalf of any of US Borrower to the extent that any such
obligation would increase the amount of taxes otherwise payable by US
Borrower pursuant to the Code; (b) more than sixty-five (65%) percent of
the voting power of all classes of Capital Stock of a non-US Subsidiary are
pledged or hypothecated to support any Obligations of US Borrower hereunder
or under any of the other Financing Agreements;(c) a security interest or
lien upon any assets of a non-US Subsidiary have been granted to Agent
under this Agreement or any of the other Financing Agreements to secure any
Obligations of US Borrower and (d) any non-US subsidiary has entered into
any agreement to guarantee or support the Obligations of US Borrower
hereunder or under any of the other Financing Agreements.
IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have
caused these presents to be duly executed as of the day and year first
above written.
AGENT BORROWERS
----- ---------
CONGRESS FINANCIAL CORPORATION HARTMARX CORPORATION
(CENTRAL), as Agent XXXXXXX APPAREL GROUP
LIMITED
ROYAL SHIRT COMPANY
LIMITED
By: /s/ XXXXX X., XXXXXXX L'ESPRIT DU PANTALON CANADIEN,
------------------------------------------
Xxxxx X. Xxxxxxx INC.
Title: Executive Vice President
----------------------------------------
By: /s/ XXXXX X. XXXXXXX
----------------------------------------
Xxxxx X. Xxxxxxx
Title: Senior Vice President of Hartmarx
Corporation and Secretary or
Assistant Secretary as to Xxxxxxx
Apparel Group Limited Royal Shirt
Company Limited L'Esprit du
Pantalon Canadien, Inc.
LENDERS
-------
CONGRESS FINANCIAL CORPORATION
(CENTRAL)
By: /s/ XXXXX X., XXXXXXX
------------------------------------------
Xxxxx X. Xxxxxxx
Title: Executive Vice President
---------------------------------------
Commitment: $155,000,000
CONGRESS FINANCIAL CORPORATION
(CANADA)
By: /s/ XXXXX X., XXXXXXX
------------------------------------------
Xxxxx X. Xxxxxxx
Title: Executive Vice President
--------------------------------------
Commitment: $10,000,000
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PRIOR PAGE]
JPMORGAN CHASE BANK
By: /s/ XXXX X. XXXXXXXXX
------------------------------
Xxxx X. Xxxxxxxxx
Title: Vice President
----------------------------
Commitment: $35,000,000
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PRIOR PAGE]
GUARANTORS
XXXX XXXXXXXXX & XXXX
HMX SPORTSWEAR, INC.
NATIONAL CLOTHING COMPANY, INC.
XXXXXX-XXXXXXX CO., INC.
INTERNATIONAL WOMEN'S APPAREL, INC.
XXXXXX-XXXX, INC.
ANNISTON SPORTSWEAR CORPORATION
MEN'S QUALITY BRANDS, INC.
X. XXXX & COMPANY, INC. (D/B/A HMX TAILORED, INC.)
UNIVERSAL DESIGN GROUP, LTD.
CONSOLIDATED APPAREL GROUP, INC.
By: /s/ XXXXX X. XXXXXXX
--------------------------------------------------
Xxxxx X. Xxxxxxx
Title: Secretary as to each
EACH OF THE COMPANIES LISTED ON
SCHEDULE 1.69 HERETO
By: /s/ XXXXX X. XXXXXXX
--------------------------------------------------
Xxxxx X. Xxxxxxx
Title: Secretary as to each
SCHEDULE 1.69
TO
LOAN AND SECURITY AGREEMENT
List of Guarantors
Anniston Sportswear Corporation
Consolidated Apparel Group, Inc.
Direct Route Marketing Corporation
Xxxx Xxxxxxxxx & Xxxx
Xxxxxx-Xxxxxxx Co., Inc.
HMX Sportswear, Inc.
International Women's Apparel, Inc.
Xxxxxx-Xxxx, Inc.
Men's Quality Brands, Inc.
X. Xxxx & Company, Inc.
National Clothing Company, Inc.
Universal Design Group, Ltd.
Briar, Inc.
Chicago Trouser Company, Ltd.
C. M. Clothing, Inc.
C. M. Outlet Corp.
Country Miss, Inc.
Country Suburbans, Inc.
E-Town Sportswear Corporation
Xxxxxxxx-Xxxxx, Inc.
Gleneagles, Inc.
Handmacher Fashions Factory Outlet, Inc.
Xxxxxxxxxx-Xxxxx, Inc.
Hartmarx International, Inc.
Xxxx Services, Inc.
Xxxx. Xxxxx Clothes, Inc.
Xxxxxxx, Xxxxx & Hill, Inc.
Hoosier Factories, Incorporated
HSM University, Inc.
Intercontinental Apparel, Inc.
JRSS, Inc.
Kuppenheimer Men's Clothiers Dadeville, Inc.
106 Real Estate Corp.
Xxxxxx Surrey, Inc.
Robert's International Corporation
SALHOLD, Inc.
Seaford Clothing Co.
Society Brand, Ltd.
TAG Licensing, Inc.
Tailored Trend, Inc.
Thorngate Uniforms, Inc.
Trade Finance International Limited
Winchester Clothing Company
Yorke Shirt Corporation
