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EXHIBIT 10.35
CDPQ SUBORDINATION AGREEMENT entered into at Montreal, as of March 31, 1999.
AMONG: CAPITAL D'AMERIQUE CDPQ INC., as Subordinated Creditor
AND: THE LENDERS SET FORTH IN SCHEDULE "A" HERETO, as Lenders
AND: NATIONAL BANK OF CANADA, as Agent
AND: GILDAN ACTIVEWEAR INC., as Borrower
WHEREAS Gildan Activewear Inc., as borrower (the "Borrower"), the Lenders
initially set forth in Schedule "A" hereto (the "Lenders") and National Bank of
Canada, as agent (the "Agent"), have entered into a credit agreement bearing
formal date of March 31, 1999 (which agreement, as same may be amended,
supplemented or restated at any time and from time to time is hereinafter
referred to as the "Credit Agreement");
WHEREAS it is a condition precedent to the making of any advance under the
Revolving Credit Facility provided for under the Credit Agreement that this
Subordination Agreement be executed and a copy of same be delivered to the
Agent;
WHEREAS the Borrower has issued in favour of Capital d'Amerique CDPQ Inc.
(the "Subordinated Creditor") a Cdn $15,000,000 debenture No. A-6 dated February
1, 1999 bearing interest at an annual rate of 12.5% calculated and payable
pursuant to the terms and conditions set forth thereunder (which debenture, as
same may be amended, supplemented or restated from time to time is hereafter
referred to as the "Debenture");
WHEREAS it is in the best interest of the Borrower and consequently of the
Subordinated Creditor to subordinate and postpone all of the debts owed to it by
the Borrower under the Debenture, the whole in accordance with and subject to
the terms and conditions of this Subordination Agreement; and
NOW, THEREFORE, in consideration of the Agent and the Lenders having
entered into the Credit Agreement with the Borrower and having agreed, subject
to the terms and conditions therein provided, to make the Revolving Credit
Facility (as defined in the Credit Agreement) available to the Borrower, the
parties hereto have agreed as follows:
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1. INTERPRETATION
1.1 DEFINITIONS
The following capitalized words and expressions, whenever used in this
Agreement or in any deed, document or instrument supplemental or ancillary
hereto, unless there be something in the subject or the context inconsistent
therewith, shall have the meaning ascribed to them herein below:
"Agent" has the meaning ascribed to it in the first preamble paragraph hereto;
"Borrower" has the meaning ascribed to it in the first preamble paragraph
hereto;
"Charged Property" means any property or asset of the Borrower being subject to
Lenders' Liens;
"Credit Agreement" has the meaning ascribed to it in the first preamble
paragraph hereto;
"Debenture" has the meaning ascribed to it in the third preamble paragraph
hereto;
"Default" means any one of the events specified in the Credit Agreement, the
occurrence or failure to occur of which, as the case may be, constitutes or with
the passage of time or the giving of notice or both, would constitute an event
permitting the Lenders to accelerate the Lenders' Indebtedness;
"Disposed", "Dispose" or "Disposition" means any realization or sale,
liquidation, transfer or alienation, or the exercise of any right of
compensation or appropriation of any deposits or credits, the creation of any
lien, hypothec, charge or security interest or any other disposition of the
whole or any part of the assets and properties of the Borrower by private
agreement, call for tenders, public auction, judicial sale or any other type of
sale having essentially the same effects as a judicial sale, sale by judicial
authority or otherwise;
"Lenders" has the meaning ascribed to it in the first preamble paragraph hereto;
"Lenders' Indebtedness" has the meaning ascribed to it in Section 2.1;
"Lenders' Liens" refers to all Liens now or hereafter held by the Agent and/or
the Lenders and/or any Person on their behalf securing the Lenders Indebtedness
or any part thereof;
"Lien" means any interest in property or the income or profits therefrom
securing an obligation owed to, or a claim by, a Person other than the owner of
such property, whether such interest is based on common law, civil law, statute
or contract, and including, but not limited to, any security interest, hypothec,
mortgage, pledge, lien, claim, charge, cession, transfer, assignment,
encumbrance, title retention agreement, lessor's interest under a lease which
would be capitalized on a balance sheet of the owner of such property or
analogous instrument in, of, or on any property or the income or profits
therefrom of a Person, other than Liens incurred in the ordinary course of
business and for the purpose of carrying on same not in connection with the
borrowing
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of money or the obtaining of credit and which do not in the aggregate materially
impair the use, the income or profits therefrom, of the property covered thereby
in the operation of such Person's business;
"Person" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, government or any department,
agency or instrumentality of any government;
"Rights, Remedies and/or Recourses" with respect to any Person, refers to any
personal action, provisional measure, any other real or personal right, any
other remedy, whether or not hypothecary, or whether same is exercised under the
terms of any security, or any other recourse whatsoever;
"Subordinated Creditor" has the meaning ascribed to it in the third preamble
paragraph hereto;
"Subordinated Indebtedness" has the meaning ascribed to it in Section 2.1;
1.2 ACCOUNTING TERMS AND PRACTICES
Each accounting term used in this Agreement has the meaning ascribed to it
under generally accepted accounting principles in Canada as established in the
Canadian Institute of Chartered Accountants Handbook, unless otherwise defined
herein. The financial calculations, audits, audit reports and financial
statements (and their different items) referred to herein shall be made or
prepared in accordance with such accounting principles applied on a consistent
basis and in accordance with the normal practice in the industry.
1.3 HEADINGS
The headings are inserted for convenience only and shall be ignored in
construing this Agreement.
1.4 GOVERNING LAW
This Agreement and the interpretation and enforcement thereof shall be
governed by and construed in accordance with the laws applicable in the Province
of Quebec.
1.5 SCHEDULES
The schedules annexed to this Agreement shall form an integral part
thereof.
1.6 REFERENCE TO THIS AGREEMENT
The expressions "hereto" or "hereunder" or "hereof" or "herein" or "this
Agreement" refer to this agreement together with any future amendment, updating
or restatement.
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1.7 FRENCH AND ENGLISH VERSIONS OF THIS AGREEMENT
This agreement exists in a French version and in an English version both
of which have been signed by all parties hereto. Each of the parties to this
agreement acknowledges being bound by its provisions notwithstanding the
language of signature which provisions are deemed to constitute a single
agreement. However, in case of incompatibility between the provisions of the
French version and the English version, the provisions of the French version
shall prevail.
2. SUBORDINATION AND POSTPONEMENT
2.1 SUBORDINATION AND POSTPONEMENT OF INDEBTEDNESS
Subject to the provisions of Sections 2.2 and 2.3 hereof, the Subordinated
Creditor acknowledges, declares and agrees that the indebtedness, of the
Borrower to it under the Debenture (the "Subordinated Indebtedness") is junior
and subordinate, and the payment thereof, whether in whole or in part, and
whether as to principal, interest, fees or otherwise, and whether at or prior
to maturity or upon acceleration of any maturity, is postponed to the prior
payment in full of the loans and of all the indebtedness, present and future,
of the Borrower to the Lenders under the Credit Agreement (all of which loans
and indebtedness are herein collectively referred to as the "Lenders'
Indebtedness").
2.2 EXCEPTION AS TO PAYMENT OF INTEREST.
Notwithstanding the provisions of Section 2.1, the Borrower, subject
nevertheless to the satisfaction of the conditions stipulated below in this
Section, may pay at any time, any and all amounts due to the Subordinated
Creditor on account of interest accrued on the Debenture, the whole, on the
date such amounts are due and payable and in accordance with the provisions of
the Debenture (including, without limitation all overdue amounts not previously
paid by the Borrower to the Subordinated Creditor because of the existence at
the time of their scheduled payment of a Default), on condition that at the
time of such payment no Event of Default (within the meaning set forth under
the Credit Agreement) exists of the nature described under subsections 17.1.1
(re: failure to pay) or 17.1.6 (re: bankruptcy and insolvency) of the Credit
Agreement.
2.3 EXCEPTION AS TO CERTAIN PAYMENT OF PRINCIPAL
Notwithstanding the provisions of Section 2.1 and in addition to the
provisions of Section 2.2, the Borrower, subject nonetheless to the
satisfaction of the conditions stipulated below in this Section, may pay, at
maturity, the principal amount of the Debenture and, at any time, any amounts
due to the Subordinated Creditor (in principal, interest, fees, penalties or
otherwise) following a voluntary prepayment made in compliance with the
provisions of Sections 3 or 4 of the Debenture (including, without limitation
all overdue amounts not previously paid by the Borrower to the Subordinated
Creditor because of the existence at the time of their scheduled payment of a
Default), on conditions that at the time of such payment no Default exists or
would result therefrom.
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2.4 NO LIEN
The Subordinated Creditor hereby acknowledges, declares and agrees that no
Lien exists in its favour in connection with the Subordinated Indebtedness and
that no Lien will be created in the future in connection with such Indebtedness
as long as the Lenders' Indebtedness has not been paid in full and the
Revolving Credit Facility provided for under the Credit Agreement has not been
terminated and cancelled.
2.5 EXERCISE OF RIGHTS UNDER THE SUBORDINATED INDEBTEDNESS
In the event that any default or event of default occurs and continues
under the Debenture, the Subordinated Creditor agrees not to directly or
indirectly exercise any Right, Remedy or Recourse granted to it by law or the
Debenture until the earlier of: (i) the date of delivery by the Agent (acting
upon the instructions of the Majority Lenders) to the Subordinated Creditor of
a written consent to the exercise of such Rights, Remedies or Recourses; (ii)
the date of delivery by the Agent to the Subordinated Creditor of a written
confirmation stating that the Lenders' Indebtedness has been fully repaid and
that the Revolving Credit Facility provided for under the Credit Agreement has
been terminated and cancelled; or (iii) the 90th day following the date the
Borrower defaults in making a scheduled payment of interest as provided under
the Debenture, provided such default is not cured by the Borrower or on its
behalf prior to such 90th day.
2.6 COLLOCATION OF PROCEEDS OF SALE, ETC.
In the event that the Charged Property, whether in whole or in part, is
Disposed or is otherwise realized, or proceeds of insurance polices are paid in
respect thereof, the Lenders shall be collocated and paid in full for all
Lenders' Indebtedness owing to the Lenders prior to the payment of the
Subordinated Indebtedness.
2.7 PRIOR PAYMENT OF LENDERS' INDEBTEDNESS IN BANKRUPTCY, ETC.
In the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceedings relating to the Borrower or its
debts or assets, and in the event of any proceedings for liquidation,
dissolution or other winding-up of the Borrower or distribution or marshalling
of assets or securities of any kind or any composition with creditors of the
Borrower, whether or not involving insolvency or bankruptcy and whether
voluntary or involuntary, if the Lenders' Indebtedness has not been paid in
full at such time, the Agent is hereby irrevocably authorized by the
Subordinated Creditor, at any such meeting or in any such proceeding, to
collect any assets or securities of any kind of the Borrower distributed,
divided or applied by way of dividend or payment or any such securities issued
on account of any of the Subordinated Indebtedness and to apply the same, or
the proceeds of any realization upon the same, as the Agent in its discretion,
elects to effect, to the Lenders' Indebtedness until the Lenders' Indebtedness
shall have been paid in full, rendering any surplus then remaining to the
Persons entitled by Law to receive same.
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2.8 PAYMENTS HELD IN DEPOSIT
In the event of any payment or distribution to the Subordinated Creditor
made in breach of the terms hereof, such a payment or distribution shall be
held under gratuitous deposit for the Lenders and shall be paid to the Agent,
for the benefit of the Lenders, forthwith following demand therefor by the
Agent, acting in accordance with the instructions of the Majority Lenders.
2.9 SCOPE OF SUBORDINATION AND POSTPONEMENT
The provisions of this Agreement are intended solely to define and
establish the relative rights of the creditors of the Borrower who are parties
hereto. Nothing in this Agreement shall in any way impair, modify or affect, as
between or among the Borrower, on the one hand, and its creditors, on the other
hand, the obligations of the Borrower to effect payment of principal, interest,
costs, fees and other amounts, obligations and liabilities owing under or
pursuant to the terms of the documents evidencing such indebtedness or affect
the relative rights of the creditors of the Borrower thereunder.
3. GENERAL PROVISIONS
3.1 NOTICES
Except as otherwise specified herein, all notices, requests, demands or
other communications to or upon the respective parties hereto shall be in
writing and shall be deemed to have been duly given or made to the party to
whom such notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, when delivered to such
party (by certified mail, postage prepaid or by telecopier or hand delivery) at
its address and attention set forth with its signature below, or at such other
address as any of the parties hereto may hereafter notify the others in
writing. No other method of giving notice is hereby precluded.
3.2 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 in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
3.3 NOTICES OF BORROWER'S DEFAULT
The Agent undertakes to furnish to the Subordinated Creditor copies of all
notices and requests sent to the Borrower under the Credit Agreement
concurrently with the sending of such notices and requests to the Borrower, it
being expressly understood, however, that the failure by the Agent to comply
with the obligation incumbent upon it under this Section does not in any way
affect or reduce the obligations of the Subordinated Creditor under the terms
of this
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Agreement nor does it prevent or preclude the Agent or the Lenders for
exercising any Rights, Remedies or Recourses any one of them may have against
the Borrower.
3.4 AMENDMENT TO CREDIT AGREEMENT
The Lenders hereby acknowledge and agree that the Credit Agreement shall
not be amended or restated without the prior written consent of the
Subordinated Creditor (which consent shall not be unreasonably withheld) if any
such amendment has the effect of prohibiting payments to the Subordinated
Creditor except as contemplated hereunder or, subject to the terms of this
Agreement, of creating a default under the Debenture.
3.5 ASSIGNMENT BY SUBORDINATED CREDITOR
The Subordinated Creditor does hereby agree that it shall not sell,
assign, transfer or otherwise dispose of all or any portion of the Subordinated
Indebtedness until and unless any purchaser, assignee or beneficiary of such
disposition shall have intervened into this Agreement and acknowledged,
declared and agreed that it shall be bound by the terms hereof as fully as
though it were an original party to this Agreement.
3.6 BENEFIT OF THIS AGREEMENT FOR FUTURE LENDERS
The parties hereto do hereby expressly acknowledge, declare and agree that
the rights, benefits and remedies created and intended to be created, at any
time and from time to time, by this Agreement in favour of the Lenders, are
created and intended to be created in favour of the Lenders and such Person or
Persons who may, at any time and from time to time, become Lender following an
assignment pursuant to the provisions of the Credit Agreement, in the same
manner and to the same extent as though each such Person was personally an
original party to or a Person specifically named as a beneficiary in this
Agreement. In furtherance of the provisions of this Section, the parties hereto
do hereby irrevocably mandate the Agent, for and on their behalf, to confirm to
and confer upon each Person who becomes a Lender, the benefits of this
Agreement and to execute any instrument necessary to evidence same.
3.7 TERMINATION
This Agreement and the respective rights and obligations of the parties
hereto shall terminate upon the termination and cancellation of the Revolving
Credit Facility provided for under the Credit Agreement, the repayment in full
of the Lenders' Indebtedness and the discharge and acquittance of the Lenders'
Liens.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date and in the place first hereinabove mentioned.
CAPITAL D'AMERIQUE CDPQ INC.,
as Subordinated Creditor
per: /s/
----------------------------------------
per: /s/
----------------------------------------
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Fax.: (000) 000-0000
Attention of the Vice-President, Legal Affairs
NATIONAL BANK OF CANADA,
as Lender
per: /s/
----------------------------------------
per: /s/
----------------------------------------
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx Xxxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention of the Manager
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LAURENTIAN BANK OF CANADA,
as Lender
per: /s/
----------------------------------------
per:
----------------------------------------
1981 XxXxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Fax.: (000) 000-0000
Attention of the Principal Manager
BANCA COMMERCIALE ITALIANA OF CANADA,
as Lender
per: /s/
----------------------------------------
per: /s/
----------------------------------------
000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxx (Xxxxxx)
X0X 0X0
Fax.: (000) 000-0000
Attention of the Vice-President
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XX XXXXXX XXXXXXXX XXXXXXXXXX
XX XXXXXX, as Lender
per: /s/
----------------------------------------
per: /s/
----------------------------------------
0, Xxxxxxxx Xxxxxxxxxx
Xxxx Xxx, Xxxxx 0000
Xxxxxxxx (Xxxxxx)
X0X 0X0
Fax: (000) 000-0000
Attention of the Manager
NATIONAL BANK OF CANADA,
as Agent
per: /s/
----------------------------------------
per:
----------------------------------------
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx Xxxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention of the Manager
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GILDAN ACTIVEWEAR INC.,
as Borrower
per: /s/ Xxx Xxxxxx
----------------------------------------
per:
----------------------------------------
000 Xxxxxx xx Xxxxxx
Xxxxxxxx (Xxxxxx)
X0X 0X0
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SCHEDULE "A"
LENDERS
National Bank of Canada
Laurentian Bank of Canada
Banca Commerciale Italiana of Canada
Xx Xxxxxx Centrale Xxxxxxxxxx du Quebec
