Exhibit 5
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$470,000,000
CREDIT AGREEMENT
among
XXXXX & LORD INDUSTRIES, INC.,
as Borrower,
XXXXX & LORD, INC.
AND
CERTAIN SUBSIDIARIES
FROM TIME TO TIME PARTIES HERETO
as Guarantors,
THE LENDERS PARTIES HERETO
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
Dated as of December 19, 1997
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................................................................1
Section 1.1 Defined Terms................................................................................1
Section 1.2 Other Definitional Provisions...............................................................27
Section 1.3 Accounting Terms............................................................................28
ARTICLE II THE LOANS; AMOUNT AND TERMS..........................................................................28
Section 2.1 Revolving Loans.............................................................................28
Section 2.2 Term Loan...................................................................................31
Section 2.3 Swingline Loan Subfacility..................................................................32
Section 2.4 Letter of Credit Subfacility................................................................33
Section 2.5 Fees........................................................................................37
Section 2.6 Commitment Reductions ......................................................................38
Section 2.7 Prepayments.................................................................................38
Section 2.8 Minimum Principal Amount of Tranches........................................................41
Section 2.9 Default Rate and Payment Dates..............................................................41
Section 2.10 Conversion Options.........................................................................41
Section 2.11 Computation of Interest and Fees...........................................................42
Section 2.12 Pro Rata Treatment and Payments............................................................43
Section 2.13 Non-Receipt of Funds by the Agent..........................................................43
Section 2.14 Inability to Determine Interest Rate.......................................................44
Section 2.15 Illegality.................................................................................45
Section 2.16 Requirements of Law........................................................................45
Section 2.17 Indemnity..................................................................................47
Section 2.18 Taxes......................................................................................47
Section 2.19 Indemnification; Nature of Issuing Lender's Duties.........................................49
ARTICLE III REPRESENTATIONS AND WARRANTIES......................................................................50
Section 3.1 Financial Condition.........................................................................51
Section 3.2 No Change...................................................................................51
Section 3.3 Corporate Existence; Compliance with Law....................................................51
Section 3.4 Corporate Power; Authorization; Enforceable Obligations.....................................52
Section 3.5 No Legal Bar; No Default....................................................................52
Section 3.6 No Material Litigation......................................................................52
Section 3.7 Investment Company Act......................................................................53
Section 3.8 Margin Regulations..........................................................................53
Section 3.9 ERISA.......................................................................................53
Section 3.10 Environmental Matters......................................................................53
Section 3.11 Purpose of Loans...........................................................................54
Section 3.12 Subsidiaries...............................................................................55
Section 3.13 Ownership..................................................................................55
Section 3.14 Indebtedness...............................................................................55
Section 3.15 Taxes......................................................................................55
Section 3.16 Intellectual Property......................................................................55
Section 3.17 Solvency...................................................................................56
Section 3.18 Investments................................................................................56
Section 3.19 Location of Collateral.....................................................................56
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Section 3.20 No Burdensome Restrictions.................................................................56
Section 3.21 Brokers' Fees..............................................................................56
Section 3.22 Labor Matters..............................................................................57
Section 3.23 Accuracy and Completeness of Information...................................................57
Section 3.24 Printed Apparel Fabrics Business...........................................................57
ARTICLE IV CONDITIONS PRECEDENT.................................................................................57
Section 4.1 Conditions to Closing Date and Initial Revolving Loans......................................57
Section 4.2 Conditions to Revolving Loans and Term Loan To Be Made in Connection with the G&L
Acquisition.............................................................................................60
Section 4.3 Conditions to Initial Revolving Loans following the G&L Acquisition.........................62
Section 4.4 Conditions to All Extensions of Credit......................................................62
ARTICLE V AFFIRMATIVE COVENANTS.................................................................................64
Section 5.1 Financial Statements........................................................................64
Section 5.2 Certificates; Other Information.............................................................65
Section 5.3 Payment of Obligations......................................................................66
Section 5.4 Conduct of Business and Maintenance of Existence............................................66
Section 5.5 Maintenance of Property; Insurance..........................................................66
Section 5.6 Inspection of Property; Books and Records; Discussions......................................67
Section 5.7 Notices.....................................................................................67
Section 5.8 Environmental Laws..........................................................................68
Section 5.9 Financial Covenants.........................................................................68
Section 5.10 Additional Subsidiary Guarantors...........................................................71
Section 5.11 Compliance with Law........................................................................71
Section 5.12 Pledged Assets.............................................................................71
Section 5.13 Revisions or Updates to Schedules..........................................................72
ARTICLE VI NEGATIVE COVENANTS...................................................................................72
Section 6.1 Indebtedness................................................................................73
Section 6.2 Liens.......................................................................................74
Section 6.3 Guaranty Obligations........................................................................74
Section 6.4 Nature of Business..........................................................................74
Section 6.5 Consolidation, Merger, Sale or Purchase of Assets, etc......................................74
Section 6.6 Advances, Investments and Loans.............................................................75
Section 6.7 Transactions with Affiliates................................................................75
Section 6.8 Ownership of Subsidiaries; Company Restrictions.............................................76
Section 6.9 Fiscal Year; Organizational Documents.......................................................76
Section 6.10 Limitation on Restricted Actions...........................................................76
Section 6.11 Restricted Payments........................................................................77
Section 6.12 Prepayments of Indebtedness, etc...........................................................77
Section 6.13 Sale Leasebacks............................................................................77
Section 6.14 No Further Negative Pledges................................................................78
ARTICLE VII EVENTS OF DEFAULT...................................................................................78
Section 7.1 Events of Default...........................................................................78
Section 7.2 Acceleration; Remedies......................................................................81
ARTICLE VIII THE AGENT..........................................................................................81
Section 8.1 Appointment.................................................................................81
Section 8.2 Delegation of Duties........................................................................82
Section 8.3 Exculpatory Provisions......................................................................82
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Section 8.4 Reliance by Agent...........................................................................82
Section 8.5 Notice of Default...........................................................................83
Section 8.6 Non-Reliance on Agent and Other Lenders.....................................................83
Section 8.7 Indemnification.............................................................................84
Section 8.8 Agent in Its Individual Capacity............................................................84
Section 8.9 Successor Agent.............................................................................84
ARTICLE IX MISCELLANEOUS........................................................................................85
Section 9.1 Amendments, Waivers and Release of Collateral...............................................85
Section 9.2 Notices.....................................................................................86
Section 9.3 No Waiver; Cumulative Remedies..............................................................87
Section 9.4 Survival of Representations and Warranties..................................................87
Section 9.5 Payment of Expenses and Taxes...............................................................87
Section 9.6 Successors and Assigns; Participations; Purchasing Lenders..................................88
Section 9.7 Adjustments; Set-off........................................................................91
Section 9.8 Table of Contents and Section Headings......................................................92
Section 9.9 Counterparts................................................................................92
Section 9.10 Severability...............................................................................92
Section 9.11 Integration................................................................................92
Section 9.12 Governing Law..............................................................................92
Section 9.13 Consent to Jurisdiction and Service of Process.............................................93
Section 9.14 Arbitration................................................................................93
Section 9.15 Confidentiality............................................................................94
Section 9.16 Acknowledgments............................................................................95
Section 9.17 Waivers of Jury Trial......................................................................95
Section 9.18 Financial Covenants and Determination of Borrowing Base....................................95
ARTICLE X GUARANTY..............................................................................................96
Section 10.1 The Guaranty...............................................................................96
Section 10.2 Bankruptcy.................................................................................97
Section 10.3 Nature of Liability........................................................................97
Section 10.4 Independent Obligation.....................................................................98
Section 10.5 Authorization..............................................................................98
Section 10.6 Reliance...................................................................................98
Section 10.7 Waiver.....................................................................................98
Section 10.8 Limitation on Enforcement.................................................................100
Section 10.9 Confirmation of Payment...................................................................100
SCHEDULES
Schedule 1.1(a) Account Designation Letter
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.2(d) Form of Term Note
Schedule 2.3(d) Form of Swingline Note
Schedule 2.4(a) Letters of Credit Outstanding
Schedule 2.10 Form of Notice of Conversion/Extension
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Schedule 2.18 Section 2.18 Certificate
Schedule 3.6 Litigation
Schedule 3.12 Subsidiaries
Schedule 3.16 Material Intellectual Property
Schedule 3.19(a) Location of Real Property
Schedule 3.19(b) Location of Collateral
Schedule 3.19(c) Chief Executive Offices
Schedule 3.22 Labor Matters
Schedule 4.1(b) Form of Secretary's Certificate
Schedule 4.1(j) Form of Solvency Certificate
Schedule 4.2(o) Existing Indebtedness of Acquired Companies
Schedule 5.2(d) Form of Borrowing Base Certificate
Schedule 5.10 Form of Joinder Agreement
Schedule 6.1(b) Indebtedness
Schedule 9.2 Schedule of Lenders' Lending Offices
Schedule 9.6(c) Form of Commitment Transfer Supplement
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CREDIT AGREEMENT, dated as of December 19, 1997, among XXXXX & LORD
INDUSTRIES, INC., a Delaware corporation (the "Borrower"), XXXXX & LORD, INC., a
Delaware corporation (the "Company"), those Subsidiaries identified as a
"Guarantor" on the signature pages hereto and such other Subsidiaries as may
from time to time become a party hereto (together with the Company, the
"Guarantors"), the several banks and other financial institutions from time to
time parties to this Agreement (collectively, the "Lenders"; and individually, a
"Lender"), and FIRST UNION NATIONAL BANK, a national banking association, as
agent for the Lenders hereunder (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make loans and
other financial accommodations to the Borrower in the amount of up to
$470,000,000, of which up to $230,000,000 will be used to refinance existing
indebtedness of the Borrower and for general corporate and working capital
purposes and the remaining proceeds will be used to finance the G&L Acquisition
(as such term is defined hereinafter) and for general corporate and working
capital purposes;
WHEREAS, the Lenders have agreed to make such loans and other financial
accommodations to the Borrower on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
As used in this Agreement, terms defined in the preamble to this
Agreement have the meanings therein indicated, and the following terms have the
following meanings:
"Account Designation Letter" shall mean the Notice of Account
Designation Letter dated the Closing Date from the Borrower to the
Agent substantially in the form attached hereto as Schedule 1.1(a).
"Acquired Companies" shall mean the Apparel Division of Target
to be acquired by the Borrower.
"Acquisition Documents" shall mean the G&L Purchase Agreement
and the Polymer Purchase Agreement, including the exhibits and
schedules thereto, and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection therewith.
"Acquisition Funding Termination Date" shall mean the date
which is the earlier of (i) 364 days following the consummation of the
Tender Offer and (ii) 180 days following the Amalgamation.
"Additional Credit Party" shall mean each Person that becomes
a Guarantor by execution of a Joinder Agreement in accordance with
Section 5.10.
"Adjusted Fixed Charge Coverage Ratio" shall mean the ratio of
Consolidated EBITDA, including any Permitted G&L Acquisition Cost
Savings, to Consolidated Fixed Charges.
"Adjusted Leverage Ratio" shall mean the ratio of Consolidated
Funded Debt to Consolidated EBITDA, including any Permitted G&L
Acquisition Cost Savings.
"Affiliate" shall mean as to any Person, any other Person
(excluding any Subsidiary) which, directly or indirectly, is in control
of, is controlled by, or is under common control with, such Person. For
purposes of this definition, a Person shall be deemed to be "controlled
by" a Person if such Person possesses, directly or indirectly, power
either (a) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) to direct or
cause the direction of the management and policies of such Person
whether by contract or otherwise.
"Agent" shall have the meaning set forth in the first
paragraph of this Agreement and any successors in such capacity.
"Agreement" shall mean this Credit Agreement, as amended,
modified or supplemented from time to time in accordance with its
terms.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the greater of (a) the Prime Rate in effect on such day
and (b) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof: "Prime Rate" shall mean, at any time, the
rate of interest per annum publicly announced from time to time by
First Union at its principal office in Charlotte, North Carolina as its
prime rate. Each change in the Prime Rate shall be effective as of the
opening of business on the day such change in the Prime Rate occurs.
The parties hereto acknowledge that the rate announced publicly by
First Union as its Prime Rate is an index or base rate and shall not
necessarily be its lowest or best rate charged to its customers or
other banks; and "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day
by the Federal Reserve Bank
2
of New York, or, if such rate is not so published on the next
succeeding Business Day, the average of the quotations for the day of
such transactions received by the Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Agent shall have determined (which determination shall be conclusive in
the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability
or failure of the Agent to obtain sufficient quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition,
as appropriate, until the circumstances giving rise to such inability
no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the opening of business on the date of such change.
"Alternate Base Rate Loans" shall mean Loans that bear
interest at an interest rate based on the Alternate Base Rate.
"Amalgamation" shall mean the amalgamation of DTA with and
into Target under the laws of Canada pursuant to the Amalgamation
Agreement.
"Amalgamation Agreement" shall mean an agreement to be entered
into between DTA and Target following the consummation of the Tender
Offer pursuant to which DTA and Target would amalgamate under the laws
of Canada, thereby forming a new corporation, as amended, modified or
supplemented from time to time in accordance with its terms.
"Apparel Division" shall mean the apparel fabrics textile
group businesses of Target conducted primarily through the Swift
Textiles Canada division of Target, six direct or indirect wholly-owned
subsidiaries of Target (being (i) DomTex USA, (ii) Swift Textiles,
Inc., a Delaware corporation, (iii) Dominion Textile (Asia) Pte. Ltd.,
a company organized under the laws of Singapore, (iv) Swift Textiles
(Far East) Ltd., a company organized under the laws of Hong Kong, (v)
Dominion Textile International B.V., a company organized under the laws
of the Netherlands, (vi) Klopman International S.r.L., a company
organized under the laws of Italy) and (vii) Swift Textiles Europe
Ltd., a company organized under the laws of the Republic of Ireland.
"Applicable Percentage" shall mean, for any day, the rate per
annum set forth below opposite the applicable Level then in effect, it
being understood that the Applicable Percentage for (i) Revolving Loans
which are Alternate Base Rate Loans shall be the percentage set forth
under the column "Alternate Base Rate Margin for Revolving Loans", (ii)
Revolving Loans which are LIBOR Rate Loans shall be the percentage set
forth under the column "LIBOR Rate Margin for Revolving Loans and
Letter of Credit Fee", (iii) the Commitment Fee shall be the percentage
set forth under the column "Commitment Fee", (iv) Term Loans which are
Alternate Base Rate Loans shall be the percentage set forth under the
column "Alternate Base Rate Margin for Term Loans", (ii) Term Loans
which are LIBOR Rate Loans shall be the percentage set forth under the
column "LIBOR Rate
Margin for Term Loans" and (vi) the Letter of Credit Fee shall be the
percentage set forth under the column "LIBOR Rate Margin for Revolving
Loans and Letter of Credit Fee":
LIBOR Rate
Alternate Margin for Alternate
Adjusted Base Rate Revolving Loans Base Rate LIBOR Rate
Leverage Margin for and Letter of Commitment Margin for Margin for
Level Ratio Revolving Loans Credit Fee Fee Term Loans Term Loans
--------- --------------- ------------------- -------------------- --------------- --------------- ---------------
I (greater than) 1.00% 2.25% 0.50% 1.50% 2.75%
5.5 to 1.0
II (greater than) 0.75% 2.00% 0.50% 1.25% 2.50%
5.0 to 1.0 but
(equal to) 5.5
to 1.0
III (greater than) 0.50% 1.75% 0.375% 1.00% 2.25%
4.5 to 1.0
but (equal to)
5.0 to 1.0
IV (greater than) 0.25% 1.50% 0.375% 0.75% 2.00%
4.0 to 1.0 but
(equal to) 4.5
to 1.0
V (greater than) 0% 1.25% 0.25% 0.50% 1.75%
3.5 to 1.0 but
(equal to) 4.0
to 1.0
VI (greater than) 0% 1.00% 0.25% 0.25% 1.50%
3.0 to 1.0 but
(equal to) 3.5
to 1.0
VII (equal to) 3.0 0% 0.75% 0.25% 0.25% 1.50%
to 1.0
The Applicable Percentage shall, in each case, be determined and
adjusted quarterly on the date five (5) Business Days after the date by
which the Company is required to provide the quarterly financial
information and certifications to the Agent and the Lenders in
accordance with the provisions of Sections 5.1(b) and 5.2(b) (each an
"Interest Determination Date"). Such Applicable Percentage shall be
effective from such Interest Determination Date until the next such
Interest Determination Date. The initial Applicable Percentages shall
be based on Level I until the first Interest Determination Date
occurring after the end of the second full fiscal quarter of the
Company following the Subsequent Transactions Closing Date. After the
Subsequent Transactions Closing Date, if the Borrower shall fail to
provide the quarterly financial information and certifications in
accordance with the provisions of Sections 5.1(b) and 5.2(b), the
Applicable Percentage from such Interest Determination Date shall, on
the date five (5) Business Days after the date by which the Company was
so required to provide such financial information and certifications to
the Agent and the Lenders, be based on Level I until such time as such
information and certifications are provided, whereupon the Level shall
be determined by the then current Adjusted Leverage Ratio.
"Asset Disposition" shall mean the disposition of any or all
of the assets (including, without limitation, the Capital Stock of a
Subsidiary or any ownership interest in a joint
4
venture) of the Company or any Subsidiary whether by sale, lease,
transfer or otherwise. The term "Asset Disposition" shall not include
(a) Specified Sales or (b) any Equity Issuance.
"Bankruptcy Code" shall mean the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded or replaced
from time to time.
"Borrower" shall have the meaning set forth in the first
paragraph of this Agreement.
"Borrowing Base" shall mean, as of any day, the sum of (a) 85%
of Eligible Receivables and (b) 55% of Eligible Inventory, in each case
as set forth in the most recent Borrowing Base Certificate delivered to
the Agent and the Lenders in accordance with the terms of Section
5.2(d).
"Borrowing Date" shall mean, in respect of any Loan, the date
such Loan is made.
"Bridge Agreement" shall have the meaning set forth in the
definition of Subordinated Debt.
"Bridge Notes" shall have the meaning set forth in the
definition of Subordinated Debt.
"Business" shall have the meaning set forth in Section 3.10.
"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in Charlotte, North Carolina or
New York, New York are authorized or required by law to close;
provided, however, that when used in connection with a rate
determination, borrowing or payment in respect of a LIBOR Rate Loan,
the term "Business Day" shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the
London interbank market.
"Capital Expenditures" shall mean all expenditures which in
accordance with GAAP would be classified as capital expenditures,
including without limitation, Capital Lease Obligations.
"Capital Lease" shall mean any lease of property, real or
personal, the obligations with respect to which are required to be
capitalized on a balance sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations" shall mean the capitalized lease
obligations relating to a Capital Lease determined in accordance with
GAAP.
"Capital Stock" shall mean (i) in the case of a corporation,
capital stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights
5
or other equivalents (however designated) of capital stock, (iii) in
the case of a partnership, partnership interests (whether general or
limited), (iv) in the case of a limited liability company, membership
interests and (v) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" shall mean (i) securities 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) having maturities of not more than twelve months from
the date of acquisition ("Government Obligations"), (ii) U.S. dollar
denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar
certificates of deposit of (y) any domestic commercial bank of
recognized standing having capital and surplus in excess of
$250,000,000 or (z) any bank whose short-term commercial paper rating
from S&P is at least A-1 or the equivalent thereof or from Xxxxx'x is
at least P-1 or the equivalent thereof (any such bank being an
"Approved Bank"), in each case with maturities of not more than 364
days from the date of acquisition, (iii) commercial paper and variable
or fixed rate notes issued by any Approved Bank (or by the parent
company thereof) or any variable rate notes issued by, or guaranteed by
any domestic corporation rated A-1 (or the equivalent thereof) or
better by S&P or P-1 (or the equivalent thereof) or better by Moody's
and maturing within six months of the date of acquisition, (iv)
repurchase agreements with a bank or trust company (including a Lender)
or a recognized securities dealer having capital and surplus in excess
of $500,000,000 for direct obligations issued by or fully guaranteed by
the United States of America, (v) obligations of any state of the
United States or any political subdivision thereof for the payment of
the principal and redemption price of and interest on which there shall
have been irrevocably deposited Government Obligations maturing as to
principal and interest at times and in amounts sufficient to provide
such payment, and (vi) auction preferred stock rated in the highest
short-term credit rating category by S&P or Moody's.
"Chase" shall mean The Chase Manhattan Bank, a New York
banking corporation.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean a collective reference to the
collateral which is identified in, and at any time will be covered by,
the Security Documents.
"Commitment" shall mean the Revolving Commitment, the LOC
Commitment, the Swingline Commitment and the Term Loan Commitment,
individually or collectively, as appropriate.
6
"Commitment Fee" shall have the meaning set forth in Section
2.5(a).
"Commitment Percentage" shall mean the Revolving Commitment
Percentage, the LOC Commitment Percentage and/or the Term Loan
Commitment Percentage, as appropriate.
"Commitment Period" shall mean the period from and including
the Closing Date to but not including the Termination Date.
"Commitment Transfer Supplement" shall mean a Commitment
Transfer Supplement, substantially in the form of Schedule 9.6(c).
"Commonly Controlled Entity" shall mean an entity, whether or
not incorporated, which is under common control with the Company within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Company and which is treated as a single employer under
Section 414 of the Code.
"Company" shall have the meaning set forth in the first
paragraph of this Agreement.
"Consolidated EBITDA" shall mean, for any period, Consolidated
Net Income plus the sum of (i) Consolidated Interest Expense for such
period, plus, to the extent the following items are deducted in
calculating Consolidated Net Income, (ii) all provisions for any
Federal, state or other income taxes for such period, plus (iii)
depreciation, amortization and other non-cash charges for such period,
including, without limitation, any accrual necessary for purposes of
conforming with Financial Accounting Standards Board Statement Number
106 (as defined by GAAP) to the extent that the accrued portion thereof
constitutes a non-cash charge, plus the sum of (a) distributions paid
in cash from the Existing Joint Ventures to the Borrower or any of its
wholly-owned Subsidiaries; provided that any such distributions made to
Foreign Subsidiaries shall be decreased by the amount that would have
been deducted from such distributions by the local taxing authorities
of the jurisdiction of organization of any such Foreign Subsidiaries
had such distributions been repatriated to the United States, for such
period and (b) adjustments to EBITDA reasonably acceptable to the Agent
for such period, of the Company and its Subsidiaries on a consolidated
basis as determined in accordance with GAAP applied on a consistent
basis. The applicable period shall be for the four consecutive quarters
ending as of the date of determination.
"Consolidated Fixed Charges" shall mean, for any period, the
sum of (i) Consolidated Interest Expense for such period plus (ii)
Consolidated Scheduled Funded Debt Payments for the next four fiscal
quarters following the end of such period plus (iii) consolidated
Capital Expenditures for such period (without duplication of items in
clause (ii)) of the Company and its Subsidiaries on a consolidated
basis determined in accordance with GAAP applied on a consistent basis.
Except as otherwise specified, the applicable period shall be for the
four consecutive quarters ending as of the date of computation.
7
"Consolidated Funded Debt" shall mean, on any date of
calculation, Funded Debt of the Company and its Subsidiaries on a
consolidated basis.
"Consolidated Interest Expense" shall mean, for any period,
all interest expense, excluding amortization of debt discount and
premium but including the interest component under Capital Leases for
such period of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP applied on a consistent basis. The
applicable period shall be for the four consecutive quarters ending as
of the date of computation; provided, however, that Consolidated
Interest Expense for the fiscal quarter ending on March 28, 1998 shall
be calculated as Consolidated Interest Expense for such quarter
multiplied by four (4); Consolidated Interest Expense for the fiscal
quarter ending on June 27, 1998 shall be calculated as Consolidated
Interest Expense for the two fiscal quarters immediately preceding such
date multiplied by two (2); and Consolidated Interest Expense for the
fiscal quarter ending on October 3, 1998 shall be calculated as
Consolidated Interest Expense for the three fiscal quarters immediately
preceding such date multiplied by one and one-third (1 and 1/3).
"Consolidated Net Income" shall mean, for any period, the net
income of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP applied on a consistent basis for
such period. Except as otherwise specified, the applicable period shall
be for the four consecutive quarters ending as of the date of
computation.
"Consolidated Net Worth" shall mean total stockholders' equity
for the Company and its Subsidiaries on a consolidated basis as
determined at a particular date in accordance with GAAP applied on a
consistent basis.
"Consolidated Scheduled Funded Debt Payments" shall mean, as
of the end of each fiscal quarter of the Company and its Subsidiaries
on a consolidated basis, the sum of all scheduled payments of principal
on Consolidated Funded Debt for the applicable period ending on such
date (including the principal component of payments due on Capital
Leases during the applicable period ending on such date); it being
understood that scheduled payments on Consolidated Funded Debt shall
not include optional prepayments or the mandatory prepayments required
pursuant to Section 2.7.
"Consolidated Tangible Net Worth" shall mean total
stockholders' equity minus goodwill, patents, trade names, trade marks,
copyrights, franchises, organizational expense, deferred expenses and
other assets in each case as are shown as "intangible assets" on a
balance sheet of the Company and its Subsidiaries on a consolidated
basis as determined at a particular date in accordance with GAAP
applied on a consistent basis.
"Continuing Director" shall have the meaning set forth in
Section 7.1(h).
8
"Contractual Obligation" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which
it or any of its property is bound.
"Credit Documents" shall mean this Agreement, each of the
Notes, any Joinder Agreement, the Letters of Credit, LOC Documents, the
Security Documents and the Wachovia JEDA Reimbursement Agreement.
"Credit Party" shall mean any of the Borrower and the
Guarantors.
"Credit Party Obligations" shall mean, without duplication,
(i) all of the obligations of the Credit Parties to the Lenders
(including the Issuing Lender) and the Agent, whenever arising, under
this Agreement, the Notes or any of the other Credit Documents
(including, but not limited to, any interest accruing after the
occurrence of a filing of a petition of bankruptcy under the Bankruptcy
Code with respect to any Credit Party, regardless of whether such
interest is an allowed claim under the Bankruptcy Code) and (ii) all
liabilities and obligations, whenever arising, owing from the Borrower
to any Lender, or any Affiliate of a Lender, arising under any Hedging
Agreement.
"Debt Issuance" shall mean the issuance of any Indebtedness
for borrowed money by the Company or any of its Subsidiaries (excluding
any Equity Issuance or any Indebtedness of the Company and its
Subsidiaries permitted to be incurred pursuant to Section 6.1 hereof).
"Default" shall mean any of the events specified in Section
7.1, whether or not any requirement for the giving of notice or the
lapse of time, or both, or any other condition, has been satisfied.
"Defaulting Lender" shall mean, at any time, any Lender that,
at such time (a) has failed to make a Loan required pursuant to the
term of this Credit Agreement, including the funding of a Participation
Interest in accordance with the terms hereof, (b) has failed to pay to
the Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Credit Agreement, or (c) has been deemed insolvent or has
become subject to a bankruptcy or insolvency proceeding or to a
receiver, trustee or similar official.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"Domestic Credit Party" shall mean any Credit Party that is
organized and existing under the laws of the United States or any state
or commonwealth thereof or under the laws of the District of Columbia.
"Domestic Lending Office" shall mean, initially, the office of
each Lender designated as such Lender's Domestic Lending Office shown
on Schedule 9.2; and thereafter, such other office of such Lender as
such Lender may from time to time specify
9
to the Agent and the Borrower as the office of such Lender at which
Alternate Base Rate Loans of such Lender are to be made.
"Domestic Subsidiary" shall mean any Subsidiary that is
organized and existing under the laws of the United States or any state
or commonwealth thereof or under the laws of the District of Columbia.
"DTA" shall mean DT Acquisition, Inc., a corporation
incorporated under the Canada Business Corporations Act.
"DTA Credit Facility" shall mean the Credit Agreement dated as
of December 17, 1997 by and among DTA, the lenders party thereto,
Chase, as administrative agent and First Union, as documentation agent,
as amended, modified or supplemented from time to time in accordance
with its terms.
"Eligible Inventory" shall be determined in accordance with
Section 9.18 hereof.
"Eligible Receivables" shall be determined in accordance with
Section 9.18 hereof.
"Environmental Laws" shall mean any and all applicable
foreign, Federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirement of Law (including common
law) regulating, relating to or imposing liability or standards of
conduct concerning protection of human health or the environment, as
now or may at any time be in effect during the term of this Agreement.
"Equity Issuance" shall mean any issuance by the Company or
any Subsidiary to any Person which is not a Credit Party of (a) shares
of its Capital Stock, (b) any shares of its Capital Stock pursuant to
the exercise of options or warrants or (c) any shares of its Capital
Stock pursuant to the conversion of any debt securities to equity. The
term "Equity Issuance" shall not include any Asset Disposition, any
Debt Issuance, any issuance of Permitted Preferred Stock or the
issuance of common stock of the Company or the Borrower to its
officers, directors or employees in connection with stock offering
plans and other benefit plans of the Company or the Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Eurodollar Reserve Percentage" shall mean for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary,
to the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for
determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) in respect of
Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for
a member bank of the Federal Reserve System in New York City.
10
"Event of Default" shall mean any of the events specified in
Section 7.1; provided, however, that any requirement for the giving of
notice or the lapse of time, or both, or any other condition, has been
satisfied.
"Excess Cash Flow" shall mean, with respect to any fiscal year
period of the Company and its Subsidiaries on a consolidated basis, an
amount equal to (a) Consolidated EBITDA for such period minus (b)
consolidated Capital Expenditures for such period actually paid in cash
minus (c) Consolidated Interest Expense for such period minus (d)
Federal, state and other income taxes actually paid in cash by the
Company and its Subsidiaries on a consolidated basis during such period
minus (e) Consolidated Scheduled Funded Debt Payments made during such
period.
"Existing Joint Ventures" shall mean Swift Textiles Europe
Ltd., Swift Textiles France S.A., Sitex S.A., Tismade S.A., Somotex
International S.A., and X.X. Xxxxxx Corp.
"Existing Letters of Credit" shall mean those Letters of
Credit outstanding on the Closing Date and identified on Schedule
2.4(a).
"Extension of Credit" shall mean, as to any Lender, the making
of a Loan by such Lender or the issuance of, or participation in, a
Letter of Credit by such Lender.
"Federal Funds Effective Rate" shall have the meaning set
forth in the definition of "Alternate Base Rate".
"Fee Letter" shall mean the letter agreement dated November
17, 1997 addressed to the Borrower from the Agent, as amended, modified
or otherwise supplemented.
"First Union" shall mean First Union National Bank, a national
banking association.
"Fixed Charge Coverage Ratio" shall mean the ratio of
Consolidated EBITDA to Consolidated Fixed Charges.
"Foreign Subsidiary" shall mean any Subsidiary that is not a
Domestic Subsidiary.
"Funded Debt" shall mean, for any Person, (i) all Indebtedness
of the types described in subsections (a), (b), (c), (k), (l) and (m)
of the definition of "Indebtedness" and (ii) all Guarantee Obligations
of Indebtedness of the types described in subsections (a), (b), (c),
(k), (l) and (m) of the definition of "Indebtedness."
"GAAP" shall mean generally accepted accounting principles in
effect in the United States of America applied on a consistent basis,
subject, however, in the case of
11
determination of compliance with the financial covenants set out in
Section 5.9 to the provisions of Section 1.3.
"G&L Acquisition" shall mean the acquisition by the Borrower
of the Acquired Companies pursuant to the G&L Purchase Agreement for a
purchase price of up to $490,000,000.
"G&L Loan" shall mean the subordinated, unsecured loan of up
to $141,000,000 from the Borrower to DTA evidenced by that certain
promissory note of DTA dated the Tender Offer Closing Date.
"G&L Purchase Agreement" shall mean the purchase agreement
dated as of October 27, 1997 entered into among Polymer, DTA and the
Company in connection with the acquisition of the Acquired Companies
following the consummation of the Tender Offer and the Amalgamation, as
assigned to and assumed by the Borrower, as amended, modified, or
otherwise supplemented.
"Government Acts" shall have the meaning set forth in Section
2.19.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantee Obligation" shall mean, as to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person
or (b) another Person (including, without limitation, any bank under
any letter of credit) to induce the creation of which the guaranteeing
person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary
obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation,
any obligation of the guaranteeing person, whether or not contingent,
(i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Guarantee Obligation
of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and
(b) the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary
12
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as
determined by the Company in good faith.
"Guarantor" shall mean any of the Company, the Subsidiaries
identified as a "Guarantor" on the signature pages hereto and the
Additional Credit Parties which execute a Joinder Agreement, together
with their successors and permitted assigns.
"Guaranty" shall mean the guaranty of the Guarantors set forth
in Article X.
"Hedging Agreements" shall mean, with respect to any Person,
any agreement entered into to protect such Person against fluctuations
in interest rates, or currency or raw materials values, including,
without limitation, any interest rate swap, cap or collar agreement or
similar arrangement between such Person and one or more counterparties,
any foreign currency exchange agreement, currency protection
agreements, commodity purchase or option agreements or other interest
or exchange rate or commodity price hedging agreements.
"Indebtedness" shall mean, of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Capital Leases,
(d) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) all obligations of such Person
under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the
ordinary course of business), (f) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(g) all Guarantee Obligations of such Person, (h) all obligations of
such Person in respect of Hedging Agreements, (i) the maximum amount of
all letters of credit issued or bankers' acceptances created for the
account of such Person and, without duplication, all drafts drawn
thereunder (to the extent not theretofore reimbursed), (j) all
preferred stock which by its terms requires or permits redemption,
mandatory sinking fund payments or the like, by a fixed date prior to
the Maturity Date, (k) the aggregate net amount of indebtedness or
obligations relating to the sale, contribution or other conveyance of
accounts receivable pursuant to any securitization transaction (or
similar transaction) regardless of whether such transaction is effected
without recourse or in a manner which would not be reflected on a
balance sheet in accordance with GAAP, (l) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product,
where such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in accordance with
GAAP and (m) the Indebtedness of any partnership or unincorporated
joint venture in which such Person is a
13
general partner or a joint venturer other than Non-Recourse
Indebtedness of such partnership or unincorporated joint venture.
"Insolvency" shall mean, with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of
such term as used in Section 4245 of ERISA.
"Insolvent" shall mean being in a condition of Insolvency.
"Interest Payment Date" shall mean (a) as to any Alternate
Base Rate Loan or Swingline Loan, the last day of each December, March,
June and September and on the Termination Date or Maturity Date, as
applicable, (b) as to any LIBOR Rate Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) as
to any LIBOR Rate Loan having an Interest Period longer than three
months, each day which is three months after the first day of such
Interest Period and the last day of such Interest Period.
"Interest Period" shall mean, with respect to any LIBOR Rate
Loan,
(i) initially, the period commencing on the
Borrowing Date or conversion date, as the case may be, with
respect to such LIBOR Rate Loan and ending one, two, three or
six months thereafter, as selected by the Borrower in the
notice of borrowing or notice of conversion given with respect
thereto; and
(ii) thereafter, each period commencing on
the last day of the immediately preceding Interest Period
applicable to such LIBOR Rate Loan and ending one, two, three
or six months thereafter, as selected by the Borrower by
irrevocable notice to the Agent not less than three Business
Days prior to the last day of the then current Interest Period
with respect thereto;
provided that the foregoing provisions are subject to the
following:
(A) if any Interest Period pertaining to a
LIBOR Rate Loan would otherwise end on a day that is
not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless
the result of such extension would be to carry such
Interest Period into another calendar month in which
event such Interest Period shall end on the
immediately preceding Business Day;
(B) any Interest Period pertaining to a
LIBOR Rate Loan that begins on the last Business Day
of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end
on the last Business Day of the relevant calendar
month;
14
(C) if the Borrower shall fail to give
notice as provided above, the Borrower shall be
deemed to have selected an Alternate Base Rate Loan
to replace the affected LIBOR Rate Loan;
(D) any Interest Period in respect of any
Loan that would otherwise extend beyond (1) in the
case of Revolving Loans, the Termination Date, shall
end on the Termination Date and (2) in the case of
the Term Loan, the Maturity Date, shall end on such
Maturity Date and, further with regard to the Term
Loan, no Interest Period shall extend beyond any
principal amortization payment date unless the
portion of the Term Loan consisting of Alternate Base
Rate Loans together with the portion of the Term Loan
consisting of LIBOR Rate Loans with Interest Periods
expiring prior to or concurrently with the date such
principal amortization payment date is due, is at
least equal to the amount of such principal
amortization payment due on such date; and
(E) no more than ten (10) LIBOR Rate Loans
may be in effect at any time. For purposes hereof,
LIBOR Rate Loans with different Interest Periods
shall be considered as separate LIBOR Rate Loans,
even if they shall begin on the same date and have
the same duration, although borrowings, extensions
and conversions may, in accordance with the
provisions hereof, be combined at the end of existing
Interest Periods to constitute a new LIBOR Rate Loan
with a single Interest Period.
"Issuing Lender" shall mean, as to the Existing Letters of
Credit, each of the Persons issuing such letters of credit identified
on Schedule 2.4(a), and as to Letters of Credit issued, extended or
renewed after the Closing Date, First Union.
"Issuing Lender Fees" shall have the meaning set forth in
Section 2.5(c)
"XXXX Xxxxx" shall mean those $7,200,000 South Carolina
Jobs-Economic Development Authority Tax-Exempt Adjustable Mode Economic
Development Revenue Bonds (Xxxxx & Lord Industries, Inc. Project)
Series 1994.
"JEDA Indenture" shall mean the Indenture of Trust dated as of
May 1, 1994 between First-Citizens Bank & Trust Company, as Trustee,
and South Carolina Jobs-Economic Development Authority pursuant to
which the XXXX Xxxxx were issued, as amended, modified, supplemented
and replaced from time to time.
"Joinder Agreement" shall mean a Joinder Agreement
substantially in the form of Schedule 5.10, executed and delivered by
an Additional Credit Party in accordance with the provisions of Section
5.10.
"Lender" shall have the meaning set forth in the first
paragraph of this Agreement.
15
"Letters of Credit" shall mean the Existing Letters of Credit
and any letter of credit issued by the Issuing Lender pursuant to the
terms hereof, as such Letters of Credit may be amended, modified,
extended, renewed or replaced from time to time.
"Letter of Credit Fee" shall have the meaning set forth in
Section 2.5(b).
"Leverage Ratio" shall mean the ratio of Consolidated Funded
Debt to Consolidated EBITDA.
"LIBOR" shall mean the arithmetic mean (rounded to the nearest
1/100th of 1%) of the offered rates for deposits in Dollars for a
period equal to the Interest Period selected which appears on the
Telerate Page 3750 at approximately 11:00 A.M. London time, two (2)
Business Days prior to the commencement of the applicable Interest
Period. If, for any reason, such rate is not available, then "LIBOR"
shall mean the rate per annum at which, as determined by the Agent,
Dollars in an amount comparable to the Loans then requested are being
offered to leading banks at approximately 11:00 A.M. London time, two
(2) Business Days prior to the commencement of the applicable Interest
Period for settlement in immediately available funds by leading banks
in the London interbank market for a period equal to the Interest
Period selected.
"LIBOR Lending Office" shall mean, initially, the office of
each Lender designated as such Lender's LIBOR Lending Office shown on
Schedule 9.2; and thereafter, such other office of such Lender as such
Lender may from time to time specify to the Agent and the Borrower as
the office of such Lender at which the LIBOR Rate Loans of such Lender
are to be made.
"LIBOR Rate" shall mean a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by the Agent
pursuant to the following formula:
LIBOR Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
"LIBOR Rate Loan" shall mean Loans the rate of interest
applicable to which is based on the LIBOR Rate.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge or other security interest or any preference, priority
or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale
or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).
"Loan" shall mean a Revolving Loan, a Swingline Loan and/or
the Term Loan, as appropriate.
16
"LOC Commitment" shall mean the commitment of the Issuing
Lender to issue Letters of Credit and with respect to each Lender, the
commitment of such Lender to purchase participation interests in the
Letters of Credit up to such Lender's LOC Committed Amount as specified
in Schedule 2.1(a), as such amount may be reduced from time to time in
accordance with the provisions hereof.
"LOC Commitment Percentage" shall mean, for each Lender, the
percentage identified as its LOC Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 9.6(c).
"LOC Committed Amount" shall mean, collectively, the aggregate
amount of all of the LOC Commitments of the Lenders to issue and
participate in Letters of Credit as referenced in Section 2.4 and,
individually, the amount of each Lender's LOC Commitment as specified
in Schedule 2.1(a).
"LOC Documents" shall mean, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any documents
delivered in connection therewith, any application therefor, and any
agreements, instruments, guarantees or other documents (whether general
in application or applicable only to such Letter of Credit) governing
or providing for (i) the rights and obligations of the parties
concerned or (ii) any collateral security for such obligations.
"LOC Obligations" shall mean, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.
"Mandatory Borrowing" shall have the meaning set forth in
Section 2.3(b)(ii) or Section 2.4(e).
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, operations, property, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company to perform its obligations, when
such obligations are required to be performed, under this Agreement,
any of the Notes or any other Credit Document or (c) the validity or
enforceability of this Agreement, any of the Notes or any of the other
Credit Documents or the rights or remedies of the Agent or the Lenders
hereunder or thereunder.
"Materials of Environmental Concern" shall mean any gasoline
or petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
17
"Maturity Date" shall mean the last scheduled quarterly
payment date for the Term Loan set forth in Section 2.2(b).
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean the aggregate cash proceeds
received by the Company or any Subsidiary in respect of any Asset
Disposition, Equity Issuance or Debt Issuance, net of (a) direct costs
(including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and (b) taxes paid or payable as a
result thereof; it being understood that "Net Cash Proceeds" shall
include, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received by the Company or
any Subsidiary in any Asset Disposition, Equity Issuance or Debt
Issuance.
"Non-Recourse Indebtedness" shall mean Indebtedness with
respect to which recourse for payment is limited to specific assets
encumbered by a Lien securing such Indebtedness; provided, however,
that personal recourse of a holder of Indebtedness against any obligor
with respect thereto for fraud, misrepresentation, misapplication of
cash, waste and other circumstances customarily excluded from
non-recourse provisions in non-recourse financing of real estate shall
not, by itself, prevent any Indebtedness from being characterized as
Non-Recourse Indebtedness.
"Nonwovens Business" shall mean the nonwoven textile group
businesses of Target, conducted primarily through the Dominion
Industrial Fabrics Company division of Target, two direct, wholly-owned
subsidiaries of Target (being Poly-Bond Inc., a Delaware corporation
and Nordlys S.A., a company organized under the laws of the Republic of
France) and the Dominion Nonwoven (South America) Argentinean joint
venture.
"Note" or "Notes" shall mean the Revolving Notes, the
Swingline Note and/or the Term Notes, collectively, separately or
individually, as appropriate.
"Notice of Borrowing" shall mean the written notice of
borrowing as referenced and defined in Section 2.1(b)(i) or 2.3(b)(i),
as appropriate.
"Notice of Conversion" shall mean the written notice of
extension or conversion as referenced and defined in Section 2.10.
"Obligations" shall mean, collectively, Loans and LOC
Obligations.
18
"Offer to Purchase" shall mean the offers to purchase for cash
all of the outstanding common shares of Target at Cdn. $11.75 per
share, and all of the outstanding First Preferred Shares of Target at
Cdn. $109.50 per share, dated October 29, 1997, made by DTA to all of
the holders of such Common Shares and First Preferred Shares, as
extended and varied pursuant to a Notice of Extension and Variation
dated November 18, 1997, pursuant to which such offer prices were
increased to Cdn. $14.50 per share and Cdn. $112.00 per share,
respectively, and as the same shall be further modified and
supplemented and in effect from time to time.
"Participant" shall have the meaning set forth in Section
9.6(b).
"Participation Interest" shall mean the purchase by a Lender
of a participation interest in Swingline Loans as provided in Section
2.3(b)(ii) or in Letters of Credit as provided in Section 2.4.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Permanent Subordinated Debt" shall have the meaning set forth
in the definition of Subordinated Debt.
"Permitted G&L Acquisition Cost Savings" shall mean certain
cost savings adjustments reasonably anticipated by the Borrower and the
Company to be achieved in connection with the G&L Acquisition and upon
the Agent's request shall be (a) made in accordance with Regulation S-X
promulgated under the Securities Act of 1933 or as otherwise agreed to
by the Agent; (b) reviewed by Ernst & Young LLP, or another nationally
recognized accounting firm or as otherwise agreed to by the Agent; and
(c) not in excess of $25,000,000 in the aggregate; provided, however,
that all such Permitted G&L Acquisition Cost Savings shall be estimated
on a good faith basis by the Borrower and the Company and shall be
reduced by (i) one-half, following the end of the second full fiscal
quarter of the Company occurring after the Subsequent Transactions
Closing Date, (ii) an additional one-quarter, following the end of the
third full fiscal quarter of the Company occurring after the Subsequent
Transactions Closing Date and (iii) an additional one-quarter,
following the end of the fourth full fiscal quarter of the Company
occurring after the Subsequent Transactions Closing Date, or as
otherwise agreed to by the Agent.
"Permitted Investments" shall mean:
(i) cash and Cash Equivalents;
(ii) receivables owing to the Company or any of its
Subsidiaries or any receivables and advances to suppliers, in
each case if created, acquired or made in the ordinary course
of business and payable or dischargeable in accordance with
customary trade terms;
19
(iii) (A) investments in and loans to any Domestic
Credit Parties; (B) investments made by any Domestic Credit
Party in any Foreign Subsidiaries or foreign joint ventures
not to exceed $3,000,000 in the aggregate at any time
outstanding (excluding from such dollar limitation the initial
investment in Foreign Subsidiaries acquired pursuant to the
G&L Acquisition and investments in Foreign Subsidiaries
existing on or prior to the Closing Date); (C) loans between
Foreign Subsidiaries; and (D) loans from any Domestic Credit
Party to any Foreign Subsidiaries not to exceed $25,000,000 in
the aggregate at any time outstanding;
(iv) loans and advances to officers, directors,
employees and Affiliates in an aggregate amount not to exceed
$2,000,000 at any time outstanding;
(v) investments (including debt obligations) received
in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(vi) investments, acquisitions or transactions
permitted under Section 6.5(b); and
(vii) additional loan advances and/or investments of
a nature not contemplated by the foregoing clauses hereof,
provided that such loans, advances and/or investments made
pursuant to this clause (vii) shall not exceed an aggregate
amount of $6,000,000.
As used herein, "investment" means all investments, in cash or by
delivery of property made, directly or indirectly in, to or from any
Person, whether by acquisition of shares of Capital Stock, property,
assets, indebtedness or other obligations or securities or by loan
advance, capital contribution or otherwise.
"Permitted Liens" shall mean:
(i) Liens created by or otherwise existing, under or
in connection with this Agreement or the other Credit
Documents in favor of the Lenders (including those Liens
securing the Wachovia JEDA Letter of Credit and the bonds
which are supported by the Wachovia JEDA Letter of Credit);
(ii) Liens in favor of a Lender hereunder in
connection with Hedging Agreements, but only (A) to the extent
such Liens secure obligations under Hedging Agreements
permitted under Section 6.1, (B) to the extent such Liens are
on the same collateral as to which the Agent on behalf of the
Lenders also has a Lien and (C) if such provider and the
Lenders shall share pari passu in the collateral subject to
such Liens;
20
(iii) purchase money Liens securing purchase money
indebtedness (and refinancings thereof) to the extent
permitted under Section 6.1(c);
(iv) Liens for taxes, assessments, charges or other
governmental levies not yet due or as to which the period of
grace (not to exceed 60 days), if any, related thereto has not
expired or which are being contested in good faith by
appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Company or
its Subsidiaries, as the case may be, in conformity with GAAP
(or, in the case of Subsidiaries with significant operations
outside of the United States of America, generally accepted
accounting principles in effect from time to time in their
respective jurisdictions of incorporation);
(v) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are not overdue for a period
of more than 60 days or which are being contested in good
faith by appropriate proceedings;
(vi) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements;
(vii) deposits to secure the performance of bids,
trade contracts, (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the
ordinary course of business;
(viii) any extension, renewal or replacement (or
successive extensions, renewals or replacements) , in whole or
in part, of any Lien referred to in the foregoing clauses;
provided that such extension, renewal or replacement Lien
shall be limited to all or a part of the property which
secured the Lien so extended, renewed or replaced (plus
improvements on such property); and
(ix) Liens created by or otherwise existing in
connection with the Indebtedness set forth on Schedule 4.2(o).
"Permitted Preferred Stock" shall mean any preferred stock
issued by the Company or the Borrower in an aggregate amount of up to
$30,000,000 which by its terms prohibits or does not permit (i)
redemption, liquidation, mandatory sinking fund payments or the like by
a fixed date on or prior to the Maturity Date and (ii) the payment of
cash dividends on or prior to the Maturity Date at a rate in excess of
eight percent (8%).
"Person" shall mean an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
21
"Plan" shall mean, at any particular time, any employee
benefit plan which is covered by Title IV of ERISA and in respect of
which the Borrower or a Commonly Controlled Entity is (or, if such plan
were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement dated as of
the Closing Date given by the Company, the Borrower and the other
Credit Parties to the Agent, as amended, modified or supplemented from
time to time in accordance with its terms.
"Polymer" shall mean Polymer Group, Inc., a Delaware
corporation.
"Polymer Acquisition" shall mean the acquisition by Polymer of
the Nonwovens Business effected (i) pursuant to the Polymer Purchase
Agreement or (ii) by DTA becoming a "Restricted Subsidiary" of Polymer
pursuant to Polymer's Credit Agreement dated as of July 3, 1997 among
Chase, as administrative agent, the various lenders and co-agents party
thereto, Polymer and certain of its subsidiaries.
"Polymer Purchase Agreement" shall mean the purchase agreement
to be entered into prior to the Subsequent Transactions Closing Date
between Polymer and DTA in connection with the acquisition of the
Nonwovens Business.
"Prime Rate" shall have the meaning set forth in the
definition of Alternate Base Rate.
"Pro Forma Basis" shall mean, with respect to any transaction,
that such transaction shall be deemed to have occurred as of the first
day of the four-fiscal quarter period ending as of the end of the
fiscal quarter most recently ended prior to the date of such
transaction with respect to which the Agent has received the financial
information required under Section 5.1. As used herein, "transaction"
means any merger or consolidation or acquisition as referenced in
Section 6.5(b).
"Projections" shall have the meaning set forth in Section 3.1.
"Properties" shall have the meaning set forth in Section
3.10(a).
"Purchase Price" shall mean the purchase price to be paid by
the Borrower for the Acquired Companies (which shall include all
related fees and expenses and the refinancing of the existing
indebtedness of such Acquired Companies).
"Purchasing Lenders" shall have the meaning set forth in
Section 9.6(c).
"Receivables" shall mean any right of payment from or on
behalf of any obligor, whether constituting an account, chattel paper,
instrument, general intangible or otherwise, arising from the sale or
financing by the Borrower or any Subsidiary of the
22
Borrower of merchandise or services, and monies due thereunder,
security in the merchandise and services financed thereby, records
related thereto, and the right to payment of any interest or finance
charges and other obligations with respect thereto, proceeds from
claims on insurance policies related thereto, any other proceeds
related thereto, and any other related rights.
"Recovery Event" shall mean the receipt by the Company, the
Borrower or any of their respective Subsidiaries of any cash insurance
proceeds or condemnation award payable by reason of theft, loss,
physical destruction or damage, taking or similar event with respect to
any of their respective property or assets.
"Register" shall have the meaning set forth in Section 9.6(d).
"Reorganization" shall mean, with respect to any Multiemployer
Plan, the condition that such Plan is in reorganization within the
meaning of such term as used in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
thirty-day notice period is waived under subsections .13, .14, .16,
.18, .19 or .20 of PBGC Reg. ss.4043.
"Required Lenders" shall mean Lenders holding in the aggregate
not less than 51% of the sum of (i) all Obligations then outstanding at
such time and (ii) the aggregate unused Commitments at such time
(treating for purposes hereof in the case of Swingline Loans and LOC
Obligations, in the case of the Swingline Lender and the Issuing
Lender, only the portion of the Swingline Loans and the LOC Obligations
of the Swingline Lender and the Issuing Lender, respectively, which is
not subject to the Participation Interests of the other Lenders and, in
the case of the Lenders other than the Swingline Lender and the Issuing
Lender, the Participation Interests of such Lenders in Swingline Loans
and LOC Obligations hereunder as direct Obligations); provided,
however, that if any Lender shall be a Defaulting Lender at such time,
then there shall be excluded from the determination of Required
Lenders, Obligations (including Participation Interests) owing to such
Defaulting Lender and such Defaulting Lender's Commitments, or after
termination of the Commitments, the principal balance of the
Obligations owing to such Defaulting Lender.
"Requirement of Law" shall mean, as to any Person, the
Certificate of Incorporation and By-laws or other organizational or
governing documents of such Person, and each law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Responsible Officer" shall mean, as to (a) the Company, the
President and Chief Executive Officer or the Chief Financial Officer or
(b) the Borrower or any other Credit Party, any duly authorized officer
thereof.
23
"Restricted Payment" shall mean (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of Capital Stock of the Company or any of its Subsidiaries, now or
hereafter outstanding, (b) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of the Company or
any of its Subsidiaries, now or hereafter outstanding, (c) any payment
made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of
Capital Stock of the Company or any of its Subsidiaries, now or
hereafter outstanding, (d) any payment or prepayment of principal of,
premium, if any, or interest on, redemption, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, the
Subordinated Debt, and (e) any loan or advance to the Company.
"Revolving Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans in an
aggregate principal amount at any time outstanding up to such Lender's
Revolving Committed Amount as specified in Schedule 2.1(a), as such
amount may be reduced from time to time in accordance with the
provisions hereof.
"Revolving Commitment Percentage" shall mean, for each Lender,
the percentage identified as its Revolving Commitment Percentage on
Schedule 2.1(a), as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section
9.6(c).
"Revolving Committed Amount" shall mean, collectively, the
aggregate amount of all Revolving Commitments as referenced in Section
2.1(a), as such amount may be reduced from time to time in accordance
with the provisions hereof, and, individually, the amount of each
Lender's Revolving Commitment as specified on Schedule 2.1(a).
"Revolving Loans" shall have the meaning set forth in Section
2.1.
"Revolving Note" or "Revolving Notes" shall mean the
promissory notes of the Borrower in favor of each of the Lenders
evidencing the Revolving Loans provided pursuant to Section 2.1(e),
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced
from time to time.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc.
"Security Agreement" shall mean the Security Agreement dated
as of the Closing Date given by the Company, the Borrower and the other
Credit Parties to the Agent, as amended, modified or supplemented from
time to time in accordance with its terms.
"Security Documents" shall mean the Security Agreement, the
Pledge Agreement, any mortgage instrument and such other documents
executed and delivered in connection
24
with the attachment and perfection of the Agent's security interests
and liens arising thereunder, including, without limitation, UCC
financing statements and patent and trademark filings.
"Single Employer Plan" shall mean any Plan which is not a
Multiemployer Plan.
"Specified Sales" shall mean (a) the sale, transfer, lease or
other disposition of inventory and materials in the ordinary course of
business, (b) the sale, transfer, lease or other disposition of
machinery, parts and equipment no longer useful in the conduct of the
business of the Company, the Borrower or any of their respective
Subsidiaries, as appropriate, in its reasonable discretion, and (c) the
sale, transfer or other disposition of Permitted Investments.
"Stock Repurchase Plan" shall mean the stock repurchase plan
of the Company implemented in April 1997 providing for the repurchase
by the Company from time to time of up to 900,000 shares of its common
stock.
"Subordinated Debt" shall mean the Senior Subordinated
Increasing Rate Notes (the "Bridge Notes") up to $250,000,000 issued by
the Borrower pursuant to the Senior Subordinated Credit Agreement among
the Company, the other guarantors party thereto, the Borrower and First
Union Corporation (the "Bridge Agreement") and the permanent senior
subordinated notes up to $250,000,000 issued by the Borrower to
refinance the Bridge Notes (the "Permanent Subordinated Debt").
"Subsequent Transactions" shall mean, collectively, the G&L
Acquisition and the Polymer Acquisition.
"Subsequent Transactions Closing Date" shall mean the date on
which the G&L Acquisition and the Polymer Acquisition are consummated.
"Subsidiary" shall mean, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Company.
"Swingline Commitment" shall mean the commitment of the
Swingline Lender to make Swingline Loans in an aggregate principal
amount at any time outstanding up to the Swingline Committed Amount,
and the commitment of the Lenders to purchase participation interests
in the Swingline Loans as provided in Section 2.3(b)(ii), as such
amounts may be reduced from time to time in accordance with the
provisions hereof.
25
"Swingline Committed Amount" shall mean the amount of the
Swingline Lender's Swingline Commitment as specified in Section 2.3(a).
"Swingline Lender" shall mean First Union, in its capacity as
such.
"Swingline Loan" or "Swingline Loans" shall have the meaning
set forth in Section 2.3(a).
"Swingline Note" shall mean the promissory note of the
Borrower in favor of the Swingline Lender evidencing the Swingline
Loans provided pursuant to Section 2.3(d), as such promissory note may
be amended, modified, supplemented, extended, renewed or replaced from
time to time.
"Target" shall mean Dominion Textile Inc., a corporation
incorporated under the Canada Business Corporations Act.
"Taxes" shall have the meaning set forth in Section 2.18.
"Tender Offer" shall mean the cash tender offer by DTA for all
of the issued and outstanding Common Shares and associated rights and
First Preferred Shares of Target as contemplated by the Offer to
Purchase.
"Tender Offer Closing Date" shall mean the date on which the
Tender Offer is consummated and all conditions set forth in the Offer
to Purchase are satisfied or waived.
"Tender Offer Funding Termination Date" shall mean February
26, 1998.
"Tender Loans" shall mean the loans made to DTA under the DTA
Credit Facility for the purpose of consummating the Tender Offer.
"Term Loan" shall have the meaning set forth in Section
2.2(a).
"Term Loan Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make its portion of the Term
Loan in a principal amount equal to such Lender's Term Loan Commitment
Percentage of the Term Loan Committed Amount (and for purposes of
making determinations of Required Lenders hereunder after the Closing
Date, the principal amount outstanding on the Term Loan).
"Term Loan Commitment Fee" shall have the meaning set forth in
Section 2.5(d).
"Term Loan Commitment Percentage" shall mean, for any Lender,
the percentage identified as its Term Loan Commitment Percentage on
Schedule 2.1(a), as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 9.6.
26
"Term Loan Committed Amount" shall have the meaning set forth
in Section 2.2(a).
"Term Note" or "Term Notes" shall mean the promissory notes of
the Borrower in favor of each of the Lenders evidencing the portion of
the Term Loan provided pursuant to Section 2.2(d), individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, restated, supplemented, extended, renewed or replaced from
time to time.
"Termination Date" shall mean the sixth anniversary of the
Closing Date.
"Tranche" shall mean the collective reference to LIBOR Rate
Loans whose Interest Periods begin and end on the same day. A Tranche
may sometimes be referred to as a "Eurodollar Tranche".
"Transfer Effective Date" shall have the meaning set forth in
each Commitment Transfer Supplement.
"2.18 Certificate" shall have the meaning set forth in Section
2.18.
"Type" shall mean, as to any Loan, its nature as an Alternate
Base Rate Loan, LIBOR Rate Loan or Swingline Loan, as the case may be.
"Wachovia JEDA Letter of Credit" shall mean that irrevocable
letter of credit no. LC 968-044594 dated May 17, 1994 issued by
Wachovia Bank of North Carolina, National Association in favor of First
Citizens Bank & Trust Company, as Trustee under those $7,200,000 South
Carolina Jobs-Economic Development Authority Tax-Exempt Adjustable Mode
Economic Development Revenue Bonds (Xxxxx & Lord Industries, Inc.
Project) Series 1994, for the account of the Borrower in the original
maximum amount of $7,830,000, being an Existing Letter of Credit
identified on Schedule 2.4(a), as such letter of credit may be
modified, supplemented, extended and replaced from time to time.
"Wachovia JEDA Reimbursement Agreement" shall mean the Amended
and Restated Reimbursement and Security Agreement dated as of June 4,
1996 between the Borrower and Wachovia Bank of North Carolina, N.A.
pursuant to which the Wachovia JEDA Letter of Credit was issued, as
amended, modified, supplemented and replaced from time to time.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the Notes
or other Credit Documents or any certificate or other document made or
delivered pursuant hereto.
27
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section, subsection, Schedule and Exhibit references are
to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 1.3 ACCOUNTING TERMS.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Company and the Borrower delivered to
the Lenders; provided that, if the Company or the Borrower notifies the Agent
that it wishes to amend any covenant in Section 5.9 to eliminate the effect of
any change in GAAP on the operation of such covenant (or if the Agent notifies
the Company and the Borrower that the Required Lenders wish to amend Section 5.9
for such purpose), then the Company's and the Borrower's compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Company,
the Borrower and the Required Lenders.
The Company and the Borrower shall deliver to the Agent and each Lender
at the same time as the delivery of any annual or quarterly financial statements
given in accordance with the provisions of Section 5.1, (i) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (ii) a reasonable estimate of the effect on the financial statements
on account of such changes in application.
ARTICLE II
THE LOANS; AMOUNT AND TERMS
SECTION 2.1 REVOLVING LOANS.
(a) Revolving Commitment. During the Commitment Period,
subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans ("Revolving Loans") to the
Borrower from time to time for the purposes hereinafter set forth;
provided, however, that (i) with regard to each Lender individually,
the sum of such Lender's share of outstanding Revolving Loans plus such
Lender's Revolving Commitment Percentage of Swingline Loans plus such
Lender's LOC Commitment Percentage of LOC Obligations shall not exceed
such Lender's Revolving Commitment
28
Percentage of the aggregate Revolving Committed Amount, and (ii) with
regard to the Lenders collectively, the sum of the aggregate amount of
outstanding Revolving Loans plus Swingline Loans plus LOC Obligations
shall not exceed (A) on or prior to the Subsequent Transactions Closing
Date, the aggregate Revolving Committed Amount then in effect and (B)
after the Subsequent Transactions Closing Date, the lesser of the
aggregate Revolving Committed Amount then in effect and the Borrowing
Base. For purposes hereof, the aggregate amount available hereunder
shall be TWO HUNDRED SEVENTY-FIVE MILLION DOLLARS ($275,000,000) (as
such aggregate maximum amount may be reduced from time to time as
provided in Section 2.6, the "Revolving Committed Amount"); provided,
however, that, until the Subsequent Transactions Closing Date, the
Revolving Committed Amount shall be TWO HUNDRED THIRTY MILLION DOLLARS
($230,000,000). Revolving Loans may consist of Alternate Base Rate
Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower
may request, and may be repaid and reborrowed in accordance with the
provisions hereof. LIBOR Rate Loans shall be made by each Lender at its
LIBOR Lending Office and Alternate Base Rate Loans at its Domestic
Lending Office. Notwithstanding any provision herein to the contrary,
(x) the initial LIBOR borrowing under this Agreement shall be made, at
the Borrower's election, as a LIBOR Rate Loan having an Interest Period
of one month or a LIBOR Rate Loan having an Interest Period of fourteen
(14) days and (y) subsequent to such initial LIBOR borrowing but prior
to the closing of the initial syndication of the Commitment and the
Loans to the Lenders, all LIBOR Rate Loans under this Agreement shall
be made or continued, at the Borrower's election, as LIBOR Rate Loans
having an Interest Period of fourteen (14) days. All LIBOR Rate Loans
having an Interest Period of fourteen (14) days shall bear interest at
the same rate as LIBOR Rate Loans having an Interest Period of one
month..
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephone
notice promptly confirmed in writing which confirmation may be
by fax) to the Agent not later than 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day prior to the date of
requested borrowing in the case of Alternate Base Rate Loans,
and on the third Business Day prior to the date of the
requested borrowing in the case of LIBOR Rate Loans; provided,
however, that LIBOR Rate Loans will not be available until
three Business Days following the Closing Date. Each such
request for borrowing shall be irrevocable and shall specify
(A) that a Revolving Loan is requested, (B) the date of the
requested borrowing (which shall be a Business Day), (C) the
aggregate principal amount to be borrowed, and (D) whether the
borrowing shall be comprised of Alternate Base Rate Loans,
LIBOR Rate Loans or a combination thereof, and if LIBOR Rate
Loans are requested, the Interest Period(s) therefor. A form
of Notice of Borrowing (a "Notice of Borrowing") is attached
as Schedule 2.1(b)(i). If the Borrower shall fail to specify
in any such Notice of Borrowing (I) an applicable Interest
Period in the case of a LIBOR Rate Loan, then such notice
shall be deemed to be a request for an Interest Period of one
month, or (II) the
29
type of Revolving Loan requested, then such notice shall be
deemed to be a request for an Alternate Base Rate Loan
hereunder. The Agent shall give notice to each Lender promptly
upon receipt of each Notice of Borrowing, the contents thereof
and each such Lender's share thereof.
(ii) Minimum Amounts. Each Revolving Loan borrowing
shall be in a minimum aggregate amount of $5,000,000 and
integral multiples of $1,000,000 in excess thereof (or the
remaining amount of the Revolving Committed Amount, if less).
(iii) Advances. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing
available to the Agent for the account of the Borrower at the
office of the Agent specified in Schedule 9.2, or at such
other office as the Agent may designate in writing, by 1:00
P.M. (Charlotte, North Carolina time) on the date specified in
the applicable Notice of Borrowing in Dollars and in funds
immediately available to the Agent. Such borrowing will then
be made available to the Borrower by the Agent by crediting
the account of the Borrower on the books of such office with
the aggregate of the amounts made available to the Agent by
the Lenders and in like funds as received by the Agent.
(c) Repayment. The principal amount of all Revolving Loans
shall be due and payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 2.9,
Revolving Loans shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as
Revolving Loans shall be comprised of Alternate Base Rate
Loans, each such Alternate Base Rate Loan shall bear interest
at a per annum rate equal to the sum of the Alternate Base
Rate plus the Applicable Percentage; and
(ii) LIBOR Rate Loans. During such periods as
Revolving Loans shall be comprised of LIBOR Rate Loans, each
such LIBOR Rate Loan shall bear interest at a per annum rate
equal to the sum of the LIBOR Rate plus the Applicable
Percentage.
Interest on Revolving Loans shall be payable in arrears on each
Interest Payment Date.
(e) Revolving Notes. Each Lender's Revolving Commitment
Percentage of the Revolving Loans shall be evidenced by a duly executed
promissory note of the Borrower to such Lender in substantially the
form of Schedule 2.1(e).
30
SECTION 2.2 TERM LOAN.
(a) Term Loan. Subject to the terms and conditions hereof and
in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make available to the Borrower on the
Subsequent Transactions Closing Date such Lender's Term Loan Commitment
Percentage of a term loan in Dollars (the "Term Loan") in the aggregate
principal amount of ONE HUNDRED NINETY-FIVE MILLION DOLLARS
($195,000,000) (the "Term Loan Committed Amount") for the purposes
hereinafter set forth. The Term Loan may consist of Alternate Base Rate
Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower
may request. The Borrower shall request the initial Term Loan borrowing
by written notice (or telephone notice promptly confirmed in writing
which confirmation may be by fax) to the Agent not later than 11:00
A.M. (Charlotte, North Carolina time) on the Business Day prior to the
date of requested borrowing in the case of Alternate Base Rate Loans,
and on the third Business Day prior to the date of the requested
borrowing in the case of LIBOR Rate Loans. Amounts repaid on the Term
Loan may not be reborrowed. LIBOR Rate Loans shall be made by each
Lender at its LIBOR Lending Office and Alternate Base Rate Loans at its
Domestic Lending Office.
(b) Repayment of Term Loan. The principal amount of the Term
Loan shall be repaid in thirty-two (32) consecutive quarterly
installments, unless accelerated sooner pursuant to Section 7.2,
commencing on the last day of the first calendar quarter following the
consummation of the G&L Acquisition. Installments one (1) through
twenty-four (24), inclusive, shall each be in the amount of $500,000
and installments twenty-five (25) through thirty-two (32), inclusive,
shall each be in the amount of $22,875,000.
(c) Interest on the Term Loan. Subject to the provisions of
Section 2.9, the Term Loan shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as the Term
Loan shall be comprised of Alternate Base Rate Loans, each such
Alternate Base Rate Loan shall bear interest at a per annum rate equal
to the sum of the Alternate Base Rate plus the Applicable Percentage;
and
(ii) LIBOR Rate Loans. During such periods as the Term Loan
shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall
bear interest at a per annum rate equal to the sum of the LIBOR Rate
plus the Applicable Percentage.
Interest on the Term Loan shall be payable in arrears on each Interest
Payment Date.
(d) Term Notes. Each Lender's Term Loan Commitment Percentage
of the Term Loan outstanding as of the Subsequent Transactions Closing
Date shall be evidenced by a duly executed promissory note of the
Borrower to such Lender in substantially the form of Schedule 2.2(d).
31
SECTION 2.3 SWINGLINE LOAN SUBFACILITY.
(a) Swingline Commitment. During the Commitment Period,
subject to the terms and conditions hereof, the Swingline Lender, in
its individual capacity, agrees to make certain revolving credit loans
to the Borrower (each a "Swingline Loan" and, collectively, the
"Swingline Loans") for the purposes hereinafter set forth; provided,
however, (i) the aggregate amount of Swingline Loans outstanding at any
time shall not exceed FIFTEEN MILLION DOLLARS ($15,000,000) (the
"Swingline Committed Amount"), and (ii) the sum of the aggregate amount
of outstanding Revolving Loans plus Swingline Loans plus LOC
Obligations shall not exceed (A) on or prior to the Subsequent
Transactions Closing Date, the aggregate Revolving Committed Amount
then in effect and (B) after the Subsequent Transactions Closing Date,
the lesser of the aggregate Revolving Committed Amount then in effect
and the Borrowing Base. Swingline Loans hereunder may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Borrowings.
(i) Notice of Borrowing and Disbursement. The
Swingline Lender will make Swingline Loans available to the
Borrower on any Business Day upon request made by the Borrower
not later than 12:00 Noon (Charlotte, North Carolina time) on
such Business Day. A notice of request for Swingline Loan
borrowing shall be made in the form of Schedule 2.1(b)(i) with
appropriate modifications. Swingline Loan borrowings hereunder
shall be made in minimum amounts of $100,000 and in integral
amounts of $100,000 in excess thereof.
(ii) Repayment of Swingline Loans. Each Swingline
Loan borrowing shall be due and payable on the Termination
Date. The Swingline Lender may, at any time, in its sole
discretion, by written notice to the Borrower and the Agent,
demand repayment of its Swingline Loans by way of a Revolving
Loan borrowing, in which case the Borrower shall be deemed to
have requested a Revolving Loan borrowing comprised entirely
of Alternate Base Rate Loans in the amount of such Swingline
Loans; provided, however, that, in the following
circumstances, any such demand shall also be deemed to have
been given one Business Day prior to each of (i) the
Termination Date, (ii) the occurrence of any Event of Default
described in Section 7.1(e), (iii) upon acceleration of the
Credit Party Obligations hereunder, whether on account of an
Event of Default described in Section 7.1(e) or any other
Event of Default, and (iv) the exercise of remedies in
accordance with the provisions of Section 7.2 hereof (each
such Revolving Loan borrowing made on account of any such
deemed request therefor as provided herein being hereinafter
referred to as a "Mandatory Borrowing"). Each Lender hereby
irrevocably agrees to make such Revolving Loans promptly upon
any such request or deemed request on account of each
Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the same such date
notwithstanding (I) the amount of Mandatory Borrowing may not
comply with the
32
minimum amount for borrowings of Revolving Loans otherwise
required hereunder, (II) whether any conditions specified in
Section 4.2 are then satisfied, (III) whether a Default or an
Event of Default then exists, (IV) failure of any such request
or deemed request for Revolving Loans to be made by the time
otherwise required in Section 2.1(b)(i), (V) the date of such
Mandatory Borrowing, or (VI) any reduction in the Revolving
Committed Amount or termination of the Revolving Commitments
immediately prior to such Mandatory Borrowing or
contemporaneously therewith. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code
with respect to the Borrower), then each Lender hereby agrees
that it shall forthwith purchase (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and
prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as shall be
necessary to cause each such Lender to share in such Swingline
Loans ratably based upon its respective Revolving Commitment
Percentage (determined before giving effect to any termination
of the Commitments pursuant to Section 7.2), provided that (A)
all interest payable on the Swingline Loans shall be for the
account of the Swingline Lender until the date as of which the
respective participation is purchased, and (B) at the time any
purchase of participations pursuant to this sentence is
actually made, the purchasing Lender shall be required to pay
to the Swingline Lender interest on the principal amount of
such participation purchased for each day from and including
the day upon which the Mandatory Borrowing would otherwise
have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within two (2)
Business Days of the date of the Mandatory Borrowing, the
Federal Funds Effective Rate, and thereafter at a rate equal
to the Alternate Base Rate.
(c) Interest on Swingline Loans. Subject to the provisions of
Section 2.9, Swingline Loans shall bear interest at a per annum rate
equal to the Alternate Base Rate plus the Applicable Percentage.
Interest on Swingline Loans shall be payable in arrears on each
Interest Payment Date.
(d) Swingline Note. The Swingline Loans shall be evidenced by
a duly executed promissory note of the Borrower to the Swingline Lender
in the original amount of the Swingline Committed Amount and
substantially in the form of Schedule 2.3(d).
SECTION 2.4 LETTER OF CREDIT SUBFACILITY.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require, during the Commitment Period
the Issuing Lender shall issue, and the Lenders shall participate in,
Letters of Credit for the account of the Borrower from time to time
upon request in a form acceptable to the Issuing Lender; provided,
however, that (i)
33
the aggregate amount of LOC Obligations shall not at any time exceed
THIRTY MILLION DOLLARS ($30,000,000) (the "LOC Committed Amount"), (ii)
the sum of the aggregate amount of Revolving Loans plus Swingline Loans
plus LOC Obligations shall not at any time exceed (A) on or prior to
the Subsequent Transactions Closing Date, the aggregate Revolving
Committed Amount then in effect and (B) after the Subsequent
Transactions Closing Date, the lesser of the aggregate Revolving
Committed Amount and the Borrowing Base, (iii) all Letters of Credit
shall be denominated in U.S. Dollars and (iv) Letters of Credit shall
be issued for the purpose of supporting tax-advantaged variable rate
demand note financing and for other lawful corporate purposes and may
be issued as standby letters of credit, including in connection with
workers' compensation and other insurance programs, and trade letters
of credit. Except as otherwise expressly agreed upon by all the
Lenders, no Letter of Credit (other than the JEDA Letter of Credit
which has an original expiry date of fourteen (14) months) shall have
an original expiry date more than twelve (12) months from the date of
issuance; provided, however, so long as no Default or Event of Default
has occurred and is continuing and subject to the other terms and
conditions to the issuance of Letters of Credit hereunder, and other
than the Wachovia JEDA Letter of Credit which by its terms is, and
shall continue to be, automatically extended each month as to which no
Notice of Non-Extension (as defined in the Wachovia JEDA Reimbursement
Agreement) is given until the 5th day of the 13th month following
receipt by the Borrower and the Trustee for the XXXX Xxxxx of a Notice
of Non-Extension from the Issuing Lender thereof (but not to a date
later than the "Termination Date" as defined therein), the expiry dates
of Letters of Credit may be extended annually or periodically from time
to time on the request of the Borrower or by operation of the terms of
the applicable Letter of Credit to a date not more than twelve (12)
months (fourteen (14) months for the JEDA Letter of Credit) from the
date of extension; provided, further, that no Letter of Credit, as
originally issued or as extended, shall have an expiry date extending
beyond the Termination Date except that prior to the Termination Date a
Letter of Credit may be issued or extended with an expiry date
extending beyond the Termination Date if, and to the extent that,
unless the Issuing Lender and the Required Lenders shall otherwise
agree, the Borrower shall provide cash collateral to the Issuing Lender
on the date of issuance or extension in an amount equal to the maximum
amount available to be drawn under such Letter of Credit. Each Letter
of Credit shall comply with the related LOC Documents. The issuance and
expiry date of each Letter of Credit shall be a Business Day. Any
Letters of Credit issued hereunder shall be in a minimum original face
amount of $250,000. There will be no more than fifteen (15) Letters of
Credit outstanding at any time. First Union shall be the Issuing Lender
on all Letters of Credit issued after the Closing Date and shall become
the Issuing Lender on all Existing Letters of Credit on the date such
Letters of Credit are extended or renewed in accordance with the terms
hereof and thereof.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted to the Issuing Lender at least five
(5) Business Days prior to the requested date of issuance. The Issuing
Lender will promptly upon request provide to the Agent for
dissemination to the Lenders a detailed report specifying the Letters
of Credit which are then issued and outstanding and any activity with
respect thereto which may have
34
occurred since the date of any prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, expiry date as well as any payments or expirations which may
have occurred. The Issuing Lender will further provide to the Agent
promptly upon request copies of the Letters of Credit. The Issuing
Lender will provide to the Agent promptly upon request a summary report
of the nature and extent of LOC Obligations then outstanding.
(c) Participations. Each Lender, with respect to the Existing
Letters of Credit, hereby purchases a participation interest in such
Existing Letters of Credit and with respect to Letters of Credit issued
on or after the Closing Date, upon issuance of a Letter of Credit,
shall be deemed to have purchased without recourse a risk participation
from the Issuing Lender in such Letter of Credit and the obligations
arising thereunder and any collateral relating thereto, in each case in
an amount equal to its LOC Commitment Percentage of the obligations
under such Letter of Credit and shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and be
obligated to pay to the Issuing Lender therefor and discharge when due,
its LOC Commitment Percentage of the obligations arising under such
Letter of Credit. Without limiting the scope and nature of each
Lender's participation in any Letter of Credit, to the extent that the
Issuing Lender has not been reimbursed as required hereunder or under
any LOC Document, each such Lender shall pay to the Issuing Lender its
LOC Commitment Percentage of such unreimbursed drawing in same day
funds on the day of notification by the Issuing Lender of an
unreimbursed drawing pursuant to the provisions of subsection (d)
hereof. The obligation of each Lender to so reimburse the Issuing
Lender shall be absolute and unconditional and shall not be affected by
the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrower to reimburse the
Issuing Lender under any Letter of Credit, together with interest as
hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the Borrower
and the Agent. The Borrower shall reimburse the Issuing Lender on the
day of drawing under any Letter of Credit (either with the proceeds of
a Swingline Loan or Revolving Loan obtained hereunder or otherwise) in
same day funds as provided herein or in the LOC Documents. If the
Borrower shall fail to reimburse the Issuing Lender as provided herein,
the unreimbursed amount of such drawing shall bear interest at a per
annum rate equal to the Alternate Base Rate plus two percent (2%).
Unless the Borrower shall immediately notify the Issuing Lender and the
Agent of its intent to otherwise reimburse the Issuing Lender, the
Borrower shall be deemed to have requested a Swingline Loan, or if and
to the extent Swingline Loans shall not be available, a Revolving Loan
in the amount of the drawing as provided in subsection (e) hereof, the
proceeds of which will be used to satisfy the reimbursement
obligations. The Borrower's reimbursement obligations hereunder shall
be absolute and unconditional under all circumstances irrespective of
any rights of set-off, counterclaim or defense to payment the Borrower
may claim or have against the Issuing Lender, the Agent, the Lenders,
the beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any failure of the
Borrower to receive
35
consideration or the legality, validity, regularity or unenforceability
of the Letter of Credit. The Issuing Lender will promptly notify the
other Lenders of the amount of any unreimbursed drawing and each Lender
shall promptly pay to the Agent for the account of the Issuing Lender
in Dollars and in immediately available funds, the amount of such
Lender's LOC Commitment Percentage of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Lender
from the Issuing Lender if such notice is received at or before 2:00
P.M. (Charlotte, North Carolina time), otherwise such payment shall be
made at or before 12:00 Noon (Charlotte, North Carolina time) on the
Business Day next succeeding the day such notice is received. If such
Lender does not pay such amount to the Issuing Lender in full upon such
request, such Lender shall, on demand, pay to the Agent for the account
of the Issuing Lender interest on the unpaid amount during the period
from the date of such drawing until such Lender pays such amount to the
Issuing Lender in full at a rate per annum equal to, if paid within two
(2) Business Days of the date of drawing, the Federal Funds Effective
Rate and thereafter at a rate equal to the Alternate Base Rate. Each
Lender's obligation to make such payment to the Issuing Lender, and the
right of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and
without regard to the termination of this Agreement or the Commitments
hereunder, the existence of a Default or Event of Default or the
acceleration of the Credit Party Obligations hereunder and shall be
made without any offset, abatement, withholding or reduction
whatsoever.
(e) Repayment with Revolving Loans. On any day on which the
Borrower shall have requested, or been deemed to have requested, (i) a
Swingline Loan borrowing to reimburse a drawing under a Letter of
Credit, the Swingline Lender shall make the Swingline Loan advance
pursuant to the terms of the request or deemed request in accordance
with the provisions for Swingline Loan advances hereunder, or (ii) a
Revolving Loan to reimburse a drawing under a Letter of Credit, the
Agent shall give notice to the Lenders that a Revolving Loan has been
requested or deemed requested in connection with a drawing under a
Letter of Credit, in which case a Revolving Loan borrowing comprised
entirely of Alternate Base Rate Loans (each such borrowing, a
"Mandatory Borrowing") shall be immediately made (without giving effect
to any termination of the Commitments pursuant to Section 7.2) pro rata
based on each Lender's respective Revolving Commitment Percentage
(determined before giving effect to any termination of the Commitments
pursuant to Section 7.2) and in the case of both clauses (i) and (ii)
the proceeds thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each Lender hereby
irrevocably agrees to make such Revolving Loans immediately upon any
such request or deemed request on account of each Mandatory Borrowing
in the amount and in the manner specified in the preceding sentence and
on the same such date notwithstanding (i) the amount of Mandatory
Borrowing may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 4.2 are then satisfied, (iii) whether a
Default or an Event of Default then exists, (iv) failure for any such
request or deemed request for Revolving Loan to be made by the time
otherwise required in Section 2.1(b), (v) the date of such Mandatory
Borrowing, or (vi) any reduction in the
36
Revolving Committed Amount after any such Letter of Credit may have
been drawn upon; provided, however, that in the event any such
Mandatory Borrowing should be less than the minimum amount for
borrowings of Revolving Loans otherwise provided in Section 2.1(b)(ii),
the Borrower shall pay to the Agent for its own account an
administrative fee of $500. In the event that any Mandatory Borrowing
cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower or
the Company), then each such Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory Borrowing would otherwise
have occurred, but adjusted for any payments received from the Borrower
on or after such date and prior to such purchase) its Participation
Interests in the outstanding LOC Obligations; provided, further, that
in the event any Lender shall fail to fund its Participation Interest
on the day the Mandatory Borrowing would otherwise have occurred, then
the amount of such Lender's unfunded Participation Interest therein
shall bear interest payable to the Issuing Lender upon demand, at the
rate equal to, if paid within two (2) Business Days of such date, the
Federal Funds Effective Rate, and thereafter at a rate equal to the
Alternate Base Rate.
(f) Modification, Extension. The issuance of any supplement,
modification, amendment, renewal, or extension to any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender shall
have the Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of issue
by the International Chamber of Commerce (the "UCP"), in which case the
UCP may be incorporated therein and deemed in all respects to be a part
thereof.
SECTION 2.5 FEES.
(a) Commitment Fee. In consideration of the Revolving
Commitment, the Borrower agrees to pay to the Agent for the ratable
benefit of the Lenders a commitment fee (the "Commitment Fee") in an
amount equal to the Applicable Percentage per annum on the average
daily unused amount of the aggregate Revolving Committed Amount. For
purposes of computing the Commitment hereunder, Swingline Loans shall
be considered usage under the aggregate Revolving Committed Amount. The
Commitment Fee shall be payable quarterly in arrears on the 15th day
following the last day of each calendar quarter for the prior calendar
quarter.
(b) Letter of Credit Fees. In consideration of the LOC
Commitments, the Borrower agrees to pay to the Issuing Lender a fee
(the "Letter of Credit Fee") equal to the Applicable Percentage per
annum on the average daily maximum amount available to be
37
drawn under each Letter of Credit from the date of issuance to the date
of expiration. In addition to such Letter of Credit Fee, the Issuing
Lender may charge, and retain for its own account without sharing by
the other Lenders, an additional facing fee of one-eighth of one
percent (1/8%) per annum on the average daily maximum amount available
to be drawn under each such Letter of Credit issued by it. The Issuing
Lender shall promptly pay over to the Agent for the ratable benefit of
the Lenders (including the Issuing Lender) the Letter of Credit Fee.
The Letter of Credit Fee shall be payable quarterly in arrears on the
15th day following the last day of each calendar quarter.
(c) Issuing Lender Fees. In addition to the Letter of Credit
Fees payable pursuant to subsection (b) hereof, the Borrower shall pay
to the Issuing Lender for its own account without sharing by the other
Lenders the reasonable and customary charges from time to time of the
Issuing Lender with respect to the amendment, transfer, administration,
cancellation and conversion of, and drawings under, such Letters of
Credit (collectively, the "Issuing Lender Fees").
(d) Term Loan Commitment Fee. In consideration of the Term
Loan Commitment, the Borrower agrees to pay to the Agent the commitment
fee as described in the Fee Letter.
(e) Administrative Fee. The Borrower agrees to pay to the
Agent the annual administrative fee as described in the Fee Letter.
SECTION 2.6 COMMITMENT REDUCTIONS .
(a) Voluntary Reductions. The Borrower shall have the right to
terminate or permanently reduce the unused portion of the Revolving
Committed Amount at any time or from time to time upon not less than
three Business Days' prior notice to the Agent (which shall notify the
Lenders thereof as soon as practicable) of each such termination or
reduction, which notice shall specify the effective date thereof and
the amount of any such reduction which shall be in a minimum amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and
shall be irrevocable and effective upon receipt by the Agent, provided
that no such reduction or termination shall be permitted if after
giving effect thereto, and to any prepayments of the Revolving Loans
made on the effective date thereof, the sum of the then outstanding
aggregate principal amount of the Revolving Loans plus Swingline Loans
plus LOC Obligations would exceed (i) on or prior to the Subsequent
Transactions Closing Date, the aggregate Revolving Committed Amount
then in effect and (ii) after the Subsequent Transactions Closing Date,
the lesser of the aggregate Revolving Committed Amount then in effect
and the Borrowing Base.
(b) Termination Date. The Revolving Commitment, the LOC
Commitment and the Swingline Commitment shall automatically terminate
on the Termination Date.
SECTION 2.7 PREPAYMENTS.
(a) Optional Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time; provided, however,
that each partial prepayment of Revolving Loans and Term Loans shall be
in a minimum principal amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof and each prepayment of Swingline
38
Loans shall be in a minimum principal amount of $100,000 and integral
multiples of $100,000 in excess thereof. The Borrower shall give three
Business Days' irrevocable notice in the case of LIBOR Rate Loans and
one Business Day's irrevocable notice in the case of Alternate Base
Rate Loans, to the Agent (which shall notify the Lenders thereof as
soon as practicable). Subject to the foregoing terms, amounts prepaid
under this Section 2.7(a) shall be applied as the Borrower may elect;
provided that if the Borrower fails to specify the application of an
optional prepayment then such prepayment shall be applied first to
Revolving Loans and then ratably to the remaining principal
installments of the Term Loan, in each case first to Alternate Base
Rate Loans and then to LIBOR Rate Loans in direct order of Interest
Period maturities. All prepayments under this Section 2.7(a) shall be
subject to Section 2.17, but otherwise without premium or penalty.
Interest on the principal amount prepaid shall be payable on the next
occurring Interest Payment Date that would have occurred had such loan
not been prepaid or, at the request of the Agent, interest on the
principal amount prepaid shall be payable on any date that a prepayment
is made hereunder through the date of prepayment. Amounts prepaid on
the Swingline Loan and the Revolving Loans may be reborrowed in
accordance with the terms hereof. Amounts prepaid on the Term Loan may
not be reborrowed.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time, the
sum of the aggregate principal amount of outstanding Revolving
Loans plus Swingline Loans plus LOC Obligations shall exceed
(i) on or prior to the Subsequent Transactions Closing Date,
the aggregate Revolving Committed Amount then in effect and
(ii) after the Subsequent Transactions Closing Date, the
lesser of the aggregate Revolving Committed Amount then in
effect and the Borrowing Base, the Borrower immediately shall
prepay the Revolving Loans and (after all Revolving Loans have
been repaid) cash collateralize the LOC Obligations, in an
amount sufficient to eliminate such excess.
(ii) Excess Cash Flow. Within ninety (90) days after
the end of each fiscal year (commencing with the fiscal year
ending October 3, 1998), the Borrower shall prepay the Loans
in an amount equal to (x) fifty percent (50%) of the Excess
Cash Flow earned during such prior fiscal year less (y) the
amount of any optional prepayments of the Term Loan or (to the
extent accompanied by a reduction in the Revolving Committed
Amount) the Revolving Loans during such prior fiscal year. Any
payments of Excess Cash Flow shall be applied as set forth in
clause (ix) below. Notwithstanding the foregoing to the
contrary, the prepayment of Loans from Excess Cash Flow shall
not be required for any prior fiscal year if the Leverage
Ratio for the four fiscal quarters ending on the last day of
such fiscal year shall be less than or equal to 3.75 to 1.0.
(iii) Asset Dispositions. Promptly following any
Asset Disposition, the Borrower shall prepay the Loans in an
aggregate amount equal to the Net Cash
39
Proceeds derived from such Asset Disposition (such prepayment
to be applied as set forth in clause (ix) below).
(iv) Debt Issuances. Immediately upon receipt by any
Credit Party of proceeds from any Debt Issuance, the Borrower
shall prepay the Loans in an aggregate amount equal to
one-hundred percent (100%) of the Net Cash Proceeds of such
Debt Issuance to the Lenders (such prepayment to be applied as
set forth in clause (ix) below).
(v) Issuances of Equity. Immediately upon receipt by
a Credit Party of proceeds from any Equity Issuance, the
Borrower shall prepay the Loans in an aggregate amount equal
to one-hundred percent (100%) of the Net Cash Proceeds of such
Equity Issuance to the Lenders (such prepayment to be applied
as set forth in clause (ix) below).
(vi) Recovery Event. To the extent of cash proceeds
received in connection with a Recovery Event which are not
applied in accordance with Section 6.5(a)(ii), immediately
following the 180th day occurring after the receipt by a
Credit Party of such cash proceeds, the Borrower shall prepay
the Loans in an aggregate amount equal to one-hundred percent
(100%) of such cash proceeds to the Lenders (such prepayment
to be applied as set forth in clause (ix) below).
(vii) Payment of G&L Loan. Immediately upon receipt
by the Borrower of any repayment or prepayment of the G&L Loan
to the extent the proceeds of such loan have not been applied
to fund the Subsequent Transactions, the Borrower shall prepay
the Loans in an aggregate amount equal to one-hundred percent
(100%) of any such repayment or prepayment to the Lenders
(such prepayment to be applied as set forth in clause (ix)
below).
(viii) Adjustments to Purchase Price. Immediately
upon receipt by the Borrower of any payment or refund arising
from an adjustment to the Purchase Price paid by the Borrower
for the Acquired Companies which, when aggregated with any
other such payments or refunds, exceeds $25,000,000, the
Borrower shall prepay the Loans in an aggregate amount equal
to one-hundred percent (100%) of any such excess to the
Lenders (such prepayment to be applied as set forth in clause
(ix) below).
(ix) Application of Mandatory Prepayments. All
amounts required to be paid pursuant to this Section 2.7(b)
shall be applied as follows: (A) with respect to all amounts
prepaid pursuant to Section 2.7(b)(i), to Revolving Loans and
(after all Revolving Loans have been repaid) to a cash
collateral account in respect of LOC Obligations, (B) with
respect to all amounts prepaid pursuant to Section 2.7(b)(ii)
through (viii), (1) first pro rata to the Term Loan (ratably
to the remaining principal installments thereof) and (2)
second to the Revolving Loans and (after all Revolving Loans
have been repaid) to a cash collateral account in
40
respect of LOC Obligations. Within the parameters of the
applications set forth above, prepayments shall be applied
first to Alternate Base Rate Loans and then to LIBOR Rate
Loans in direct order of Interest Period maturities. All
prepayments under this Section 2.7(b) shall be subject to
Section 2.17 and be accompanied by interest on the principal
amount prepaid through the date of prepayment.
SECTION 2.8 MINIMUM PRINCIPAL AMOUNT OF TRANCHES.
All borrowings, payments and prepayments in respect of Revolving Loans
and Term Loan shall be in such amounts and be made pursuant to such elections so
that after giving effect thereto the aggregate principal amount of the Revolving
Loans and Term Loan comprising any Tranche shall not be less than $5,000,000 or
a whole multiple of $1,000,000 in excess thereof.
SECTION 2.9 DEFAULT RATE AND PAYMENT DATES.
(a) If all or a portion of the principal amount of any Loan
which is a LIBOR Rate Loan shall not be paid when due or continued as a
LIBOR Rate Loan in accordance with the provisions of Section 2.10
(whether at the stated maturity, by acceleration or otherwise), such
overdue principal amount of such Loan shall be converted to an
Alternate Base Rate Loan at the end of the Interest Period applicable
thereto.
(b) If all or a portion of (i) the principal amount of any
Loan, (ii) any interest payable thereon, or (iii) any fee or other
amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount
shall bear interest at a rate per annum which is (x) in the case of
overdue principal, the rate that would otherwise be applicable thereto
assuming Level I interest rate margins were then in effect, plus 2% or
(y) in the case of overdue interest, fees or other amounts, the
Alternate Base Rate, plus 2%, in each case from the date of such
non-payment until such amount is paid in full (after as well as before
judgment). Upon the occurrence, and during the continuance, of any
other Event of Default hereunder, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents shall bear interest,
payable on demand, at a per annum rate which is (A) in the case of
principal, the rate that would otherwise be applicable thereto assuming
Level I interest rate margins were then in effect, plus 2% or (B) in
the case of interest, fees or other amounts, the Alternate Base Rate,
plus 2% (after as well as before judgment).
(c) Interest on each Loan shall be payable in arrears on each
Interest Payment Date, provided that interest accruing pursuant to
paragraph (b) of this Section 2.9 shall be payable from time to time on
demand.
SECTION 2.10 CONVERSION OPTIONS.
(a) The Borrower may, in the case of Revolving Loans and the
Term Loan, elect from time to time to convert Alternate Base Rate Loans
to LIBOR Rate Loans, by
41
giving the Agent at least three Business Days' prior irrevocable
written notice of such election. A form of Notice of Conversion/
Extension is attached as Schedule 2.10. If the date upon which an
Alternate Base Rate Loan is to be converted to a LIBOR Rate Loan is not
a Business Day, then such conversion shall be made on the next
succeeding Business Day and during the period from such last day of an
Interest Period to such succeeding Business Day such Loan shall bear
interest as if it were an Alternate Base Rate Loan. All or any part of
outstanding Alternate Base Rate Loans may be converted as provided
herein, provided that (i) no Loan may be converted into a LIBOR Rate
Loan when any Default or Event of Default has occurred and is
continuing and (ii) partial conversions shall be in an aggregate
principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
(b) Any LIBOR Rate Loans may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by
the Borrower with the notice provisions contained in Section 2.10(a);
provided, that no LIBOR Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, in which
case such Loan shall be automatically converted to an Alternate Base
Rate Loan at the end of the applicable Interest Period with respect
thereto. If the Borrower shall fail to give timely notice of an
election to continue a LIBOR Rate Loan, or the continuation of LIBOR
Rate Loans is not permitted hereunder, such LIBOR Rate Loans shall be
automatically converted to Alternate Base Rate Loans at the end of the
applicable Interest Period with respect thereto.
SECTION 2.11 COMPUTATION OF INTEREST AND FEES.
(a) Interest payable hereunder with respect to Alternate Base
Rate Loans shall be calculated on the basis of a year of 365 days (or
366 days, as applicable) for the actual days elapsed. All other fees,
interest and all other amounts payable hereunder shall be calculated on
the basis of a 360 day year for the actual days elapsed. The Agent
shall as soon as practicable notify the Borrower and the Lenders of
each determination of a LIBOR Rate on the Business Day of the
determination thereof. Any change in the interest rate on a Loan
resulting from a change in the Alternate Base Rate shall become
effective as of the opening of business on the day on which such change
in the Alternate Base Rate shall become effective. The Agent shall as
soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest
error. The Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the computations used by the Agent in
determining any interest rate.
42
SECTION 2.12 PRO RATA TREATMENT AND PAYMENTS.
Each borrowing of Revolving Loans and any reduction of the Revolving
Commitments shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Each payment under this Agreement or any Note shall
be applied, first, to any fees then due and owing by the Borrower pursuant to
Section 2.5, second, to interest then due and owing in respect of the Notes of
the Borrower and, third, to principal then due and owing hereunder and under the
Notes of the Borrower. Each payment on account of any fees pursuant to Section
2.5 shall be made pro rata in accordance with the respective amounts due and
owing (except as to the portion of the Letter of Credit retained by the Issuing
Lender and the Issuing Lender Fees). Each payment (other than prepayments) by
the Borrower on account of principal of and interest on the Revolving Loans and
on the Term Loan shall be made pro rata according to the respective amounts due
and owing. Each prepayment on account of principal of the Loans shall be
applied, to such of the Loans as the Borrower may designate (to be applied pro
rata among the Lenders); provided, that prepayments made pursuant to Section
2.15 shall be applied in accordance with such section. All payments (including
prepayments) to be made by the Borrower on account of principal, interest and
fees shall be made without defense, set-off or counterclaim (except as provided
in Section 2.18(b)) and shall be made to the Agent for the account of the
Lenders at the Agent's office specified on Schedule 9.2 in Dollars and in
immediately available funds not later than 1:00 P.M. (Charlotte, North Carolina
time) on the date when due. The Agent shall distribute such payments to the
Lenders entitled thereto promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the LIBOR Rate Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a LIBOR Rate Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day.
SECTION 2.13 NON-RECEIPT OF FUNDS BY THE AGENT.
(a) Unless the Agent shall have been notified in writing by a
Lender prior to the date a Loan is to be made by such Lender (which
notice shall be effective upon receipt) that such Lender does not
intend to make the proceeds of such Loan available to the Agent, the
Agent may assume that such Lender has made such proceeds available to
the Agent on such date, and the Agent may in reliance upon such
assumption (but shall not be required to) make available to the
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to recover
such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Agent's demand therefor,
the Agent will promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from the Lender or the Borrower, as the
case may be, interest on such corresponding amount in respect of each
day from the date such corresponding amount was made available by the
Agent to the
43
Borrower to the date such corresponding amount is recovered by the
Agent at a per annum rate equal to (i) from the Borrower at the
applicable rate for the applicable borrowing pursuant to the Notice of
Borrowing and (ii) from a Lender at the Federal Effective Funds Rate.
(b) Unless the Agent shall have been notified in writing by
the Borrower, prior to the date on which any payment is due from it
hereunder (which notice shall be effective upon receipt) that the
Borrower does not intend to make such payment, the Agent may assume
that such Borrower has made such payment when due, and the Agent may in
reliance upon such assumption (but shall not be required to) make
available to each Lender on such payment date an amount equal to the
portion of such assumed payment to which such Lender is entitled
hereunder, and if the Borrower has not in fact made such payment to the
Agent, such Lender shall, on demand, repay to the Agent the amount made
available to such Lender. If such amount is repaid to the Agent on a
date after the date such amount was made available to such Lender, such
Lender shall pay to the Agent on demand interest on such amount in
respect of each day from the date such amount was made available by the
Agent to such Lender to the date such amount is recovered by the Agent
at a per annum rate equal to the Federal Funds Effective Rate.
(c) A certificate of the Agent submitted to the Borrower or
any Lender with respect to any amount owing under this Section 2.13
shall be conclusive in the absence of manifest error.
SECTION 2.14 INABILITY TO DETERMINE INTEREST RATE.
Notwithstanding any other provision of this Agreement, if (i) the Agent
shall reasonably determine (which determination shall be conclusive and binding
absent manifest error) that, by reason of circumstances affecting the relevant
market, reasonable and adequate means do not exist for ascertaining LIBOR for
such Interest Period, or (ii) the Required Lenders shall reasonably determine
(which determination shall be conclusive and binding absent manifest error) that
the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders
of funding LIBOR Rate Loans that the Borrower has requested be outstanding as a
Eurodollar Tranche during such Interest Period, the Agent shall forthwith give
telephone notice of such determination, confirmed in writing, to the Borrower,
and the Lenders at least two Business Days prior to the first day of such
Interest Period. Unless the Borrower shall have notified the Agent upon receipt
of such telephone notice that it wishes to rescind or modify its request
regarding such LIBOR Rate Loans, any Loans that were requested to be made as
LIBOR Rate Loans shall be made as Alternate Base Rate Loans and any Loans that
were requested to be converted into or continued as LIBOR Rate Loans shall be
converted into Alternate Base Rate Loans. Until any such notice has been
withdrawn by the Agent, no further Loans shall be made as, continued as, or
converted into, LIBOR Rate Loans for the Interest Periods so affected.
44
SECTION 2.15 ILLEGALITY.
Notwithstanding any other provision of this Agreement, if the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof by the relevant Governmental Authority to any Lender shall
make it unlawful for such Lender or its LIBOR Lending Office to make or maintain
LIBOR Rate Loans as contemplated by this Agreement or to obtain in the interbank
eurodollar market through its LIBOR Lending Office the funds with which to make
such Loans, (a) such Lender shall promptly notify the Agent and the Borrower
thereof, (b) the commitment of such Lender hereunder to make LIBOR Rate Loans or
continue LIBOR Rate Loans as such shall forthwith be suspended until the Agent
shall give notice that the condition or situation which gave rise to the
suspension shall no longer exist, and (c) such Lender's Loans then outstanding
as LIBOR Rate Loans, if any, shall be converted on the last day of the Interest
Period for such Loans or within such earlier period as required by law as
Alternate Base Rate Loans. The Borrower hereby agrees promptly to pay any
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for actual and direct costs (but not including anticipated profits)
reasonably incurred by such Lender in making any repayment in accordance with
this Section including, but not limited to, any interest or fees payable by such
Lender to lenders of funds obtained by it in order to make or maintain its LIBOR
Rate Loans hereunder. A certificate as to any additional amounts payable
pursuant to this Section submitted by such Lender, through the Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender to be material.
SECTION 2.16 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law
or in the interpretation or application thereof or compliance by any
Lender with any request or directive (whether or not having the force
of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit or any
application relating thereto, any LIBOR Rate Loan made by it,
or change the basis of taxation of payments to such Lender in
respect thereof (except for changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by,
any office of such Lender which is not otherwise included in
the determination of the LIBOR Rate hereunder; or
45
(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such
Lender of making or maintaining LIBOR Rate Loans or the Letters of
Credit or to reduce any amount receivable hereunder or under any Note,
then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such
Lender for such additional cost or reduced amount receivable which such
Lender reasonably deems to be material as determined by such Lender
with respect to its LIBOR Rate Loans or Letters of Credit. A
certificate as to any additional amounts payable pursuant to this
Section submitted by such Lender, through the Agent, to the Borrower
shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to
change its Domestic Lending Office or LIBOR Lending Office, as the case
may be) to avoid or to minimize any amounts which might otherwise be
payable pursuant to this paragraph of this Section; provided, however,
that such efforts shall not cause the imposition on such Lender of any
additional costs or legal or regulatory burdens deemed by such Lender
to be material.
(b) If any Lender shall have reasonably determined that the
adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance
by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having
the force of law) from any central bank or Governmental Authority made
subsequent to the date hereof does or shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which
such Lender or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an
amount reasonably deemed by such Lender to be material, then from time
to time, within fifteen (15) days after demand by such Lender, the
Borrower shall pay to such Lender such additional amount as shall be
certified by such Lender as being required to compensate it for such
reduction. Such a certificate as to any additional amounts payable
under this Section submitted by a Lender (which certificate shall
include a description of the basis for the computation), through the
Agent, to the Borrower shall be conclusive absent manifest error.
(c) Notwithstanding anything to the contrary contained herein,
the Borrower shall not have any obligation to pay to any Lender amounts
owing under this Section 2.16 for any period which is more than ninety
(90) days prior to the date upon which the request for payment therefor
is delivered to the Borrower.
(d) The agreements in this Section 2.16 shall survive the
termination of this Agreement and payment of the Notes and all other
amounts payable hereunder.
46
SECTION 2.17 INDEMNITY.
The Borrower hereby agrees to indemnify each Lender and to hold such
Lender harmless from any funding loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in payment of the
principal amount of or interest on any Loan by such Lender in accordance with
the terms hereof, (b) default by the Borrower in accepting a borrowing after the
Borrower has given a notice in accordance with the terms hereof, (c) default by
the Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder. A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender, through the Agent, to the Borrower (which
certificate must be delivered to the Agent within thirty days following such
default, prepayment or conversion) shall be conclusive in the absence of
manifest error. The agreements in this Section shall survive termination of this
Agreement and payment of the Notes and all other amounts payable hereunder.
SECTION 2.18 TAXES.
(a) All payments made by the Borrower hereunder or under any
Note will be, except as provided in Section 2.18(b), made free and
clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any Governmental
Authority or by any political subdivision or taxing authority thereof
or therein with respect to such payments (but excluding any tax imposed
on or measured by the net income or profits of a Lender pursuant to the
laws of the jurisdiction in which it is organized or the jurisdiction
in which the principal office or applicable lending office of such
Lender is located or any subdivision thereof or therein) and all
interest, penalties or similar liabilities with respect thereto (all
such non-excluded taxes, levies, imposts, duties, fees, assessments or
other charges being referred to collectively as "Taxes"). If any Taxes
are so levied or imposed, the Borrower agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any
Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note.
The Borrower will furnish to the Agent as soon as practicable after the
date the payment of any Taxes is due pursuant to applicable law
certified copies (to the extent reasonably available and required by
law) of tax receipts evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless each Lender, and
reimburse such Lender upon its written request, for the amount of any
Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees to deliver
to the Borrower and the Agent on or prior to the Closing Date, or in
the case of a Lender that is an assignee or transferee of an
47
interest under this Agreement pursuant to Section 9.6(d) (unless the
respective Lender was already a Lender hereunder immediately prior to
such assignment or transfer), on the date of such assignment or
transfer to such Lender, (i) if the Lender is a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, two accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001
(or successor forms) certifying such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments
to be made under this Agreement and under any Note, or (ii) if the
Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code, either Internal Revenue Service Form 1001 or 4224 as set
forth in clause (i) above, or (x) a certificate substantially in the
form of Schedule 2.18 (any such certificate, a "2.18 Certificate") and
(y) two accurate and complete original signed copies of Internal
Revenue Service Form W-8 (or successor form) certifying such Lender's
entitlement to an exemption from United States withholding tax with
respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Lender agrees that it will deliver
upon the Borrower's request updated versions of the foregoing, as
applicable, whenever the previous certification has become obsolete or
inaccurate in any material respect, together with such other forms as
may be required in order to confirm or establish the entitlement of
such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any
Note. Notwithstanding anything to the contrary contained in Section
2.18(a), but subject to the immediately succeeding sentence, (x) each
Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold Taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from
interest, fees or other amounts payable hereunder for the account of
any Lender which is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes to the extent that such Lender has not provided to the
Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrower shall
not be obligated pursuant to Section 2.18(a) hereof to gross-up
payments to be made to a Lender in respect of Taxes imposed by the
United States if (I) such Lender has not provided to the Borrower the
Internal Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 2.18(b) or (II) in the case of a payment,
other than interest, to a Lender described in clause (ii) above, to the
extent that such Forms do not establish a complete exemption from
withholding of such Taxes. Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section 2.18,
the Borrower agrees to pay additional amounts and to indemnify each
Lender in the manner set forth in Section 2.18(a) (without regard to
the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as
described in the immediately preceding sentence as a result of any
changes after the Closing Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of
Taxes.
(c) Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its Domestic Lending Office or LIBOR
Lending Office, as the case may be) to avoid or to minimize any amounts
which might otherwise be payable pursuant to this
48
Section; provided, however, that such efforts shall not cause the
imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender to be material.
(d) If the Borrower pays any additional amount pursuant to
this Section 2.18 with respect to a Lender, such Lender shall use
reasonable efforts to obtain a refund of tax or credit against its tax
liabilities on account of such payment; provided that such Lender shall
have no obligation to use such reasonable efforts if either (i) it is
in an excess foreign tax credit position or (ii) it believes in good
faith, in its sole discretion, that claiming a refund or credit would
cause adverse tax consequences to it. In the event that such Lender
receives such a refund or credit, such Lender shall pay to the Borrower
an amount that such Lender reasonably determines is equal to the net
tax benefit obtained by such Lender as a result of such payment by the
Borrower. In the event that no refund or credit is obtained with
respect to the Borrower's payments to such Lender pursuant to this
Section 2.18, then such Lender shall upon request provide a
certification that such Lender has not received a refund or credit for
such payments. Nothing contained in this Section 2.18 shall require a
Lender to disclose or detail the basis of its calculation of the amount
of any tax benefit or any other amount or the basis of its
determination referred to in the proviso to the first sentence of this
Section 2.18 to the Borrower or any other party.
(e) The agreements in this Section 2.18 shall survive the
termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
SECTION 2.19 INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
(a) In addition to its other obligations under Section 2.4,
the Borrower hereby agrees to protect, indemnify, pay and save each
Issuing Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit or (ii) the failure of the Issuing Lender to honor
a drawing under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority (all such acts or omissions,
herein called "Government Acts").
(b) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Issuing Lender shall
not be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (iii) for failure of
the beneficiary of a Letter of Credit to comply fully
49
with conditions required in order to draw upon a Letter of Credit; (iv)
for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under a Letter of Credit or of the proceeds thereof; and (vii)
for any consequences arising from causes beyond the control of the
Issuing Lender, including, without limitation, any Government Acts.
None of the above shall affect, impair, or prevent the vesting of the
Issuing Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted
by the Issuing Lender, under or in connection with any Letter of Credit
or the related certificates, if taken or omitted in good faith, shall
not put such Issuing Lender under any resulting liability to the
Borrower. It is the intention of the parties that this Agreement shall
be construed and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts or
omissions, whether rightful or wrongful, of any Government Authority.
The Issuing Lender shall not, in any way, be liable for any failure by
the Issuing Lender or anyone else to pay any drawing under any Letter
of Credit as a result of any Government Acts or any other cause beyond
the control of the Issuing Lender.
(d) Nothing in this Section 2.19 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.4(d)
hereof. The obligations of the Borrower under this Section 2.19 shall
survive the termination of this Agreement. No act or omissions of any
current or prior beneficiary of a Letter of Credit shall in any way
affect or impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 2.19, the Borrower shall have no obligation to indemnify any
Issuing Lender in respect of any liability incurred by such Issuing
Lender arising out of the gross negligence or willful misconduct of the
Issuing Lender (including action not taken by an Issuing Lender), as
determined by a court of competent jurisdiction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit herein provided for, each of the Company and the Borrower
hereby represents and warrants to the Agent and to each Lender that:
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SECTION 3.1 FINANCIAL CONDITION.
The consolidated balance sheet of the Company and its consolidated
Subsidiaries as at September 27, 1997 and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, reported on
(only in the case of such annual statements) by Ernst & Young LLP, copies of
which have heretofore been furnished to each Lender, are complete and correct
and present fairly the consolidated financial condition of the Company and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as disclosed therein). Neither the Company nor any of
its consolidated Subsidiaries had, at the date of the balance sheets referred to
above, any material Guarantee Obligation, contingent liabilities or liability
for taxes, long-term lease or unusual forward or long-term commitment,
including, without limitation, any material interest rate or foreign currency
swap or exchange transaction, which is not reflected in the foregoing statements
or in the notes thereto. The five-year financial and operational projections for
the Company and its Subsidiaries (including the Apparel Division) for the fiscal
years of 1998 through 2002 delivered to the Agent prior to the Closing Date (the
"Projections"), constitute a reasonable basis as of the Closing Date for the
assessment of the future performance of the Company and its Subsidiaries
(including the Apparel Division) during the periods indicated therein, it being
understood that any projected financial information represents projections,
based on various assumptions, of future results of operations which may or may
not in fact occur and no assurance can be given that such results will be
achieved.
SECTION 3.2 NO CHANGE.
Since September 27, 1997 (and after delivery of annual audited
financial statements in accordance Section 5.1(a), from the date of the most
recently delivered annual audited financial statements) there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.
Each of the Company, its Subsidiaries and the Borrower (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the requisite power and authority and
the legal right to own and operate all its material property, to lease the
material property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified to conduct business and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except to the extent that the failure to so qualify or be in good standing would
not, in the aggregate, have a Material Adverse Effect and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
51
SECTION 3.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Company, the Borrower and the other Credit Parties has full
power and authority and the legal right to make, deliver and perform the Credit
Documents to which it is party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the Credit Documents
to which it is party. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery or performance of any Credit Document by the Company, the Borrower or
the other Credit Parties (other than those which have been obtained) or with the
validity or enforceability of any Credit Document against the Company or the
Borrower (except such filings as are necessary in connection with the perfection
of the Liens created by such Credit Documents). Each Credit Document to which it
is a party has been duly executed and delivered on behalf of the Company, the
Borrower or the other Credit Parties, as the case may be. Each Credit Document
to which it is a party constitutes a legal, valid and binding obligation of the
Company, the Borrower or the other Credit Parties, as the case may be,
enforceable against the Company, the Borrower or such other Credit Party, as the
case may be, in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
SECTION 3.5 NO LEGAL BAR; NO DEFAULT.
The execution, delivery and performance of the Credit Documents, the
borrowings thereunder and the use of the proceeds of the Loans will not violate
any Requirement of Law or any Contractual Obligation of the Company, its
Subsidiaries or the Borrower (except those as to which waivers or consents have
been obtained), and will not result in, or require, the creation or imposition
of any Lien on any of its or their respective properties or revenues pursuant to
any Requirement of Law or Contractual Obligation other than the Liens arising
under or contemplated in connection with the Credit Documents. Neither the
Company nor any of its Subsidiaries is in default under or with respect to any
of its Contractual Obligations in any respect which would reasonably be expected
to have a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
SECTION 3.6 NO MATERIAL LITIGATION.
Except as set forth in Schedule 3.6, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of the Company or the Borrower, threatened by or against
the Company, the Borrower or any of their Subsidiaries or against any of its or
their respective properties or revenues (a) with respect to the Credit Documents
or any Loan or any of the transactions contemplated hereby, or (b) which, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect.
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SECTION 3.7 INVESTMENT COMPANY ACT.
Neither the Company nor the Borrower is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 3.8 MARGIN REGULATIONS.
No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. The
Company and its Subsidiaries taken as a group do not own "margin stock" except
as identified in the financial statements referred to in Section 3.1 and the
aggregate value of all "margin stock" owned by the Company and its Subsidiaries
taken as a group does not exceed 25% of the value of their assets.
SECTION 3.9 ERISA.
Neither a Reportable Event nor an "accumulated funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code, except to the extent that any such occurrence or failure to comply
would not reasonably be expected to have a Material Adverse Effect. No
termination of a Single Employer Plan has occurred resulting in any liability
that has remained underfunded, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period which would reasonably be expected to have
a Material Adverse Effect. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by an amount which, as determined in
accordance with GAAP, would reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Commonly Controlled Entity is currently
subject to any liability for a complete or partial withdrawal from a
Multiemployer Plan which would reasonably be expected to have a Material Adverse
Effect.
SECTION 3.10 ENVIRONMENTAL MATTERS.
Except to the extent that all of the following, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect:
(a) To the best knowledge of the Company or the Borrower, the
facilities and properties owned, leased or operated by the Company, the
Borrower or any of their Subsidiaries (the "Properties") do not contain
any Materials of Environmental Concern in amounts or concentrations
which (i) constitute a violation of, or (ii) could give rise to
liability under, any Environmental Law.
53
(b) To the best knowledge of the Company or the Borrower, the
Properties and all operations of the Company, the Borrower and/or their
Subsidiaries at the Properties are in compliance, and have in the last
five years been in compliance, in all material respects with all
applicable Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Company, the
Borrower or any of their Subsidiaries (the "Business").
(c) Neither the Company, the Borrower nor any of their
Subsidiaries has received any written or actual notice of violation,
alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does the
Company or the Borrower have knowledge or reason to believe that any
such notice will be received or is being threatened.
(d) To the best knowledge of the Company or the Borrower,
Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location which could give rise to liability under any Environmental
Law, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could give rise to liability under,
any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Company or the Borrower,
threatened, under any Environmental Law to which the Company, the
Borrower or any Subsidiary is or will be named as a party with respect
to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business.
(f) To the best knowledge of the Company or the Borrower,
there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or
related to the operations of the Company, the Borrower or any
Subsidiary in connection with the Properties or otherwise in connection
with the Business, in violation of or in amounts or in a manner that
could give rise to liability under Environmental Laws.
SECTION 3.11 PURPOSE OF LOANS.
Up to $230,000,000 of the proceeds of the Revolving Loans will be used
to refinance existing indebtedness of the Borrower and for general corporate and
working capital purposes. On and after the G&L Acquisition, the remaining
proceeds of the Revolving Loans and the proceeds of the Term Loan will be used
to finance the G&L Acquisition and for general corporate and working capital
purposes.
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SECTION 3.12 SUBSIDIARIES.
Set forth on Schedule 3.12 is a complete and accurate list of all
Subsidiaries of the Company and the Borrower. Information on the attached
Schedule includes state of incorporation; the number of shares of each class of
Capital Stock or other equity interests outstanding; the number and percentage
of outstanding shares of each class of stock; and the number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and similar rights. The outstanding Capital Stock and other equity
interests of all such Subsidiaries is validly issued, fully paid and
non-assessable and is owned, free and clear of all Liens (other than those
arising under or contemplated in connection with the Credit Documents). The
Company and the Borrower shall cause Schedule 3.12 to be updated upon the
consummation of the G&L Acquisition.
SECTION 3.13 OWNERSHIP.
Each of the Company and its Subsidiaries is the owner of, and has good
and marketable title to, all of its respective assets, except as may be
permitted pursuant Section 6.13 hereof, and none of such assets is subject to
any Lien other than Permitted Liens.
SECTION 3.14 INDEBTEDNESS.
Except as otherwise permitted under Section 6.1, the Company and its
Subsidiaries have no Indebtedness.
SECTION 3.15 TAXES.
Each of the Company and its Subsidiaries has filed, or caused to be
filed, all tax returns (federal, state, local and foreign) required to be filed
and paid (a) all amounts of taxes shown thereon to be due (including interest
and penalties) and (b) all other taxes, fees, assessments and other governmental
charges (including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. Neither the Company nor the Borrower is aware as of the
Closing Date of any proposed tax assessments against it or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect..
SECTION 3.16 INTELLECTUAL PROPERTY.
Each of the Company and its Subsidiaries owns, or has the legal right
to use, all trademarks, tradenames, copyrights, technology, know-how and
processes necessary for each of them to conduct its business as currently
conducted except for those the failure to own or have such legal right to use
could not have a Material Adverse Effect (the "Material Intellectual Property").
Set forth on Schedule 3.16 is a list of all Material Intellectual Property owned
by each of the Company and its Subsidiaries or that the Company or any of its
Subsidiaries has the
55
right to use. Except as provided on Schedule 3.16, no claim has been asserted
and is pending by any Person challenging or questioning the use of any such
Material Intellectual Property or the validity or effectiveness of any such
Material Intellectual Property, nor does the Company or any of its Subsidiaries
know of any such claim, and, to the knowledge of the Company or any of its
Subsidiaries, the use of such Material Intellectual Property by the Company or
any of its Subsidiaries does not infringe on the rights of any Person, except
for such claims and infringements that in the aggregate, could not have a
Material Adverse Effect. Schedule 3.16 may be updated from time to time by the
Borrower by giving written notice thereof to the Agent.
SECTION 3.17 SOLVENCY.
The fair saleable value of each Credit Party's assets, measured on a
going concern basis, exceeds all probable liabilities, including those to be
incurred pursuant to this Credit Agreement. None of the Credit Parties (a) has
unreasonably small capital in relation to the business in which it is or
proposes to be engaged or (b) has incurred, or believes that it will incur after
giving effect to the transactions contemplated by this Credit Agreement, debts
beyond its ability to pay such debts as they become due.
SECTION 3.18 INVESTMENTS.
All Investments of each of the Company and its Subsidiaries are
Permitted Investments.
SECTION 3.19 LOCATION OF COLLATERAL.
Set forth on Schedule 3.19(a) is a list of the Properties of the
Company and its Subsidiaries with street address, county and state where
located. Set forth on Schedule 3.19(b) is a list of all locations where any
tangible personal property of the Company and its Subsidiaries is located,
including county and state where located. Set forth on Schedule 3.19(c) is the
chief executive office and principal place of business of each of the Company
and its Subsidiaries. Schedule 3.19(a), 3.19(b) and 3.19(c) may be updated from
time to time by the Borrower giving written notice thereof to the Agent.
SECTION 3.20 NO BURDENSOME RESTRICTIONS.
None of the Company or any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could have a Material Adverse Effect.
SECTION 3.21 BROKERS' FEES.
None of the Company or any of its Subsidiaries has any obligation to
any Person in respect of any finder's, broker's, investment banking or other
similar fee in connection with any of the transactions contemplated under the
Credit Documents other than the closing and other fees payable pursuant to this
Credit Agreement or payable in connection with the Tender Offer or the
56
G&L Acquisition, which fees, together with expenses incurred in connection with
this Credit Agreement, the Tender Offer and the G&L Acquisition, shall not
exceed $60,000,000.
SECTION 3.22 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Company or any of its Subsidiaries as of the
Closing Date and none of the Company or any of its Subsidiaries has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years other than as set forth in Schedule 3.22 hereto.
SECTION 3.23 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information (excluding the Projections) heretofore,
contemporaneously or hereafter furnished by or on behalf of the Borrower, the
Company or any of their Subsidiaries to the Agent or any Lender for purposes of
or in connection with this Agreement or any other Credit Document, or any
transaction contemplated hereby or thereby, is or will be true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time. There is no fact now known to
the Borrower, the Company or any of their Subsidiaries which has, or would have,
a Material Adverse Effect which fact has not been set forth herein, in the
financial statements of the Company and its Subsidiaries furnished to the Agent
and/or the Lenders, or in any certificate, opinion or other written statement
made or furnished by the Borrower or the Company to the Agent and/or the
Lenders.
SECTION 3.24 PRINTED APPAREL FABRICS BUSINESS.
Neither the Company nor any of its Subsidiaries owes any material
payments or has any other material obligations with respect to the closure in
September, 1995, of the printed apparel fabrics business of the Borrower.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 CONDITIONS TO CLOSING DATE AND INITIAL REVOLVING LOANS.
This Agreement shall become effective upon, and the obligation of each
Lender to make the initial Revolving Loans on the Tender Offer Closing Date is
subject to, the satisfaction of the following conditions precedent:
(a) Execution of Agreement. The Agent shall have received (i)
multiple counterparts of this Agreement for each Lender, executed by a
duly authorized officer of each party hereto, (ii) for the account of
each Lender a Revolving Note and a Term Note and for the account of the
Swingline Lender, a Swingline Note and (iii) multiple counterparts of
the
57
Security Agreement and the Pledge Agreement for each Lender, in each
case conforming to the requirements of this Agreement and executed by a
duly authorized officer of the Borrower or the Company or other Credit
Party, as applicable.
(b) Corporate Documents. The Agent shall have received the
following:
(i) Articles of Incorporation. Copies of the
articles of incorporation or charter documents of the Company,
the Borrower and the other Credit Parties certified to be true
and complete as of a recent date by the appropriate
governmental authority of the state of its incorporation.
(ii) Resolutions. Copies of resolutions of
the Board of Directors of the Company, the Borrower and the
other Credit Parties approving and adopting the Credit
Documents, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a
secretary or assistant secretary as of the Closing Date to be
true and correct and in force and effect as of such date.
(iii) Bylaws. A copy of the bylaws of the
Company, the Borrower and the other Credit Parties certified
by a secretary or assistant secretary as of the Closing Date
to be true and correct and in force and effect as of such
date.
(iv) Good Standing. Copies of (i)
certificates of good standing, existence or its equivalent
with respect to the Company, the Borrower and the other Credit
Parties certified as of a recent date by the appropriate
governmental authorities of the state of incorporation and
each other state in which the failure to so qualify and be in
good standing would have a Material Adverse Effect on the
business or operations of the Company, the Borrower and their
respective Subsidiaries in such state and (ii) a certificate
indicating payment of all corporate franchise taxes certified
as of a recent date by the appropriate governmental taxing
authorities.
(v) Incumbency. An incumbency certificate of
each Credit Party certified by a secretary or assistant
secretary to be true and correct as of the Closing Date.
(c) Legal Opinions of Counsel. The Agent shall have received,
with a copy for each Lender, an opinion of Rosenman & Colin LLP,
counsel for the Company, the Borrower and the other Credit Parties,
dated the Closing Date and addressed to the Agent and the Lenders, in
form and substance acceptable to the Agent.
(d) Personal Property Collateral. The Agent shall have
received:
(i) searches of Uniform Commercial Code
filings in the jurisdiction of the chief executive office of
each Credit Party and each jurisdiction where any Collateral
is located or where a filing would need to be made in order to
perfect
58
the Agent's security interest in the Collateral, copies of the
financing statements on file in such jurisdictions and
evidence that no Liens exist other than Permitted Liens;
(ii) duly executed UCC financing statements
for each appropriate jurisdiction as is necessary, in the
Agent's sole discretion, to perfect the Agent's security
interest in the Collateral;
(iii) searches of ownership of Material
Intellectual Property in the appropriate governmental offices
and such patent/trademark/copyright filings as requested by
the Agent in order to perfect the Agent's security interest in
the Collateral;
(iv) all stock certificates evidencing the
Capital Stock pledged to the Agent pursuant to the Pledge
Agreement, together with duly executed in blank undated stock
powers attached thereto (unless, with respect to the pledged
Capital Stock of any Foreign Subsidiary, such stock powers are
deemed unnecessary by the Agent in its reasonable discretion
under the law of the jurisdiction of incorporation of such
Person);
(v) such patent/trademark/copyright filings
as requested by the Agent in order to perfect the Agent's
security interest in the Material Intellectual Property;
(vi) all instruments and chattel paper in
the possession of any of the Credit Parties, together with
allonges or assignments as may be necessary or appropriate to
perfect the Agent's security interest in the Collateral;
(vii) duly executed consents as are
necessary, in the Agent's sole discretion, to perfect the
Lenders' security interest in the Collateral; and
(viii) in the case of any personal property
Collateral located at premises leased by a Credit Party, such
estoppel letters, consents and waivers from the landlords on
such real property as may be required by the Agent.
(e) Liability and Casualty Insurance. The Agent shall have
received copies of insurance policies or certificates of insurance
evidencing liability and casualty insurance meeting the requirements
set forth herein or in the Security Documents. The Agent shall be named
as loss payee and additional insured on all such insurance policies for
the benefit of the Lenders.
(f) Fees. The Agent shall have received all fees, if any,
owing pursuant to the Fee Letter and Section 2.5.
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(g) Tender Offer Closing Date. The Tender Offer Closing Date
shall have occurred on or before the Tender Offer Funding Termination
Date.
(h) DTA Credit Facility. (i) DTA shall have entered into the
DTA Credit Facility, (ii) the Agent shall have a received a copy of the
DTA Credit Facility, certified by an officer of DTA as true and
correct, (iii) the conditions to the financing for the Tender Offer set
forth in the DTA Credit Facility shall have been satisfied or waived,
(iv) DTA shall have received proceeds from the Tender Loans made under
the DTA Credit Facility in an aggregate principal amount of
$245,000,000 and (v) the Tender Offer shall have been consummated in
accordance with the Offer to Purchase.
(i) Litigation. There shall not exist any pending litigation
or investigation affecting or relating to the Bridge Notes, this
Agreement and the other Credit Documents, the DTA Credit Facility, the
Tender Offer or the Amalgamation that in the reasonable judgment of the
Agent could materially adversely affect the Bridge Notes, this
Agreement and the Other Credit Documents, the DTA Credit Facility, the
Tender Offer or the Amalgamation, that has not been settled, dismissed,
vacated, discharged or terminated prior to the Tender Offer Closing
Date.
(j) Solvency Certificate. The Agent shall have received, with
a copy for each Lender, an officer's certificate for each Credit Party
prepared by the chief financial officer of each such Credit Party as to
the financial condition, solvency and related matters of each such
Credit Party, in each case after giving effect to the initial
borrowings under the Credit Documents, in substantially the form of
Schedule 4.1(j) hereto.
(k) Account Designation Letter. The Agent shall have received
the executed Account Designation Letter in the form of Schedule 1.1(a)
hereto.
(l) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in form and substance to the Agent and
its counsel.
SECTION 4.2 CONDITIONS TO REVOLVING LOANS AND TERM LOAN TO BE MADE IN
CONNECTION WITH THE G&L ACQUISITION.
The obligation of each Lender to make the Revolving Loans and the Term
Loan on the Subsequent Transactions Closing Date is subject to the satisfaction
of the following conditions precedent on such date:
(a) Acquisition Documents. The Acquisition Documents shall
have been completed to the satisfaction of the Agent, the Subsequent
Transactions shall have been consummated substantially in accordance
with the terms of the Acquisition Documents and the purchase price
(including fees and expenses) for the Acquired Companies (which shall
include the refinancing of the existing senior bank indebtedness and
the publicly
60
issued senior indebtedness of such Acquired Companies other than the
Indebtedness set forth on Schedule 4.2(o) hereto) shall not exceed
$490,000,000.
(b) Legal Opinions of Counsel. The Agent shall have received
each opinion, report and other document required to be delivered
pursuant to the Acquisition Documents in connection with the Subsequent
Transactions, with a letter from each person delivering such opinion,
report and other document authorizing reliance thereon by the Agent and
the Lenders, all in form and substance acceptable to the Agent.
(c) Personal Property Collateral. The Agent shall have
received the items described in Section 4.1(d) hereof relating to the
Acquired Companies and the actions described in Section 4.1(d) to
perfect the Agent's security interest in the assets of the Acquired
Companies shall have been taken.
(d) Liability and Casualty Insurance. The Agent shall have
received copies of insurance policies or certificates of insurance
evidencing liability and casualty insurance meeting the requirements
set forth herein or in the Security Documents relating to the Acquired
Companies. The Agent shall be named as loss payee and additional
insured on all such insurance policies for the benefit of the Lenders.
(e) Subsequent Transactions Closing Date. The Subsequent
Transactions Closing Date shall have occurred on or before the
Acquisition Funding Termination Date.
(f) Corporate Structure. The corporate capital and ownership
structure of the Company and its Subsidiaries shall be as described in
Schedule 3.12.
(g) Subordinated Debt. The Borrower shall have received
proceeds from the issuance of the Subordinated Debt in an aggregate
principal amount of $250,000,000. The terms and conditions governing
the Subordinated Debt shall be acceptable to the Agent.
(h) Government Consent. The Agent shall have received evidence
that all U.S. and Canadian governmental, shareholder and material third
party consents and approvals necessary in connection with the
Subsequent Transactions and the related financings and other
transactions contemplated hereby have been obtained and all applicable
waiting periods have expired without any action being taken by any
authority that could restrain, prevent or impose any material adverse
conditions on the Subsequent Transactions or such other transactions or
that could seek or threaten any of the foregoing.
(i) Compliance with Laws. The Subsequent Transactions and the
related financings and other transactions contemplated hereby shall be
in compliance with all applicable U.S. and Canadian laws and
regulations (including all applicable U.S. and Canadian securities and
banking laws, rules and regulations).
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(j) Bankruptcy. There shall be no bankruptcy or insolvency
proceedings with respect to the Acquired Companies or any pending
injunction with respect to the Subsequent Transactions.
(k) Legal Aspects. The Agent and its counsel shall be
reasonably satisfied with all legal aspects regarding the G&L
Acquisition.
(l) Consolidated Funded Debt. The aggregate Consolidated
Funded Debt on the Subsequent Transactions Closing Date shall not be in
excess of $695,000,000.
(m) Availability of Revolving Loans. After giving effect to
the making of the Revolving Loans and the Term Loan on the Subsequent
Transactions Closing Date, there shall be availability under the
Revolving Commitments of at least $25,000,000.
(n) Fees and Expenses. The aggregate fees and expenses
incurred by the Company and the Borrower in connection with the Tender
Offer and the Subsequent Transactions shall not exceed $60,000,000.
(o) Existing Indebtedness of Acquired Companies. All of the
existing senior bank indebtedness and publicly issued senior
indebtedness of the Acquired Companies shall be repaid in full on the
Subsequent Transactions Closing Date except for the Indebtedness set
forth on Schedule 4.2(o) hereto.
(p) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in form and substance to the Agent and
its counsel.
SECTION 4.3 CONDITIONS TO INITIAL REVOLVING LOANS FOLLOWING THE G&L
ACQUISITION.
The obligation of each Lender to make the initial Revolving Loans
hereunder following the G&L Acquisition is subject to the receipt by the Agent
of a Borrowing Base Certificate dated as of the Borrowing Date, after giving
effect to the G&L Acquisition, substantially in the form of Schedule 5.2(d) and
certified by the chief financial officer of the Borrower to be true and correct
as of such Borrowing Date.
SECTION 4.4 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligation of each Lender to make any Extension of Credit hereunder
(excluding the initial Revolving Loans to be made hereunder on the Tender Offer
Closing Date and the Loans to be made hereunder on the Subsequent Transactions
Closing Date to finance the Subsequent Transactions) is subject to the
satisfaction of the following conditions precedent on the date of making such
Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein, in the Security Documents
or which are contained in any
62
certificate furnished at any time under or in connection herewith shall
be true and correct in all material respects on and as of the date of
such Extension of Credit as if made on and as of such date.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after
giving effect to the Extension of Credit to be made on such date unless
such Default or Event of Default shall have been waived in accordance
with this Agreement.
(c) Compliance with Commitments. Immediately after giving
effect to the making of any such Extension of Credit (and the
application of the proceeds thereof), (i) the sum of the aggregate
principal amount of outstanding Revolving Loans plus Swingline Loans
plus LOC Obligations shall not exceed (A) on or prior to the Subsequent
Transactions Closing Date, the aggregate Revolving Committed Amount
then in effect and (B) after the Subsequent Transactions Closing Date,
the lesser of the Revolving Committed Amount then in effect and the
Borrowing Base, (ii) the LOC Obligations shall not exceed the LOC
Committed Amount and (iii) the Swingline Loans shall not exceed the
Swingline Commitment.
(d) Additional Conditions to Revolving Loans. If such Loan is
made pursuant to Section 2.1, all conditions set forth in such Section
shall have been satisfied.
(e) Additional Conditions to Term Loan. If such Loan is made
pursuant to Section 2.2, all conditions set forth in such Section shall
have been satisfied.
(f) Additional Conditions to Swingline Loan. If such Loan is
made pursuant to Section 2.3, all conditions set forth in such Section
shall have been satisfied.
(g) Additional Conditions to Letters of Credit. If such
Extension of Credit is made pursuant to Section 2.4, all conditions set
fort in such Section shall have been satisfied.
Each request for an Extension of Credit (excluding the initial
Revolving Loans to be made hereunder on the Tender Offer Closing Date and the
Loans to be made hereunder on the Subsequent Transactions Closing Date to
finance the Subsequent Transactions) and each acceptance by the Borrower of any
such Extension of Credit shall be deemed to constitute a representation and
warranty by the Borrower as of the date of such Extension of Credit that the
applicable conditions in paragraphs (a) and (b), and in (d), (e), (f) or (g) of
this Section have been satisfied.
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ARTICLE V
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations, together with interest, Commitment Fees and all other amounts owing
to the Agent or any Lender hereunder, are paid in full, the Company shall, and
shall cause the Borrower to, and each of its other Subsidiaries (other than in
the case of Sections 5.1, 5.2 or 5.7 hereof), to:
SECTION 5.1 FINANCIAL STATEMENTS.
Furnish to the Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, but in
any event within ninety (90) days after the end of each fiscal year of
the Company, a copy of the consolidated balance sheet of the Company
and its consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income and retained earnings and
of cash flows of the Company and its consolidated Subsidiaries for such
year, audited by Ernst & Young LLP or other firm of independent
certified public accountants of nationally recognized standing
reasonably acceptable to the Required Lenders, setting forth in each
case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification indicating that the scope of the audit was inadequate to
permit such independent certified public accountants to certify such
financial statements without such qualification;
(b) Quarterly Financial Statements. As soon as available and
in any event within forty-five (45) days after the end of each of the
first three fiscal quarters of the Company, a company-prepared
consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of such period and related company-prepared
statements of income and retained earnings and of cash flows for the
Company and its consolidated Subsidiaries for such quarterly period and
for the portion of the fiscal year ending with such period, in each
case setting forth in comparative form consolidated figures for the
corresponding period or periods of the preceding fiscal year (subject
to normal recurring year-end audit adjustments);
(c) Annual Budget Plan. As soon as available, but in any event
no more than forty-five (45) days after the end of each fiscal year, a
copy of the detailed annual budget or plan of the Company for the next
fiscal year, in form and detail reasonably acceptable to the Agent and
the Required Lenders, together with a summary of the material
assumptions made in the preparation of such annual budget or plan; and
(d) Audited Financials of Apparel Division. As soon as
available, but in any event no more than fifteen (15) Business Days
following the Subsequent Transactions
64
Closing Date but in no event later than February 15, 1998, the audited
annual financial statements of the Apparel Division for the fiscal year
ended June 30, 1997,
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change, if any, in the application of accounting principles as
provided in Section 1.3.
SECTION 5.2 CERTIFICATES; OTHER INFORMATION.
Furnish to the Agent and each of the Lenders:
(a) concurrently with the delivery of the financial statements
referred to in Section 5.1(a) above, a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and 5.1(b) above, a certificate of a
Responsible Officer stating that, to the best of such Responsible
Officer's knowledge, each of the Credit Parties during such period
observed or performed in all material respects all of its covenants and
other agreements, and satisfied in all material respects every
condition, contained in this Agreement to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate and such certificate shall include the calculations
required to indicate compliance with Section 5.9;
(c) within thirty (30) days after the same are sent, copies of
all reports (other than those otherwise provided pursuant to Section
5.1 and those which are of a promotional nature) and other financial
information which the Company or the Borrower sends to its
stockholders, and within thirty days after the same are filed, copies
of all financial statements and non-confidential reports which the
Company or the Borrower may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental
Authority;
(d) within fifteen (15) days after the end of each fiscal
month, a Borrowing Base Certificate as of the end of the immediately
preceding fiscal month, substantially in the form of Schedule 5.2(d)
and certified by the chief financial officer of the Borrower to be true
and correct as of the date thereof;
65
(e) within ninety (90) days after the end of each fiscal year
of the Company, a certificate containing information regarding (i) the
calculation of Excess Cash Flow and (ii) the amount of all Asset
Dispositions, Debt Issuances, Equity Issuances, amounts received in
connection with any Recovery Event, any repayments or prepayments of
the G&L Loan and any adjustments to the purchase price of the Acquired
Companies that were made during the prior fiscal year;
(f) promptly upon receipt thereof, a copy of any other report
or "management letter" submitted by independent accountants to the
Company or any of its Subsidiaries in connection with any annual,
interim or special audit of the books of such Person; and
(g) promptly, such additional financial and other information
as the Agent, on behalf of any Lender, may from time to time reasonably
request.
SECTION 5.3 PAYMENT OF OBLIGATIONS.
Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, in accordance with industry practice
(subject, where applicable, to specified grace periods) all its material
obligations of whatever nature and any additional costs that are imposed as a
result of any failure to so pay, discharge or otherwise satisfy such
obligations, except when the amount or validity of such obligations and costs is
currently being contested in good faith by appropriate proceedings and reserves,
if applicable, in conformity with GAAP with respect thereto have been provided
on the books of the Company or its Subsidiaries, as the case may be.
SECTION 5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
Continue to engage in business of the same general type as now
conducted by it on the date hereof and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business; comply with all Contractual Obligations and
Requirements of Law applicable to it except to the extent that failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.
SECTION 5.5 MAINTENANCE OF PROPERTY; INSURANCE.
Keep all material property useful and necessary in its business in good
working order and condition (ordinary wear and tear excepted); maintain with
financially sound and reputable insurance companies insurance on all its
material property (including without limitation its material tangible
Collateral) in at least such amounts and against at least such risks as are
usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to the Agent, upon written request, full
information as to the insurance carried; provided, however, that the Company and
its Subsidiaries may maintain self insurance plans to the extent companies of
similar size and in similar businesses do so.
66
SECTION 5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its businesses and activities; and
permit, during regular business hours and upon reasonable notice by the Agent,
the Agent to visit and inspect any of its properties and examine and make
abstracts from any of its books and records (other than materials protected by
the attorney-client privilege and materials which the Company or the Borrower
may not disclose without violation of a confidentiality obligation binding upon
it) at any reasonable time and as often as may reasonably be desired, and to
discuss the business, operations, properties and financial and other condition
of the Company and its Subsidiaries with officers and employees of the Company
and its Subsidiaries and with its independent certified public accountants.
SECTION 5.7 NOTICES.
Give notice in writing to the Agent (which shall promptly transmit such
notice to each Lender) of:
(a) within five Business Days after the Company or the
Borrower knows or has reason to know thereof, the occurrence of any
Default or Event of Default;
(b) promptly, any default or event of default under any
Contractual Obligation of the Company or any of its Subsidiaries or the
Borrower which would reasonably be expected to have a Material Adverse
Effect;
(c) promptly, any litigation, or any investigation or
proceeding known to the Company or the Borrower, affecting the Company
or any of its Subsidiaries or the Borrower which, if adversely
determined, would reasonably be expected to have a Material Adverse
Effect;
(d) as soon as possible and in any event within thirty (30)
days after the Company or the Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC
or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Company or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, Reorganization
or Insolvency of, any Plan; and
(e) promptly, any other development or event which would
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company or
67
the Borrower proposes to take with respect thereto. In the case of any notice of
a Default or Event of Default, the Borrower shall specify that such notice is a
Default or Event of Default notice on the face thereof.
SECTION 5.8 ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and ensure
compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws and obtain and comply in
all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications, registrations
or permits required by applicable Environmental Laws except to the
extent that failure to do so would not reasonably be expected to have a
Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with
all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the
pendency of such proceedings would not reasonably be expected to have a
Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective employees, agents, officers and
directors, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable
to the operations of the Company, any of its Subsidiaries or the
Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the
extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor. The
agreements in this paragraph shall survive repayment of the Notes and
all other amounts payable hereunder.
SECTION 5.9 FINANCIAL COVENANTS.
Commencing on the day immediately following the Subsequent Transactions
Closing Date or, if the G&L Acquisition shall not have occurred on or prior to
the Acquisition Funding Termination Date, on the day immediately following the
Acquisition Funding Termination Date, and subject to the negotiation of
satisfactory covenant levels pursuant to Section 9.18 hereof, the Company shall,
and shall cause each of its Subsidiaries and the Borrower to, comply with the
following financial covenants:
(a) Adjusted Leverage Ratio. As of the end of each fiscal
quarter set forth in the table below, there shall be maintained an
Adjusted Leverage Ratio of not greater than
68
the corresponding ratio appearing in such table. The applicable period
for purposes of determining compliance herewith shall be for the period
of four (4) fiscal quarters ending on the applicable date set forth
below.
[COMPANY/BORROWER TO PROVIDE CORRECT FISCAL QUARTER END DATES]
Period Ratio
March 28, 1998
June 27, 1998
October 3, 1998
December 31, 1998
March 31, 1999
June 30, 1999
September 30, 1999
March 31, 2000
June 30, 2000
September 30, 2000
December 31, 2000
March 31, 2001
June 30, 2001
September 30, 2001
December 31, 2001
March 31, 2002
June 30, 2002
September 30, 2002
December 31, 2002
Last day of fiscal year
2000 and thereafter
(b) Consolidated Tangible Net Worth. There shall be maintained
at all times Consolidated Tangible Net Worth of at least the amounts
set forth below for the applicable periods set forth below:
Period Amounts
Last day of fiscal year
1997 through the next-
to-last day of fiscal
year 1998 $
Last day of fiscal year
1998 through the next-
to-last day of fiscal
year 1999 $
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Last day of fiscal year
1999 through the next-
to-last day of fiscal
year 2000 $
Last day of fiscal year
2000 through the next-
to-last day of fiscal
year 2001 $
Last day of fiscal year
2001 through the next-
to-last day of fiscal
year 2002 $
Last day of fiscal year
2002 and thereafter $
(c) Capital Expenditures. The Company and its Subsidiaries
shall not, as a group, make or incur Capital Expenditures in any fiscal
year in excess of the amount shown below, on a non-cumulative basis:
Fiscal year 1998 $
Fiscal year 1999 $
Fiscal year 2000 $
Fiscal year 2001 $
Fiscal year 2002 $
Fiscal year 2003
and each fiscal
year thereafter $
(d) Adjusted Fixed Charge Coverage Ratio. As of the end of
each fiscal quarter, commencing with March 28, 1998, there shall be
maintained an Adjusted Fixed Charge Coverage Ratio of at least ___:1.0.
The applicable period for purposes of determining compliance herewith
shall be for the period of four (4) fiscal quarters then ended.
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SECTION 5.10 ADDITIONAL SUBSIDIARY GUARANTORS.
The Credit Parties will cause each of their Domestic Subsidiaries,
whether newly formed, after acquired or otherwise existing, to promptly become a
"Subsidiary Guarantor" hereunder by way of execution of a Joinder Agreement. The
guaranty obligations of any such Additional Credit Party shall be secured by,
among other things, the Collateral of the Additional Credit Party and a pledge
of 100% of the Capital Stock or other equity interest of its Domestic
Subsidiaries and 65% of the Capital Stock or other equity interest of its
Foreign Subsidiaries to the extent that such pledge is permissible under
applicable law, and a pledge by the Company, the Borrower or other Credit Party
which is the owner of the Capital Stock or other equity interest in such
Subsidiary of 100% of the Capital Stock if it is a Domestic Subsidiary and 65%
of its Capital Stock or other equity interest if it is a Foreign Subsidiary.
SECTION 5.11 COMPLIANCE WITH LAW.
Each Credit Party will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and its
Property if noncompliance with any such law, rule, regulation, order or
restriction could have a Material Adverse Effect.
SECTION 5.12 PLEDGED ASSETS.
(a) Each Credit Party will, and will cause each of its
Subsidiaries to, cause 100% of the Capital Stock in the Borrower and
each other direct or indirect Domestic Subsidiaries of the Company and
65% of the Capital Stock in each of the Foreign Subsidiaries of the
Company and its Domestic Subsidiaries to be subject at all times to a
first priority, perfected Lien in favor of the Agent pursuant to the
terms and conditions of the Security Documents or such other security
documents as the Agent shall reasonably request.
(b) If, subsequent to the Closing Date, a Credit Party shall
(a) acquire any Material Intellectual Property, securities,
instruments, chattel paper or other personal property required to be
delivered to the Agent as Collateral hereunder or under any of the
Security Documents or (b) acquire or lease any real property, the
Borrower shall promptly (and in any event within three (3) Business
Days) after any Responsible Officer of a Credit Party acquires
knowledge of same notify the Agent of same. Each Credit Party shall,
and shall cause each of its Subsidiaries to, take such action at its
own expense as requested by the Agent (including, without limitation,
any of the actions described in Section 4.1(d) hereof) to ensure that
the Agent has a first priority perfected Lien to secure the Credit
Party Obligations in (i) all personal property of the Credit Parties
located in the United States and (ii) to the extent deemed to be
material by the Agent or the Required Lenders in its or their sole
reasonable discretion, all other personal property of the Credit
Parties, subject in each case only to Permitted Liens. Each Credit
Party shall, and shall cause each of its Subsidiaries to, adhere to the
covenants regarding the location of personal property as set forth in
the Security Documents.
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(c) The Borrower shall use reasonable commercial efforts to
deliver or cause to be delivered to the Agent satisfactory estoppel
letters, consents and/or waivers from the landlords and other property
owners with respect to each of its leased locations, warehouse or
processing locations within 45 days following the Closing Date and
within 45 days following the acquisition or leasing of additional
locations by the Borrower or any of its Subsidiaries.
(d) The Borrower shall deliver or cause to be delivered to the
Agent within 60 days following the Closing Date satisfactory evidence
that the security interests of the Agent in the stock of Dimmit
Industries and in any other property of the Credit Parties located in,
or otherwise subject to the laws of, Mexico have been perfected under
the laws of Mexico.
(e) The Borrower shall deliver or cause to be delivered to the
Agent within 45 days following the Closing Date satisfactory evidence
that the security interest of CIT Group/Business Credit, Inc. in the
Xxxxx & Lord trademark on file in the U.S. Patent and Trademark Office
has been terminated and released.
SECTION 5.13 REVISIONS OR UPDATES TO SCHEDULES.
If any of the information or disclosures provided on any of Schedules
originally attached hereto become outdated or incorrect in any material respect
as a result of the consummation of the G&L Acquisition, the Borrower shall
promptly deliver to the Agent and the Lenders such revisions or updates to such
Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s), provided, that no such revisions or updates to any such Schedule(s)
shall be deemed to have amended, modified or superseded such Schedule(s) as
originally attached hereto, or to have cured any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such
Schedule(s), unless and until the Agent, in its sole discretion, shall have
accepted in writing such revisions or updates to such Schedule(s).
ARTICLE VI
NEGATIVE COVENANTS
The Company hereby covenants and agrees that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations, together with interest, Commitment Fees and all other amounts owing
to the Agent or any Lender hereunder, are paid in full, the Company shall, and
shall cause each of its Subsidiaries and the Borrower, to:
72
SECTION 6.1 INDEBTEDNESS.
The Company will not, nor will it permit any Subsidiary to, contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising or existing under this Agreement and
the other Credit Documents and the Subordinated Debt;
(b) Indebtedness existing as of the Closing Date as referenced
in the financial statements referenced in Section 3.1 (and set out more
specifically in Schedule 6.1(b)) and Indebtedness set forth on Schedule
4.2(o) hereto and renewals, refinancings or extensions thereof in a
principal amount not in excess of that outstanding as of the date of
such renewal, refinancing or extension;
(c) Indebtedness incurred after the Closing Date consisting of
Capital Leases or Indebtedness incurred to provide all or a portion of
the purchase price or cost of construction of an asset provided that
(i) such Indebtedness when incurred shall not exceed the purchase price
or cost of construction of such asset; (ii) no such Indebtedness shall
be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing; and (iii) the
total amount of all such Indebtedness shall not exceed $20,000,000 at
any time outstanding;
(d) Unsecured intercompany Indebtedness among the Company and
its Subsidiaries, provided that any such Indebtedness shall be fully
subordinated to the Credit Party Obligations hereunder on terms
reasonably satisfactory to the Agent; and provided, further, that
intercompany Indebtedness of Foreign Subsidiaries owed to Domestic
Credit Parties shall not exceed $25,000,000 in the aggregate at any one
time;
(e) Indebtedness and obligations owing under Hedging
Agreements relating to the Loans hereunder and other Hedging Agreements
entered into in order to manage existing or anticipated interest rate,
exchange rate or commodity price risks and not for speculative
purposes;
(f) Indebtedness and obligations of Domestic Credit Parties
owing under documentary letters of credit (but not under standby,
direct pay or other letters of credit except for the Letters of Credit
hereunder) generally; and
(g) other unsecured Indebtedness of Domestic Credit Parties
which does not exceed $10,000,000 in the aggregate at any time
outstanding.
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SECTION 6.2 LIENS.
The Company will not, nor will it permit any Subsidiary to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, except for Permitted
Liens.
SECTION 6.3 GUARANTY OBLIGATIONS.
The Company will not, nor will it permit any Subsidiary to, enter into
or otherwise become or be liable in respect of any Guaranty Obligations
(excluding specifically therefrom endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) other than (i)
those in favor of the Lenders in connection herewith and (ii) Guaranty
Obligations by the Company or its Subsidiaries of Indebtedness permitted under
Section 6.1 (except, as regards Indebtedness under subsection (b) thereof, only
if and to the extent such Indebtedness was guaranteed on the Closing Date).
SECTION 6.4 NATURE OF BUSINESS.
The Company will not, nor will it permit any Subsidiary to, alter the
character of its business in any material respect from that conducted as of the
Closing Date except as a result of the G&L Acquisition.
SECTION 6.5 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC.
The Company will not, nor will it permit any Subsidiary to,
(a) dissolve, liquidate or wind up its affairs, sell,
transfer, lease or otherwise dispose of its property or assets or agree
to do so at a future time except the following, without duplication,
shall be expressly permitted:
(i) Specified Sales;
(ii) the sale, transfer, lease or other disposition
of property or assets to an unrelated party not in the
ordinary course of business (other than Specified Sales),
where and to the extent that they are the result of a Recovery
Event or otherwise and the net proceeds therefrom are used to
repair or replace damaged property or to purchase or otherwise
acquire new assets or property, provided that such purchase or
acquisition is consummated within 180 days of such receipt;
(iii) the sale, lease or transfer of property or
assets (at fair value) between the Company and the Borrower;
74
(iv) the sale, lease or transfer of property or
assets from a Domestic Credit Party other than the Company or
the Borrower to another Domestic Credit Party; and
(v) the sale and lease of the Borrower's property
permitted pursuant to Section 6.13 hereof; or
(b) purchase, lease or otherwise acquire (in a single
transaction or a series of related transactions) all or any substantial
part of the property or assets of any Person (other than purchases or
other acquisitions of inventory, leases, materials, property and
equipment in the ordinary course of business, except as otherwise
limited or prohibited herein), or enter into any transaction of merger
or consolidation, except for (i) investments or acquisitions permitted
pursuant to Section 6.6, (ii) the merger or consolidation of the
Company into the Borrower or the Borrower into the Company, or a sale,
transfer or lease of all or a substantial part of its properties (at
fair value) to, the Company or the Borrower, (iii) the G&L Acquisition,
(iv) the merger or consolidation of a Domestic Credit Party with and
into another Domestic Credit Party, provided that if the Company or the
Borrower is a party thereto, either the Company or the Borrower will be
the surviving corporation, and (v) the merger or consolidation of any
other Person with and into a Credit Party, provided that in any such
case a Credit Party shall be the surviving corporation and no Default
or Event of Default would exist after giving effect thereto on a Pro
Forma Basis.
As used herein, "substantial part" shall mean property and assets, the book
value of which, when added to the book value of all other assets sold, leased or
otherwise disposed of by the Company and its Subsidiaries (other than in the
ordinary course of business), during the 12-month period ending with the date of
such sale, lease or other disposition exceeds 10% of Consolidated Tangible Net
Worth, determined as of the end of the immediately preceding fiscal year.
SECTION 6.6 ADVANCES, INVESTMENTS AND LOANS.
The Company will not, nor will it permit any Subsidiary to, lend money
or extend credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any Person except for (a) Permitted Investments and (b)
repurchases of the Company's common stock by the Company permitted pursuant to
Section 6.11 hereof.
SECTION 6.7 TRANSACTIONS WITH AFFILIATES.
Except as permitted in subsection (iv) of the definition of Permitted
Investments and otherwise to an extent not judged material by the Required
Lenders in their discretion, the Company will not, nor will it permit any
Subsidiary to, enter into any transaction or series of transactions, whether or
not in the ordinary course of business, with any officer, director, shareholder
or Affiliate other than on terms and conditions substantially as favorable as
would be
75
obtainable in a comparable arm's-length transaction with a Person other than an
officer, director, shareholder or Affiliate.
SECTION 6.8 OWNERSHIP OF SUBSIDIARIES; COMPANY RESTRICTIONS.
(a) The Company will not, nor will it permit any Subsidiary
to, create, form or acquire any Subsidiaries, except for (i) Domestic
Subsidiaries which are joined as Additional Credit Parties in
accordance with the terms hereof, (ii) Foreign Subsidiaries acquired
pursuant to the G&L Acquisition and (iii) other Foreign Subsidiaries,
provided that any investment in, capitalization of or organizational
costs and expenses incurred in the formation and start-up of, any such
other Foreign Subsidiaries shall not, together with other Permitted
Investments in Foreign Subsidiaries, exceed $3,000,000 in the aggregate
at any one time. The Company will not sell, transfer, pledge or
otherwise dispose of any Capital Stock or other equity interests in any
of its Subsidiaries (including the Borrower), nor will it permit any of
its Subsidiaries to issue, sell, transfer, pledge or otherwise dispose
of any of their Capital Stock or other equity interests, except in a
transaction permitted by Section 6.5.
(b) The Company will not (i) hold any assets other than the
Capital Stock of the Borrower, (ii) have any liabilities other than (A)
the liabilities under the Credit Documents, (B) tax liabilities in the
ordinary course of business, (C) loans and advances permitted under
this Agreement and (D) corporate, administrative and operating expenses
in the ordinary course of business and (iii) engage in any business
other than (A) owning the Capital Stock of the Borrower and activities
incidental or related thereto and (B) acting as a Guarantor hereunder
and pledging its assets to the Agent, for the benefit of the Lenders,
pursuant to the Security Documents to which it is a party.
SECTION 6.9 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
The Company will not, nor will it permit the Borrower to, change its
fiscal year. The Company will not, nor will it permit any Subsidiary to, amend,
modify or change its articles of incorporation (or corporate charter or other
similar organizational document) or bylaws (or other similar document) without
the prior written consent of the Required Lenders.
SECTION 6.10 LIMITATION ON RESTRICTED ACTIONS.
The Company will not, nor will it permit any Subsidiary to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its properties or assets to any Credit Party, or (e) act as a
Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing
76
under or by reason of (i) this Agreement and the other Credit Documents, (ii)
the Subordinated Debt, (iii) applicable law, (iv) any document or instrument
governing Indebtedness incurred pursuant to Section 6.1(c), provided that any
such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith or (v) any Permitted Lien or any
document or instrument governing any Permitted Lien, provided that any such
restriction contained therein relates only to the asset or assets subject to
such Permitted Lien.
SECTION 6.11 RESTRICTED PAYMENTS.
The Company will not, nor will it permit any Subsidiary to, directly or
indirectly, declare, order, make or set apart any sum for or pay any Restricted
Payment, except (a) to make dividends payable solely in the same class of
Capital Stock of such Person, (b) to make dividends or other distributions
payable to any Credit Party (directly or indirectly through Subsidiaries), (c)
to make dividends payable on Permitted Preferred Stock, (d) to make repurchases
of the Company's common stock pursuant to the Stock Repurchase Plan in an amount
up to $5,000,000 in the aggregate and (e) as permitted by Section 6.12.
SECTION 6.12 PREPAYMENTS OF INDEBTEDNESS, ETC.
The Company will not, nor will it permit any Subsidiary to, (a) after
the issuance thereof, amend or modify (or permit the amendment or modification
of) any of the terms of any Indebtedness if such amendment or modification would
add or change any terms in a manner adverse to the issuer of such Indebtedness,
or shorten the final maturity or average life to maturity or require any payment
to be made sooner than originally scheduled or increase the interest rate
applicable thereto or change any subordination provision thereof, or (b) make
(or give any notice with respect thereto) any voluntary or optional payment or
prepayment, redemption, acquisition for value or defeasance of (including
without limitation, by way of depositing money or securities with the trustee
with respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any Subordinated Debt, except that so long as there is
no Default or Event of Default then in existence and subject to the terms and
provisions of the indenture or other document evidencing the Subordinated Debt,
the Borrower shall be entitled to pay interest and scheduled principal payments
thereon in accordance with the terms of the Subordinated Debt.
SECTION 6.13 SALE LEASEBACKS.
The Company will not, nor will it permit any Subsidiary to, directly or
indirectly, become or remain liable as lessee or as guarantor or other surety
with respect to any lease, whether an operating lease or a Capital Lease, of any
property (whether real, personal or mixed), whether now owned or hereafter
acquired, (a) which the Company or any Subsidiary has sold or transferred or is
to sell or transfer to a Person which is not the Company or any Subsidiary or
(b) which the Company or any Subsidiary intends to use for substantially the
same purpose as any other property which has been sold or is to be sold or
transferred by the Company or any Subsidiary to another Person which is not the
Company or any Subsidiary in connection with such lease; provided, however, that
the Borrower shall be permitted to enter into that certain Inducement and
Millage Rate Agreement and that certain Lease Purchase Agreement, in each
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case, with Darlington County, South Carolina and dated as of December 1, 1997
relating to the sale and lease of the expansion of the Borrower's textile
manufacturing facility located in Darlington County, South Carolina, and such
other related documents necessary to effect such sale and lease.
SECTION 6.14 NO FURTHER NEGATIVE PLEDGES.
The Company will not, nor will it permit any Subsidiary to, enter into,
assume or become subject to any agreement prohibiting or otherwise restricting
the creation or assumption of any Lien upon its properties or assets, whether
now owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation, except (a) pursuant
to this Agreement and the other Credit Documents, (b) pursuant to the terms of
the Subordinated Debt, (c) pursuant to any document or instrument governing
Indebtedness incurred pursuant to Section 6.1(c), provided that any such
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith and (d) in connection with any Permitted Lien
or any document or instrument governing any Permitted Lien, provided that any
such restriction contained therein relates only to the asset or assets subject
to such Permitted Lien.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) The Borrower shall fail to pay any principal on any Note
when due in accordance with the terms thereof or hereof; or the
Borrower shall fail to reimburse the Issuing Lender for any LOC
Obligations when due in accordance with the terms hereof and such
failure shall continue unremedied for three (3) Business Days; or the
Borrower shall fail to pay any interest on any Note or any fee or other
amount payable hereunder when due in accordance with the terms thereof
or hereof and such failure shall continue unremedied for five (5)
Business Days (or any Guarantor shall fail to pay on the Guaranty in
respect of any of the foregoing or in respect of any other Guaranty
Obligations thereunder); or
(b) Any representation or warranty made or deemed made herein,
in the Security Documents or in any of the other Credit Documents or
which is contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect, false or misleading in
any material respect on or as of the date made or deemed made; or
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(c) (i) Any Credit Party shall fail to perform, comply with or
observe any term, covenant or agreement applicable to it contained in
Section 5.1(d), Section 5.7(a), Section 5.9 or Article VI hereof ; or
(ii) any Credit Party shall fail to comply with any other covenant,
contained in this Credit Agreement or the other Credit Documents or any
other agreement, document or instrument among any Credit Party, the
Agent and the Lenders or executed by any Credit Party in favor of the
Agent or the Lenders (other than as described in Sections 7.1(a) or
7.1(c)(i) above), and in the event such breach or failure to comply is
capable of cure, is not cured within thirty (30) days of its
occurrence; or
(d) The Company, any of its Subsidiaries or the Borrower shall
(i) default in any payment of principal of or interest on (A) the
Subordinated Debt or (B) any Indebtedness (other than the Notes) in a
principal amount outstanding of at least $5,000,000 in the aggregate
for the Company, its Subsidiaries and the Borrower beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness was created; or (ii) default in
the observance or performance of any other agreement or condition
relating to (A) the Subordinated Debt or (B) any Indebtedness in a
principal amount outstanding of at least $5,000,000 in the aggregate
for the Company, its Subsidiaries and the Borrower or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries
of such Indebtedness (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity; or
(e) (i) The Company, any of its Subsidiaries or the Borrower
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or the Company, any Subsidiary or the
Borrower shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Company, any
Subsidiary or the Borrower any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Company, any Subsidiary
or the Borrower any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Company, any Subsidiary or the
Borrower shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts
79
set forth in clause (i), (ii), or (iii) above; or (v) the Company, any
Subsidiary or the Borrower shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they
become due; or
(f) One or more judgments or decrees shall be entered against
the Company, any of its Subsidiaries or the Borrower involving in the
aggregate a liability (to the extent not paid when due or covered by
insurance) of $5,000,000 or more and all such judgments or decrees
shall not have been paid and satisfied, vacated, discharged, stayed or
bonded pending appeal within 45 days from the entry thereof; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Company or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a Trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Company, any of its Subsidiaries
or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, any
Multiemployer Plan or (vi) any other similar event or condition shall
occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other
such events or conditions, if any, could have a Material Adverse
Effect; or
(h) Either (i) a "person" or a "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934
other than Citicorp Venture Capital Ltd. or any of its Affiliates
("CVC") or members of senior management of the Company or the Borrower
as of the Closing Date) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of 45% or more of
the then outstanding voting stock of the Company (other than as a
result of CVC converting its shares in the Company from voting stock to
non-voting stock) or (ii) a majority of the Board of Directors of the
Company shall consist of individuals who are not Continuing Directors;
"Continuing Director" means, as of any date of determination, (i) an
individual who on the date two years prior to such determination date
was a member of the Company's Board of Directors and (ii) any new
Director whose nomination for election by the Company's shareholders
was approved by a vote of at least 75% of the Directors then still in
office who either were Directors on the date two years prior to such
determination date or whose nomination for election was previously so
approved; or
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(i) The Guaranty or any provision thereof shall cease to be in
full force and effect or any Guarantor or any Person acting by or on
behalf of any Guarantor shall deny or disaffirm any Guarantor's
obligations under the Guaranty; or
(j) Any other Credit Document shall fail to be in full force
and effect or to give the Agent and/or the Lenders the security
interests, liens, rights, powers and privileges purported to be created
thereby (except as such documents may be terminated or no longer in
force and effect in accordance with the terms thereof, other than those
indemnities and provisions which by their terms shall survive); or
(k) There shall occur and be continuing any Event of Default
under and as defined in the indenture or other document evidencing the
Subordinated Debt or any of the Credit Party Obligations for any reason
shall cease to be designated as senior indebtedness thereunder.
SECTION 7.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, then, and in any such
event, (a) if such event is an Event of Default specified in Section 7.1(e)
above, automatically the Commitments shall immediately terminate and the Loans
(with accrued interest thereon), and all other amounts under the Credit
Documents (including without limitation the maximum amount of all contingent
liabilities under Letters of Credit) shall immediately become due and payable,
and (b) if such event is any other Event of Default, either or both of the
following actions may be taken: (i) with the written consent of the Required
Lenders, the Agent may, or upon the written request of the Required Lenders, the
Agent shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the written consent of the Required Lenders, the Agent may, or upon the written
request of the Required Lenders, the Agent shall, by notice of default to the
Borrower, declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes to be due and payable forthwith
and direct the Borrower to pay to the Agent cash collateral as security for the
LOC Obligations for subsequent drawings under then outstanding Letters of Credit
an amount equal to the maximum amount of which may be drawn under Letters of
Credit then outstanding, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section 7.2, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
ARTICLE VIII
THE AGENT
SECTION 8.1 APPOINTMENT.
Each Lender hereby irrevocably designates and appoints First Union
National Bank as the Agent of such Lender under this Agreement, and each such
Lender irrevocably authorizes First
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Union National Bank, as the Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agent.
SECTION 8.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties under this Agreement by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care. Without limiting the foregoing, the Agent
may appoint on of its affiliates as its agent to perform the functions of the
Agent hereunder relating to the advancing of funds to the Borrower and
distribution of funds to the Lenders and to perform such other related functions
of the Agent hereunder as are reasonably incidental to such functions.
SECTION 8.3 EXCULPATORY PROVISIONS.
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Company or the Borrower or any officer thereof contained in this Agreement
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Credit Documents or for any failure of the Company
or the Borrower to perform its obligations hereunder or thereunder. The Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance by the Company or the Borrower of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Company or the Borrower.
SECTION 8.4 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it in good faith
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Company or the Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all
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purposes unless (a) a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent and (b) the Agent shall have
received the written agreement of such assignee to be bound hereby as fully and
to the same extent as if such assignee were an original Lender party hereto, in
each case in form satisfactory to the Agent. The Agent shall be fully justified
in failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under any of the Credit
Documents in accordance with a request of the Required Lenders or all of the
Lenders, as may be required under this Agreement, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
SECTION 8.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender, the Company or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided, however, that unless
and until the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders except to the extent that this Credit
Agreement expressly requires that such action be taken, or not taken, only with
the consent or upon the authorization of the Required Lenders, or all of the
Lenders, as the case may be.
SECTION 8.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representation or warranty to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the Company and/or the
Borrower, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Company and the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the 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 credit analysis, appraisals and decisions in taking or not taking action
under this Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Company and the Borrower. Except for
notices, reports and other
83
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Company and the Borrower which may come into the possession of the Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 8.7 INDEMNIFICATION.
The Lenders agree to indemnify the Agent in its capacity hereunder (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is sought under this
Section, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of any Credit Document
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing; provided, however,
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting from the Agent's gross
negligence or willful misconduct. The agreements in this Section 8.7 shall
survive the termination of this Agreement and payment of the Notes and all other
amounts payable hereunder.
SECTION 8.8 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Company and the Borrower
as though the Agent were not the Agent hereunder. With respect to its Loans made
or renewed by it and any Note issued to it, the Agent shall have the same rights
and powers under this Agreement as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall include
the Agent in its individual capacity.
SECTION 8.9 SUCCESSOR AGENT.
The Agent may resign as Agent upon 30 days' prior notice to the Company
and the Lenders. If the Agent shall resign as Agent under this Agreement and the
Notes, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be approved by the
Company, whereupon such successor agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such successor agent
effective upon such appointment and approval, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or further act
or deed on the part of such former Agent or any of the parties to this Agreement
or any holders of the Notes. After any retiring Agent's resignation as Agent,
the provisions of this Section 8.9 shall inure to its
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benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 AMENDMENTS, WAIVERS AND RELEASE OF COLLATERAL.
Neither this Agreement, nor any of the Notes, nor any of the other
Credit Documents (including the Wachovia JEDA Letter of Credit and the Wachovia
JEDA Reimbursement Agreement), nor any terms hereof or thereof may be amended,
supplemented, waived or modified except in accordance with the provisions of
this Section nor may be released except as specifically provided herein or in
the Security Documents or in accordance with the provisions of this Section 9.1.
The Required Lenders may, or, with the written consent of the Required Lenders,
the Agent may, from time to time, (a) enter into with the Company and the
Borrower written amendments, supplements or modifications hereto and to the
other Credit Documents for the purpose of adding any provisions to this
Agreement or the other Credit Documents or changing in any manner the rights of
the Lenders or of the Company and the Borrower hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders may specify in such
instrument, any of the requirements of this Agreement or the other Credit
Documents or any Default or Event of Default and its consequences or (c) release
collateral in accordance with the terms hereof or of any Security Document or on
such other terms and conditions as the Required Lenders may agree; provided,
however, that no such waiver and no such amendment, waiver, supplement,
modification or release shall (i) reduce the amount or extend the scheduled date
of maturity of any Loan or Note or any installment thereon, or reduce the stated
rate of any interest or fee payable hereunder (other than interest at the
increased post-default rate) or extend the scheduled date of any payment thereof
or increase the amount or extend the expiration date of any Lender's Commitment,
in each case without the written consent of each Lender directly affected
thereby, or (ii) amend, modify or waive any provision of this Section 9.1 or
reduce the percentage specified in the definition of Required Lenders, without
the written consent of all the Lenders, or (iii) amend, modify or waive any
provision of Article VIII without the written consent of the then Agent, or (iv)
release any of the Guarantors from their obligations under the Guaranty, without
the written consent of all of the Lenders, or (v) release all or substantially
all of the collateral without the written consent of all of the Lenders, or (vi)
amend, modify or waive any provision of the Credit Documents requiring consent,
approval or request of the Required Lenders or all Lenders and, provided,
further, that no amendment, waiver or consent affecting the rights or duties of
the Agent or the Issuing Lender under any Credit Document shall in any event be
effective, unless in writing and signed by the Agent and/or the Issuing Lender,
as applicable, in addition to the Lenders required hereinabove to take such
action. Any such waiver, any such amendment, supplement or modification and any
such release shall apply equally to each of the Lenders and shall be binding
upon the Company, the Borrower, the other Credit Parties, the Lenders, the Agent
and all future holders of the Notes. In the case of any waiver, the Company, the
Borrower, the other Credit Parties, the Lenders and the Agent shall be restored
to their former
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position and rights hereunder and under the outstanding Loans and Notes and
other Credit Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
Notwithstanding any of the foregoing to the contrary, the consent of
the Company or the Borrower shall not be required for any amendment,
modification or waiver of the provisions of Article VIII (other than the
provisions of Section 8.9); provided, however, that the Agent will provide
written notice to the Company and the Borrower of any such amendment,
modification or waiver. In addition, the Company, the Borrower and the Lenders
hereby authorize the Agent to modify this Credit Agreement by unilaterally
amending or supplementing Schedule 2.1(a) from time to time in the manner
requested by the Borrower, the Agent or any Lender in order to reflect any
assignments or transfers of the Loans as provided for hereunder; provided,
however, that the Agent shall promptly deliver a copy of any such modification
to the Borrower and each Lender.
SECTION 9.2 NOTICES.
Except as otherwise provided in Article II, all notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made (a) when delivered by
hand, (b) when transmitted via telecopy (or other facsimile device) to the
number set out herein, (c) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (d)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case, addressed as follows in the
case of the Company, the Borrower, the other Credit Parties and the Agent, and
as set forth on Schedule 9.2 in the case of the Lenders, or to such other
address as may be hereafter notified by the respective parties hereto and any
future holders of the Notes:
The Borrower: Xxxxx & Lord Industries, Inc.
0000 XxXxxxx Xxxx
Xxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
The Company Xxxxx & Lord, Inc.
and the other 0000 XxXxxxx Xxxx
Credit Xxx Xxxxx Xxxxxx
Xxxxxxx: Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
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The Agent: First Union National Bank
Xxx Xxxxx Xxxxx Xxxxxx, XX00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Syndication Agency Services
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
First Union National Bank
Xxx Xxxxx Xxxxx Xxxxxx, XX-0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Xx. Vice President
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
SECTION 9.3 NO WAIVER; CUMULATIVE REMEDIES.
No failure to exercise and no delay in exercising, on the part of the
Agent or any Lender, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
SECTION 9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans, provided that all such representations and warranties shall
terminate on the date upon which the Commitments have been terminated and all
amounts owing hereunder and under any Notes have been paid in full.
SECTION 9.5 PAYMENT OF EXPENSES AND TAXES.
The Company and the Borrower agree (a) to pay or reimburse the Agent
for all its reasonable out-of-pocket costs and expenses incurred in connection
with the development, preparation, negotiation, printing and execution of, and
any amendment, supplement or modification to, this Agreement and the other
Credit Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, together with the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse each Lender and
the Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights
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under this Agreement, the Notes and any such other documents, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent and to
the Lenders (including reasonable allocated costs of in-house legal counsel),
and (c) on demand, to pay, indemnify, and hold each Lender and the Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or administration
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Credit
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and the Agent and their Affiliates harmless from and against, any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of the Credit Documents and any such other documents and the use, or proposed
use, of proceeds of the Loans (all of the foregoing, collectively, the
"indemnified liabilities"); provided, however, that neither the Company nor the
Borrower shall have any obligation hereunder to the Agent or any Lender with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of the Agent or any such Lender. The agreements in this Section 9.5
shall survive repayment of the Loans, Notes and all other amounts payable
hereunder.
SECTION 9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING LENDERS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company, the Borrower, the Lenders, the Agent, all
future holders of the Notes and their respective successors and
assigns, except that neither the Company nor the Borrower, may assign
or transfer any of its rights or obligations under this Agreement or
the other Credit Documents without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held
by such Lender, any Commitment of such Lender, or any other interest of
such Lender hereunder. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Agreement, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement. No Lender shall transfer or grant any participation under
which the Participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Credit Document except to the
extent such amendment or waiver would (i) extend the scheduled maturity
of any Loan or Note or any installment thereon in which such
Participant is participating, or reduce the stated rate or extend the
time of payment of interest or fees thereon (except in connection with
a waiver of interest at the increased post-default rate) or reduce the
principal amount thereof, or increase the
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amount of the Participant's participation over the amount thereof then
in effect (it being understood that a waiver of any Default or Event of
Default shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be
permitted without consent of any participant if the Participant's
participation is not increased as a result thereof), (ii) release the
Company from its obligations under the Guaranty, or release any of the
Guarantors from their obligations under the Guaranty, (iii) release all
or substantially all of the collateral, or (iv) consent to the
assignment or transfer by the Company or the Borrower of any of its
rights and obligations under this Agreement. In the case of any such
participation, the Participant shall not have any rights under this
Agreement or any of the other Credit Documents (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 the Borrower
hereunder shall be determined as if such Lender had not sold such
participation, provided that each Participant shall be entitled to the
benefits of Sections 2.16, 2.17, 2.18 and 9.5 with respect to its
participation in the Commitments and the Loans outstanding from time to
time; provided, that no Participant shall be entitled to receive any
greater amount pursuant to such Sections than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time,
sell or assign to any Lender or any affiliate thereof and with the
consent of the Agent and, so long as no Event of Default has occurred
and is continuing, the Borrower (in each case, which consent shall not
be unreasonably withheld), to one or more additional banks or financial
institutions ("Purchasing Lenders"), all or any part of its rights and
obligations under this Agreement and the Notes in minimum amounts of
$5,000,000 unless to an existing Lender (or, if less, the entire amount
of such Lender's obligations), pursuant to a Commitment Transfer
Supplement, executed by such Purchasing Lender and such transferor
Lender (and, in the case of a Purchasing Lender that is not then a
Lender or an affiliate thereof, the Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower), and delivered to
the Agent for its acceptance and recording in the Register. Upon such
execution, delivery, acceptance and recording, from and after the
Transfer Effective Date specified in such Commitment Transfer
Supplement, (x) the Purchasing Lender thereunder shall be a party
hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender hereunder with
a Commitment as set forth therein, and (y) the transferor Lender
thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Agreement (and,
in the case of a Commitment Transfer Supplement covering all or the
remaining portion of a transferor Lender's rights and obligations under
this Agreement, such transferor Lender shall cease to be a party
hereto). Such Commitment Transfer Supplement shall be deemed to amend
this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting
adjustment of Commitment Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of
such transferor Lender under this
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Agreement and the Notes. On or prior to the Transfer Effective Date
specified in such Commitment Transfer Supplement, the Borrower, at its
own expense, shall execute and deliver to the Agent in exchange for the
Notes delivered to the Agent pursuant to such Commitment Transfer
Supplement new Notes to the order of such Purchasing Lender in an
amount equal to the Commitment assumed by it pursuant to such
Commitment Transfer Supplement and, unless the transferor Lender has
not retained a Commitment hereunder, new Notes to the order of the
transferor Lender in an amount equal to the Commitment retained by it
hereunder. Such new Notes shall be dated the Closing Date and shall
otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Lender shall be returned by the Agent to
the Borrower marked "canceled".
(d) The Agent shall maintain at its address referred to in
Section 9.2 a copy of each Commitment Transfer Supplement delivered to
it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of
the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly executed Commitment Transfer
Supplement, together with payment to the Agent by the transferor Lender
or the Purchasing Lender, as agreed between them, of a registration and
processing fee of $3,000 for each Purchasing Lender listed in such
Commitment Transfer Supplement and the Notes subject to such Commitment
Transfer Supplement, the Agent shall (i) accept such Commitment
Transfer Supplement, (ii) record the information contained therein in
the Register and (iii) give prompt notice of such acceptance and
recordation to the Lenders and the Borrower.
(f) The Company and the Borrower each authorizes each Lender
to disclose to any Participant or Purchasing Lender (each, a
"Transferee") and any prospective Transferee any and all financial
information in such Lender's possession concerning the Company and its
Affiliates which has been delivered to such Lender by or on behalf of
the Company or the Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Company or the
Borrower in connection with such Lender's credit evaluation of the
Company and its Affiliates prior to becoming a party to this Agreement,
in each case subject to Section 9.15.
(g) At the time of each assignment pursuant to this Section
9.6 to a Person which is not already a Lender hereunder and which is
not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Lender shall provide to the Borrower and the Agent
the appropriate Internal Revenue Service Forms (and, if applicable, a
2.18 Certificate) described in Section 2.18.
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(h) Nothing herein shall prohibit any Lender from pledging or
assigning any of its rights under this Agreement (including, without
limitation, any right to payment of principal and interest under any
Note) to any Federal Reserve Bank in accordance with applicable laws.
SECTION 9.7 ADJUSTMENTS; SET-OFF.
(a) Each Lender agrees that if any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its
Loans, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 7.1(e), or
otherwise) in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such
other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in
such portion of each such other Lender's Loan, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but
without interest. The Company and the Borrower agree that each Lender
so purchasing a portion of another Lender's Loans may exercise all
rights of payment (including, without limitation, rights of set-off)
with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Lenders
provided by law (including, without limitation, other rights of
set-off), each Lender shall have the right, without prior notice to the
Company or the Borrower, any such notice being expressly waived by the
Company and the Borrower to the extent permitted by applicable law,
upon the occurrence of any Event of Default, to setoff and appropriate
and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for
the credit or the account of the Company and/or the Borrower, or any
part thereof in such amounts as such Lender may elect, against and on
account of the obligations and liabilities of the Company and/or the
Borrower to such Lender hereunder and claims of every nature and
description of such Lender against the Company and/or the Borrower, in
any currency, whether arising hereunder, under the Notes or under any
documents contemplated by or referred to herein or therein, as such
Lender may elect, whether or not such Lender has made any demand for
payment and although such obligations, liabilities and claims may be
contingent or unmatured. The aforesaid right of set-off may be
exercised by such Lender against the Company and/or the Borrower or
against any trustee in bankruptcy, debtor in possession, assignee for
the benefit of creditors, receiver or execution, judgment or attachment
creditor of the Company and/or the Borrower, or against anyone else
claiming through or against the Company and/or the Borrower or any such
trustee in bankruptcy, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment
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creditor, notwithstanding the fact that such right of set-off shall not
have been exercised by such Lender prior to the occurrence of any Event
of Default. Each Lender agrees promptly to notify the Company, the
Borrower and the Agent after any such set-off and application made by
such Lender; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application.
SECTION 9.8 TABLE OF CONTENTS AND SECTION HEADINGS.
The table of contents and the Section and subsection headings herein
are intended for convenience only and shall be ignored in construing this
Agreement.
SECTION 9.9 COUNTERPARTS.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Company, the Borrower and the Agent.
SECTION 9.10 SEVERABILITY.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 9.11 INTEGRATION.
This Agreement and the Notes represent the agreement of the Company,
the Borrower, the Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Agent, the Company, the Borrower or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the Notes.
SECTION 9.12 GOVERNING LAW.
This Agreement and the Notes and the rights and obligations of the
parties under this Agreement and the Notes shall be governed by, and construed
and interpreted in accordance with, the law of the State of North Carolina.
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SECTION 9.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
All judicial proceedings brought against the Company, the Borrower
and/or any other Credit Party with respect to this Agreement, any Note or any of
the other Credit Documents may be brought in any state or federal court of
competent jurisdiction in the State of North Carolina, and, by execution and
delivery of this Agreement, each of the Company, the Borrower and the other
Credit Parties accepts, for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any final judgment rendered thereby
in connection with this Agreement from which no appeal has been taken or is
available. Each of the Company, the Borrower and the other Credit Parties
irrevocably agrees that all service of process in any such proceedings in any
such court may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to it at its
address set forth in Section 9.2 or at such other address of which the Agent
shall have been notified pursuant thereto, such service being hereby
acknowledged by the each of the Company, the Borrower and the other Credit
Parties to be effective and binding service in every respect. Each of the
Company, the Borrower, the other Credit Parties, the Agent and the Lenders
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens which it
may now or hereafter have to the bringing of any such action or proceeding in
any such jurisdiction. Nothing herein shall affect the right to serve process in
any other manner permitted by law or shall limit the right of any Lender to
bring proceedings against the Company, the Borrower or the other Credit Parties
in the court of any other jurisdiction.
SECTION 9.14 ARBITRATION.
(a) Notwithstanding the provisions of Section 9.14 to the
contrary, upon demand of any party hereto, whether made before or
within three (3) months after institution of any judicial proceeding,
any dispute, claim or controversy arising out of, connected with or
relating to this Agreement and other Credit Documents ("Disputes")
between or among parties to this Agreement shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration
hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to
arbitration, claims brought as class actions, claims arising from
Credit Documents executed in the future, or claims arising out of or
connected with the transaction reflected by this Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration
Rules") of the American Arbitration Association (the "AAA") and Title 9
of the U.S. Code. All arbitration hearings shall be conducted in
Charlotte, North Carolina. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall be concluded within 120
days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then no more than
a total extension of 60 days. The expedited procedures set forth in
Rule 51 et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall
apply to any Dispute. A
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judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall
be comprised of licensed attorneys selected from the Commercial
Financial Dispute Arbitration Panel of the AAA. The single arbitrator
selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state
where the hearing will be conducted or if such person is not available
to serve, the single arbitrator may be a licensed attorney. The parties
hereto do not waive applicable Federal or state substantive law except
as provided herein. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to Hedging
Agreements or the Wachovia JEDA Letter of Credit.
(b) Notwithstanding the preceding binding arbitration
provisions, the Agent, the Lenders, the Company, the Borrower and the
other Credit Parties agree to preserve, without diminution, certain
remedies that the Agent on behalf of the Lenders may employ or exercise
freely, independently or in connection with an arbitration proceeding
or after an arbitration action is brought. The Agent on behalf of the
Lenders shall have the right to proceed in any court of proper
jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale
granted under Credit Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii)
all rights of self-help including peaceful occupation of real property
and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment
of receiver and filing an involuntary bankruptcy proceeding; and (iv)
when applicable, a judgment by confession of judgment. Preservation of
these remedies does not limit the power of an arbitrator to grant
similar remedies that may be requested by a party in a Dispute.
(c) The parties hereto agree that they shall not have a remedy
of punitive or exemplary damages against the other in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they
have now or which may arise in the future in connection with any
Dispute whether the Dispute is resolved by arbitration or judicially.
(d) By execution and delivery of this Agreement, each of the
parties hereto accepts, for itself and in connection with its
properties, generally and unconditionally, the non-exclusive
jurisdiction relating to any arbitration proceedings conducted under
the Arbitration Rules in Charlotte, North Carolina and irrevocably
agrees to be bound by any final judgment rendered thereby in connection
with this Agreement from which no appeal has been taken or is
available.
SECTION 9.15 CONFIDENTIALITY.
The Agent and each of the Lenders agrees that it will use its best
efforts not to disclose without the prior consent of the Company (other than to
its employees, affiliates, auditors or counsel or to another Lender) any
information with respect to the Company and its Subsidiaries which is furnished
pursuant to this Agreement, any other Credit Document or any documents
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contemplated by or referred to herein or therein and which is designated by the
Company to the Lenders in writing as confidential or as to which it is otherwise
reasonably clear such information is not public, except that any Lender may
disclose any such information (a) as has become generally available to the
public other than by a breach of this Section 9.15, (b) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or federal regulatory body having or claiming to have jurisdiction over
such Lender or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or the OCC or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required or appropriate in
response to any summons or subpoena or any law, order, regulation or ruling
applicable to such Lender, (d) to any prospective Participant or assignee in
connection with any contemplated transfer pursuant to Section 9.6, provided that
such prospective transferee shall have been made aware of this Section 9.15 and
shall have agreed to be bound by its provisions as if it were a party to this
Agreement or (e) to Gold Sheets and other similar bank trade publications; such
information to consist of deal terms and other information regarding the credit
facilities evidenced by this Credit Agreement customarily found in such
publications.
SECTION 9.16 ACKNOWLEDGMENTS.
The Company, the Borrower and the other Credit Parties each hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of each Credit Document;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Company, the Borrower or any other
Credit Party arising out of or in connection with this Agreement and
the relationship between Agent and Lenders, on one hand, and the
Company, the Borrower and the other Credit Parties, on the other hand,
in connection herewith is solely that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the
Company and/or the Borrower or the other Credit Parties and the
Lenders.
SECTION 9.17 WAIVERS OF JURY TRIAL.
The Company, the Borrower, the other Credit Parties, the Agent and the
Lenders hereby irrevocably and unconditionally waive, to the extent permitted by
applicable law, trial by jury in any legal action or proceeding relating to this
Agreement or any other Credit Document and for any counterclaim therein.
SECTION 9.18 FINANCIAL COVENANTS AND DETERMINATION OF BORROWING BASE.
THE AGENT AND THE BORROWER SHALL NEGOTIATE IN GOOD FAITH (A) THE
COVENANT LEVELS TO BE SET FORTH IN SECTION 5.9 HEREOF AND THE INCLUSION OF
ADDITIONAL FINANCIAL COVENANTS, AS DEEMED PRUDENT BY THE AGENT, IN SAID SECTION
5.9 PRIOR TO THE SUBSEQUENT
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TRANSACTIONS CLOSING DATE AND (B) THE ELIGIBILITY CRITERIA FOR ACCOUNTS
RECEIVABLE AND INVENTORY OF THE BORROWER AND ITS SUBSIDIARIES TO BE INCLUDED IN
THE BORROWING BASE; SUCH COVENANTS AND ELIGIBILITY CRITERIA TO BECOME EFFECTIVE
ON THE SUBSEQUENT TRANSACTIONS CLOSING DATE (OR IF EARLIER, THE ACQUISITION
FUNDING TERMINATION DATE) FOR THE PERIOD COMMENCING WITH DECEMBER 31, 1997 AND
ENDING WITH THE TERMINATION OF THE CREDIT AGREEMENT. AS A CONDITION TO
COMPLETING THE NEGOTIATION OF THE AFORESAID FINANCIAL COVENANTS AND ELIGIBILITY
CRITERIA, THE AGENT SHALL HAVE (1) RECEIVED (A) THE UNAUDITED FINANCIAL
STATEMENTS OF THE APPAREL DIVISION FOR THE TWELVE-MONTH PERIOD ENDED OCTOBER 3,
1997, (B) THE REVISED FIVE-YEAR PROJECTIONS OF THE COMPANY AND ITS SUBSIDIARIES
(INCLUDING THE APPAREL DIVISION) FOR FISCAL YEARS 1998 THROUGH 2002 IN FORM AND
SUBSTANCE REASONABLY ACCEPTABLE TO THE AGENT AND (C) A DETAILED ITEMIZATION OF
ANTICIPATED COST SAVINGS DERIVED FROM THE G&L ACQUISITION (I) PREPARED BY THE
COMPANY IN ACCORDANCE WITH REGULATION S-X PROMULGATED UNDER THE SECURITIES ACT
OF 1933 OR AS OTHERWISE AGREED TO BY THE AGENT AND (II) REVIEWED BY ERNST &
YOUNG LLP OR AS OTHERWISE AGREED TO BY THE AGENT AND (2) COMPLETED ALL
REASONABLY NECESSARY FIELD AUDITS TO ENABLE IT TO DETERMINE THE ELIGIBILITY
CRITERIA FOR ACCOUNTS RECEIVABLE AND INVENTORY TO BE INCLUDED IN THE BORROWING
BASE. IN THE EVENT THAT THE BORROWER AND THE AGENT SHALL BE UNABLE TO NEGOTIATE
THE FINANCIAL COVENANTS OF SECTION 5.9 OR THE ELIGIBILITY CRITERIA FOR THE
BORROWING BASE TO THEIR MUTUAL SATISFACTION WITHIN FIVE (5) BUSINESS DAYS
FOLLOWING THE CONSUMMATION OF THE G&L ACQUISITION, THE LOANS AND ALL OTHER
OBLIGATIONS HEREUNDER SHALL BECOME AND BE IMMEDIATELY DUE AND PAYABLE WITHOUT
FURTHER ACT OR NOTICE BY THE AGENT TO THE BORROWER OR ANY OTHER PERSON ON SUCH
DATE.
ARTICLE X
GUARANTY
SECTION 10.1 THE GUARANTY.
In order to induce the Lenders to enter into this Agreement and to
extend credit hereunder and in recognition of the direct benefits to be received
by the Guarantors from the Extensions of Credit hereunder, each of the
Guarantors hereby agrees with the Agent and the Lenders as follows: the
Guarantor hereby unconditionally and irrevocably jointly and severally
guarantees as primary obligor and not merely as surety the full and prompt
payment when due, whether upon maturity, by acceleration or otherwise, of any
and all indebtedness of the Borrower to the Agent
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and the Lenders. If any or all of the indebtedness of the Borrower to the Agent
and the Lenders becomes due and payable hereunder, each Guarantor
unconditionally promises to pay such indebtedness to the Agent and the Lenders,
or order, on demand, together with any and all reasonable expenses which may be
incurred by the Agent or the Lenders in collecting any of the indebtedness. The
word "indebtedness" is used in this Article X in its most comprehensive sense
and includes any and all advances, debts, obligations and liabilities of the
Borrower arising in connection with this Agreement, in each case, heretofore,
now, or hereafter made, incurred or created, whether voluntarily or
involuntarily, absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time reduced, or
extinguished and thereafter increased or incurred, whether the Borrower may be
liable individually or jointly with others, whether or not recovery upon such
indebtedness may be or hereafter become barred by any statute of limitations,
and whether or not such indebtedness may be or hereafter become otherwise
unenforceable.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents, to the extent the obligations of a Guarantor
other than the Company shall be adjudicated to be invalid or unenforceable for
any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of each such Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
SECTION 10.2 BANKRUPTCY.
Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all indebtedness of the
Borrower to the Lenders whether or not due or payable by the Borrower upon the
occurrence of any of the events specified in Section 7.1(e), and unconditionally
promises to pay such indebtedness to the Agent for the account of the Lenders,
or order, on demand, in lawful money of the United States. Each of the
Guarantors further agrees that to the extent that the Borrower or a Guarantor
shall make a payment or a transfer of an interest in any property to the Agent
or any Lender, which payment or transfer or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, or otherwise is avoided,
and/or required to be repaid to the Borrower or a Guarantor, the estate of the
Borrower or a Guarantor, a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such avoidance or repayment, the obligation or part thereof intended
to be satisfied shall be revived and continued in full force and effect as if
said payment had not been made.
SECTION 10.3 NATURE OF LIABILITY.
The liability of each Guarantor hereunder is exclusive and independent
of any security for or other guaranty of the indebtedness of the Borrower
whether executed by any such Guarantor, any other guarantor or by any other
party, and no Guarantor's liability hereunder shall be affected or impaired by
(a) any direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or maximum
liability of a
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guarantor or of any other party as to the indebtedness of the Borrower, or (c)
any payment on or in reduction of any such other guaranty or undertaking, or (d)
any dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to the Agent or the Lenders on the
indebtedness which the Agent or such Lenders repay the Borrower pursuant to
court order in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding, and each of the Guarantors waives any right to the
deferral or modification of its obligations hereunder by reason of any such
proceeding.
SECTION 10.4 INDEPENDENT OBLIGATION.
The obligations of each Guarantor hereunder are independent of the
obligations of any other guarantor or the Borrower, and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other guarantor or the Borrower and whether or not
any other Guarantor or the Borrower is joined in any such action or actions.
SECTION 10.5 AUTHORIZATION.
Each of the Guarantors authorizes the Agent and each Lender without
notice or demand (except as shall be required by applicable statute and cannot
be waived), and without affecting or impairing its liability hereunder, from
time to time to (a) renew, compromise, extend, increase, accelerate or otherwise
change the time for payment of, or otherwise change the terms of the
indebtedness or any part thereof in accordance with this Agreement, including
any increase or decrease of the rate of interest thereon, (b) take and hold
security from any guarantor or any other party for the payment of this Guaranty
or the indebtedness and exchange, enforce waive and release any such security,
(c) apply such security and direct the order or manner of sale thereof as the
Agent and the Lenders in their discretion may determine and (d) release or
substitute any one or more endorsers, guarantors, the Borrower or other
obligors.
SECTION 10.6 RELIANCE.
It is not necessary for the Agent or the Lenders to inquire into the
capacity or powers of the Borrower or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
SECTION 10.7 WAIVER.
(a) Each of the Guarantors waives any right (except as shall
be required by applicable statute and cannot be waived) to require the
Agent or any Lender to (i) proceed against the Borrower, any other
guarantor or any other party, (ii) proceed against or exhaust any
security held from the Borrower, any other guarantor or any other
party, or (iii) pursue any other remedy in the Agent's or any Lender's
power whatsoever. Each of the Guarantors waives any defense based on or
arising out of any defense of the Borrower, any other guarantor or any
other party other than payment in full of the
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indebtedness, including without limitation any defense based on or
arising out of the disability of the Borrower, any other guarantor or
any other party, or the unenforceability of the indebtedness or any
part thereof from any cause, or the cessation from any cause of the
liability of the Borrower other than payment in full of the
indebtedness. Without limiting the generality of the provisions of this
Article X, each of the Guarantors hereby specifically waives the
benefits of N.C. Gen. Stat. ss. 26-7 through 26-9, inclusive. The Agent
or any of the Lenders may, at their election, foreclose on any security
held by the Agent or a Lender by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or
exercise any other right or remedy the Agent and any Lender may have
against the Borrower or any other party, or any security, without
affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the indebtedness has been paid. Each of
the Guarantors waives any defense arising out of any such election by
the Agent and each of the Lenders, even though such election operates
to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of the Guarantors against the Borrower or any
other party or any security.
(b) Each of the Guarantors waives all presentments, demands
for performance, protests and notices, including without limitation
notices of nonperformance, notice of protest, notices of dishonor,
notices of acceptance of this Guaranty, and notices of the existence,
creation or incurring of new or additional indebtedness. Each Guarantor
assumes all responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the indebtedness
and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that neither the Agent nor any
Lender shall have any duty to advise such Guarantor of information
known to it regarding such circumstances or risks.
(c) Each of the Guarantors hereby agrees it will not exercise
any rights of subrogation which it may at any time otherwise have as a
result of this Guaranty (whether contractual, under Section 509 of the
U.S. Bankruptcy Code, or otherwise) to the claims of the Lenders
against the Borrower or any other guarantor of the indebtedness of the
Borrower owing to the Lenders (collectively, the "Other Parties") and
all contractual, statutory or common law rights of reimbursement,
contribution or indemnity from any Other Party which it may at any time
otherwise have as a result of this Guaranty until such time as the
Loans hereunder shall have been paid and the Commitments have been
terminated. Each of the Guarantors hereby further agrees not to
exercise any right to enforce any other remedy which the Agent and the
Lenders now have or may hereafter have against any Other Party, any
endorser or any other guarantor of all or any part of the indebtedness
of the Borrower and any benefit of, and any right to participate in,
any security or collateral given to or for the benefit of the Lenders
to secure payment of the indebtedness of the Borrower until such time
as the Loans hereunder shall have been paid and the Commitments have
been terminated.
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SECTION 10.8 LIMITATION ON ENFORCEMENT.
The Lenders agree that this Guaranty may be enforced only by the action
of the Agent acting upon the instructions of the Required Lenders and that no
Lender shall have any right individually to seek to enforce or to enforce this
Guaranty, it being understood and agreed that such rights and remedies may be
exercised by the Agent for the benefit of the Lenders upon the terms of this
Agreement. The Lenders further agree that this Guaranty may not be enforced
against any director, officer, employee or stockholder of the Guarantors.
SECTION 10.9 CONFIRMATION OF PAYMENT.
The Agent and the Lenders will, upon request after payment of the
indebtedness and obligations which are the subject of this Guaranty and
termination of the commitments relating thereto, confirm to the Borrower, the
Guarantors or any other Person that the such indebtedness and obligations have
been paid and the commitments relating thereto terminated, subject to the
provisions of Section 10.2.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Charlotte, North Carolina by its proper and duly
authorized officers as of the day and year first above written.
BORROWER: XXXXX & LORD INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Title: Executive Vice-President
COMPANY: XXXXX & LORD, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Title: Executive Vice-President
GUARANTORS: G&L SERVICE COMPANY, NORTH
AMERICA, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
Title: Vice-President
FIRST UNION NATIONAL BANK,
as Administrative Agent and as a
Lender
By: /s/ Xxxxxxx X. Xxxxx
Title: Senior Vice-President
