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$150,000,000
SENIOR SECURED
SUPER PRIORITY DEBTOR-IN-POSSESSION
LOAN AND SECURITY AGREEMENT
Dated as of December 3, 1999
By and Among
Tultex Corporation
and
CERTAIN SUBSIDIARIES PARTY HERETO
AS BORROWERS
(collectively, the Borrowers)
and
THE Subsidiary Guarantors PARTY HERETO
(collectively, the Guarantors)
and
THE FINANCIAL INSTITUTIONS PARTY
HERETO FROM TIME TO TIME
(the Lenders)
and
BANK OF AMERICA, N.A.
(the Agent)
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TABLE OF CONTENTS(1)
PAGE
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ARTICLE 1 DEFINITIONS...........................................................................................2
SECTION 1.1. Definitions.........................................................................2
SECTION 1.2. General............................................................................30
ARTICLE 2 REVOLVING CREDIT FACILITY............................................................................31
SECTION 2.1. Revolving Credit Loans.............................................................31
SECTION 2.2. Manner of Borrowing Revolving Credit Loans.........................................31
SECTION 2.3. Repayment of Revolving Credit Loans................................................33
SECTION 2.4. Revolving Credit Note..............................................................34
ARTICLE 3 LETTER OF CREDIT FACILITY............................................................................34
SECTION 3.1. Agreement to Issue.................................................................34
SECTION 3.2. Amounts............................................................................34
SECTION 3.3. Conditions.........................................................................34
SECTION 3.4. Issuance of Letters of Credit......................................................35
SECTION 3.5. Duties of the Issuing Bank.........................................................35
SECTION 3.6. Payment of Reimbursement Obligations...............................................36
SECTION 3.7. Participations.....................................................................36
SECTION 3.8. Indemnification, Exoneration.......................................................37
SECTION 3.9. Supporting Letter of Credit; Cash Collateral.......................................38
SECTION 3.10. Letters of Credit under Original Loan Agreement....................................39
ARTICLE 4 GENERAL LOAN PROVISIONS..............................................................................39
SECTION 4.1. Interest...........................................................................39
SECTION 4.2. Certain Fees.......................................................................40
SECTION 4.3. Manner of Payment..................................................................42
SECTION 4.4. General............................................................................42
SECTION 4.5. Loan Accounts; Statements of Account...............................................42
SECTION 4.6. Termination of Agreement...........................................................43
SECTION 4.7. Making of Loans....................................................................43
SECTION 4.8. Settlement Among Lenders...........................................................46
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1 This Table of Contents is included for reference purposes only and does not
constitute part of the Loan and Security Agreement.
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SECTION 4.9. Mandatory Prepayments..............................................................49
SECTION 4.10. Payments Not at End of Interest Period; Failure to Borrow..........................50
SECTION 4.11. Assumptions Concerning Funding of LIBOR Loans......................................50
SECTION 4.12. Notice of Conversion or Continuation...............................................51
SECTION 4.13. Conversion or Continuation.........................................................51
SECTION 4.14. Maximum Number of LIBOR Loans; Minimum Increments..................................51
SECTION 4.15. Changed Circumstances..............................................................52
SECTION 4.16. Cash Collateral Account............................................................53
SECTION 4.17. Borrowers' Agent...................................................................54
SECTION 4.18. Joint and Several Liability........................................................55
SECTION 4.19. Obligations Absolute...............................................................55
SECTION 4.20. Waiver of Suretyship Defenses......................................................55
SECTION 4.21. Superpriority Nature of Secured Obligations........................................56
ARTICLE 5 CONDITIONS PRECEDENT.................................................................................56
SECTION 5.1. Conditions Precedent to Loans and Letters of Credit................................56
SECTION 5.2. All Loans; Letters of Credit.......................................................59
SECTION 5.3. Conditions as Covenants............................................................60
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.......................................................................60
SECTION 6.1. Representations and Warranties.....................................................60
SECTION 6.2. Survival of Representations and Warranties, Etc....................................70
ARTICLE 7 SECURITY INTEREST....................................................................................71
SECTION 7.1. Security Interest..................................................................71
SECTION 7.2. Continued Priority of Security Interest............................................71
ARTICLE 8 COLLATERAL COVENANTS.................................................................................72
SECTION 8.1. Collection of Receivables..........................................................72
SECTION 8.2. Verification and Notification......................................................74
SECTION 8.3. Disputes, Returns and Adjustments..................................................74
SECTION 8.4. Invoices...........................................................................74
SECTION 8.5. Delivery of Instruments............................................................75
SECTION 8.6. Sales of Inventory.................................................................75
SECTION 8.7. Ownership and Defense of Title.....................................................75
SECTION 8.8. Insurance..........................................................................75
SECTION 8.9. Location of Offices and Collateral.................................................76
SECTION 8.10. Records Relating to Collateral.....................................................76
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SECTION 8.11. Inspection.........................................................................76
SECTION 8.12. Information and Reports............................................................77
SECTION 8.13. Power of Attorney..................................................................78
SECTION 8.14. Assignment of Claims Act...........................................................78
ARTICLE 9 AFFIRMATIVE COVENANTS................................................................................78
SECTION 9.1. Preservation of Corporate Existence and Similar Matters............................78
SECTION 9.2. Compliance with Applicable Law.....................................................79
SECTION 9.3. Maintenance of Property............................................................79
SECTION 9.4. Conduct of Business................................................................79
SECTION 9.5. Insurance..........................................................................79
SECTION 9.6. Payment of Taxes and Claims........................................................79
SECTION 9.7. Accounting Methods and Financial Records...........................................79
SECTION 9.8. Use of Proceeds....................................................................79
SECTION 9.9. Hazardous Waste and Substances; Environmental Requirements.........................80
SECTION 9.10. Year 2000 Compliance...............................................................80
SECTION 9.11. Indenture Trustees.................................................................80
SECTION 9.12. Standard Inventory Costing System..................................................80
SECTION 9.13. Post Closing Deliveries............................................................81
SECTION 9.14. Post-Petition Date Motions........................................................ 81
ARTICLE 10 INFORMATION.........................................................................................81
SECTION 10.1. Financial Statements...............................................................81
SECTION 10.2. Accountants' Certificate...........................................................82
SECTION 10.3. Officer's Certificate..............................................................82
SECTION 10.4. Copies of Other Reports............................................................82
SECTION 10.5. Notice of Litigation and Other Matters.............................................83
SECTION 10.6. ERISA..............................................................................83
SECTION 10.7. Accuracy of Information............................................................84
SECTION 10.8. Revisions or Updates to Schedules..................................................84
ARTICLE 11 NEGATIVE COVENANTS..................................................................................84
SECTION 11.1. Financial Ratios...................................................................84
SECTION 11.2. Indebtedness for Money Borrowed....................................................84
SECTION 11.3. Guaranties.........................................................................85
SECTION 11.4. Investments........................................................................85
SECTION 11.5. Capital Expenditures...............................................................85
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SECTION 11.6. Restricted Dividend Payments and Purchases, Etc....................................85
SECTION 11.7. Merger, Consolidation and Sale of Assets...........................................85
SECTION 11.8. Transactions with Affiliates.......................................................85
SECTION 11.9. Liens..............................................................................85
SECTION 11.10. Capitalized Lease Obligations......................................................86
SECTION 11.11. Operating Leases...................................................................86
SECTION 11.12. Limitation on Certain Restrictions on Subsidiaries.................................86
SECTION 11.13. Plans..............................................................................86
SECTION 11.14. Sales and Leasebacks...............................................................86
SECTION 11.15. Amendments of Other Agreements.....................................................86
SECTION 11.16. Fiscal Year........................................................................86
SECTION 11.17. Repayments.........................................................................86
ARTICLE 12 DEFAULT.............................................................................................87
SECTION 12.1. Events of Default..................................................................87
SECTION 12.2. Remedies...........................................................................91
SECTION 12.3. Application of Proceeds............................................................93
SECTION 12.4. Power of Attorney..................................................................93
SECTION 12.5. Miscellaneous Provisions Concerning Remedies.......................................94
ARTICLE 13 ASSIGNMENTS.........................................................................................94
SECTION 13.1. Successors and Assigns; Participations.............................................94
SECTION 13.2. Representation of Lenders..........................................................97
ARTICLE 14 AGENT...............................................................................................97
SECTION 14.1. Appointment of Agent...............................................................97
SECTION 14.2. Delegation of Duties...............................................................98
SECTION 14.3. Exculpatory Provisions.............................................................98
SECTION 14.4. Reliance by Agent..................................................................98
SECTION 14.5. Notice of Default..................................................................99
SECTION 14.6. Non-Reliance on Agent and Other Lenders............................................99
SECTION 14.7. Indemnification...................................................................100
SECTION 14.8. Agent in Its Individual Capacity..................................................100
SECTION 14.9. Successor Agent...................................................................100
SECTION 14.10. Notices from Agent to Lenders.....................................................100
SECTION 14.11. Field Examination Reports; Disclaimer by Lenders..................................101
ARTICLE 15 GUARANTEE..........................................................................................101
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SECTION 15.1. Guarantee.........................................................................101
SECTION 15.2. Obligations Unconditional.........................................................101
SECTION 15.3. Waiver of Suretyship Defenses.....................................................102
SECTION 15.4. Reinstatement.....................................................................102
SECTION 15.5. Remedies..........................................................................103
SECTION 15.6. Continuing Guaranty...............................................................103
ARTICLE 16 MISCELLANEOUS......................................................................................103
SECTION 16.1. Notices...........................................................................103
SECTION 16.2. Expenses..........................................................................104
SECTION 16.3. Stamp and Other Taxes.............................................................105
SECTION 16.4. Setoff............................................................................105
SECTION 16.5. Litigation........................................................................106
SECTION 16.6. Waiver of Rights..................................................................106
SECTION 16.7. Consent to Advertising and Publicity..............................................107
SECTION 16.8. Reversal of Payments..............................................................107
SECTION 16.9. Injunctive Relief.................................................................107
SECTION 16.10. Accounting Matters................................................................107
SECTION 16.11. Amendments........................................................................107
SECTION 16.12. Assignment........................................................................109
SECTION 16.13. Performance of Obligors' Duties...................................................109
SECTION 16.14. Indemnification...................................................................109
SECTION 16.15. All Powers Coupled with Interest..................................................109
SECTION 16.16. Survival..........................................................................110
SECTION 16.17. Titles and Captions...............................................................110
SECTION 16.18. Severability of Provisions........................................................110
SECTION 16.19. Governing Law.....................................................................110
SECTION 16.20. Counterparts......................................................................110
SECTION 16.21. Reproduction of Documents.........................................................110
SECTION 16.22. Term of Agreement.................................................................111
SECTION 16.23. Contribution and Indemnification among the Obligors...............................111
SECTION 16.24. Restrictions on Actions by Lenders; Sharing of Payments...........................111
SECTION 16.25. Agency for Perfection.............................................................112
SECTION 16.26. Taxes.............................................................................112
SECTION 16.27. Final Agreement...................................................................112
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SECTION 16.28. Waiver of Consequential Damages, Etc..............................................113
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EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C FORM OF REVOLVING CREDIT NOTE
EXHIBIT D FORM OF SETTLEMENT REPORT
EXHIBIT E FORM OF OPINION OF BANKRUPTCY COUNSEL
EXHIBIT F FORM OF COMPLIANCE CERTIFICATE
Schedule C-1 Commitments
Schedule P-1 Projections
Schedule S-1 Senior Claims
Schedule 3.10 Outstanding Letters of Credit
Schedule 5.1(j) First Day Orders
Schedule 6.1(a) Organization
Schedule 6.1(b) Capitalization
Schedule 6.1(c) Subsidiaries
Schedule 6.1(e) Compliance with Laws
Schedule 6.1(f) Principal Business
Schedule 6.1(g) Governmental Approvals
Schedule 6.1(h) Title to Properties
Schedule 6.1(i) Liens
Schedule 6.1(j) Indebtedness and Guaranties
Schedule 6.1(k) Litigation
Schedule 6.1(l) Tax Matters
Schedule 6.1(p) ERISA
Schedule 6.1(s) Location of Offices and Receivables
Schedule 6.1(t) Location of Inventory
Schedule 6.1(u) Equipment
Schedule 6.1(v) Real Estate
Schedule 6.1(w) Corporate and Fictitious Names
Schedule 6.1(z) Employee Relations
Schedule 6.1(aa) Proprietary Rights
Schedule 6.1(bb) Trade Names
Schedule 6.1(cc) Bank Accounts
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$150,000,000 SENIOR SECURED SUPER PRIORITY DEBTOR-IN-POSSESSION
LOAN AND SECURITY AGREEMENT
Dated as of December 3, 1999
Tultex Corporation, a Virginia corporation ("Tultex"), CALIFORNIA SHIRT
SALES, INC., a Virginia corporation, DOMINION STORES, INC., a Virginia
corporation, TULTEX/T-SHIRT CITY, INC., a Virginia corporation, and TRACK GEAR
INC., a Virginia corporation, each as a debtor and a debtor-in-possession
(collectively, the "Borrowers"), DOMINION DISTRIBUTION, INC., a Virginia
corporation, TULTEX SUBSIDIARY (VA), INC., a Virginia corporation, TULTEX
SUBSIDIARY (MASS), INC., a Massachusetts corporation, SWEATJET INCORPORATED, a
Virginia corporation, and TULTEX INTERNATIONAL, INC., a Virginia corporation
(collectively, the "Debtor Guarantors"), AKOM, LTD., a Cayman Islands, B.W.I.
corporation, LIGA MAYOR DE MEXICO, S.A. DE C.V., a Mexican corporation, TULTEX
CANADA INC., a Canadian corporation (collectively, the "Non-Debtor Guarantors"
and, together with the Debtor Guarantors, the "Guarantors" and each a
"Guarantor"), the financial institutions party to this Agreement from time to
time (the "Lenders"), and BANK OF AMERICA, N.A., a national banking association,
as agent for the Lenders (the "Agent"), agree as follows:
W I T N E S S E T H :
A. On December 3, 1999 (the "Petition Date"), a voluntary petition for
relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. xx.xx.
101 et seq. was filed by the Borrowers and the Debtor Guarantors in the United
States Bankruptcy Court for the Western District of Virginia (the "Court") as
administratively consolidated Chapter 11 Case No. 99-_________ (___) (the
"Chapter 11 Case"). The Borrowers and the Debtor Guarantors are and will
continue to operate their respective businesses and manage their respective
properties as debtors-in-possession pursuant to Sections 1107 and 1108 of the
Bankruptcy Code.
B. The Borrowers have requested that the Lenders and the Issuing Bank
provide a senior secured super priority revolving credit facility of up to
$150,000,000. The Borrowers intend to utilize such facility to (i) refinance
certain debt owed pursuant to that certain Loan and Security Agreement dated as
of May 7, 1999, among the Borrowers, the Guarantors, the Agent (f/k/a
NationsBank, N.A.), and the various lenders party thereto (the "Original Loan
Agreement"), (ii) fund their working capital requirements and guarantee their
letter of credit obligations during the pendency of the Chapter 11 Case, and
(iii) fund general corporate purposes in the ordinary course of business. The
Agent, the Issuing Bank and the Lenders are willing to extend such post-petition
financing to the Borrowers in accordance with and on the terms and conditions
set forth in this Agreement (including, but not limited to, the grant by each
Obligor to the Agent, for the benefit of the Secured Creditors, of a Lien on and
security interest in, all property of the Obligors, whether now owned or
hereafter acquired, as more fully set forth in the other Loan Documents executed
by the Obligors in connection with this Agreement and in the Interim Order and
Final Order, and on an interim and final basis.
C. The Obligors' business is a mutual and collective enterprise and the
Obligors believe that the consolidation of all loans and other financial
accommodations under this Agreement will enhance the aggregate borrowing powers
of the Obligors and facilitate the administration of the Chapter 11 Case and
their loan relationship with the Agent, the Issuing Bank and the Lenders, all to
the mutual advantage of the Obligors.
D. Each Obligor acknowledges that it will receive substantial direct
and indirect benefits by reason of the making of loans and other financial
accommodations to the other Obligors as provided in this Agreement, by virtue of
the Obligors' various inter-relationships as joint guarantors or joint obligors
and the beneficiaries thereof, as lessors and lessees, as suppliers and
customers, and as joint venturers.
E. The Agent's, the Issuing Bank's and the Lenders' willingness to
extend financial accommodations to the Obligors, and to administer each
Obligor's collateral security therefor, on a combined basis as more fully set
forth in this Agreement, is done solely as an accommodation to the Obligors and
at the Obligors' request and in furtherance of the Obligors' mutual and
collective enterprise.
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. For the purposes of this Agreement:
"Account Debtor" means a Person who is obligated on a
Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or
Investment, means the acquiring or acquisition of such Business Unit or
Investment by purchase, exchange, issuance of stock or other securities, or by
merger, reorganization or any other method.
"Affiliate" means, with respect to a Person, (a) any partner,
officer, shareholder (if holding more than 10% of the outstanding shares of
capital stock of such Person), director, employee or managing agent of such
Person, (b) any other Person (other than a Subsidiary) that, (i) directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 10% or more of any class of voting stock or
partnership or other voting interest of such Person or any Subsidiary of such
Person, or (iii) 10% or more of the voting stock or partnership or other voting
interest of which is directly or indirectly beneficially owned or held by such
Person or a Subsidiary of such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities or partnership or other voting interest, by contract or otherwise.
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"Agency Account" means an account of an Obligor maintained by
it with a Clearing Bank pursuant to an Agency Account Agreement.
"Agency Account Agreement" means an agreement among an
Obligor, the Agent and a Clearing Bank, in form and substance satisfactory to
the Agent, concerning the collection of payments that represent the proceeds of
Receivables or of any other Collateral.
"Agent" means Bank of America, N.A., a national banking
association, and any successor agent appointed pursuant to SECTION 14.9.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of SECTION 16.1.
"Aggregate Credit Obligations" means, as of any time of
determination, the sum of (a) the aggregate principal amount of Revolving Credit
Loans then outstanding, plus (b) the aggregate principal amount of all Agent
Advances then outstanding, plus (c) the aggregate principal amount of all
Pre-Petition Loans then outstanding.
"Agreement" means and includes this Agreement, including all
Schedules, Exhibits and other attachments hereto, and all amendments,
modifications and supplements hereto and thereto.
"Agreement Date" means the date as of which this Agreement is
dated.
"Applicable Law" means all applicable provisions of
constitutions, statutes, rules, regulations and orders of all governmental
bodies and of all orders and decrees of all courts and arbitrators, including
Environmental Laws and the Bankruptcy Code.
"Applicable Margin" means, as to (a) Prime Rate Loans, 1.75%,
and (b) LIBOR Loans, 3.75%.
"Asset Disposition" means the disposition of any asset of any
Obligor or any of its Subsidiaries, other than sales of Inventory in the
ordinary course of business.
"Assignment and Acceptance" means an assignment and acceptance
in the form attached hereto as EXHIBIT A assigning all or a portion of a
Lender's interests, rights and obligations under this Agreement pursuant to
SECTION 13.1.
"Available Revolving Credit Facility" means, as of any time of
determination, (a) the Revolving Credit Facility, minus (b) the Aggregate Credit
Obligations, minus (c) the Letter of Credit Reserve.
"Bank of America" means Bank of America, N.A., and its
successors and assigns.
"Bank Priority Collateral" means (a) all Receivables and
Receivables Related Collateral (as defined in the Intercreditor Agreement); (b)
all Inventory; (c) all Contract Rights relating to or arising out of Receivables
or Inventory; (d) all General Intangibles, including all Proprietary Rights; (e)
all Tax Refund Claims; (f) all documents of title, policies and certificates of
insurance,
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securities, chattel paper and other documents and instruments evidencing or
pertaining to any and all items of Bank Priority Collateral identified in the
other clauses of this definition; (g) all of the Obligors' demand, time,
savings, passbook, money market or like depository accounts, and certificates of
deposit, maintained with a bank, savings and loan association, credit union or
like organization; (h) the Logo Athletic Notes; and (i) any and all products and
proceeds of the foregoing (including any claim to any item referred to in this
definition, and any claim against any third party for loss of, damage to or
destruction of any or all of the Bank Priority Collateral, or for proceeds
payable under, or unearned premiums with respect to, policies of insurance with
respect to Bank Priority Collateral) in whatever form, including cash,
negotiable instruments and other instruments for the payment of money,
investment property, chattel paper, security agreements and other documents.
"Banking Relationship" means (a) checking and operating
account relationships between any Obligor and any Lender (or any Affiliate of a
Lender) and (b) Hedge Agreements between any Obligor and any Lender (or any
Affiliate of a Lender).
"Bankruptcy Code" means the United States Bankruptcy Code (11
U.S.C. Section 101 et seq.), as now or hereafter amended, and any successor
statute.
"Benefit Plan" means an "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) in respect of
which an Obligor or any Related Company is, or within the immediately preceding
six years was, an "employer" as defined in Section 3(5) of ERISA, including such
plans as may be established after the Agreement Date.
"Bonds" means, collectively, (a) the $110,000,000 aggregate
original principal amount of 10 5/8% Senior Notes due 2005 of Tultex, and (b)
the $75,000,000 aggregate original principal amount of Senior Notes due 2007 of
Tultex, in each case issued pursuant to an Indenture.
"Borrower" has the meaning set forth in the recital clauses
hereof.
"Borrowers' Agent" means Tultex, acting in its capacity as
agent for the other Borrowers and Obligors, pursuant to SECTION 4.17.
"Borrowing" means a borrowing of Revolving Credit Loans
bearing interest at the same rate, made by all Lenders on the same date and, in
the case of LIBOR Loans, having a single Interest Period, and the continuation
or conversion of an existing Loan or Loans in whole or in part.
"Borrowing Base" means at any time an amount equal to the
lesser of:
(a) the Revolving Credit Facility MINUS the sum of
(i) the Letter of Credit Reserve, PLUS
(ii) such other reserves as the Agent in its
reasonable discretion may establish from time to time, and
(b) an amount equal to
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(i) 85% (or such lesser percentage as the Agent may
in its reasonable discretion determine from time to time) of
the face value of Eligible Receivables due and owing at such
time, PLUS
(ii) THE LESSER OF
(A) the Applicable Inventory Advance
Percentage of the lesser of cost (determined on a
first-in-first-out accounting basis and as adjusted,
until Tultex has updated its standard inventory
costing systems in accordance with SECTION 9.12, in
the case of raw materials and finished goods, for the
applicable Capitalized Variance set forth below) and
fair market value of Eligible Inventory, net of
reserves for obsolescence, at such time, PROVIDED
that no more than $4,000,000 shall be included in the
Borrowing Base with respect to inventory located at
retail stores, AND
(B) the Inventory Sublimit, MINUS
(iii) the sum of
(A) the Letter of Credit Reserve, PLUS
(B) the Carve-Out Amount, PLUS
(C) the Dilution Reserve, PLUS
(D) the Treasury Management Reserve, PLUS
(E) such other reserves as the Agent in its
reasonable discretion may establish from time to
time.
As used herein, "Applicable Inventory Advance Percentage" means (x) 50% in the
case of Eligible Inventory consisting of raw materials, (y) 40% in the case of
Eligible Inventory consisting of greige goods, and (z) in the case of Eligible
Inventory consisting of finished goods (I) from the Agreement Date through
December 31, 1999, 57.5%, and (II) from January 1, 2000 and thereafter, 55%; or,
in any such case, such lesser percentage as the Agent may in its reasonable
discretion determine from time to time; provided, however, the blended
"Applicable Inventory Advance Percentage" shall not at any time exceed that
percentage determined by the Agent by dividing (i) the product of (a) (x) from
the Agreement Date through December 31, 1999, 85% and (y) from January 1, 2000
and thereafter, 80%, multiplied by (b) the Orderly Liquidation Value of finished
goods, greige goods, and raw material Inventory of the Obligors by (2) the
Eligible Inventory of the Obligors. As used herein, "Inventory Sublimit" means
(i) from the Agreement Date through December 31, 1999, $70,000,000, and (ii)
from January 1, 2000 and thereafter, $60,000,000. As used herein, "Capitalized
Variance" means such amount or percentage reduction (in the case of raw
materials) or increase (in the case of finished goods) as may be determined
pursuant to the Xxxxx Xxxxxx inventory reports delivered to the Agent from time
to time pursuant to Section 8.12(f) (which increase, in the case of finished
goods, shall not exceed $13,000,000).
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"Borrowing Base Certificate" means a certificate in the form
attached hereto as EXHIBIT B.
"Business Day" means (a) any day other than a Saturday, Sunday
or other day on which banks in Atlanta, Georgia are authorized or required to
close and (b) in respect of any determination with respect to a LIBOR Loan, any
day referred to in CLAUSE (A) that is also a day on which tradings are conducted
in the London interbank eurodollar market.
"Business Unit" means the assets constituting the business or
a division or operating unit thereof of any Person.
"California Shirt" means California Shirt Sales, Inc., a
Virginia corporation.
"Capital Expenditures" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets (other
than assets which constitute a Business Unit) which are not, in accordance with
GAAP, treated as expense items for such Person in the year made or incurred or
as a prepaid expense applicable to a future year or years.
"Capitalized Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented
by obligations under a Capitalized Lease, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Carve-Out Amount" has the meaning set forth in SECTION 4.21.
"Carve-Out Expenses" has the meaning set forth in SECTION
4.21.
"Cash Collateral" means collateral consisting of cash or Cash
Equivalents on which the Agent, for the benefit of the Secured Creditors, has a
first priority Lien.
"Cash Collateral Account" means a special interest-bearing
deposit account consisting of cash maintained at the Agent's Office and under
the sole dominion and control of the Agent, for the benefit of the Secured
Creditors, established pursuant to the provisions of SECTION 4.16 for the
purposes set forth therein.
"Cash Equivalents" means: (a) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (b) commercial paper maturing no more than one year from the date
issued and, at the time of acquisition thereof, having a rating of at least A-1
from Standard & Poor's Corporation or at least P-1 from Xxxxx'x Investors
Service, Inc.; (c) certificates of deposit or bankers' acceptances issued in
Dollar denominations and maturing within one year from the date of issuance
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $100,000,000 and, unless
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issued by the Agent or a Lender, not subject to setoff or offset rights in favor
of such bank arising from any banking relationship with such bank; and (d)
repurchase agreements in form and substance and for amounts satisfactory to the
Agent.
"Chapter 11 Case" has the meaning assigned to it in the
recital clauses hereof.
"Clearing Bank" means Bank of America and any other banking
institution with which an Agency Account has been established pursuant to an
Agency Account Agreement.
"Collateral" means and includes, collectively, all of the
collateral referred to in the Interim Order, the Final Order and each of the
Security Documents and all of each Obligor's right, title and interest in and to
each of the following, wherever located and whether now or hereafter existing or
now owned or hereafter acquired or arising, but in any event excluding all
avoidance actions under Sections 545, 547, 548, 549, 550, 553(b) or 724(a) of
the Bankruptcy Code:
(a) all Receivables,
(b) all Inventory,
(c) all Contract Rights,
(d) all General Intangibles,
(e) all Tax Refund Claims,
(f) all Logo Athletic Notes,
(g) all Equipment,
(h) all Real Estate,
(i) all goods and other property, whether or not delivered,
(i) the sale or lease of which gives or purports to give rise to any
Receivable, including all merchandise returned or rejected by or
repossessed from customers, or (ii) securing any Receivable, including
all rights as an unpaid vendor or lienor (including stoppage in
transit, replevin and reclamation) with respect to such goods and other
property,
(j) all mortgages, deeds to secure debt and deeds of trust on
real or personal property, guaranties, leases, security agreements, and
other agreements and property which secure or relate to any Receivable
or other Collateral, or are acquired for the purpose of securing and
enforcing any item thereof,
(k) all documents of title, policies and certificates of
insurance, securities, chattel paper and other documents and
instruments evidencing or pertaining to any and all items of
Collateral,
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(l) all files, correspondence, computer programs, tapes, discs
and related data processing software which contain information
identifying or pertaining to any Tax Refund Claim or any of the
Receivables or any Account Debtor, or showing the amounts thereof or
payments thereon or otherwise necessary or helpful in the realization
thereon or the collection thereof,
(m) any demand, time, savings, passbook, money market or like
depository account, and all certificates of deposit, maintained with a
bank, savings and loan association, credit union or like organization,
(n) all cash deposited with the Agent or any Lender or any
Affiliate of the Agent or any Lender or which the Agent, for the
benefit of the Secured Creditors, or any Lender or such Affiliate is
entitled to retain or otherwise possess as collateral pursuant to the
provisions of this Agreement or any of the Security Documents or any
agreement relating to any Letters of Credit,
(o) any other "property" of the Debtors' estates pursuant to
Section 541 of the Bankruptcy Code, and
(p) any and all products and proceeds of the foregoing
(including any claim to any item referred to in this definition, and
any claim against any third party for loss of, damage to or destruction
of any or all of, the Collateral or for proceeds payable under, or
unearned premiums with respect to, policies of insurance) in whatever
form, including cash, negotiable instruments and other instruments for
the payment of money, investment property, chattel paper, security
agreements and other documents.
"Collateral Access Agreement" means, with respect to any
leased premises of any Borrower, an agreement executed by the landlord,
warehouseman or bailee thereof and delivered to the Agent, pursuant to which
such landlord, warehouseman or bailee waives any Lien rights it may hold in
regard to such Borrower's property, grants access by the Agent to such leased
premises, permits the use of such leased premises by the Agent and grants to the
Agent other rights consistent therewith to permit the Agent to exercise any and
all rights with respect to any of the Collateral, in form and substance
reasonably acceptable to the Agent or the inclusion of such findings and
decretal portions in the Interim Order and the Final Order as provides rights
and protections that are reasonably equivalent to the foregoing and are
reasonably acceptable to the Agent, in lieu of, the execution and delivery of
the above referenced agreements.
"Commitment" means, as to each Lender, the obligations of such
Lender to make Revolving Credit Loans and to purchase participations in Letters
of Credit, and which shall not exceed (a) the amount set forth (i) opposite such
Lender's name on SCHEDULE C-1, or (ii) from and after the date hereof, in the
Register (as defined in SECTION 13.1), minus (b) the principal amount
outstanding from time to time of all Pre-Petition Loans made by such Lender.
"Commitment Percentage" means, as to any Lender, the
percentage of the Total Commitment obtained by dividing such Lender's Commitment
by the Total Commitment.
"Committee" means the Official Committee of Unsecured
Creditors, appointed or
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approved by the applicable United States Trustee in the Chapter 11 Case.
"Consolidated" means, when used with reference to any
accounting term used herein, the sum of the applicable accounting term for
Tultex and its Consolidated Subsidiaries, as consolidated after the elimination
of intercompany items.
"Consolidated Subsidiaries" means, as to Tultex, the
Subsidiaries of Tultex whose accounts are at the time in question, in accordance
with GAAP and pursuant to the written consent of the Required Lenders, which
consent may be withheld in their discretion conditioned upon, among other
things, the execution and delivery of guaranties, security agreements, mortgages
and other documents required by the Required Lenders in their discretion,
consolidated with those of Tultex.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contract Rights" means any rights under contracts not yet
earned by performance and not evidenced by an instrument or chattel paper, which
contracts relate to or arise out of any of the Receivables or Inventory.
"Convertible Subordinated Notes" means, collectively, (a)
Tultex's 10% Convertible Subordinated Note due 2007, in the original principal
amount of $2,715,000, payable to California Shirt, (b) Tultex's 10% Convertible
Subordinated Note due 2007, in the original principal amount of $6,000,000,
payable to California Shirt, (c) Tultex's 10% Convertible Subordinated Note due
2007, in the original principal amount of $1,000,000, payable to Signet Trust
Company, as Escrow Agent pursuant to the Escrow Agreement dated April 16, 1997,
and (d) Tultex's 9% Convertible Subordinated Note due 2007, in the original
principal amount of $4,690,000, payable to California Shirt.
"Copyrights" means and includes, in each case whether now
existing or hereafter arising, all of each Obligor's right, title and interest
in and to: (a) all copyrights, rights and interests in copyrights, works
protectable by copyright, copyright registrations and copyright applications;
(b) all renewals of any of the foregoing; (c) all income, royalties, damages and
payments now or hereafter due and/or payable under any of the foregoing,
including damages or payments for past or future infringements of any of the
foregoing; (d) the right to xxx for past, present and future infringements of
any of the foregoing; and (e) all rights corresponding to any of the foregoing
throughout the world.
"Court" has the meaning assigned to it in the recital clauses
hereof.
"Debtor Guarantors" has the meaning assigned to it in the
recital clauses hereof.
"Debtors" means the Borrowers and the Debtor Guarantors.
"Default" means any of the events specified in SECTION 12.1
which with the passage of time or giving of notice or both would constitute an
Event of Default.
"Default Margin" means 3%.
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"Dilution Reserve" means, at any time of calculation, 2% of
the face value of Receivables due and owing at such time.
"Disbursement Account" means one or more accounts maintained
by and in the name of Tultex or any other Borrower with a Disbursing Bank for
the purposes of disbursing Revolving Credit Loan proceeds and amounts deposited
thereto.
"Disbursing Bank" means any commercial bank with which a
Disbursement Account is maintained.
"Dollar" and "$" mean freely transferable United States
dollars.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"Effective Date" means the later of (a) the Agreement Date,
and (b) the first date on which all of the conditions set forth in ARTICLE 5
shall have been fulfilled or waived.
"Effective Interest Rate" means each rate of interest per
annum on the Revolving Credit Loans in effect from time to time pursuant to the
provisions of SECTIONS 4.1(A), (B) and (D).
"Eligible Assignee" means: (a) a commercial bank, commercial
finance company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default exists, any
Person reasonably acceptable to the Agent; PROVIDED in each case that the
representation contained in SECTION 13.2 hereof shall be true with respect to
such Person.
"Eligible In-Transit Inventory" means (a) Inventory being
imported to the United States or Canada by an Obligor under a documentary Letter
of Credit, PROVIDED that all documents of title with respect thereto have been
consigned with the Agent or its representative on terms acceptable to the Agent,
(b) finished goods Inventory in transit between the Obligor's locations in the
United States and Canada, and (c) up to $5,000,000 (computed at the lesser of
cost (determined on a first-in-first-out accounting basis) and fair market
value) in the aggregate at any time of Inventory in transit from a foreign
manufacturing or processing facility of Tultex or any of its Subsidiaries to an
Obligor's locations in the United States and Canada, PROVIDED such Inventory
described in CLAUSE (C) is located in the United States (or is on an ocean-going
vessel destined for a United States port and is covered by an ocean cargo
insurance policy, naming the Agent as loss payee, that is acceptable to the
Agent); FURTHER PROVIDED, in each case, such Inventory meets all of the
requirements set forth under Eligible Inventory.
"Eligible Inventory" means Inventory which the Agent, in its
reasonable discretion, determines to meet all of the following requirements:
(a) such Inventory is owned by an Obligor which is organized
or incorporated under the laws of the United States or Canada (or, in
either case, any state or province thereof) and which has its principal
place of business and chief executive office in the United States or
Canada,
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(b) such inventory is stored at a location listed on SCHEDULE
6.1(T) or is Eligible In-Transit Inventory,
(c) such Inventory is subject to the Security Interest, which
is perfected as to such Inventory, and is subject to no other Lien
whatsoever other than a Permitted Lien,
(d) such Inventory consists of finished goods, greige goods or
raw materials,
(e) such Inventory does not consist of work-in-process,
chemicals, supplies, or packing and shipping materials,
(f) such Inventory is in good condition and meets all
standards imposed by any governmental agency, or department or division
thereof, having regulatory authority over such goods, their use or
sale,
(g) such Inventory is currently either usable or salable, at
prices approximating at least cost, in the normal course of the
applicable Obligor's business, and is not slow moving or stale,
(h) such Inventory is not obsolete or returned or repossessed
or used goods taken in trade,
(i) unless such Inventory is Eligible In-Transit Inventory,
such Inventory is located within the United States or Canada at one of
the locations set forth in the most recent Schedule of Inventory
delivered to the Agent,
(j) such Inventory is in the possession and control of an
Obligor and not any third party or if the Inventory is held by a third
party bailee and a negotiable instrument has not been issued with
respect to it (i) a financing statement (or the equivalent) which names
the third party bailee as the debtor/bailee, names such Obligor as the
secured party/xxxxxx, names the Agent as assignee of the secured
party/xxxxxx, and contains a description of such Inventory acceptable
to the Agent and otherwise in compliance with the requirements of
Sections 2-326 and 9-114 of the Uniform Commercial Code (or the
equivalent) has been filed in the appropriate filing office and (ii)
such other steps as the Agent may reasonably require in order to
establish and preserve the priority of the Security Interest against
secured creditors of such third party bailee or such Obligor shall have
been taken,
(k) if such Inventory is located in a warehouse or other
facility leased by an Obligor, a Collateral Access Agreement with
respect to such premises is in effect,
(l) if such Inventory contains or bears any Proprietary Rights
licensed to an Obligor by any Person, the Agent shall be satisfied that
it may sell or otherwise dispose of such Inventory in accordance with
ARTICLE 12 without infringing the rights of the licensor of such
Proprietary Rights or violating any contract with such licensor (and
without payment of any royalties other than any royalties due with
respect to the sale or disposition of such Inventory pursuant to the
existing license agreement), and, if the Agent deems it necessary, the
applicable
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Obligor shall deliver to the Agent a consent or sublicense agreement
from such licensor in form and substance acceptable to the Agent, and
(m) such Inventory is not determined by the Agent, on behalf
of the Secured Creditors, in its reasonable discretion, to be
ineligible for any other reason.
"Eligible Receivable" means a Receivable that consists of the
unpaid portion of the obligation stated on the invoice issued to an Account
Debtor with respect to Inventory sold and shipped to or services performed for
such Account Debtor in the ordinary course of business, net of any credits or
rebates owed by any Obligor to the Account Debtor, and that the Agent, in its
reasonable discretion, determines to meet all of the following requirements:
(a) such Receivable is owned by an Obligor which is organized
or incorporated under the laws of the United States or Canada (or, in
either case, any state or province thereof) and which has its principal
place of business and chief executive office in the United States or
Canada,
(b) such Receivable represents a complete bona fide
transaction which requires no further act under any circumstances on
the part of such Obligor to make such Receivable payable by the Account
Debtor,
(c) such Receivable shall not be more than 60 days past due,
(d) no more than 120 days shall have elapsed from the date of
the original invoice,
(e) the goods the sale of which gave rise to such Receivable
were shipped or delivered to the Account Debtor on an absolute sale
basis and not on a xxxx and hold sale basis, a consignment sale basis,
a guaranteed sale basis, a sale or return basis, or on the basis of any
other similar understanding, and no material part of such goods shall
have been returned or rejected,
(f) such Receivable is not evidenced by chattel paper or an
instrument of any kind, or if such Receivable is evidenced by chattel
paper or an instrument, such chattel paper or instrument has been
collaterally assigned to the Agent, for the benefit of the Secured
Creditors, pursuant to an assignment in form and substance satisfactory
to the Agent, and is in the possession of the Agent,
(g) the Account Debtor with respect to such Receivable is not
insolvent or the subject of any bankruptcy or insolvency proceedings of
any kind or of any other proceeding or action, threatened or pending,
which might, in the Agent's reasonable discretion, have a materially
adverse effect on such Account Debtor, and is not, in the reasonable
discretion of the Agent, deemed ineligible for credit or other reasons,
(h) such Receivable is not owing by an Account Debtor having
50% or more in face value of its then-existing accounts owing to the
Obligors which are in dispute or ineligible under CLAUSE (B) or (C)
above,
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(i) such Receivable is not owing by an Account Debtor whose
then-existing accounts owing to the Obligors exceed in face amount 15%
(20% in the case of Sears) of total Eligible Receivables, PROVIDED this
restriction shall only exclude the amount in excess of such
concentration limit,
(j) if such Receivable arises from the performance of
services, such services have been fully rendered and do not relate to
any warranty claim or obligation,
(k) if such Receivable is owing by an Account Debtor that is
located outside of the United States or Canada, the goods which gave
rise to such Receivable were shipped after receipt by the applicable
Obligor from the Account Debtor of an irrevocable letter of credit that
has been confirmed by a financial institution acceptable to the Agent,
is in form and substance acceptable to the Agent, payable in the full
face amount of the face value of the Receivable at a place of payment
located within the United States or Canada and has, if requested by the
Agent, been duly assigned to the Agent, provided that no supporting
letter of credit will be required with respect to up to $2,000,000 in
face value of Receivables owing from Nissan Trading Co. at any time,
(l) such Receivable is a valid, legally enforceable obligation
of the Account Debtor with respect thereto,
(m) such Receivable is not subject to any present or
contingent (and no facts exist which are the basis for any future)
offset, deduction, counterclaim, dispute or other defense on the part
of the Account Debtor with respect thereto, PROVIDED this restriction
shall only exclude the amount of such Receivable that is subject to
offset, deduction, counterclaim, dispute or defense,
(n) such Receivable is subject to the Security Interest, which
is perfected as to such Receivable, and is subject to no other Lien
whatsoever,
(o) such Receivable is evidenced by an invoice or other
documentation in form acceptable to the Agent,
(p) such Receivable is not subject to the Assignment of Claims
Act of 1940, as amended from time to time, or any Applicable Law now or
hereafter existing similar in effect thereto, or to any other
prohibition (under Applicable Law, by contract or otherwise) against
its assignment or requiring notice of or consent to such assignment,
unless all such required notices have been given, all such required
consents have been received and all other procedures have been complied
with such that such Receivable shall have been duly and validly
assigned to the Agent, for the benefit of the Secured Creditors,
(q) the goods giving rise to such Receivable were not, at the
time of the sale thereof, subject to any Lien, except the Security
Interest and Permitted Liens,
(r) no Obligor is in breach of any express or implied
representation or warranty with respect to the goods the sale of which
gave rise to such Receivable nor in breach of any
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representation or warranty, covenant or other agreement contained in
the Loan Documents with respect to such Receivable,
(s) such Receivable does not arise out of any transaction with
any Subsidiary, Affiliate, creditor, tenant, lessor or supplier of any
Obligor,
(t) such Receivable does not arise out of finance or similar
charges by any Obligor or other fees for the time value of money,
(u) the Account Debtor with respect to such Receivable is not
located in any state or jurisdiction denying creditors access to its
courts in the absence of qualification to transact business in such
state or the filing of a Notice of Business Activities Report or other
similar filing, unless the applicable Obligor has either qualified as a
foreign corporation authorized to transact business in such state or
jurisdiction or has filed a Notice of Business Activities Report or
similar filing with the applicable state or jurisdiction agency for the
then current year, and
(v) neither the Account Debtor with respect to such
Receivable, nor such Receivable, is determined by the Agent in its
reasonable discretion to be ineligible for any other reason.
"Environmental Laws" means all federal, state, local and
foreign laws now or hereafter in effect relating to pollution or protection of
the environment, including laws relating to emissions, discharges, Releases or
threatened Releases of pollutants, Contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment (including ambient air,
surface water, ground water, or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, removal, transport,
or handling of pollutants, Contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes, and any and all regulations, notices or demand
letters issued, entered, promulgated or approved thereunder; such laws and
regulations include but are not limited to the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901 et seq., as amended; the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq., as amended; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.,
as amended; the Clean Air Act, 46 U.S.C. ss. 7401 et seq., as amended; and all
federal, state, local and foreign lien and environmental cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental
entity for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such governmental entity in response to, a Release or
threatened Release of Contaminant into the environment.
"Equipment" means all machinery, apparatus, equipment, motor
vehicles, tractors, trailers, rolling stock, fittings and fixtures and other
tangible personal property (other than Inventory) of every kind and description
used in the Obligors' business operations or owned by an Obligor or in which an
Obligor has an interest, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements therefor.
"Event of Default" means any of the events specified in
SECTION 12.1, PROVIDED that any requirement for notice or lapse of time or any
other condition has been satisfied.
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"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate per annum equal for each day during such period to 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 for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of Atlanta, or, if such rate
is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
federal funds brokers of recognized standing selected by the Agent.
"Fee Letter" means, collectively, the December 3, 1999 fee
letter between Bank of America and Tultex, and any other letter agreement
between Tultex and Bank of America with respect to fees payable by the Obligors
in connection with this Agreement.
"Final Order" means the order of the Court entered in the
Chapter 11 Case after a final hearing under Bankruptcy Rule 4001(c)(2) or such
other procedures as approved by the Court and acceptable to the Agent,
reasonably satisfactory in form and substance to the Agent and the Lenders, and
from which no appeal has been timely filed, or if timely filed, no stay of such
order pending appeal has been granted or such appeal has been dismissed (unless
the Agent and the Lenders waive such requirement), together with all extensions,
modifications and amendments thereto, which, among other matters but not by way
of limitation, authorizes the Borrowers to obtain credit, incur Indebtedness,
and grant Liens under this Agreement and the other Loan Documents, as the case
may be, and provides for the super priority of the Agent and the Lenders'
claims, all as set forth in such order.
"Financial Officer" means the Chief Financial Officer,
Treasurer or Controller of Tultex.
"Financing Statements" means any and all Uniform Commercial
Code financing statements (or other similar documents), in form and substance
satisfactory to the Agent, executed and delivered by the Obligors to the Agent,
naming the Agent, for the benefit of the Secured Creditors, as secured party,
and the Obligors as debtor, in connection with this Agreement.
"Funded Indebtedness" means (a) all Indebtedness under this
Agreement and (b) all other Indebtedness for Money Borrowed, including all
Subordinated Indebtedness.
"GAAP" means generally accepted accounting principles
consistently applied and maintained throughout the period indicated and, when
used with reference to Tultex or any Subsidiary of Tultex, consistent with the
prior financial practice of Tultex, as reflected on the financial statements
referred to in SECTION 6.1(N); PROVIDED, HOWEVER, that, in the event that
changes shall be mandated by the Financial Accounting Standards Board or any
similar accounting authority of comparable standing, or shall be recommended by
Tultex's independent public accountants, such changes shall be included in GAAP
as applicable to Tultex and its Subsidiaries only from and after such date as
the Borrowers' Agent, the Required Lenders and the Agent shall have amended this
Agreement to the extent necessary to reflect any such changes in the financial
covenants set forth in ARTICLE 11.
"General Intangibles" means all of the Obligors' now owned or
hereafter acquired general intangibles and other intangible personal property of
every kind and nature which relate to or arise
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out of any of the Receivables or Inventory, including all of the following which
relate to or arise out of any of the Receivables or Inventory: all Proprietary
Rights, corporate or other business records, inventions, designs, blueprints,
plans, specifications, goodwill, computer software, customer lists,
registrations, licenses, franchises, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, property, casualty or any similar type of insurance and any
proceeds thereof, and any letter of credit, guarantee, claims, security interest
or other security held by or granted to any Obligor to secure payment by an
Account Debtor of any of the Receivables.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all governmental bodies, whether federal, state, local or foreign
national or provincial and all agencies thereof.
"Guarantor" has the meaning set forth in the recital clauses
hereof.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any
obligation of another Person shall mean and include (a) a guaranty (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), directly or indirectly, in any manner, of any part or all of such
obligation of such other Person, and (b) an agreement, direct or indirect,
contingent or otherwise, and whether or not constituting a guaranty, the
practical effect of which is to assure the payment or performance (or payment of
damages in the event of nonperformance) of any part or all of such obligation of
such other Person whether by (i) the purchase of securities or obligations, (ii)
the purchase, sale or lease (as lessee or lessor) of property or the purchase or
sale of services primarily for the purpose of enabling the guarantor with
respect to such obligation to make any payment or performance (or payment of
damages in the event of nonperformance) of or on account of any part or all of
such obligation, or to assure the owner of such obligation against loss, (iii)
the supplying of funds to or in any other manner investing in the guarantor with
respect to such obligation, (iv) repayment of amounts drawn down by
beneficiaries of letters of credit, or (v) the supplying of funds to or
investing in a Person on account of all or any part of such Person's obligation
under a Guaranty of any obligation or indemnifying or holding harmless, in any
way, such Person against any part or all of such obligation, excluding, in any
event, indemnification obligations arising in the ordinary course of business.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts, and other similar agreements.
"Indebtedness" of any Person means, without duplication, all
Liabilities of such Person, and to the extent not otherwise included in
Liabilities, the following: (a) all obligations for Money Borrowed or for the
deferred purchase price of property or services, (b) all obligations (including,
during the noncancellable term of any lease in the nature of a title retention
agreement, all future payment obligations under such lease discounted to their
present value in accordance with GAAP) secured by any Lien to which any property
or asset owned or held by such Person is subject, whether or not the obligation
secured thereby shall have been assumed by such Person, (c) all obligations of
other Persons which such Person has Guaranteed, including all obligations of
such Person consisting of recourse liability with respect to accounts receivable
sold or otherwise disposed of by such Person, (d) all obligations of such Person
in respect of Hedge Agreements, and (e) in the case of the Borrowers (without
duplication), all obligations under the Revolving Credit Loans.
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"Indentures" means, collectively, (a) the Indenture dated as
of March 15, 1995 pursuant to which the Bonds of Tultex due 2005 were issued, as
supplemented prior to the Agreement Date, and (b) the Indenture dated as of
April 15, 1997 pursuant to which the Bonds of Tultex due 2007 were issued, as
supplemented prior to the Agreement Date.
"Indenture Trustees" means, collectively, the trustees under
each of the Indentures.
"Initial Loans" means the Revolving Credit Loans made to the
Borrowers on the Effective Date pursuant to the Initial Notice of Borrowing.
"Initial Notice of Borrowing" means the Notice of Borrowing
given by the Borrowers with respect to the Initial Loans, which shall also
specify the method of disbursement.
"Interbank Offered Rate" means, with respect to any LIBOR Loan
for the Interest Period applicable thereto, the per annum rate of interest
determined by the Agent (each such determination to be conclusive and binding
absent manifest error) as of two Business Days prior to the first day of such
Interest Period as the effective rate at which deposits in immediately available
funds in Dollars are being offered or quoted to major banks in the London
interbank market for deposits for a term comparable to such Interest Period and
in the amount of such LIBOR Loan, which rate shall be determined from the
display designated as Page 3750 of Dow Services, Inc. In the event Page 3750
shall be unavailable for any reason or the Agent in good faith elects to no
longer use such service for determining such rate under this Agreement, such
rate may be determined by the Agent from any other interest rate reporting
service of recognized standing that the Agent shall select.
"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of May 7, 1999, between the Agent and the Indenture Trustees.
"Interest Payment Date" means the first day of each calendar
month commencing on January 1, 2000 and continuing on the first day of each
month thereafter until the Secured Obligations have been irrevocably paid in
full.
"Interest Period" means, with respect to each LIBOR Loan, the
period commencing on the date of the making or continuation of or conversion to
such LIBOR Loan and ending one month thereafter, as the Borrowers may elect in
the applicable Notice of Borrowing or Notice of Conversion or Continuation;
PROVIDED, that: (a) any Interest Period that would otherwise end on a day that
is not a Business Day shall, subject to the provisions of CLAUSE (C) below, be
extended to the next succeeding Business Day unless such Business Day falls in
the next calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day; (b) any Interest Period 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, subject to CLAUSE (C) below, end on the last Business Day of a
calendar month; (c) any Interest Period that would otherwise end after the
Termination Date shall end on the Termination Date; and (d) notwithstanding
CLAUSE (C) above, no Interest Period shall have a duration of less than one
month and if any applicable Interest Period would be for a shorter period, such
Interest Period shall not be available hereunder.
"Interim Advances" means those advances of Revolving Credit
Loans made under this
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Agreement pursuant to the terms of the Interim Order.
"Interim Letters of Credit" means the Letters of Credit issued
under this Agreement pursuant to the terms of the Interim Order.
"Interim Order" means the order of the Court entered in the
Chapter 11 Case after an interim hearing (assuming satisfaction of the standards
prescribed in Bankruptcy Rule 4001(c) and other applicable law), together with
all extensions, modifications and amendments thereto, reasonably satisfactory in
form and substance to the Agent, which, among other matters but not by way of
limitation, authorizes, on an interim basis, the Borrowers to execute and to
perform under the terms of this Agreement and the other Loan Documents.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.
"Inventory" means all inventory as such term is defined in the
Uniform Commercial Code and shall include, without limitation, (a) all goods
intended for sale or lease by the Obligors, or for display or demonstration, (b)
all work in process, (c) all raw materials and other materials and supplies of
every nature and description used or which might be used in connection with the
manufacture, packing, shipping, advertising, selling, leasing or furnishing of
such goods or otherwise used or consumed in the Obligors' business, and (d) all
documents evidencing and general intangibles relating to any of the foregoing.
"Inventory Appraisal" means the inventory appraisal prepared
by the Xxxxxxx Group and delivered to the Agent prior to the Agreement Date and
each other inventory appraisal delivered to the Agent pursuant to SECTION
8.12(F).
"Inventory Appraiser" has the meaning set forth in SECTION
8.12(F).
"Investment" means, with respect to any Person, (a) the
acquisition or ownership by such Person of any share of capital stock, evidence
of Indebtedness or other security issued by any other Person, (b) any loan,
advance or extension of credit to, or contribution to the capital of, any other
Person, excluding advances to employees in the ordinary course of business for
business expenses, (c) any Guaranty of the obligations of any other Person, and
(d) any other investment (other than the Acquisition of a Business Unit) in any
other Person.
"IRS" means the Internal Revenue Service.
"Issuing Bank" means Bank of America, in its capacity as
issuer of any Letter of Credit, or any successor thereto.
"Lender" means at any time any financial institution party to
this Agreement at such time, including any such Person becoming a party hereto
pursuant to the provisions of ARTICLE 13, and its successors and assigns, and
"Lenders" means at any time all of the financial institutions party to this
Agreement at such time, including any such Persons becoming parties hereto
pursuant to the provisions of ARTICLE 13, and their successors and assigns.
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"Letter of Credit" means any Letter of Credit issued by the
Issuing Bank for the account of the Borrowers pursuant to ARTICLE 3.
"Letter of Credit Amount" means, with respect to any Letter of
Credit, the aggregate maximum amount at any time available for drawing under
such Letter of Credit.
"Letter of Credit Facility" means the amount of $12,000,000.
"Letter of Credit Obligations" means, at any time, the sum of
(a) the Reimbursement Obligations of the Borrowers at such time, PLUS (b) the
aggregate Letter of Credit Amount of Letters of Credit outstanding at such time,
PLUS (c) the aggregate Letter of Credit Amount of Letters of Credit the issuance
of which has been authorized by the Agent and the Issuing Bank pursuant to
SECTION 3.4(B) but that have not yet been issued, in each case as determined by
the Agent.
"Letter of Credit Reserve" means, at any time, the aggregate
Letter of Credit Obligations at such time, other than Letter of Credit
Obligations that are fully secured by Cash Collateral.
"Liabilities" of any Person means all items (except for items
of capital stock, additional paid-in capital or retained earnings, or of general
contingency or deferred tax reserves) which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Liabilities are to be
determined.
"LIBOR" means, with respect to any LIBOR Loan for the Interest
Period applicable thereto, a simple per annum interest rate determined pursuant
to the following formula:
LIBOR = Interbank Offered Rate
------------------------------------
1 - LIBOR Reserve Percentage
LIBOR shall be adjusted automatically as of the effective date of any change in
the LIBOR Reserve Percentage.
"LIBOR Loan" means any Loan bearing interest at a rate
determined by reference to LIBOR, including any such Loans continued as or
converted into a LIBOR Loan on the same day by the Lenders for the same Interest
Period.
"LIBOR Reserve Percentage" means that percentage (expressed as
a decimal) which is in effect from time to time under Regulation D of the Board
of Governors of the Federal Reserve System, as such regulation may be amended
from time to time, or any successor regulation, as the maximum reserve
requirement (including any basic, supplemental, emergency, special, or marginal
reserves) applicable with respect to Eurocurrency liabilities as that term is
defined in Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate of LIBOR Loans is
determined), whether or not any Lender has any Eurocurrency liabilities subject
to such reserve requirement at that time. LIBOR Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to
reserve requirements without benefit of credits for proration, exceptions or
offsets that may be available from time to time to any Lender.
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"LIBOR Revolving Credit Loan" means a LIBOR Loan outstanding
under the Revolving Credit Facility.
"Lien" means, as applied to the property of any Person: (a)
any mortgage, deed to secure debt, deed of trust, lien, pledge, charge, lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security interest, security title or encumbrance
of any kind in respect of any property of such Person, or upon the income or
profits therefrom, (b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to the payment of the general, unsecured
creditors of such Person, (c) any Indebtedness which is unpaid more than 60 days
after the same shall have become due and payable and which if unpaid might by
law (including bankruptcy and insolvency laws), or otherwise, be given any
priority whatsoever over the claims of general unsecured creditors of such
Person, and (d) the filing of, or any agreement to give, any financing statement
under the Uniform Commercial Code or its equivalent in any jurisdiction,
excluding informational financing statements relating to leased property.
"Loan" means any Revolving Credit Loan, as well as all such
loans collectively, as the context requires.
"Loan Account" and "Loan Accounts" shall have the meanings
ascribed thereto in SECTION 4.5.
"Loan Documents" means collectively this Agreement, the Notes,
the Security Documents, the Fee Letter, all Collateral Access Agreements, and
each other instrument, agreement or document executed by any Obligor, or any
Affiliate or Subsidiary of any Obligor, in connection with this Agreement,
whether prior to, on or after the Effective Date, and each other instrument,
agreement or document referred to herein or contemplated hereby.
"Lockbox" means each post office box specified in a Lockbox
Agreement.
"Lockbox Agreement" means each agreement between an Obligor
and a Clearing Bank concerning the establishment of a Lockbox for the collection
of Receivables.
"Logo Athletic Note" means, collectively, (a) the
Non-Negotiable Subordinated Promissory Note of TKS Acquisition, Inc., dated July
15, 1998, payable to Tultex in the principal amount of $5,000,000, (b) the
Non-Negotiable Subordinated Promissory Note of TKS Acquisition, Inc., dated July
15, 1998, payable to Tultex in the principal amount of $2,500,000, and (c) the
Non-Negotiable Subordinated Promissory Note of TKS Acquisition, Inc., dated July
15, 1998, payable to Tultex in the principal amount of $5,000,000.
"Materially Adverse Effect" means any act, omission,
situation, circumstance, event or undertaking (other than the filing of the
Chapter 11 Case, the issuance of default notices under the Indentures and
otherwise as disclosed in the financial statements and other financial reports
furnished to the Agent and the Lenders prior to the Petition Date) which would,
singly or in any combination with one or more other acts, omissions, situations,
circumstances, events or undertakings have, or reasonably be expected by the
Agent to have, a materially adverse effect upon (a) the business, assets,
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properties, liabilities, condition (financial or otherwise), results of
operations or business prospects of Tultex and its Consolidated Subsidiaries
taken as a whole, (b) the value of the Collateral, (c) the Security Interest or
the priority of the Security Interest, (d) the respective ability of any Obligor
or any of their Subsidiaries to perform any material obligations under this
Agreement or any other Loan Document to which it is a party, or (e) the
legality, validity, binding effect, enforceability or admissibility into
evidence of any Loan Document or the ability of the Agent or any Lender to
enforce any rights or remedies under or in connection with any Loan Document.
"Minimum Commitment" means $10,000,000.
"Money Borrowed" means, as applied to Indebtedness, (a)
Indebtedness for money borrowed, (b) Indebtedness, whether or not in any such
case the same was for money borrowed, (i) represented by notes payable, and
drafts accepted, that represent extensions of credit, (ii) constituting
obligations evidenced by bonds, debentures, notes or similar instruments, or
(iii) upon which interest charges are customarily paid or that was issued or
assumed as full or partial payment for property (other than trade credit that is
incurred in the ordinary course of business), (c) Indebtedness that constitutes
a Capitalized Lease Obligation, (d) Indebtedness under Hedge Agreements, and (e)
Indebtedness that is such by virtue of CLAUSE (C) of the definition thereof, but
only to the extent that the obligations Guaranteed are obligations that would
constitute Indebtedness for Money Borrowed.
"Mortgages" means and includes any and all of the mortgages,
deeds of trust, deeds to secure debt, assignments and orders of the Court
pursuant to which the Agent receives, for the benefit of the Secured Creditors,
a Lien on all Real Estate of the Obligors, and all amendments, modifications and
supplements thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which an Obligor or a Related Company is
required to contribute or has contributed within the immediately preceding six
years.
"Net Outstandings" of any Lender means, at any time, the sum
of (a) all amounts paid by such Lender (other than pursuant to SECTION 14.7) to
the Agent in respect of Revolving Credit Loans or otherwise under this
Agreement, MINUS (b) all amounts paid by the Agent to such Lender which are
received by the Agent and which, pursuant to this Agreement, are paid over to
such Lender for application in reduction of the outstanding principal balance of
the Revolving Credit Loans.
"Net Proceeds" means proceeds received by any Obligor in cash
from any Asset Disposition (including payments under notes or other debt
securities received in connection with any Asset Disposition), net of: (a) the
transaction costs of such sale, lease, transfer or other disposition; (b) any
tax liability arising from such transaction; and (c) amounts applied to
repayment of Indebtedness (other than the Secured Obligations and Indebtedness
under the Bonds and Indentures) secured by a Lien on the asset or property
disposed.
"Non-Debtor Guarantors" shall have the meaning assigned to it
in the recital clauses hereof.
"Non-Ratable Loan" means a Revolving Credit Loan made by Bank
of America in accordance with the provisions of SECTION 4.8(B).
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"Note" means any of the Revolving Credit Notes and "Notes"
means more than one such Note.
"Notice of Borrowing" means a written notice, or telephonic
notice followed by a confirming same-day written notice, requesting a Borrowing
of either a Prime Rate Revolving Credit Loan or a LIBOR Revolving Credit Loan,
which is given by telex or facsimile transmission in accordance with the
applicable provisions of SECTION 2.2 and which specifies (i) the amount of the
requested Borrowing, and (ii) the date of the requested Borrowing.
"Notice of Conversion or Continuation" has the meaning
specified in SECTION 4.12.
"Obligor" means any Borrower, any Guarantor and any other
Person liable with respect to the Secured Obligations, whether as maker,
endorser, guarantor, pledgor or otherwise, and whether such liability is direct,
indirect, primary or secondary, and "Obligors" means all of such Persons
collectively.
"Operating Lease" means any lease (other than a lease
constituting a Capitalized Lease Obligation) of real or personal property.
"Orderly Liquidation Value" means the value, based on the net
median recovery percentage and other methodology acceptable to the Agent, as
determined from time to time by an Inventory Appraiser.
"Original Loan Agreement" has the meaning set forth in the
recital clauses hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor agency.
"PBGC Agreement" means that certain agreement between Tultex
and the PBGC dated as of July 2, 1999.
"Patent Assignment" means the Conditional Assignment and
Patent Security Agreement, dated as of the Agreement Date, made by the Obligors
to the Agent, for the benefit of the Secured Creditors.
"Patents" means and includes, in each case whether now
existing or hereafter arising, all of the Obligors' right, title and interest in
and to (a) any and all patents and patent applications, (b) inventions and
improvements described and claimed therein, (c) reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (d)
income, royalties, damages, claims and payments now or hereafter due and/or
payable under and with respect thereto, including damages and payments for past
and future infringements thereof, (e) rights to xxx for past, present and future
infringements thereof, and (f) all rights corresponding to any of the foregoing
throughout the world.
"Permitted Investments" means Investments in: (a) negotiable
certificates of deposit and time deposits issued by Bank of America or by any
United States bank or trust company having capital, surplus and undivided
profits in excess of $100,000,000, (b) any direct obligation of the United
States of America or any agency or instrumentality thereof which has a remaining
maturity at the time
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of purchase of not more than one year and repurchase agreements relating to the
same, (c) sales of inventory on credit in the ordinary course of business, (d)
shares of capital stock, evidence of Indebtedness or other security acquired in
consideration for or as evidence of past-due or restructured Receivables in an
aggregate face amount of such Receivables at any time not to exceed $500,000,
(e) Guaranties permitted pursuant to SECTION 11.3, (f) loans and advances to any
Obligor from any other Obligor, for the purpose of providing working capital in
the ordinary course of business, to the extent permitted by the Court, (g) loans
to employees for recruiting and hiring purposes, to the extent permitted by the
Court, and (h) other Investments of up to $50,000 in the aggregate at any time.
"Permitted Liens" means: (a) Liens securing taxes, assessments
and other governmental charges or levies (excluding any Lien imposed pursuant to
any of the provisions of ERISA or the Federal Tax Lien Act of 1966) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business, but
(i) in all cases only if payment shall not at the time be required to be made in
accordance with SECTION 9.6 or the Bankruptcy Code and (ii) in the case of
warehousemen or landlords, only if such liens do not exceed the respective
amounts (if any) set forth in, the Interim Order or the Final Order, as the case
may be, (b) Liens consisting of deposits or pledges made in the ordinary course
of business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or similar legislation or under
spayment or performance bonds, and utility deposits required by order of the
Court, if any, (c) Liens constituting encumbrances in the nature of zoning
restrictions, easements, and rights or restrictions of record on the use of real
property, which do not materially detract from the value of such property or
impair the use thereof in the business of the Obligors or their Subsidiaries,
(d) Purchase Money Liens, (e) Liens of the Agent, for the benefit of the Secured
Creditors, arising under this Agreement and the other Loan Documents and the
Original Loan Agreement, (f) reclamation claims against the Borrowers not
exceeding the respective amounts, if any, set forth in the Interim Order or the
Final Order, as the case may be, (g) Liens which, by virtue of the entry of, and
pursuant to the terms of, the Interim Order or the Final Order, or any other
order of the Court granting such Liens, are subordinate and inferior to the
Liens of the Agent on the Collateral, (h) a Lien for Carve-Out Expenses not
exceeding the Carve-Out Amount, and (i) Liens securing the Senior Claims.
"Permitted Purchase Money Indebtedness" means Purchase Money
Indebtedness incurred after the Agreement Date (a) which is secured by a
Purchase Money Lien, (b) the aggregate principal amount of which does not exceed
an amount equal to the lesser of (i) the cost (including the principal amount of
such Indebtedness, whether or not assumed) of the property (other than
Inventory) subject to such Lien, and (ii) the fair value of such property (other
than Inventory) at the time of its acquisition, and (c) which, when aggregated
with the principal amount of all other such Indebtedness and Capitalized Lease
Obligations at the time outstanding, does not exceed $1,000,000. For the
purposes of this definition, the principal amount of any Purchase Money
Indebtedness consisting of Capitalized Leases shall be computed as a Capitalized
Lease Obligation.
"Person" means an individual, limited liability company,
corporation, partnership, association, trust or unincorporated organization,
joint venture or other entity or a government or any agency or political
subdivision thereof.
"Petition Date" has the meaning assigned to it in the recital
clauses hereof.
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"Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in respect of which an Obligor or any Related Company is, or
within the immediately preceding six years was, an "employer" as defined in
Section 3(5) of ERISA.
"Pre-Petition Loans" means "Loans" as defined in and made
pursuant to the Original Loan Agreement.
"Prime Rate" means on any day the interest rate per annum
equal to the rate of interest publicly announced by the Agent at its head office
in Atlanta, Georgia as its "prime" rate, as in effect on the last Business Day
of the calendar month immediately preceding the month in which such day falls.
The Agent lends at rates above and below the Prime Rate.
"Prime Rate Loan" means any Prime Rate Revolving Credit Loan,
and "Prime Rate Loans" means more than one such Loan.
"Prime Rate Revolving Credit Loan" means each Borrowing of
Prime Rate Loans under the Revolving Credit Facility on the same day, a
specified principal amount of Prime Rate Loans outstanding under the Revolving
Credit Facility, and any Non-Ratable Loan.
"Projections" means, for Tultex and its Consolidated
Subsidiaries, (a) the forecasted Borrowing Base calculations and cash flow
statements for the period from November 1, 1999 through the end of March 2000,
prepared on a weekly basis and attached hereto as Schedule P-1, and (b) the
quarterly budgets delivered to the Agent after the Agreement Date pursuant to
SECTION 10.1(C) hereof, in each case together with appropriate supporting
details and a statement of underlying assumptions.
"Proportionate Share" or "Ratable", as applied to a Lender,
means such Lender's share of an amount in Dollars or other property at the time
of determination equal to (i) the Commitment Percentage of such Lender, or (ii)
if the Commitments are terminated, the percentage of the total principal amount
of Loans (plus Letter of Credit Obligations) outstanding at such time obtained
by dividing the principal amount of the Loans (plus Letter of Credit
Obligations) then owing to such Lender by the total principal amount of all
Loans (plus Letter of Credit Obligations) then owing to all Lenders.
"Proprietary Rights" means all of the Obligors' now owned and
hereafter arising or acquired Patents, Copyrights, and Trademarks, including
those Proprietary Rights set forth on SCHEDULE 6.1(AA) hereto, and all other
rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and
all rights to xxx for past, present and future infringement of any of the
foregoing.
"Purchase Money Indebtedness" means (a) Indebtedness created
to secure the payment of all or any part of the purchase price of any property
(other than Inventory), (b) any Indebtedness incurred at the time of or within
30 days prior to or after the acquisition of any property (other than Inventory)
for the purpose of financing all or any part of the purchase price thereof, and
(c) any renewals, extensions or refinancings thereof, but not any increases in
the principal amounts thereof outstanding at the time of any such renewal,
extension or refinancing.
"Purchase Money Lien" means any Lien securing Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
property (other than Inventory) the
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purchase price of which was financed through the incurrence of the Purchase
Money Indebtedness secured by such Lien.
"Real Estate" means all of the Obligors' now or hereafter
owned or leased estates in real property, including the real property described
on SCHEDULE 6.1(V).
"Receivables" means and includes, as to each Obligor, (a) any
and all rights to the payment of money or other forms of consideration of any
kind (whether classified under the Uniform Commercial Code as accounts, contract
rights, chattel paper, general intangibles, or otherwise) including accounts
receivable, letters of credit and the right to receive payment thereunder,
chattel paper, tax refunds, insurance proceeds, Contract Rights, notes, drafts,
instruments, documents, acceptances, and all other debts, obligations and
liabilities in whatever form from any Person, but excluding the Logo Athletic
Note and the Vendor Note, (b) all guarantees, security and Liens for payment
thereof, (c) all goods, whether now owned or hereafter acquired, and whether
sold, delivered, undelivered, in transit or returned, which may be represented
by, or the sale or lease of which may have given rise to, any such right to
payment or other debt, obligation or liability, and (d) all proceeds of any of
the foregoing.
"Reimbursement Agreement" means, with respect to a Letter of
Credit, such form of application therefor and form of reimbursement agreement
therefor (whether in a single document or several documents) as the Issuing Bank
may employ in the ordinary course of business for its own account, with such
modifications thereto as may be agreed upon by the Issuing Bank and the
Borrowers, PROVIDED that such application and agreement and any modifications
thereto are not inconsistent with the terms of this Agreement.
"Reimbursement Obligations" means the reimbursement or
repayment obligations of the Borrowers to the Issuing Bank pursuant to SECTION
3.6 or pursuant to a Reimbursement Agreement with respect to amounts that have
been drawn under Letters of Credit.
"Related Company" means any (a) corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Internal Revenue Code) as any Obligor; (b) partnership or other
trade or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with any Obligor; or (c)
member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as any Obligor, any corporation described
in CLAUSE (A) above or any partnership, trade or business described in CLAUSE
(B) above.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water or
groundwater.
"Remedial Action" means actions required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
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"Reportable Event" has the meaning set forth in Section
4043(c) of ERISA, but shall not include a Reportable Event as to which the
provision for 30 days notice to the PBGC is waived under applicable regulations.
"Required Lenders" means, at any time, any combination of
Lenders whose Commitment Percentages at such time aggregate in excess of 50%;
PROVIDED, HOWEVER, that if any Lender shall have failed to fund its
Proportionate Share of any Loan in accordance with the terms of this Agreement,
then, for so long as such failure continues, the term "Required Lenders" shall
mean Lenders (excluding such Lender whose failure to fund its Proportionate
Share of any Loan has not been cured) whose Commitment Percentages (computed
after excluding the defaulting Lender's Commitment from the Total Commitment) at
such time aggregate in excess of 50%; PROVIDED FURTHER, HOWEVER, that if the
Commitments have been terminated, the term "Required Lenders" shall mean Lenders
(excluding each Lender whose failure to fund its Proportionate Share of any Loan
has not been cured) holding Loans (plus Letter of Credit Obligations)
representing in excess of 50% of the aggregate principal amount of Loans and
Letter of Credit Obligations (excluding the Loans and Letter of Credit
Obligations owing to the defaulting Lender) outstanding at such time
"Restricted Dividend Payment" means any dividend, distribution
or payment on or with respect to (a) any shares of a Person's capital stock
(other than dividends payable solely in shares of its capital stock) or (b) any
partnership or other ownership interest in a Person, excluding, however, any
such dividend, distribution or payment to Tultex by any Subsidiary of Tultex.
"Restricted Payment" means (a) any redemption or prepayment or
other retirement, prior to the stated maturity thereof or prior to the due date
of any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness for Money Borrowed, (b) any redemption, retirement
or payment with respect to Subordinated Indebtedness, (c) the payment by any
Person of the principal amount of or interest on any Indebtedness (other than
trade debt) owing to a shareholder, partner or equity holder of such Person or
to any Affiliate of any such shareholder, partner or equity holder, (d) the
payment of any management, consulting or similar fee by any Person to any
Affiliate of such Person.
"Restricted Purchase" means any payment on account of the
purchase, redemption or other acquisition or retirement by a Person of any (a)
shares of such Person's capital stock (except shares acquired on the conversion
thereof into other shares of capital stock of such Person), (b) a partnership
interest in such Person, if such Person is a partnership, or (c) a membership
interest in such Person, if such Person is a limited liability company.
"Revolving Credit Facility" means the principal amount of
$150,000,000 or such lesser or greater amount as shall be agreed upon from time
to time in writing by the Agent, the Lenders and the Borrowers.
"Revolving Credit Loans" means loans made to the Borrowers
pursuant to SECTION 2.1.
"Revolving Credit Note" means each Revolving Credit Note made
by the Borrowers payable to the order of a Lender evidencing the joint and
several obligation of the Borrowers to pay the aggregate unpaid principal amount
of the Revolving Credit Loans made to them by such Lender (and
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any promissory note or notes that may be issued from time to time in
substitution, renewal, extension, replacement or exchange therefor, whether
payable to such Lender or to a different Lender in connection with a Person
becoming a Lender after the Effective Date or otherwise), substantially in the
form of EXHIBIT C hereto, with all blanks properly completed, either as
originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced.
"Schedule of Inventory" means a schedule delivered by the
Borrowers' Agent to the Agent pursuant to the provisions of SECTION 8.12(B).
"Schedule of Receivables" means a schedule delivered by the
Borrowers' Agent to the Agent pursuant to the provisions of SECTION 8.12(A).
"Secured Creditors" means, collectively, the Agent, the
Issuing Bank, the Lenders, and each Affiliate of each of the foregoing.
"Secured Obligations" means, in each case whether now in
existence or hereafter arising, (a) the principal of, and interest and premium,
if any, on, the Loans, and any fees payable in connection with the Loans or this
Agreement, (b) the Reimbursement Obligations and all other obligations of the
Borrowers to the Issuing Bank, the Agent or any Lender arising in connection
with the issuance of Letters of Credit, and (c) all indebtedness, liabilities,
obligations, covenants and duties of the Obligors to the Agent, the Lenders or
any other Secured Creditor of every kind, nature and description arising under
or in respect of this Agreement, the Notes or any of the other Loan Documents or
the Banking Relationship, whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any note, and whether or not for the payment of money,
including fees required to be paid pursuant to ARTICLE 4 and expenses required
to be paid or reimbursed pursuant to SECTION 16.2.
"Security Documents" means this Agreement, the Financing
Statements, the Patent Assignment, the Trademark Assignment, the Mortgages, the
Interim Order, the Final Order and each other writing executed and delivered by
an Obligor securing the Secured Obligations.
"Security Interest" means the Liens of the Agent, for the
benefit of the Secured Creditors, on and in the Collateral effected hereby or by
any of the Security Documents or pursuant to the terms hereof or thereof.
"Senior Claims" means (a) the Liens in favor of the holders of
the Bonds on the Collateral as security for the obligations evidenced by the
Bonds, PROVIDED that such Liens are subject to the Intercreditor Agreement and,
with respect to the Bank Priority Collateral, are junior to the Lien of the
Agent therein, and (b) those other claims or liens that have priority over the
claims or Liens of the Agent, the Issuing Bank, and the Lenders, to the extent
allowed and as specifically set forth on SCHEDULE S-1 attached hereto.
"Settlement Date" means each Business Day after the Effective
Date selected by the Agent in its sole discretion subject to and in accordance
with the provisions of SECTION 4.8(B) as of which a Settlement Report is
delivered by the Agent and on which settlement is to be made among the Lenders
in accordance with the provisions of SECTION 4.8.
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"Settlement Report" means each report, substantially in the
form attached hereto as EXHIBIT D, prepared by the Agent and delivered to each
Lender and setting forth, among other things, as of the Settlement Date
indicated thereon and as of the next preceding Settlement Date, the aggregate
principal balance of all Revolving Credit Loans outstanding, each Lender's
Commitment Percentage thereof, each Lender's Net Outstandings and all
Non-Ratable Loans made, and all payments of principal, interest and fees
received by the Agent from the Borrowers during the period beginning on such
next preceding Settlement Date and ending on such Settlement Date.
"Subordinated Indebtedness" means (a) the Indebtedness of
Tultex evidenced by the Convertible Subordinated Notes, including principal
thereof and interest and premium, if any, thereon, together with any and all
Indebtedness related thereto, and (b) any other Indebtedness for Money Borrowed
which is in an amount, and is expressly subordinated to the Secured Obligations
on terms and conditions, acceptable to the Agent and the Required Lenders in
their discretion.
"Subsidiary" (a) when used to determine the relationship of a
Person to another Person, means a Person of which an aggregate of 50% or more of
the stock of any class or classes or 50% or more of other ownership interests is
owned of record or beneficially by such other Person, or by one or more
Subsidiaries of such other Person, or by such other Person and one or more
Subsidiaries of such Person, (i) if the holders of such stock, or other
ownership interests, (A) are ordinarily, in the absence of contingencies,
entitled to vote for the election of a majority of the directors (or other
individuals performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency, or (B) are
entitled, as such holders, to vote for the election of a majority of the
directors (or individuals performing similar functions) of such Person, whether
or not the right so to vote exists by reason of the happening of a contingency,
or (ii) in the case of such other ownership interests, if such ownership
interests constitute a majority voting interest, and (b) when used with respect
to a Plan, ERISA or a provision of the Internal Revenue Code pertaining to
employee benefit plans, also means any corporation, trade or business (whether
or not incorporated) which is under common control with any Obligor and is
treated as a single employer with such Obligor under Section 414(b) or (c) of
the Internal Revenue Code and the regulations thereunder.
"Super-Majority Lenders" means, at any time, any combination
of Lenders whose Commitment Percentages at such time aggregate in excess of
66.66%; PROVIDED, HOWEVER, that if any Lender shall have failed to fund its
Proportionate Share of any Loan in accordance with the terms of this Agreement,
then, for so long as such failure continues, the term "Super-Majority Lenders"
shall mean Lenders (excluding such Lender whose failure to fund its
Proportionate Share of any Loan has not been cured) whose Commitment Percentages
(computed after excluding the defaulting Lender's Commitment from the Total
Commitment) at such time aggregate in excess of 66.66%; PROVIDED FURTHER,
HOWEVER, that if the Commitments have been terminated, the term "Super-Majority
Lenders" shall mean Lenders (excluding each Lender whose failure to fund its
Proportionate Share of any Loan has not been cured) holding Loans (plus Letter
of Credit Obligations) representing in excess of 66.66% of the aggregate
principal amount of Loans and Letter of Credit Obligations (excluding the Loans
and Letter of Credit Obligations owing to the defaulting Lender) outstanding at
such time
"Supporting Letter of Credit" has the meaning specified in
SECTION 3.9.
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"Tax Refund Claims" means all tax refund claims and all rights
with respect thereto, including all rights to settle or compromise the amount of
such claims, to file amendments and other documents with respect thereto, and to
receive the proceeds thereof.
"Termination Date" means the earliest of: (a) December 3,
2001; (b) the date that the Agent elects pursuant to SECTION 12.2 to terminate
the Borrowers' right to receive Loans or accommodations for Letters of Credit;
(c) the date of prepayment in full by the Borrowers of the Loans in accordance
with the provisions of SECTION 4.6; (d) thirty-five (35) days following the
Petition Date, if the Interim Order has been entered but the Final Order has not
been entered by the Court by such date; (e) the close of business on the first
Business Day after the entry of the Final Order, if by that time the Borrowers
have not paid the Agent the fees required under SECTION 4.2(A) hereof; and (f)
unless the Agent and the Lenders agree otherwise, the date a plan of
reorganization confirmed in the Chapter 11 Case of the Borrowers becomes
effective.
"Termination Event" means (a) a Reportable Event, (b) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (c) the institution
of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
the appointment of a trustee to administer any Plan.
"Total Commitment" means the sum of the Commitments.
"Trademark Assignment" means the Conditional Assignment and
Trademark Security Agreement, dated as of the Agreement Date, made by the
Obligors to the Agent, for the benefit of the Secured Creditors.
"Trademarks" means and includes in each case whether now
existing or hereafter arising, all of the Obligors' right, title and interest in
and to (a) trademarks (including service marks), trade names and trade styles
and the registrations and applications for registration thereof and the goodwill
of the business symbolized by the trademarks, (b) licenses of the foregoing,
whether as licensee or licensor, (c) renewals thereof, (d) income, royalties,
damages and payments now or hereafter due and/or payable with respect thereto,
including damages, claims and payments for past and future infringements
thereof, (e) rights to xxx for past, present and future infringements thereof,
including the right to settle suits involving claims and demands for royalties
owing, and (f) all rights corresponding to any of the foregoing throughout the
world.
"Treasury Management Reserve" means a reserve established by
the Agent from time to time in its reasonable discretion in connection with its
cash management relationship with the Borrowers, which reserve as of the
Agreement Date is $1,500,000.
"Tultex" means Tultex Corporation, a Virginia corporation.
"Tultex Canada" means Tultex Canada, Inc., a Canadian
corporation.
"Type" means, when used in respect of any Loan or Borrowing,
the rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined.
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"Unfunded Vested Accrued Benefits" means with respect to any
Plan at any time, the amount (if any) by which (a) the present value of all
vested nonforfeitable benefits under such Plan exceeds (b) the fair market value
of all Plan assets allocable to such benefits, all determined as of the then
most recent valuation date for such Plan.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect from time to time in the State of Georgia or in any other state the
laws of which are required by Section 9-103 thereof to be applied in connection
with the issue of perfection of security interests.
"Vendor Note" means, collectively, (a) the promissory note
dated July 1, 1997 of Textiles Arco Iris, SA. De CV, as amended, payable to
Tultex in the amount of $198,000 as of April 3, 1999, and (b) the contract
obligations due from Overseas Manufacturing Systems of America, Inc. and related
parties under the agreement dated October 11, 1995, as amended on July 1, 1997,
payable to Tultex in the amount of $4,354,000 as of April 3, 1999.
SECTION 1.2. General.
(a) All terms of an accounting nature not specifically defined
herein shall have the meaning ascribed thereto by GAAP.
(b) The terms accounts, chattel paper, contract rights,
documents, equipment, instruments, general intangibles, investment property and
inventory, as and when used in this Agreement or the Security Documents, shall
have the meanings given those terms in the Uniform Commercial Code.
(c) Unless otherwise specified, a reference in this Agreement
to a particular section or subsection is a reference to that section or
subsection of this Agreement, and the words "hereof," "herein," "hereunder" and
words of similar import, when used in this Agreement, refer to this Agreement as
a whole and not to any particular provision, section or subsection of this
Agreement.
(d) Wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular and
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
(e) Words denoting individuals include corporations and vice
versa.
(f) Unless otherwise specified, the word "including" means
"including but not limited to".
(g) References to any legislation or statute or code, or to
any provisions of any legislation or statute or code, shall include any
modification or reenactment of, or any legislative, statutory or code provision
substituted for, such legislation, statute or code or provision thereof.
(h) References to any document or agreement (including this
Agreement) shall include references to such document or agreement as amended,
novated, supplemented, modified, reissued or replaced from time to time, so long
as and to the extent that such amendment, novation,
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supplement, modification, reissuance or replacement is either not prohibited by
the terms of this Agreement or is consented to by the Required Lenders (or
Lenders, as the case may be) and the Agent.
(i) References to any Person include its successor or
permitted substitutes and assigns.
(j) Each reference to a time of day shall refer to Atlanta,
Georgia time.
ARTICLE 2
REVOLVING CREDIT FACILITY
SECTION 2.1. Revolving Credit Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally, but not jointly, to make
Revolving Credit Loans (on both an interim and final basis as those terms are
commonly used in the context of the Bankruptcy Code) to the Borrowers from time
to time from the Effective Date to but not including the Termination Date, as
requested or deemed requested by the Borrowers in accordance with the terms of
SECTION 2.2, in amounts equal to such Lender's Commitment Percentage of each
such Loan requested or deemed requested hereunder up to an aggregate amount at
any one time outstanding equal to such Lender's Commitment Percentage of the
Borrowing Base; PROVIDED, HOWEVER, that the Aggregate Credit Obligations (after
giving effect to the Loans requested) shall not exceed the Borrowing Base. It is
expressly understood and agreed that the Lenders may and at present intend to
use the Borrowing Base as a maximum ceiling on Revolving Credit Loans to the
Borrowers; PROVIDED, HOWEVER, that it is agreed that should the Revolving Credit
Loans exceed the ceiling so determined or any other limitation set forth in this
Agreement, such Revolving Credit Loans shall nevertheless constitute Secured
Obligations and, as such, shall be entitled to all benefits thereof and security
therefor. Notwithstanding anything herein to the contrary, Interim Advances with
respect to Revolving Credit Loans pursuant to the Interim Order shall not exceed
the maximum principal amounts allowed under the Interim Order. The principal
amount of any Revolving Credit Loan which is repaid pursuant to SECTION 2.3(C)
may be reborrowed by the Borrowers, subject to the terms and conditions of this
Agreement, in accordance with the terms of this SECTION 2.1. The Agent's and
each Lender's books and records reflecting the date and the amount of each
Revolving Credit Loan and each repayment of principal thereof shall constitute
PRIMA FACIE evidence of the accuracy of the information contained therein,
subject to the provisions of SECTION 4.5.
SECTION 2.2. Manner of Borrowing Revolving Credit Loans.
Borrowings under the Revolving Credit Facility shall be made as follows:
(a) Requests for Borrowing.
(i) Prime Rate Revolving Credit Loans. A request for
a Borrowing of a Prime Rate Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner:
(A) with respect to the initial Borrowing to
be made on the Effective Date, the Borrowers shall
give the Agent an Initial Notice of
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Borrowing on the proposed date of the Borrowing, and,
as to subsequent Prime Rate Revolving Credit Loans,
the Borrowers shall give the Agent a Notice of
Borrowing before 11:00 a.m. on the proposed Borrowing
date, all of which notices shall be irrevocable,
(B) whenever a check or other item is
presented to a Disbursing Bank for payment against a
Disbursement Account in an amount greater than the
then available balance in such account, such
Disbursing Bank shall, and is hereby irrevocably
authorized by the Borrowers to, give the Agent notice
thereof, which notice shall be deemed to be an
irrevocable request for a Prime Rate Revolving Credit
Loan on the date of such notice in an amount equal to
the excess of such check or other item over such
available balance,
(C) unless payment is otherwise made by the
Obligors, the becoming due of any amount required to
be paid under this Agreement or any of the Notes as
interest shall be deemed to be an irrevocable request
for a Prime Rate Revolving Credit Loan on the due
date in the amount required to pay such interest,
(D) unless payment is otherwise made by the
Obligors, the becoming due of any other Secured
Obligation shall be deemed to be an irrevocable
request for a Prime Rate Revolving Credit Loan on the
due date in the amount then so due, and such request
shall be irrevocable, and
(E) the receipt by the Agent of notification
from the Issuing Bank to the effect that a drawing
has been made under a Letter of Credit and that the
Borrowers have failed to reimburse the Issuing Bank
therefor in accordance with the terms of the Letter
of Credit, the Reimbursement Agreement and ARTICLE 3,
shall be deemed to be an irrevocable request for a
Prime Rate Revolving Credit Loan on the date such
notification is received in the amount of such
drawing which is so unreimbursed.
(ii) LIBOR Revolving Credit Loans. The Borrowers may
request a LIBOR Loan under the Revolving Credit Facility by
giving the Agent a Notice of Borrowing (which notice shall be
irrevocable) not later than 11:00 a.m. on the date three
Business Days before the date on which the requested LIBOR
Revolving Credit Loan is to be made; PROVIDED the Borrowers
shall not be permitted to request, and the Lenders shall not
be required to make, LIBOR Revolving Credit Loans at any time
during the existence of an Event of Default.
(iii) Notification of Lenders. Unless the Agent has
elected periodic settlements pursuant to SECTION 4.8, the
Agent shall promptly notify the Lenders of any Notice of
Borrowing given or deemed given pursuant to this SECTION
2.2(A) by 12:00 noon on the proposed Borrowing date (in the
case of Prime Rate Revolving Credit Loans) or by 3:00 p.m.
three Business Days before the proposed Borrowing date (in the
case of LIBOR Revolving Credit Loans). Not later than 1:00
p.m. on the proposed Borrowing date, each Lender will make
available to the Agent, for the account of the
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Borrowers, at the Agent's Office in funds immediately
available to the Agent, an amount equal to such Lender's
Commitment Percentage of such Prime Rate Revolving Credit Loan
or LIBOR Revolving Credit Loan, as the case may be.
(b) Disbursement of Loans. Each Borrower hereby irrevocably
authorizes the Agent to disburse the proceeds of each Borrowing requested, or
deemed to be requested, pursuant to this SECTION 2.2 as follows:
(i) the proceeds of each Borrowing requested under
SECTION 2.2(A)(I)(A) (other than the Borrowing of the Initial
Loans), 2.2(A)(I)(B) or 2.2(A)(II) shall be disbursed by the
Agent in Dollars in immediately available funds by wire
transfer to a Disbursement Account or, in the absence of a
Disbursement Account, by wire transfer to such other account
as may be agreed upon by the Borrowers and the Agent from time
to time, and the proceeds of the Initial Loans under SECTION
2.2(A)(I)(A) shall be disbursed in accordance with the Initial
Notice of Borrowing;
(ii) the proceeds of each Borrowing deemed requested
under SECTION 2.2(A)(I)(C) or (D) shall be disbursed by the
Agent by way of direct payment of the relevant interest or
Secured Obligation; and
(iii) the proceeds of each Borrowing deemed requested
under SECTION 2.2(A)(I)(E) shall be disbursed by the Agent
directly to the Issuing Bank on behalf of the Borrowers.
SECTION 2.3. Repayment of Revolving Credit Loans. The
Revolving Credit Loans will be repaid as follows:
(a) Whether or not any Default or Event of Default
has occurred, the outstanding principal amount of all the
Revolving Credit Loans is due and payable, and shall be repaid
by the Borrowers in full, not later than the Termination Date;
(b) If at any time the Aggregate Credit Obligations
exceed the Borrowing Base in effect at such time, the
Borrowers shall repay the Revolving Credit Loans in an amount
sufficient to reduce the aggregate unpaid principal amount of
such Revolving Credit Loans by an amount equal to such excess,
together with accrued and unpaid interest on the amount so
repaid to the date of repayment;
(c) Each Borrower hereby instructs the Agent to repay
the Pre-Petition Loans, and after the Pre-Petition Loans are
paid in full, the Revolving Credit Loans, outstanding on any
day in an amount equal to the amount, if any, received by the
Agent on such day pursuant to SECTION 8.1(B); PROVIDED that
payments received in excess of outstanding Revolving Credit
Loans or payments received on account of LIBOR Loans which
would otherwise result in prepayment of such Loans prior to
the end of the Interest Period applicable thereto may (in the
absence of an Event of Default), upon the instruction of the
Borrowers to the Agent not later than 1:00 p.m. on any
Business Day, be applied to the Cash Collateral Account; and
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(d) Each LIBOR Loan is due and payable on the last
day of the Interest Period applicable thereto, except to the
extent converted or continued in accordance with SECTIONS 4.12
and 4.13.
Repayments pursuant to SECTION 2.3(B) or (C) shall be applied first to the Prime
Rate Revolving Credit Loans and then, subject to the provisions of SECTION
2.3(C), to LIBOR Revolving Credit Loans.
SECTION 2.4. Revolving Credit Note. Each Lender's Revolving Credit Loans and the
joint and several obligation of the Borrowers to repay such Revolving Credit
Loans shall also be evidenced by a Revolving Credit Note payable to the order of
such Lender. Each Revolving Credit Note shall be dated as of the Agreement Date
(or the later date of any Assignment and Acceptance) and shall be duly and
validly executed and delivered by the Borrowers.
ARTICLE 3
LETTER OF CREDIT FACILITY
SECTION 3.1. Agreement to Issue. Upon the terms and subject to the conditions
of, and in reliance upon the representations and warranties made under, this
Agreement, the Issuing Bank agrees to issue for the account of the Borrowers one
or more Letters of Credit in accordance with this ARTICLE 3, from time to time
during the period commencing on the Effective Date and ending on the Termination
Date.
SECTION 3.2. Amounts. The Issuing Bank shall not have any obligation to issue
any Letter of Credit at any time: (a) if, after giving effect to the issuance of
the requested Letter of Credit, (i) the aggregate Letter of Credit Obligations
of the Borrowers would exceed the Letter of Credit Facility then in effect or
(ii) the Aggregate Credit Obligations would exceed the Borrowing Base (after
reduction for the Letter of Credit Reserve in respect of such Letter of Credit);
or (b) which has a term longer than ninety days or an expiration date after the
last Business Day that is more than 10 days prior to the Termination Date.
Notwithstanding anything herein to the contrary, Interim Letters of Credit
issued hereunder (including Letters of Credit issued pursuant to SECTION 3.10
hereof) pursuant to the Interim Order shall not exceed the maximum principal
amounts allowed under the Interim Order.
SECTION 3.3. Conditions. The obligation of the Issuing Bank to issue any Letter
of Credit is subject to the satisfaction of (a) the conditions precedent
contained in ARTICLE 5 and (b) the following additional conditions precedent in
a manner satisfactory to the Agent and the Issuing Bank: (i) the Borrowers shall
have delivered to the Issuing Bank and the Agent at such times and in such
manner as the Issuing Bank or the Agent may prescribe an application in form and
substance satisfactory to the Issuing Bank and the Agent for the issuance of the
Letter of Credit, a Reimbursement Agreement and such other documents as may be
required pursuant to the terms thereof, and the form and terms of the proposed
Letter of Credit shall be satisfactory to the Issuing Bank and the Agent; and
(ii) as of the date of issuance, no order of any court, arbitrator or
governmental authority having jurisdiction or authority over the Issuing Bank
shall purport by its terms to enjoin or restrain banks generally from issuing
letters of credit of the type and in the amount of the proposed Letter of
Credit, and no law, rule or regulation applicable to banks generally and no
request or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over banks generally shall
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prohibit, or request that the Issuing Bank refrain from, the issuance of letters
of credit generally or the issuance of such Letter of Credit.
SECTION 3.4. Issuance of Letters of Credit.
(a) Request for Issuance. The Borrowers shall give the Issuing
Bank and the Agent written notice of the Borrowers' request for the
issuance of a Letter of Credit no later than three Business Days prior
to the proposed date of issuance of the Letter of Credit. Such notice
shall be irrevocable and shall specify the original face amount of the
Letter of Credit requested, the effective date (which date shall be a
Business Day) of issuance of such requested Letter of Credit, whether
such Letter of Credit may be drawn in a single or in multiple draws,
the date on which such requested Letter of Credit is to expire (which
date shall be a Business Day more than 10 days prior to the Termination
Date), the purpose for which such Letter of Credit is to be issued, and
the beneficiary of the requested Letter of Credit. The Borrowers shall
attach to such notice the form of the Letter of Credit that the
Borrowers request to be issued.
(b) Responsibilities of the Agent; Issuance. The Agent shall
determine, as of the Business Day immediately preceding the requested
effective date of issuance of the Letter of Credit set forth in the
notice from the Borrowers pursuant to SECTION 3.4(A), the amount of the
unused Letter of Credit Facility and the Borrowing Base. If (i) the
form of the Letter of Credit delivered by the Borrowers to the Agent is
acceptable to the Issuing Bank and the Agent in their sole discretion,
(ii) the undrawn face amount of the requested Letter of Credit is less
than or equal to the lesser of (A) the unused Letter of Credit Facility
and (B) the Borrowing Base less the Aggregate Credit Obligations, and
(iii) if requested by the Agent, the Agent has received a certificate
or other assurance from the Borrowers stating that the applicable
conditions set forth in ARTICLE 5 have been satisfied, then the Issuing
Bank will cause the Letter of Credit to be issued.
(c) Notice of Issuance. Promptly after the issuance of any
Letter of Credit, the Issuing Bank shall give the Agent written or
facsimile notice, or telephonic notice confirmed promptly thereafter in
writing, of the issuance of such Letter of Credit, and the Agent shall
give each Lender written or facsimile notice, or telephonic notice
confirmed promptly thereafter in writing, of the issuance of such
Letter of Credit.
(d) No Extension or Amendment. No Letter of Credit shall be extended or
amended unless the requirements of this SECTION 3.4 are met as though a
new Letter of Credit were being requested and issued.
SECTION 3.5. Duties of the Issuing Bank. Any action taken or
omitted to be taken by the Issuing Bank under or in connection with any Letter
of Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not result in any liability of the Issuing Bank to any Lender
or relieve any Lender of its obligations hereunder to the Issuing Bank. In
determining whether to pay under any Letter of Credit, the Issuing Bank shall
have no obligation to any Lender other than to confirm that any documents
required to be delivered under such Letter of Credit in connection with such
drawing have been presented and appear on their face to comply with the
requirements of such Letter of Credit.
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SECTION 3.6. Payment of Reimbursement Obligations.
(a) Payment to Issuer. Notwithstanding any provisions to the
contrary in any Reimbursement Agreement, the Borrowers jointly and
severally agree to reimburse the Issuing Bank for any drawings (whether
partial or full) under each Letter of Credit issued by the Issuing Bank
and agree to pay to the Issuing Bank the amount of all other
Reimbursement Obligations and other amounts payable to the Issuing Bank
under or in connection with such Letter of Credit immediately when due,
irrespective of any claim, setoff, defense or other right which the
Borrowers may have at any time against the Issuing Bank or any other
Person.
(b) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of the Borrowers with respect to any Letter of
Credit (or any Reimbursement Obligation relating thereto) received by
the Issuing Bank, or by the Agent and distributed by the Agent to the
Lenders on account of their respective participations therein, is
thereafter set aside, avoided or recovered from the Issuing Bank or the
Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the
Agent, for the account of the Agent or the Issuing Bank, their
respective Commitment Percentages of such amount set aside, avoided or
recovered together with interest at the rate required to be paid by the
Agent upon the amount required to be repaid by it.
SECTION 3.7. Participations.
(a) Purchase of Participations. Immediately upon issuance by
the Issuing Bank of a Letter of Credit, each Lender shall be deemed to
have irrevocably and unconditionally purchased and received, without
recourse or warranty, an undivided interest and participation in such
Letter of Credit equal to such Lender's Commitment Percentage of the
face amount thereof (including all obligations of the Borrowers with
respect thereto, other than amounts owing to the Issuing Bank under
SECTION 4.2(D), and any security therefor or guaranty pertaining
thereto).
(b) Sharing of Letter of Credit Payments. In the event that
the Issuing Bank makes a payment under any Letter of Credit and the
Issuing Bank shall not have been repaid such amount pursuant to SECTION
3.6, then the Issuing Bank shall be deemed to have made a Non-Ratable
Loan in the amount of such payment, and notwithstanding the occurrence
or continuance of a Default or Event of Default at the time of such
payment, such Non-Ratable Loan shall be subject to the provisions of
SECTION 4.8 and the absolute obligations of the Lenders to pay for
their respective participation interests therein.
(c) Sharing of Reimbursement Obligation Payments. Whenever the
Issuing Bank receives a payment from or on behalf of the Borrowers on
account of a Reimbursement Obligation as to which the Agent has
previously received for the account of the Issuing Bank payment from a
Lender pursuant to this SECTION 3.7, the Issuing Bank shall promptly
pay to the Agent, for the benefit of such Lender, such Lender's
Commitment Percentage of the amount of such payment from the Borrowers
in Dollars. Each such payment shall be made by the Issuing Bank on the
Business Day on which the Issuing Bank receives immediately available
funds
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pursuant to the immediately preceding sentence, if received prior to
11:00 a.m. on such Business Day and otherwise on the next succeeding
Business Day.
(d) Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit,
Reimbursement Agreement or application for any Letter of Credit and
such other documentation as may reasonably be requested by such Lender.
(e) Obligations Irrevocable. Notwithstanding the occurrence or
continuance of a Default or Event of Default or other failure of any
condition to the issuance of Letters of Credit hereunder subsequent to
the Letters of Credit to be issued on the Effective Date, unless the
Issuing Bank shall have received notice from the Required Lenders
(which notice shall become effective on the third Business Day after
receipt of such notice by the Issuing Bank unless otherwise agreed by
the Issuing Bank) prior to a proposed issuance date of any Letter of
Credit that such Lenders will not participate in any Letter of Credit
to be issued on such date, the Issuing Bank may assume that each Lender
will participate in such Letter of Credit in accordance with this
SECTION 3.7, and the Issuing Bank may, in reliance upon such
assumption, issue such Letter of Credit for the account of the
Borrowers. The obligations of each Lender to make payments to the Agent
with respect to any Letter of Credit and their participations therein
pursuant to the provisions of SECTION 4.8 hereof or otherwise and the
obligations of the Borrowers to make payments to the Issuing Bank or to
the Agent, for the account of Lenders, shall be irrevocable, shall not
be subject to any qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this Agreement
(assuming, in the case of the obligations of the Lenders to make such
payments, that the Letter of Credit has been issued in accordance with
this ARTICLE 3), including any of the following circumstances: (i) any
lack of validity or enforceability of this Agreement or any of the
other Loan Documents; (ii) the existence of any claim, setoff, defense
or other right which the Borrowers may have at any time against a
beneficiary named in a Letter of Credit or any transferee of any Letter
of Credit (or any Person for whom any such transferee may be acting),
any Lender, the Issuing Bank or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transactions between the Borrowers or any other Person and
the beneficiary named in any Letter of Credit); (iii) any draft,
certificate or any other document presented under the Letter of Credit
upon which payment has been made in good faith and according to its
terms proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; (iv) the surrender or impairment of any Collateral or any
other security for the Secured Obligations or the performance or
observance of any of the terms of any of the Loan Documents; (v) the
occurrence of any Default or Event of Default; or (vi) the Agent's
failure to deliver to the Lenders the notice provided for in SECTION
3.4(C).
SECTION 3.8. Indemnification, Exoneration.
(a) Indemnification. In addition to amounts payable as
elsewhere provided in this ARTICLE 3, the Borrowers jointly and
severally agree to protect, indemnify, pay and save the Issuing Bank,
the Lenders and the Agent harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) which the Issuing Bank, any
Lender or the Agent may incur or be subject to as a consequence,
directly or indirectly, of (i) the issuance of any Letter of Credit,
other than as a
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result of its gross negligence or willful misconduct, as determined by
a court of competent jurisdiction, or (ii) the failure of the Issuing
Bank to honor a drawing under any 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 governmental authority (all such acts or omissions
being hereinafter referred to collectively as "Government Acts").
(b) Assumption of Risk by the Borrowers. As among the
Borrowers, the Issuing Bank, the Lenders and the Agent, the Borrowers
assume all risks of the acts and omissions of, or misuse of any of the
Letters of Credit by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, subject
to the provisions of the applications for the issuance of Letters of
Credit, the Issuing Bank, the Lenders and the Agent shall not be
responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any Person in
connection with the application for and issuance of and presentation of
drafts with respect to any of the Letters of Credit, even if it should
prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) the failure of the beneficiary of any
Letter of Credit to comply duly with conditions required in order to
draw upon such Letter of Credit; (iv) 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)
errors in interpretation of technical terms; (vi) any loss or delay in
the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit or of the proceeds thereof; (vii)
the misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of the Lenders or
the Agent, including any Government Acts. None of the foregoing shall
affect, impair or prevent the vesting of any of the Issuing Bank's or
the Agent's rights or powers under this SECTION 3.8.
(c) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action
taken or omitted by the Agent, the Issuing Bank or any Lender under or
in connection with any of the Letters of Credit or any related
certificates, if taken or omitted in good faith, shall not result in
any liability of the Issuing Bank, any Lender or the Agent to the
Borrowers or relieve the Borrowers of any of their obligations
hereunder to any such Person.
SECTION 3.9. Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of SECTION 3.2(B), any Letter of Credit is
outstanding on the Termination Date, then on or prior to the Termination Date,
or in any case upon the occurrence of an Event of Default, the Borrowers shall,
promptly on demand by the Agent, deposit with the Agent, for the Ratable benefit
of the Lenders, with respect to each Letter of Credit then outstanding, as the
Agent shall specify, either (a) a standby letter of credit (a "Supporting Letter
of Credit") in form and substance satisfactory to the Agent and the Issuing
Bank, issued by an issuer reasonably satisfactory to the Agent and the Issuing
Bank in an amount equal to the greatest amount for which such Letter of Credit
may be drawn, under which Supporting Letter of Credit the Agent is entitled to
draw amounts necessary to reimburse the Agent, the Issuing Bank and the Lenders
for payments made by the Agent, the Issuing Bank and the Lenders under such
Letter of Credit or under any reimbursement or guaranty agreement with respect
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thereto, or (b) Cash Collateral in an amount necessary to reimburse the Agent,
the Issuing Bank and the Lenders for payments made by the Agent, the Issuing
Bank and the Lenders under such Letter of Credit or under any reimbursement or
guaranty agreement with respect thereto. Such Supporting Letter of Credit or
Cash Collateral shall be held by the Agent for the benefit of the Issuing Bank
and the Lenders, as security for, and to provide for the payment of, the
Reimbursement Obligations. In addition, the Agent may at any time after the
Termination Date apply any or all of such Cash Collateral to the payment of any
or all of the Secured Obligations then due and payable. At the Borrowers'
request, but subject to the Agent's reasonable approval, the Agent shall invest
any Cash Collateral consisting of cash or any proceeds of Cash Collateral
consisting of cash in Cash Equivalents, and any commissions, expenses and
penalties incurred by the Agent in connection with any investment and redemption
of such Cash Collateral shall be Secured Obligations hereunder secured by the
Collateral, shall bear interest at the rates provided herein for Prime Rate
Revolving Credit Loans, and shall be charged to the Borrowers' Loan Accounts,
or, at the Agent's option, shall be paid out of the proceeds of any earnings
received by the Agent from the investment of such Cash Collateral as provided
herein or out of such cash itself. The Agent makes no representation or warranty
as to, and shall not be responsible for, the rate of return, if any, earned on
any Cash Collateral. Any earnings on Cash Collateral shall be held as additional
Cash Collateral on the terms set forth in this SECTION 3.9.
SECTION 3.10. Letters of Credit under Original Loan Agreement. SCHEDULE 3.10
contains a schedule of certain letters of credit issued prior to the Effective
Date by the Issuing Bank for the account of the Borrowers. On the Effective Date
(a) such letters of credit, to the extent still outstanding, shall automatically
and without further action of the parties thereto, and without payment of any
fees pursuant to Section 4.2 (d)(ii)(B), be converted into Letters of Credit
issued pursuant to this Article 3 and subject to the provisions hereof, (b) the
face amount of such letters of credit shall be included in the calculation of
Letter of Credit Obligations, and (iii) all liabilities of the Borrowers with
respect to such letters of credit shall constitute Secured Obligations.
ARTICLE 4
GENERAL LOAN PROVISIONS
SECTION 4.1. Interest.
(a) Prime Rate Loans. Subject to the provisions of SECTION
4.1(D), the Borrowers will pay interest on the unpaid principal amount
of each Prime Rate Loan, for each day from the day such Loan is made
until such Loan is paid (whether at maturity, by reason of
acceleration, or otherwise) or is converted to a Loan of a different
Type, at a rate per annum equal to the sum of (i) the Applicable Margin
and (ii) the Prime Rate, payable monthly in arrears as it accrues on
each Interest Payment Date and when such Prime Rate Loan is due
(whether at maturity, by reason of acceleration or otherwise).
(b) LIBOR Loans. Subject to the provisions of SECTION 4.1(D),
the Borrowers will pay interest on the unpaid principal amount of each
LIBOR Loan for the applicable Interest Period at a rate per annum equal
to the sum of (i) the Applicable Margin and (ii) LIBOR, payable in
arrears as it accrues on each Interest Payment Date, and when such
LIBOR Loan is due (whether at maturity, by reason of acceleration or
otherwise).
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(c) Other Secured Obligations. The Borrowers will, to the
extent permitted by Applicable Law, pay interest on the unpaid
principal amount of any Secured Obligation that is due and payable,
other than the Loans, in accordance with SECTIONS 4.1(A) or (D), as
applicable, as if such Secured Obligation were a Prime Rate Loan.
(d) Default Rate. If there shall occur and be continuing an
Event of Default, at the election of the Required Lenders, the unpaid
principal amount of the Loans and other Secured Obligations shall no
longer bear interest in accordance with the terms of SECTION 4.1(A),
(B) or (C), but shall bear interest for each day from the date of such
Event of Default until such Event of Default shall have been cured or
waived at a rate per annum equal to the sum of (i) the Default Margin
and (ii) the rate otherwise applicable to such Loan or other Secured
Obligation, payable on demand. The interest rate provided for in the
preceding sentence shall, to the extent permitted by Applicable Law,
apply to and accrue on the amount of any judgment entered with respect
to any Secured Obligation.
(e) Calculation of Interest. The interest rates provided for
in SECTIONS 4.1(A), (B), (C) and (D) shall be computed on the basis of
a year of 360 days and the actual number of days elapsed.
(f) Maximum Rate. It is not intended by the Lenders, and
nothing contained in this Agreement or the Notes shall be deemed, to
establish or require the payment of a rate of interest in excess of the
maximum rate permitted by Applicable Law (the "Maximum Rate"). If, in
any month, the Effective Interest Rate, absent such limitation, would
have exceeded the Maximum Rate, then the Effective Interest Rate for
that month shall be the Maximum Rate, and, if in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate,
then the Effective Interest Rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of
interest which would have been paid if the same had not been limited by
the Maximum Rate. In the event, upon payment in full of the Secured
Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which
would have been paid or accrued if the Effective Interest Rate had at
all times been in effect, then the Borrowers shall, to the extent
permitted by Applicable Law, pay to the Lenders an amount equal to the
excess, if any, of (i) the lesser of (A) the amount of interest which
would have been charged if the Maximum Rate had, at all times, been in
effect and (B) the amount of interest which would have accrued had the
Effective Interest Rate, at all times, been in effect and (ii) the
amount of interest actually paid or accrued under this Agreement. In
the event the Lenders receive, collect or apply as interest any sum in
excess of the Maximum Rate, such excess amount shall be applied to the
reduction of the principal balance of the Secured Obligations, and if
no such principal is then outstanding, such excess or part thereof
remaining, shall be paid to the Borrowers.
SECTION 4.2. Certain Fees.
(a) Closing Fee. As additional consideration for the
extensions of credit provided for hereunder, the Borrowers shall pay to
the Agent, on behalf of the Lenders in accordance with their respective
Commitment Percentages, a closing fee in the aggregate amount of One
Million Five Hundred Thousand Dollars, with fifty percent of such
closing fee being due and
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payable on the Effective Date and the remaining fifty percent being due
and payable on the 45th day after the Effective Date. The closing fee
provided for herein shall compensate the Lenders for the internal costs
associated with the origination, structuring, processing, approving and
closing of the transactions contemplated by this Agreement, including
administrative, general overhead and lost opportunity costs, but not
including any out-of-pocket expenses for which the Borrowers have
agreed to reimburse the Agent, including the Agent's out-of-pocket
expenses incurred (and per diem charges accrued) in connection with its
due diligence examination of the Obligors and the closing of the
transactions contemplated by this Agreement. The closing fee shall be
fully earned when due and shall not be subject to refund or rebate.
(b) Agent Fee; Field Exam Fee. For administration and other
services performed by the Agent in connection with its continuing
administration of this Agreement, the Borrowers shall pay to the Agent,
for its own account, and not for the account of the Lenders, the annual
Agent and field examination fees in accordance with the terms of the
Fee Letter. The fees payable pursuant to this SECTION 4.2(B) shall be
fully earned by the Agent on the date payment thereof is due and shall
not be subject to refund or rebate.
(c) Unused Line Fee. In connection with and as consideration
for the holding available for the use of the Borrowers hereunder the
full amount of the Revolving Credit Facility, the Borrowers will pay a
fee to the Agent, for the Ratable benefit of the Lenders, for each day
from the Effective Date until the Termination Date, in an amount equal
to 0.375% per annum of the Available Revolving Credit Facility for such
day. Such fee shall be payable monthly in arrears on each Interest
Payment Date, shall be fully earned when due and payable and shall not
be subject to refund or rebate, and shall be calculated based on a year
of 360 days and the actual number of days elapsed.
(d) Letter of Credit Fees.
(i) The Borrowers shall pay to the Agent, for the Ratable
benefit of the Lenders, Letter of Credit fees on a per annum
basis equal to the Applicable Margin for LIBOR Loans
multiplied by the average daily aggregate Letter of Credit
Amount of all Letters of Credit from time to time outstanding
during the term of this Agreement. Such fees shall be payable
to the Agent, for the Ratable benefit of the Lenders in
accordance with their respective Commitment Percentages,
monthly in arrears on each Interest Payment Date, and shall be
calculated based on a year of 360 days and the actual number
of days elapsed.
(ii) The Borrowers shall pay to the Agent, for the account
of the Issuing Bank, (A) the standard fees and charges of the
Issuing Bank for issuing, administering, amending, renewing,
paying and canceling letters of credit, as and when assessed,
and (B) a facing fee equal to 0.125% of the face amount of
each Letter of Credit, due upon issuance.
(e) Collection Fee. During the period from and including the
Effective Date to and including the Termination Date, the Borrowers
will pay to the Agent for its own account on the first day of each
month an amount of interest computed at the Effective Interest Rate
applicable to Prime Rate Revolving Credit Loans on each remittance
received by the Agent
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against Receivables (as contemplated by SECTION 8.1 hereof) during the
preceding month, from the close of business on the date of receipt of
each such remittance until the close of business on the second Business
Day following the receipt of the remittance, as compensation for delays
in the collection and clearance of checks and other remittances.
(f) General. All fees shall be fully earned by the identified
recipient thereof when due and payable and, except as otherwise set
forth herein or required by applicable law, shall not be subject to
refund or rebate. All fees provided for in this SECTION 4.2 are for
compensation for services and are not, and shall not be deemed to be,
interest or a charge for the use of money. The Borrowers acknowledge
that all of the terms of the Fee Letter shall survive the execution,
delivery and closing of this Agreement.
SECTION 4.3. Manner of Payment.
(a) Except as otherwise expressly provided in SECTION 8.1(B),
each payment (including prepayments) by the Borrowers on account of the
principal of or interest on the Loans or of any other amounts payable
to the Lenders under this Agreement or any Note shall be made not later
than 12:00 noon on the date specified for payment under this Agreement
to the Agent, for the account of the Lenders, at the Agent's Office, in
Dollars, in immediately available funds and shall be made without any
setoff, counterclaim or deduction whatsoever. Any payment received
after such time but before 1:00 p.m. on such day shall be deemed a
payment on such date for the purposes of SECTION 12.1, but for all
other purposes shall be deemed to have been made on the next succeeding
Business Day.
(b) The Borrowers hereby irrevocably authorize each Lender and
each Affiliate of such Lender and each participant herein to charge any
account of the Borrowers maintained with such Lender or such Affiliate
or participant with such amounts as may be necessary from time to time
to pay any Secured Obligations (whether or not owed to such Lender,
Affiliate or participant) which are not paid when due.
SECTION 4.4. General. If any payment under this Agreement or
any Note shall be specified to be made upon a day which is not a Business Day,
it shall be made on the next succeeding day which is a Business Day and such
extension of time shall in such case be included in computing interest, if any,
in accordance with such payment.
SECTION 4.5. Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a loan
account in the Borrowers' name (each, a "Loan Account" and
collectively, the "Loan Accounts"). Each such Loan Account shall show
as debits thereto each Loan made under this Agreement by such Lender to
the Borrowers and as credits thereto all payments received by such
Lender and applied to principal of such Loan, so that the balance of
the loan account at all times reflects the principal amount due such
Lender from the Borrowers.
(b) The Agent shall maintain on its books a control account
for the Borrowers in which shall be recorded (i) the amount of each
disbursement made hereunder, (ii) the amount of any principal or
interest due or to become due from the Borrowers hereunder, and (iii)
the
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amount of any sum received by the Agent hereunder from the Borrowers
and each Lender's Ratable share therein.
(c) The entries made in the accounts pursuant to SUBSECTIONS
(A) and (B) shall be prima facie evidence, in the absence of manifest
error, of the existence and amounts of the obligations of the Borrowers
therein recorded and in case of discrepancy between such accounts, in
the absence of manifest error, the accounts maintained pursuant to
SUBSECTION (B) shall be controlling.
(d) The Agent will account separately to the Borrowers monthly
with a statement of Loans, charges and payments made to and by the
Borrowers pursuant to this Agreement, and such accounts rendered by the
Agent shall be deemed final, binding and conclusive, save for manifest
error, unless the Agent is notified by the Borrowers in writing to the
contrary within 30 days of the date the account to the Borrowers was so
rendered. Such notice by the Borrowers shall be deemed an objection to
only those items specifically objected to therein. Failure of the Agent
to render such account shall in no way affect the rights of the Agent
or of the Lenders hereunder.
SECTION 4.6. Termination of Agreement. The Borrowers shall
have the right, at any time, to terminate this Agreement upon not less than 60
days prior written notice to the Agent of their intention to terminate this
Agreement, which notice shall specify the effective date of such termination.
Upon receipt of such notice, the Agent shall promptly notify each Lender
thereof. On the date specified in such notice, such termination shall be
effected, PROVIDED, that the Borrowers shall, on or prior to such date, pay to
the Agent, for itself and the account of the Secured Creditors, in same day
funds, an amount equal to all Secured Obligations then outstanding, including
all (a) accrued interest thereon, (b) all accrued fees provided for hereunder,
(c) any amounts payable to the Lenders pursuant to this ARTICLE 4 or SECTIONS
16.2, 16.3 and 16.14, and (d) any other amounts payable to the Agent or any
Secured Creditor under any other Loan Document. In addition thereto, the
Borrowers shall deliver to the Agent (i) an indemnity or Cash Collateral in form
and substance acceptable to the Agent with respect to any checks or other
instruments received by the Agent and credited to the Borrowers in calculating
the payoff amount, and (ii) in respect of each outstanding Letter of Credit,
either a Supporting Letter of Credit or Cash Collateral as provided in SECTION
3.9. Following a notice of termination as provided for in this SECTION 4.6 and
upon payment in full of the amounts specified in this SECTION 4.6, this
Agreement shall be terminated and the Agent, the Issuing Bank, the Lenders and
the Obligors shall have no further obligations to any other party hereto, except
for any indemnity obligations which expressly survive the termination of this
Agreement.
SECTION 4.7. Making of Loans.
(a) Nature of Obligations of Lenders to Make Loans. The
obligations of the Lenders under this Agreement to make the Loans are
several and are not joint or joint and several.
(b) Assumption by Agent. Subject to the provisions of SECTION
4.8 and notwithstanding the occurrence or continuance of a Default or
Event of Default or other failure of any condition to the making of
Loans hereunder subsequent to the Loans to be made on the Effective
Date, unless the Agent shall have received notice from the Required
Lenders in
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accordance with the provisions of SECTION 4.7(C) (and such notice shall
have become effective) prior to a proposed borrowing date that such
Lenders will not make available to the Agent such Lenders' Ratable
portion of the amount to be borrowed on such date, the Agent may assume
that each Lender will make such portion available to the Agent in
accordance with SECTION 2.2(A), and the Agent may, in reliance upon
such assumption, make available to the Borrowers on such date a
corresponding amount. If and to the extent any Lender shall not make
such Ratable portion available to the Agent, such Lender and the
Borrowers severally agree to repay to the Agent forthwith on demand
such corresponding amount, together with interest thereon for each day
from the date such amount is made available to the Borrowers until the
date such amount is repaid to the Agent at the Effective Interest Rate
or, if lower, subject to SECTION 4.1(F), the Maximum Rate. If such
Lender shall repay to the Agent such corresponding amount, the amount
so repaid shall constitute such Lender's Commitment Percentage of the
Loan made on such borrowing date for purposes of this Agreement. The
failure of any Lender to make its Commitment Percentage of any Loan
available shall not (without regard to whether the Borrowers shall have
returned the amount thereof to the Agent in accordance with this
SECTION 4.7) relieve it or any other Lender of its obligation, if any,
hereunder to make its Commitment Percentage of such Loan available on
such borrowing date, but no Lender shall be responsible for the failure
of any other Lender to make its Commitment Percentage of such Loan
available on the borrowing date.
(c) Delegation of Authority to Agent. Without limiting the
generality of SECTION 14.1, each Lender expressly authorizes the Agent
to determine on behalf of such Lender (i) any reduction or increase of
advance rates applicable to the Borrowing Base, so long as such advance
rates do not at any time exceed the rates set forth in the Borrowing
Base definition, (ii) the creation or elimination of any reserves
(other than the Letter of Credit Reserve) against the Revolving Credit
Facility and the Borrowing Base, and (iii) whether or not Inventory or
Receivables shall be deemed to constitute Eligible Inventory, Eligible
In-Transit Inventory, or Eligible Receivables. Such authorization may
be withdrawn by the Required Lenders by giving the Agent written notice
of such withdrawal signed by the Required Lenders; PROVIDED, HOWEVER,
that unless otherwise agreed by the Agent such withdrawal of
authorization shall not become effective until the thirtieth Business
Day after receipt of such notice by the Agent. Thereafter, the Required
Lenders shall jointly instruct the Agent in writing regarding such
matters with such frequency as the Required Lenders shall jointly
determine. Unless and until the Agent shall have received written
notice from the Required Lenders as to the existence of a Default, an
Event of Default or some other circumstance which would relieve the
Lenders of their respective obligations to make Loans hereunder, which
notice shall be in writing and shall be signed by the Required Lenders
and shall expressly state that the Required Lenders do not intend to
make available to the Agent such Lenders' Ratable share of Loans made
after the effective date of such notice, the Agent shall be entitled to
continue to make the assumptions described in SECTION 4.7(B). The
notice described in the preceding sentence shall become effective on
the third Business Day after receipt of such notice by the Agent unless
otherwise agreed by the Agent. The Agent shall not be required to make
any Loan as to which it shall have received notice by a Lender of such
Lender's intention not to make its Ratable portion of such Loan
available to the Agent. Any withdrawal of authorization under this
SECTION 4.7(C) shall not affect the validity of any Loans made (or
Letters of Credit issued) prior to the effectiveness thereof.
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(d) Agent Advances. The Agent is hereby authorized by the
Borrowers and the Lenders, from time to time in the Agent's sole
discretion, (i) after the occurrence of a Default or an Event of
Default, or (ii) at any time that any of the other applicable
conditions precedent set forth in ARTICLE 5 have not been satisfied, to
make Revolving Credit Loans to the Borrowers on behalf of the Lenders
which the Agent, in its reasonable business judgment, deems necessary
or desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Secured Obligations, or (C) to pay any
other amount chargeable to the Obligors pursuant to the terms of this
Agreement, including costs, fees and expenses as described in SECTION
16.2 (any of the advances described in this SECTION 4.7(D) being
hereinafter referred to as "Agent Advances"); PROVIDED that (x) the
Required Lenders may at any time revoke the Agent's authorization
contained in this SECTION 4.7(D) to make Agent Advances, any such
revocation to be in writing and to become effective on the third
Business Day after the Agent's receipt thereof, and (y) the Agent shall
not allow more than $5,000,000 in Agent Advances to be outstanding
under this SECTION 4.7(D) at any time without the consent of all the
Lenders. All Agent Advances shall be repayable by the Borrowers on
demand and secured by the Collateral, shall constitute Revolving Credit
Loans and Secured Obligations hereunder, and shall bear interest at the
rate applicable to Prime Rate Revolving Credit Loans from time to time.
The Agent shall notify each Lender in writing of each such Agent
Advance. All Agent Advances shall constitute Non-Ratable Loans, as
defined in SECTION 4.8(B), and shall be subject to the provisions
thereof.
(e) Replacement of Certain Lenders. If a Lender (the "Affected
Lender") shall have failed to fund its Proportionate Share of any Loan
requested (or deemed requested) by the Borrowers which such Lender is
obligated to fund under the terms of this Agreement and which failure
has not been cured, then, in any such case and in addition to any other
rights and remedies that the Agent, any other Lender or the Borrowers
may have against such Affected Lender, the Agent or the Borrowers'
Agent may make written demand on such Affected Lender (with a copy to
the Borrowers' Agent, in case of demand by the Agent, and with a copy
to the Agent, in the case of demand by the Borrowers' Agent) for the
Affected Lender to assign, and such Affected Lender shall assign
pursuant to one or more duly executed Assignment and Acceptances within
5 Business Days after the date of such demand, to one or more Lenders
willing to accept such assignment or assignments, or to one or more
Eligible Assignees (to the extent willing to accept such assignment or
assignments) designated by the Agent or the Borrowers' Agent (provided
such Eligible Assignee is reasonably acceptable to the Agent and, if no
Event of Default exists, the Borrowers' Agent), all of such Affected
Lender's rights and obligations under this Agreement (including its
Commitments and all Loans owing to it) in accordance with ARTICLE 13.
The Affected Lender shall be entitled to receive, in cash and
concurrently with the execution and delivery of each such Assignment
and Acceptance, all amounts owed to the Affected Lender hereunder or
under any other Loan Document, including the aggregate outstanding
principal amount of the Loans owed to such Lender, together with
accrued interest thereon through the date of such assignment. Upon the
replacement of any Affected Lender pursuant to this SECTION 4.7(E),
such Affected Lender shall cease to have any participation in,
entitlement to, or other right to share in the Security Interest or any
other Lien of the Agent in any Collateral and such Affected Lender
shall have no further liability to the Agent, any Lender or any other
Person under any of the Loan Documents (except as provided in SECTION
14.7 and elsewhere in this Agreement as to events or transactions which
occur prior to the replacement of such Affected Lender).
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SECTION 4.8. Settlement Among Lenders.
(a) Revolving Credit Loans. It is agreed that each Lender's
Net Outstandings are intended by the Lenders to be equal at all times
to such Lender's Commitment Percentage of the aggregate principal
amount of all Revolving Credit Loans outstanding. Notwithstanding such
agreement, the several and not joint obligation of each Lender to fund
Revolving Credit Loans made in accordance with the terms of this
Agreement ratably in accordance with such Lender's Commitment
Percentage and each Lender's right to receive its Ratable share of
principal payments on Revolving Credit Loans in accordance with its
Commitment Percentage, the Lenders agree that in order to facilitate
the administration of this Agreement and the other Loan Documents that
settlement among them may take place on a periodic basis in accordance
with the provisions of this SECTION 4.8.
(b) Settlement Procedures as to Revolving Credit Loans. To the
extent and in the manner hereinafter provided in this SECTION 4.8,
settlement among the Lenders as to Revolving Credit Loans may occur
periodically on Settlement Dates determined from time to time by the
Agent, which may occur before or after the occurrence or during the
continuance of a Default or Event of Default and whether or not all of
the conditions set forth in SECTION 5.2 have been met. On each
Settlement Date payments shall be made by or to Bank of America and the
other Lenders in the manner provided in this SECTION 4.8 in accordance
with the Settlement Report delivered by the Agent pursuant to the
provisions of this SECTION 4.8 in respect of such Settlement Date so
that as of each Settlement Date, and after giving effect to the
transactions to take place on such Settlement Date, each Lender's Net
Outstandings shall equal such Lender's Commitment Percentage of the
Revolving Credit Loans outstanding.
(i) Selection of Settlement Dates. If the Agent elects, in
its discretion, but subject to the consent of Bank of America,
to settle accounts among the Lenders with respect to principal
amounts of Revolving Credit Loans less frequently than each
Business Day, then the Agent shall designate periodic
Settlement Dates which may occur on any Business Day after the
Effective Date; PROVIDED, HOWEVER, that the Agent shall
designate as a Settlement Date any Business Day which is an
Interest Payment Date; and PROVIDED FURTHER, that a Settlement
Date shall occur at least once during each seven-day period.
The Agent shall designate a Settlement Date by delivering to
each Lender a Settlement Report not later than 12:00 noon on
the proposed Settlement Date, which Settlement Report shall be
with respect to the period beginning on the next preceding
Settlement Date and ending on such designated Settlement Date.
(ii) Non-Ratable Loans and Payments. Between Settlement
Dates, the Agent shall request and Bank of America may (but
shall not be obligated to) advance to the Borrowers out of
Bank of America's own funds, the entire principal amount of
any Revolving Credit Loan requested or deemed requested
pursuant to SECTION 2.2(A) or any Agent Advance made pursuant
to SECTION 4.7(D) (any such Revolving Credit Loan or Agent
Advance being referred to as a "Non-Ratable Loan"). The making
of each Non-Ratable Loan by Bank of America shall be deemed to
be a purchase by Bank of America of a 100% participation in
each other Lender's Commitment Percentage of the amount of
such Non-Ratable Loan. All payments of principal, interest and
any other
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amount with respect to such Non-Ratable Loan shall be payable
to and received by the Agent for the account of Bank of
America. Upon demand by Bank of America, with notice thereof
to the Agent, each other Lender shall pay to Bank of America,
as the repurchase of such participation, an amount equal to
100% of such Lender's Commitment Percentage of the principal
amount of such Non-Ratable Loan. Any payments received by the
Agent between Settlement Dates which in accordance with the
terms of this Agreement are to be applied to the reduction of
the outstanding principal balance of Revolving Credit Loans,
shall be paid over to and retained by Bank of America for such
application, and such payment to and retention by Bank of
America shall be deemed, to the extent of each other Lender's
Commitment Percentage of such payment, to be a purchase by
each such other Lender of a participation in the Revolving
Credit Loans (including the repurchase of participations in
Non-Ratable Loans) held by Bank of America. Upon demand by
another Lender, with notice thereof to the Agent, Bank of
America shall pay to the Agent, for the account of such other
Lender, as a repurchase of such participation, an amount equal
to such other Lender's Commitment Percentage of any such
amounts (after application thereof to the repurchase of any
participations of Bank of America in such other Lender's
Commitment Percentage of any Non-Ratable Loans) paid only to
Bank of America by the Agent.
(iii) Net Decrease in Outstandings. If on any Settlement
Date the increase, if any, in the dollar amount of any
Lender's Net Outstandings which is required to comply with the
first sentence of SECTION 4.8(A) is less than such Lender's
Commitment Percentage of amounts received by the Agent but
paid only to Bank of America since the next preceding
Settlement Date, such Lender and the Agent, in their
respective records, shall apply such Lender's Commitment
Percentage of such amounts to the increase in such Lender's
Net Outstandings, and Bank of America shall pay to the Agent,
for the account of such Lender, the excess allocable to such
Lender.
(iv) Net Increase in Outstandings. If on any Settlement
Date the increase, if any, in the dollar amount of any
Lender's Net Outstandings which is required to comply with the
first sentence of SECTION 4.8(A) exceeds such Lender's
Commitment Percentage of amounts received by the Agent but
paid only to Bank of America since the next preceding
Settlement Date, such Lender and the Agent, in their
respective records, shall apply such Lender's Commitment
Percentage of such amounts to the increase in such Lender's
Net Outstandings, and such Lender shall pay to the Agent, for
the account of Bank of America, any excess.
(v) No Change in Outstandings. If a Settlement Report
indicates that no Revolving Credit Loans have been made during
the period since the next preceding Settlement Date, then such
Lender's Commitment Percentage of any amounts received by the
Agent but paid only to Bank of America shall be paid by Bank
of America to the Agent, for the account of such Lender. If a
Settlement Report indicates that the increase in the dollar
amount of a Lender's Net Outstandings which is required to
comply with the first sentence of SECTION 4.8(A) is exactly
equal to such Lender's Commitment Percentage of amounts
received by the Agent but paid only to Bank of America since
the next preceding Settlement Date, such Lender and the Agent,
in their
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respective records, shall apply such Lender's Commitment
Percentage of such amounts to the increase in such Lender's
Net Outstandings.
(vi) Return of Payments. If any amounts received by Bank
of America in respect of the Secured Obligations are later
required to be returned or repaid by Bank of America to the
Borrowers or their respective representatives or successors in
interest, whether by court order, settlement or otherwise, in
excess of Bank of America's Commitment Percentage of all such
amounts required to be returned by all Lenders, each other
Lender shall, upon demand by Bank of America with notice to
the Agent, pay to the Agent for the account of Bank of
America, an amount equal to the excess of such Lender's
Commitment Percentage of all such amounts required to be
returned by all Lenders over the amount, if any, returned
directly by such Lender.
(vii) Payments to Agent, Lenders.
(A) Payment by any Lender to the Agent shall be made
not later than 1:00 p.m. on the Business Day such payment
is due, PROVIDED that if such payment is due on demand by
another Lender, such demand is made on the paying Lender
not later than 10:00 a.m. on such Business Day. Payment by
the Agent to any Lender shall be made by wire transfer,
promptly following the Agent's receipt of funds for the
account of such Lender and in the type of funds received
by the Agent, PROVIDED that if the Agent receives such
funds at or prior to 1:00 p.m., the Agent shall pay such
funds to such Lender by 2:00 p.m. on such Business Day. If
a demand for payment is made after the applicable time set
forth above, the payment due shall be made by 2:00 p.m. on
the first Business Day following the date of such demand.
(B) If a Lender shall, at any time, fail to make any
payment to the Agent required hereunder, the Agent may,
but shall not be required to, retain payments that would
otherwise be made to such Lender hereunder and apply such
payments to such Lender's defaulted obligations hereunder,
at such time, and in such order, as the Agent may elect in
its sole discretion.
(C) With respect to the payment of any funds under
this SECTION 4.8(B), whether from the Agent to a Lender or
from a Lender to the Agent, the party failing to make full
payment when due pursuant to the terms hereof shall, upon
demand by the other party, pay such amount together with
interest on such amount at the Federal Funds Effective
Rate.
(c) Settlement of Other Secured Obligations. All other amounts
received by the Agent on account of, or applied by the Agent to the
payment of, any Secured Obligation owed to the Lenders (including fees
payable to the Lenders pursuant to SECTIONS 4.2(C) and (D) and proceeds
from the sale of, or other realization upon, all or any part of the
Collateral following an Event of Default) that are received by the
Agent on or prior to 1:00 p.m. on a Business Day will be paid by the
Agent to each Lender on the same Business Day, and any such amounts
that are received by the Agent after 1:00 p.m. will be paid by the
Agent to each Lender on the following Business Day. Unless otherwise
stated herein, the Agent shall distribute fees payable
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to the Lenders pursuant to SECTIONS 4.2(C) and (D) ratably to the
Lenders based on each Lender's Commitment Percentage and shall
distribute proceeds from the sale of, or other realization upon, all or
any part of the Collateral following an Event of Default ratably to the
Lenders based on the amount of the Secured Obligations then owing to
each Lender.
(d) Allocation of Payments. All monies to be applied to the
Secured Obligations, whether such monies represent voluntary payments
by the Obligors or are received pursuant to demand for payment or
realized from any disposition of Collateral, shall be allocated among
the Agent and such of the Lenders and other holders of the Secured
Obligations as are entitled thereto (and, with respect to monies
allocated to the Lenders, on a Ratable basis unless otherwise provided
in this SECTION 4.8(D)): (i) first, to Bank of America to pay principal
and accrued interest on any portion of any Non-Ratable Loan which Bank
of America may have advanced on behalf of any Lender (other than
itself) and for which Bank of America has not been reimbursed by such
Lender or the Obligors; (ii) second, to the Agent to pay the amount of
expenses that have not been reimbursed to the Agent by the Obligors or
the Lenders, together with interest accrued thereon; (iii) third, to
the Agent to pay any indemnified amount that has not been paid to the
Agent by the Obligors or the Lenders, together with interest accrued
thereon; (iv) fourth, to the Agent to pay any fees due and payable to
the Agent under this Agreement; (v) fifth, to the Lenders for any
indemnified amount that they have paid to the Agent and for any
expenses that they have reimbursed to the Agent; (vi) sixth, to the
Lenders in payment of the unpaid principal and accrued interest in
respect of the Loans and any other Secured Obligations then outstanding
and held by any Lender to be shared among the Lenders on a Ratable
basis, or on such other basis as may be agreed upon in writing by all
of the Lenders (which agreement or agreements may be entered into
without notice to or the consent or approval of the Obligors), and
(vii) seventh, to the holders of the other Secured Obligations who are
not Lenders on a pro rata basis. The allocations set forth in this
SECTION 4.8(D) are solely to determine the rights and priorities of the
Agent and the Lenders as among themselves and may be changed by the
Agent and the Lenders without notice to, or the consent or approval of,
the Obligors or any other Person. Whenever allocation is made pursuant
to this SECTION 4.8(D) to the holder of Secured Obligations in which
another Lender acquires a participation, the monies received by such
holder shall be shared as between such holder and such participants on
a Ratable basis.
SECTION 4.9. Mandatory Prepayments.
(a) Prepayments from Asset Dispositions. Without limiting the
restrictions set forth in SECTIONS 8.7 and 11.7, the Obligors agree
that (i) immediately upon the receipt by any Obligor of the proceeds of
any Asset Disposition of Bank Priority Collateral, the Obligors shall
apply such proceeds as provided in SECTION 4.9(C), and (ii) within 10
days after the receipt by any Obligor of the Net Proceeds of any Asset
Disposition of assets other than Bank Priority Collateral, the Obligors
shall apply such Net Proceeds as provided in SECTION 4.9(C) or to the
redemption or repurchase of outstanding Bonds, provided, however, that
the Obligors shall not be required to make such application pursuant to
clause (ii) above to the extent that the Net Proceeds from Asset
Dispositions during any fiscal year of the Obligors do not exceed, in
the aggregate, $200,000. Concurrently with the making of any such
application, the Borrowers' Agent shall deliver to the Agent a
certificate of the Financial Officer demonstrating the calculations of
the amount required to be applied and, in the case of the application
of the Net
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Proceeds from Asset Dispositions of assets other than Bank Priority
Collateral pursuant to CLAUSE (II) above, the amount of such Net
Proceeds to be applied as provided in SECTION 4.9(C) and the amount of
such Net Proceeds to be applied to the redemption or repurchase of
outstanding Bonds. Notwithstanding the foregoing, to the extent that
the gross proceeds from Asset Dispositions of assets other than Bank
Priority Collateral during any fiscal year of the Obligors do not
exceed, in the aggregate, $2,000,000, if the Obligors reasonably expect
such proceeds to be reinvested within six months in productive assets
of a kind then used or useable in the business of the Obligors and that
are not subject to any Lien other than Permitted Liens, then the
Obligors shall not be required to make the application of Net Proceeds
as provided in clause (ii) above, provided that (A) within 10 days
after the receipt by any Obligor of such gross proceeds, the
Borrowers'Agent shall deliver to the Agent a certificate of the
Financial Officer certifying that the Obligors reasonably expect to
reinvest such proceeds within six months as provided above, and (B) to
the extent that the Obligors fail to reinvest such proceeds within six
months as provided above, (x) the Obligors shall immediately apply the
unreinvested amount as provided in Section 4.9(c) or to the redemption
or repurchase of outstanding Bonds and (y) the Borrowers' Agent shall
deliver to the Agent a certificate of the Financial Officer
demonstrating the calculations of the amount required to be applied and
the amount of such Net Proceeds to be applied as provided in Section
4.9(c) and the amount of such Net Proceeds to be applied to the
redemption or repurchase of outstanding Bonds.
(b) Prepayments from Equity Offerings. In the event that, at
any time after the Effective Date, Tultex or any of its Subsidiaries
issues capital stock or other securities or receives an additional
capital contribution in respect of existing capital stock or other
securities (excluding any such issuance to, or receipt from, another
Obligor or a Consolidated Subsidiary of Tultex), no later than the
second Business Day following the date of receipt of the proceeds from
such issuance, the Obligors shall (i) apply such proceeds, net of
underwriting discounts and commissions and other reasonable costs
associated therewith, as provided in SECTION 4.9(C), and (ii) the
Borrowers' Agent shall deliver to the Agent a certificate of the
Financial Officer demonstrating the calculations of the amount required
to be applied and the amount of such net proceeds to be applied as
provided in SECTION 4.9(C).
(c) Application of Proceeds of Prepayments. All prepayments of
the Secured Obligations pursuant to this SECTION 4.9 shall be applied
to the outstanding Revolving Credit Loans, to the extent thereof, then
to the other Secured Obligations, PROVIDED that payments shall be first
applied to Prime Rate Loans to the extent thereof and then to LIBOR
Loans and any payments received which would otherwise result in the
prepayment of LIBOR Loans prior to the end of the Interest Period
applicable thereto may, upon the request of the Borrowers' Agent, in
the absence of an Event of Default, be applied to the Cash Collateral
Account, with any excess to be deposited with the Agent to be held as
Cash Collateral for the Secured Obligations and applied by the Agent
from time to time to outstanding Revolving Credit Loans promptly upon
the making of such Revolving Credit Loans or, after the Termination
Date, to any of the Secured Obligations as set forth in SECTION 4.8(D).
SECTION 4.10. Payments Not at End of Interest Period; Failure
to Borrow. If for any reason any payment of principal with respect to any LIBOR
Loan is made on any day prior to the last day of the Interest Period applicable
to such LIBOR Loan or, after having given a Notice of Borrowing with respect to
any LIBOR Revolving Credit Loan or a Notice of Conversion or Continuation with
respect to
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any Loan to be continued as or converted into a LIBOR Loan, such Loan is not
made or is not continued as or converted into a LIBOR Loan due to the Borrowers'
failure to borrow or to fulfill the applicable conditions set forth in ARTICLE
5, the Borrowers shall pay to each Lender upon the request of the Agent or such
Lender an amount sufficient to compensate the Agent and such Lender for any and
all losses or expenses which the Agent or such Lender has sustained or incurred
as a consequence thereof. The Borrowers shall pay such amount upon presentation
by the Agent (or as to any Lender, by such Lender) of a statement setting forth
the amount and the Agent's (or such Lender's) calculation thereof pursuant
hereto, which statement shall be deemed true and correct absent manifest error.
SECTION 4.11. Assumptions Concerning Funding of LIBOR Loans.
Calculation of all amounts payable to the Lenders under this ARTICLE 4 shall be
made as though each Lender had actually funded or committed to fund its LIBOR
Loans through the purchase of an underlying deposit in an amount equal to the
amount of its Ratable share thereof and having a maturity comparable to the
relevant Interest Period for such LIBOR Loan; PROVIDED, HOWEVER, each Lender may
fund its LIBOR Loans in any manner it deems fit and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this ARTICLE
4.
SECTION 4.12. Notice of Conversion or Continuation. Whenever
the Borrowers desire, subject to the provisions of SECTION 4.13, to convert an
outstanding Loan into a Loan or Loans of a different Type or to continue all or
a portion of an outstanding LIBOR Loan for a subsequent Interest Period, the
Borrowers shall notify the Agent by telephone or in writing by telex or
facsimile transmission (which notice shall be irrevocable) not later than 11:00
a.m. on the date three Business Days before the day on which such proposed
conversion or continuation is to be effective (and such effective date of any
continuation shall be the last day of the Interest Period for the applicable
LIBOR Loan), PROVIDED the Borrowers shall not be permitted to convert Loans into
(or continue Loans as) LIBOR Loans at any time during the existence of an Event
of Default. Each such notice (a "Notice of Conversion or Continuation") shall
(a) identify the Loan to be converted or continued, the aggregate outstanding
principal balance thereof and, if a LIBOR Loan, the last day of the Interest
Period applicable to such Loan, (b) specify the effective date of such
conversion or continuation, (c) specify the principal amount of such Loan to be
converted or continued and, if converted, the Type or Types into which the same
is to be converted, and (d) the Interest Period to be applicable to the LIBOR
Loan as converted or continued, and shall, if notice thereof was originally
given by telephone, be immediately followed by a signed, written confirmation
thereof by the Borrowers in a form acceptable to the Agent, PROVIDED that if
such written confirmation differs in any respect from the action taken by the
Lenders, the records of the Agent shall control absent manifest error.
SECTION 4.13. Conversion or Continuation. Provided that no
Event of Default shall have occurred and be continuing (but subject to the
provisions of SECTIONS 4.12 and 4.15), the Borrowers may request that all or any
part of any outstanding Loan be converted into a Loan or Loans of a different
Type or be continued as a Loan or Loans of the same Type, in the same aggregate
principal amount, on any Business Day (which, in the case of continuation of a
LIBOR Loan, shall be the last day of the Interest Period applicable to such
Loan), upon notice (which notice shall be irrevocable) given in accordance with
SECTION 4.12.
SECTION 4.14. Maximum Number of LIBOR Loans; Minimum
Increments.
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(a) If the Agent does not receive a notice of election in
accordance with SECTION 4.12 with respect to the continuation of a
LIBOR Loan within the applicable time limits specified in said SECTION
4.12, or if, when such notice must be given, an Event of Default exists
or such Type of Loan is not available, the Borrowers shall be deemed to
have elected to convert such LIBOR Loan in whole into a Prime Rate Loan
on the last day of the Interest Period therefor.
(b) Notwithstanding the foregoing, the Borrowers may not
select an Interest Period that would end, but for the provisions of the
definition of "Interest Period," after the Termination Date.
(c) In no event shall there be more than five LIBOR Loans
outstanding hereunder at any time. For the purpose of this SUBSECTION
(D), each LIBOR Loan having a distinct Interest Period shall be deemed
to be a separate Loan hereunder.
(d) Each LIBOR Loan shall be in a minimum amount of $5,000,000
and increments of $500,000 in excess thereof.
SECTION 4.15. Changed Circumstances.
(a) If the introduction of or any change in or in the
interpretation of (in each case, after the date hereof) any law or
regulation makes it unlawful, or any governmental authority asserts,
after the date hereof, that it is unlawful, for any Lender to perform
its obligations hereunder to make LIBOR Loans or to fund or maintain
LIBOR Loans hereunder, such Lender shall notify the Agent of such event
and the Agent shall notify the Borrowers of such event, and the right
of the Borrowers to select LIBOR Loans for any subsequent Interest
Period or in connection with any subsequent conversion of any Loan
shall be suspended until the Agent shall notify the Borrowers that the
circumstances causing such suspension no longer exist, and the
Borrowers shall forthwith prepay in full all LIBOR Loans then
outstanding, and shall pay all interest accrued thereon through the
date of such prepayment or conversion, unless the Borrowers, within
three Business Days after such notice from the Agent, request the
conversion of all LIBOR Loans then outstanding into Prime Rate Loans;
PROVIDED, that if the date of such repayment or proposed conversion is
not the last day of the Interest Period applicable to such LIBOR Loan,
the Borrowers shall also pay any amount due pursuant to SECTION 4.10.
(b) If the Agent shall, at least one Business Day before the
date of any requested Loan or the effective date of any conversion or
continuation of an existing Loan to be made or continued as or
converted into a LIBOR Loan (each such requested Loan made and Loan to
be converted or continued, a "Pending Loan"), notify the Borrowers that
LIBOR will not adequately reflect the cost to the Lenders of making or
funding such Pending Loan as a LIBOR Loan or that the Interbank Offered
Rate is not reasonably determinable, including from any interest rate
reporting service of recognized standing, then the right of the
Borrowers to select LIBOR Loans for such Pending Loan, any subsequent
Loan or in connection with any subsequent conversion or continuation of
any Loan shall be suspended until the Agent shall notify the Borrowers
that the circumstances causing such suspension no longer exist, and
each Pending Loan and each such subsequent Loan requested to be made,
continued or converted shall be made or continued as or converted into
a Prime Rate Loan.
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(c) If, due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of reserve
requirements included in the LIBOR Reserve Percentage) in or in the
interpretation of, in each case after the date hereof, any law or
regulation (except to the extent such introduction, change or
interpretation affects taxes measured by net income), or (ii) the
compliance with a guideline or request (except to the extent such
guideline or request affects taxes measured by net income) from any
central bank or other governmental authority (whether nor not having
the force of law) made after the date hereof, there shall be any
increase in the cost to any Lender of agreeing to make or making,
funding or maintaining LIBOR Loans (other than as separately provided
for in SECTION 4.15(D)), then the Borrowers shall from time to time,
within 30 days after demand by such Lender (with a copy of such demand
to the Agent), pay to the Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such
increased cost.
(d) If (i) the adoption of or change in, after the date
hereof, any law, rule, regulation or guideline regarding capital
requirements for banks or bank holding companies, or any change, after
the date hereof, in the interpretation or application thereof by any
governmental authority charged with the interpretation or
administration thereof, or (ii) compliance by such Lender with any
guideline, request or directive, made or promulgated after the date
hereof, of any such entity regarding capital adequacy (whether or not
having the force of law), has the effect of reducing the return on a
Lender's capital as a consequence of its maintaining its Loans or
commitment to make Loans hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies with respect to
capital adequacy immediately before such adoption, change or compliance
and assuming the full utilization of such Lender's capital immediately
before such adoption, change or compliance) or if any change in law,
regulation, treaty or official directive or the interpretation or
application thereof by any court or by any governmental authority
charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental
authority (whether or not having the force of law) subjects a Lender to
any tax with respect to payments of principal or interest or any other
amounts payable hereunder by the Borrowers or otherwise with respect to
the transactions contemplated hereby (except for taxes on the overall
net income of such Lender imposed by the United States of America or
any political subdivision thereof), in each case by any amount deemed
by such Lender to be material, then such Lender shall promptly after
its determination of such occurrence notify the Borrowers and the Agent
thereof. The Borrowers agree to pay to the Agent, for the account of
such Lender, as an additional fee from time to time, within 30 days
after demand by such Lender, such amount as such Lender certifies to be
the amount that will compensate it for such reduction or tax.
(e) Before giving any notice pursuant to SECTION 4.15(A) or
making any demand pursuant to SECTION 4.15(C) or (D), each Lender
agrees to use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to designate a different
lending office if the making of such a designation would avoid the need
for such notice or demand, or reduce the amount of such increased cost,
reduction in return or tax and would not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender.
(f) A certificate of the Lender claiming compensation under
SECTION 4.15(C) or (D) shall be conclusive in the absence of manifest
error. Such certificate shall set forth the nature of the occurrence
giving rise to such compensation, the additional amount or amounts to
be paid to it
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hereunder, and the method by which such amounts were determined. In
determining such amount, a Lender may use any reasonable averaging and
attribution methods.
SECTION 4.16. Cash Collateral Account. The Borrowers shall
establish a Cash Collateral Account with the Agent in which to deposit
Collateral consisting of cash or Cash Equivalents from time to time: (a)
representing payments received pursuant to SECTIONS 2.3(C) and 4.9 in excess of
then outstanding Revolving Credit Loans or on account of LIBOR Loans which would
otherwise result in repayment of such Loans prior to the end of the Interest
Period applicable thereto, (b) with respect to Letter of Credit Obligations (i)
at the request of the Agent upon the occurrence of an Event of Default, or (ii)
for the purposes set forth in SECTION 4.6 in the event of termination of this
Agreement, or (c) for any other purpose appropriate under this Agreement to
provide security for the Secured Obligations. On the last day of the applicable
Interest Period as to any amounts deposited to the Cash Collateral Account
pursuant to CLAUSE (A) above or if a drawing under a Letter of Credit occurs
with respect to any amounts deposited to the Cash Collateral Account pursuant to
CLAUSE (B) above, each Borrower hereby authorizes the Agent to use the monies
deposited in the Cash Collateral Account to make payment to the payee with
respect to such Loan or drawing. The Cash Collateral Account shall be in the
name of the Agent and the Agent shall have sole dominion and control over, and
sole access to, the Cash Collateral Account. Neither any Borrower nor any Person
claiming on behalf of or through any Borrower shall have any right to withdraw
any of the funds held in the Cash Collateral Account. Each Borrower agrees that
it will not at any time sell or otherwise dispose of any interest in the Cash
Collateral Account or any funds held therein or create or permit to exist any
Lien upon or with respect to the Cash Collateral Account or any funds held
therein, except as provided in or contemplated by this Agreement. The Agent
shall exercise reasonable care in the custody and preservation of any funds held
in the Cash Collateral Account and shall be deemed to have exercised such care
if such funds are accorded treatment substantially equivalent to that which the
Agent accords other funds deposited with the Agent, it being understood that the
Agent shall not have any responsibility for taking any necessary steps to
preserve rights against any parties with respect to any funds held in the Cash
Collateral Account. Subject to the right of the Agent to withdraw funds from the
Cash Collateral Account as provided herein, the Agent will, so long as no
Default or Event of Default shall have occurred and be continuing, from time to
time invest funds on deposit in the Cash Collateral Account, reinvest proceeds
of any such investments which may mature or be sold, and invest interest or
other income received from any such investments, in each case, in Cash
Equivalents, as the Borrowers may direct prior to the occurrence of a Default or
Event of Default and as the Agent may select after the occurrence and during the
continuance of a Default or Event of Default. Such proceeds, interest and
income, which are not so invested or reinvested in Cash Equivalents, shall be
deposited and held by the Agent in the Cash Collateral Account. The Agent makes
no representation or warranty as to, and shall not be responsible for, the rate
of return, if any, earned in any Cash Collateral. Any earnings on Cash
Collateral shall be held as additional Cash Collateral on the terms set forth in
this SECTION 4.16.
SECTION 4.17. Borrowers' Agent. Each of the Borrowers and
Obligors other than Tultex hereby appoints Tultex as, and Tultex shall act under
this Agreement as, the agent, attorney-in-fact and legal representative of such
other Borrowers and Obligors for all purposes, including requesting Borrowings
and receiving account statements and other notices and communications to the
Borrowers and the Obligors (or any of them) from the Agent, the Issuing Bank or
any Lender. The Agent, the Issuing Bank and the Lenders may rely, and shall be
fully protected in relying, on any Notice of Borrowing, Notice of Conversion or
Continuation, request for a Letter of Credit, disbursement instruction, report,
information or any other notice or communication made or given by Tultex,
whether in its own name, on behalf of any other Borrower or Obligor or on behalf
of "the Borrowers" or "the Obligors," and neither
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the Agent, the Issuing Bank nor any Lender shall have any obligation to make any
inquiry or request any confirmation from or on behalf of any other Borrowers or
Obligors as to the binding effect on it of any such Notice, request,
instruction, report, information, other notice or communications, nor shall the
joint and several character of the Borrowers' and other Obligors' liability for
the Secured Obligations be affected, PROVIDED that the provisions of this
SECTION 4.17 shall not be construed so as to preclude any Borrower from directly
requesting Borrowings or taking other actions permitted to be taken by "a
Borrower" hereunder. The Agent and each Lender intend to maintain a single Loan
Account in the name of "Tultex Corporation" hereunder and each Borrower
expressly agrees to such arrangement and confirms that such arrangement shall
have no effect on the joint and several character of its liability for the
Secured Obligations.
SECTION 4.18. Joint and Several Liability.
(a) Joint and Several Liability. The Secured Obligations shall
constitute one joint and several direct and general obligation of all
of the Borrowers. Notwithstanding anything to the contrary contained
herein, each of the Borrowers shall be jointly and severally, with each
other Borrower, directly and unconditionally liable to the Agent, the
Issuing Bank and the Lenders for all Secured Obligations and shall have
the obligations of co-maker with respect to the Loans, the Notes and
the Secured Obligations, it being agreed that the advances to each
Borrower inure to the benefit of all Borrowers, and that the Agent, the
Issuing Bank and the Lenders are relying on the joint and several
liability of the Borrowers as co-makers in extending the Loans
hereunder and issuing Letters of Credit. Each Borrower hereby
unconditionally and irrevocably agrees that upon default in the payment
when due (whether at stated maturity, by acceleration or otherwise) of
any principal of, or interest on, any Loan or other Secured Obligation
payable to the Agent, the Issuing Bank or any Lender, it will forthwith
pay the same, without notice or demand.
(b) No Reduction in Obligations. No payment or payments made
by any of the Borrowers or any other Person or received or collected by
the Agent, the Issuing Bank or any Lender from any of the Borrowers or
any other Person by virtue of any action or proceeding or any setoff or
appropriation or application at any time or from time to time in
reduction of or in payment of the Secured Obligations shall be deemed
to modify, reduce, release or otherwise affect the liability of each
Borrower under this Agreement, which shall remain liable for the
Secured Obligations until the Secured Obligations are paid in full and
the Revolving Credit Facility is terminated.
SECTION 4.19. Obligations Absolute. Each Borrower agrees that
the Secured Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Agent, the Issuing Bank or any Lender with respect thereto. All Secured
Obligations shall be conclusively presumed to have been created in reliance
hereon. The liabilities under this Agreement shall be absolute and unconditional
irrespective of: (a) any lack of validity or enforceability of any Loan
Documents or any other agreement or instrument relating thereto; (b) any change
in the time, manner or place of payments of, or in any other term of, all or any
part of the Secured Obligations, or any other amendment or waiver thereof or any
consent to departure therefrom, including any increase in the Secured
Obligations resulting from the extension of additional credit to any Borrower or
other Obligor or otherwise; (c) any taking, exchange, release or non-perfection
of any collateral, or any release or amendment or waiver of or consent to
departure from any guaranty for all or any of the Secured
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Obligations; (d) any change, restructuring or termination of the corporate
structure or existence of any Borrower or other Obligor; or (e) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, any Borrower or a Guarantor. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must otherwise be returned by the
Agent, the Issuing Bank or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower or other Obligor or otherwise, all as though such
payment had not been made.
SECTION 4.20. Waiver of Suretyship Defenses. Each Borrower
agrees that the joint and several liability of the Borrowers provided for in
SECTION 4.18 shall not be impaired or affected by any modification, supplement,
extension or amendment of any contract or agreement to which the other Borrowers
may hereafter agree (other than an agreement signed by the Agent and the Lenders
specifically releasing such liability), nor by any delay, extension of time,
renewal, compromise or other indulgence granted by the Agent, the Issuing Bank
or any Lender with respect to any of the Secured Obligations, nor by any other
agreements or arrangements whatever with the other Borrowers or with anyone
else, each Borrower hereby waiving all notice of such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each Borrower is direct and unconditional as to all
of the Secured Obligations, and may be enforced without requiring the Agent, the
Issuing Bank or any Lender first to resort to any other right, remedy or
security. Each Borrower hereby expressly waives promptness, diligence, notice of
acceptance and any other notice (except to the extent expressly provided for
herein or in another Loan Document) with respect to any of the Secured
Obligations, the Notes, this Agreement or any other Loan Document and any
requirement that the Agent, the Issuing Bank or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any Borrower or any other Person or any collateral,
including any rights any Borrower may otherwise have under O.C.G.A. ss. 10-7-24
or any successor statute or any analogous statute in any jurisdiction under the
laws of which any Borrower is incorporated or in which any Borrower conducts
business.
SECTION 4.21. Superpriority Nature of Secured Obligations. All
Secured Obligations shall constitute administrative expenses of the Borrowers in
the Chapter 11 Case with priority under Section 364(c) of the Bankruptcy Code
over any and all other administrative expenses of the kind specified in, among
other Sections, Sections 105, 503(b) and 507(b) of the Bankruptcy Code, subject
and subordinate only to the following (hereafter referred to as the "Carve-Out
Expenses"): fees and disbursements incurred on and after the Petition Date by
professionals retained pursuant to court order in the Chapter 11 Case pursuant
to Section 327 or Section1103 of the Bankruptcy Code by the Borrowers or the
Committee, and any statutorily mandated costs and fees of the Clerk of the Court
and the United States Trustee with respect to the Chapter 11 Case, up to a
maximum aggregate amount unpaid on the Termination Date not to exceed $500,000
(such dollar amount being referred to herein as the "Carve-Out Amount"),
provided that the Carve-Out Amount shall be increased to $1,000,000 following
the entry of the Final Order and the expiration of any applicable periods for
appeal with respect thereto, and upon such increase not requiring the Borrowers
to repay Revolving Credit Loans pursuant to SECTION 2.3(B) hereof (determined
without regard to fees and expenses which may be awarded and paid on an interim
basis or any pre-petition retainer paid to Debtors' counsel in connection with
or related to the Chapter 11 Case), The Carve-Out Expenses shall not include any
other claims that are or may be senior to or pari passu with any of the
Carve-Out Expenses or any professional fees and expenses of a Chapter 7 trustee
and the Carve-Out Expenses shall not include any
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fees or disbursements related to the preparation for, or commencement or
prosecution of, any claims or proceedings against the Agent or any Secured
Creditor or their claims or security interests in or Liens on, the Collateral
whether under this Agreement or on account of any Secured Creditor's claims
existing prior to the Petition Date. Other than the Senior Claims and the
Carve-Out Expenses, no other claim having a priority superior or pari passu to
that granted to the Agent, the Issuing Bank and the Lenders by the Interim Order
or the Final Order shall be granted or approved while any Secured Obligations
under this Agreement remain outstanding.
ARTICLE 5
CONDITIONS PRECEDENT
SECTION 5.1. Conditions Precedent to Loans and Letters of
Credit. Notwithstanding any other provision of this Agreement, the initial Loans
will not be made, and no Letters of Credit will be issued, until the fulfillment
of each of the following conditions prior to or contemporaneously with the
making of the first to be made of such Loans or issuance of such Letters of
Credit:
(a) Financial Condition. The Obligors shall have delivered to
the Agent the Projections.
(b) Fees. The Borrowers shall have paid all of the fees
payable on the Effective Date.
(c) Security Interests. The Agent shall have received
satisfactory evidence that the Agent (for the benefit of the Secured
Creditors) has a valid and perfected security interest as of such date
in all of the Collateral, subject only to Permitted Liens, and that
such security interest is of a first priority subject only to Senior
Claims or as provided for by the Interim Order.
(d) Closing Documents. The Agent shall have received each of
the following documents, all of which shall be satisfactory in form and
substance to the Agent and its counsel and to the Lenders:
(i) certified copies of the articles or certificate of
incorporation and bylaws (or equivalent constitutive
documents) of each Obligor as in effect on the Effective Date,
(ii) certified copies of all corporate action, including
shareholder approval, if necessary, taken by each Obligor to
authorize the execution, delivery and performance of this
Agreement, the other Loan Documents, and in the case of the
Borrowers, the borrowings under this Agreement,
(iii) certificates of incumbency and specimen signatures
with respect to each of the officers of each Obligor
authorized to execute and deliver this Agreement and the other
Loan Documents on behalf of each Obligor executing any
document, certificate or instrument to be delivered in
connection with this Agreement or the other
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Loan Documents and, in the case of the Borrowers, to request
borrowings under this Agreement,
(iv) a certificate evidencing the good standing of each
Obligor in the jurisdiction of its incorporation and in each
other jurisdiction in which it is required to be qualified as
a foreign corporation to transact its business as presently
conducted,
(v) copies of all financial statements referred to in
SECTION 6.1(N) and meeting the requirements thereof,
(vi) a certification from the principal officers of the
Obligors as to such factual matters as shall be requested by
the Agent,
(vii) certificates or binders of insurance relating to
each of the policies of insurance covering any of the
Collateral, together with loss payable clauses which comply
with the terms of SECTION 8.8,
(viii) a certificate of the Financial Officer (or such
other officer of Tultex as may be acceptable to the Agent)
stating that, to the best of his knowledge and based on an
examination sufficient to enable him to make an informed
statement, (A) all of the representations and warranties made
or deemed to be made under this Agreement are true and correct
as of the Effective Date, after giving effect to the Loans to
be made at such time and the application of the proceeds
thereof, and (B) no Default or Event of Default exists,
(ix) a Borrowing Base Certificate prepared as of December
2, 1999, and a Schedule of Inventory and a Schedule of
Receivables prepared as of November 6, 1999,
(x) a Collateral Access Agreement with respect to each
leased premises on which any Bank Priority Collateral is
located,
(xi) Agency Account Agreements and the related Lockbox
Agreements, each duly executed by the applicable Borrowers and
the Clearing Bank party thereto,
(xii) the Initial Notice of Borrowing, duly executed by
the Borrowers' Agent,
(xiii) copies of each of the other Loan Documents duly
executed by the parties thereto, together with evidence
satisfactory to the Agent of the due authorization and binding
effect of each such Loan Document on such party, and
(xiv) such other documents and instruments as the Agent or
any Lender may reasonably request.
(e) Notes. Each Lender shall have received a Revolving Credit
Note duly executed and delivered by the Borrowers, complying with the
terms of SECTION 2.4.
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(f) Other Security Documents. The Agent shall have received
each other Security Document, in form and substance satisfactory to the
Agent and the Lenders, duly executed and delivered by the applicable
Borrowers and Guarantors, including the Patent Assignment and the
Trademark Assignment.
(g) Availability. The Agent shall be provided with evidence
satisfactory to it that, as of the Effective Date, after giving effect
to the Initial Loans and the issuance of any Letters of Credit on the
Effective Date, (a) the Borrowing Base at such time MINUS (b) the
outstanding Pre-Petition Loans plus the aggregate principal amount of
the Initial Loans plus the face value of all initial Letters of Credit
to be issued (including Letters of Credit issued pursuant to Section
3.10) is not less than $5,000,000 (after disbursements and advances,
and with all obligations of the Obligors current based on terms agreed
to or acquiesced in by vendors and consistent with the Obligors' usual
payment practices).
(h) No Injunctions, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body to
enjoin, restrain, or prohibit, or to obtain damages in respect of, or
which is related to or arises out of this Agreement, the repurchase or
redemption of any Bonds, or the consummation of the transactions
contemplated hereby or thereby, or which, in the Lenders' discretion,
would make it inadvisable to consummate the transactions contemplated
by this Agreement.
(i) Materially Adverse Effect. There shall have been no change
in the business, assets, management, operations, financial condition or
prospects of the Obligors since October 2, 1999, which change, in the
reasonable judgment of the Agent, will have a Materially Adverse
Effect.
(j) Bankruptcy Case Matters.
(i) The Court shall have entered the Interim Order, in
form and substance satisfactory to the Agent,
(ii) The Borrowers shall have obtained appropriate Court
orders approving their cash management system, all as
reasonably acceptable to the Agent,
(iii) The orders described on SCHEDULE 5.1(J) in form and
substance reasonably satisfactory to the Agent shall have been
entered in the Chapter 11 Case, and
(iv) The automatic stay shall have been modified to permit
creation and perfection of the Agent's, the Issuing Banks' and
the Lenders' Liens and security interests and shall have been
automatically vacated, to the extent set forth in the Interim
Order and the Final Order, to permit enforcement of the
Agent's, the Issuing Banks' and the Lenders' rights and
remedies under the Loan Documents.
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SECTION 5.2. All Loans; Letters of Credit. At the time of the
making of each Loan, including the Initial Loans and all subsequent Loans, and
the issuance of each Letter of Credit:
(a) all of the representations and warranties made or deemed
to be made under this Agreement and the other Loan Documents shall be
true and correct at such time both with and without giving effect to
the Loan to be made at such time (and the application of the proceeds
thereof) or the Letter of Credit to be issued at such time,
(b) the corporate actions of the Obligors referred to in
SECTION 5.1(D)(II) shall remain in full force and effect and the
incumbency of officers shall be as stated in the certificates of
incumbency delivered pursuant to SECTION 5.1(D)(III) or as subsequently
modified and reflected in a certificate of incumbency delivered to the
Agent,
(c) the credit requested would not cause the aggregate
outstanding amount of the Loans (including Letter of Credit
Obligations) to exceed the amount then authorized by the Interim Order
or the Final Order, as the case may be, and no order modifying or
vacating such order shall have been entered, and no appeal of such
order shall have been timely filed or, if such an appeal has been
taken, no stay of such order pending appeal has been granted or such
appeal has been dismissed, and
(d) except for the Interim Advances and the Interim Letters of
Credit, the Final Order shall have been entered in the Chapter 11 Case.
Each request or deemed request for any Borrowing hereunder shall be
deemed to be a certification by the Borrowers to the Agent and the
Lenders as to the matters set forth in this SECTION 5.2 and the Agent
may, without waiving either condition, consider the conditions
specified in this SECTION 5.2 fulfilled and a representation by the
Borrowers to such effect made, if no written notice to the contrary is
received by the Agent prior to the making of the Loan then to be made
or the issuance of the Letter of Credit then to be issued.
SECTION 5.3. Conditions as Covenants. In the event that the
Lenders make the Initial Loans or a Letter of Credit is issued prior to the
satisfaction of all conditions precedent set forth in SECTION 5.1, and such
conditions are not waived in writing by the Agent, the Borrowers shall
nevertheless cause such condition or conditions to be satisfied within 30 days
after the making of such Initial Loans or the issuance of such Letter of Credit.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties. Each Obligor
represents and warrants to the Agent and to the Lenders as follows:
(a) Organization; Power; Qualification. Each Obligor and each
of its Subsidiaries is a corporation, duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, having the power and authority to own its properties and
to carry
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on its business as now being and hereafter proposed to be conducted
and, except as set forth on SCHEDULE 6.1(A), is duly qualified and
authorized to do business in each jurisdiction in which the character
of its properties or the nature of its business requires such
qualification or authorization. The jurisdictions in which each Obligor
and each of its Subsidiaries is qualified to do business as a foreign
corporation are listed on SCHEDULE 6.1(A).
(b) Capitalization. The outstanding capital stock of each
Obligor has been duly and validly issued and is fully paid and
nonassessable, and the number and owners of such shares of capital
stock of each Obligor are set forth on SCHEDULE 6.1(B). The issuance
and sale of each Obligor's capital stock have been registered or
qualified under applicable federal, state and foreign securities laws
or are exempt therefrom. Except as set forth on SCHEDULE 6.1(B), there
are no shareholder agreements, options, subscription agreements or
other agreements or understandings to which any Obligor is a party in
effect with respect to the capital stock of such Obligor, including
agreements providing for special voting requirements or arrangements
for approval of corporate actions or other matters relating to
corporate governance or restrictions on share transfer or providing for
the issuance of any securities convertible into shares of the capital
stock of such Obligor, any warrants or other rights to acquire any
shares or securities convertible into such shares, or any agreement
that obligates such Obligor, either by its terms of at the election of
any other Person, to repurchase such shares under any circumstances.
(c) Subsidiaries. SCHEDULE 6.1(C) correctly sets forth the
name of each Subsidiary of the Obligors, its jurisdiction of
incorporation, the name of its immediate parent or parents, and the
percentage of its issued and outstanding securities owned by an Obligor
or any other Subsidiary of an Obligor and indicating whether such
Subsidiary is a Consolidated Subsidiary. Except as set forth on
SCHEDULE 6.1(c), (i) no Subsidiary of an Obligor has issued any
securities convertible into shares of such Subsidiary's capital stock
or any options, warrants or other rights to acquire any shares or
securities convertible into such shares, (ii) the outstanding stock and
securities of each Subsidiary of each Obligor are owned by Tultex or a
wholly-owned Subsidiary of Tultex, or by Tultex and one or more of its
wholly-owned Subsidiaries, free and clear of all Liens, warrants,
options and rights of others of any kind whatsoever, and (iii) no
Obligor has any Subsidiaries. The outstanding capital stock of each
Subsidiary of the Obligors has been duly and validly issued and is
fully paid and nonassessable by the issuer, and the number and owners
of the shares of such capital stock are set forth on SCHEDULE 6.1(C).
(d) Authorization of Agreement, Notes, Loan Documents and
Borrowing. Each Obligor has the right and power, and has taken all
necessary action to authorize such Obligor, to execute, deliver and
perform this Agreement and each of the other Loan Documents to which it
is a party in accordance with their respective terms. This Agreement
and each of the other Loan Documents have been duly executed and
delivered by the duly authorized officers of each Obligor party thereto
and each is, or each when executed and delivered in accordance with
this Agreement will be, a legal, valid and binding obligation of each
Obligor party thereto, enforceable in accordance with its terms.
(e) Compliance of Agreement, Notes, Loan Documents and
Borrowing with Laws, Etc. Except as set forth on SCHEDULE 6.1(E), the
execution, delivery and performance of this Agreement and each of the
other Loan Documents in accordance with their respective terms and the
borrowings hereunder do not and will not, by the passage of time, the
giving of notice
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or otherwise, (i) require any Governmental Approval or violate any
Applicable Law relating to any Obligor or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute a default under the
articles or certificate of incorporation or by-laws of any Obligor or
any of its Subsidiaries, or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned
or hereafter acquired by any Obligor or any of its Subsidiaries other
than the Security Interest.
(f) Business. The Obligors and their Subsidiaries are engaged
principally in the business set forth on SCHEDULE 6.1(F).
(g) Compliance with Law; Governmental Approvals.
(i) Except as set forth on SCHEDULE 6.1(G), each Obligor
and each of its Subsidiaries (A) has all Governmental
Approvals, including permits relating to federal, state, local
and foreign Environmental Laws, ordinances and regulations,
required by any Applicable Law for it to conduct its business,
each of which is in full force and effect, is final and not
subject to review on appeal and is not the subject of any
pending or, to the knowledge of any Obligor, threatened attack
by direct or collateral proceeding, and (B) is in compliance
with each Governmental Approval applicable to it and in
compliance with all other Applicable Laws relating to it,
including all Environmental Laws and all occupational health
and safety laws applicable to any Obligor, any of its
Subsidiaries or their respective properties, except for
instances of noncompliance which would not, singly or in the
aggregate, cause a Default or Event of Default or have a
Materially Adverse Effect and in respect of which reserves in
respect of such Obligor's or such Subsidiary's reasonably
anticipated liability therefor have been established on the
consolidated books of the Obligors.
(ii) Without limiting the generality of the above, except
with respect to matters which could not reasonably be expected
to have, singly or in the aggregate, a Materially Adverse
Effect: (A) the operations of each Obligor and each of its
Subsidiaries comply in all material respects with all
applicable environmental, health and safety requirements of
Applicable Law; (B) each Obligor and each of its Subsidiaries
has obtained all environmental, health and safety permits
necessary for its operation, and all such permits are in good
standing and each Obligor and each of its Subsidiaries is in
compliance in all material respects with all terms and
conditions of such permits; (C) neither any Obligor nor any of
its Subsidiaries nor any of their respective present or past
property or operations are subject to any order from or
agreement with any public authority or party respecting (x)
any environmental, health or safety requirements of Applicable
Law, (y) any Remedial Action, or (z) any liabilities and costs
arising from the Release or threatened Release of a
Contaminant into the environment; (D) none of the operations
of any Obligor or of any of its Subsidiaries is subject to any
judicial or administrative proceeding alleging a violation of
any environmental, health or safety requirement of Applicable
Law; (E) none of the present nor past operations of any
Obligor or any of its Subsidiaries is the subject of any
investigation by any public authority evaluating whether any
Remedial Action is needed to respond to a Release or
threatened Release of a Contaminant into the environment; (F)
neither any Obligor nor any of its Subsidiaries has filed any
notice
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under any requirement of Applicable Law indicating past or
present treatment, storage or disposal of a hazardous waste,
as that term is defined under 40 CFR Part 261 or any state
equivalent; (G) neither any Obligor nor any of its
Subsidiaries has filed any notice under any requirement of
Applicable Law reporting a Release of a Contaminant into the
environment; (H) except in compliance in all material respects
with applicable Environmental Laws, during the course of any
Obligor's or any of its Subsidiaries' ownership of or
operations on the Real Estate, there have been no (1)
generation, treatment, recycling, storage or disposal of
hazardous waste, as that term is defined under 40 CFR Part 261
or any state equivalent, (2) use of underground storage tanks
or surface impoundments, (3) use of asbestos-containing
materials, or (4) use of polychlorinated biphenyls (PCB) used
in hydraulic oils, electrical transformers or other equipment;
(I) neither any Obligor nor any of its Subsidiaries has
entered into any negotiations or agreements with any Person
(including any prior owner of any of the Real Estate or other
property of any Obligor or any of its Subsidiaries) relating
to any Remedial Action or environmental related claim; (J)
neither any Obligor nor any of its Subsidiaries has received
any notice or claim to the effect that it is or may be liable
to any Person as a result of the Release or threatened Release
of a Contaminant into the environment; (K) neither any Obligor
nor any of its Subsidiaries has any material contingent
liability in connection with any Release or threatened Release
of any Contaminant into the environment; (L) no Environmental
Lien has attached to any of the Real Estate or other property
of any Obligor or of any of its Subsidiaries; (M) the presence
and condition of all asbestos-containing material which is on
or part of the Real Estate (excluding any raw materials used
in the manufacture of products or products themselves) do not
violate in any material respect any currently applicable
requirement of Applicable Law; and (N) neither any Obligor nor
any of its Subsidiaries manufactures, distributes or sells, or
has ever manufactured, distributed or sold, products which
contain asbestos-containing material.
(iii) Each Obligor has notified the Agent of the receipt
by it or any of its Subsidiaries of any notice of a material
violation of any Environmental Laws and occupational health
and safety laws applicable to such Obligor, Subsidiaries or
any of their respective properties.
(h) Title to Properties. Except as set forth on SCHEDULE
6.1(H), each Obligor and each of its Subsidiaries has valid and legal
title to or leasehold interest in all personal property, Real Estate
and other assets used in its business, including those reflected on the
most recent balance sheets of the Obligors delivered pursuant to
SECTION 6.1(N).
(i) Liens. Except as set forth on SCHEDULE 6.1(I), none of the
properties and assets of any Obligor or any of its Subsidiaries is
subject to any Lien, except Permitted Liens. Other than the Financing
Statements, no financing statement under the Uniform Commercial Code or
similar laws of any jurisdiction or other instrument evidencing a Lien
which names any Obligor or any of its Subsidiaries as debtor has been
filed (and has not been terminated) in any jurisdiction, and neither
any Obligor nor any of its Subsidiaries has signed any such financing
statement or other instrument or any security agreement authorizing any
secured party thereunder to file any such financing statement or
instrument, except to perfect Permitted Liens.
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(j) Indebtedness and Guaranties. SCHEDULE 6.1(J) is a complete
and correct listing of all Indebtedness for Money Borrowed and
Guaranties of each Obligor and its Subsidiaries. Each Obligor and its
Subsidiaries has performed and is in compliance with all of the terms
of such Indebtedness and Guaranties and all instruments and agreements
relating thereto, and no default or event of default, or event or
condition which with notice or lapse of time or both would constitute
such a default or event of default, exists with respect to any such
Indebtedness or Guaranty.
(k) Litigation. Except as set forth on SCHEDULE 6.1(K), there
are no actions, suits or proceedings pending (nor, to the knowledge of
any Obligor, are there any actions, suits or proceedings threatened, or
any reasonable basis therefor) against or in any other way relating to
or affecting any Obligor or any of its Subsidiaries or any of any
Obligor's or any of its Subsidiaries' properties in any court or before
any arbitrator of any kind or before or by any governmental body,
except actions, suits or proceedings of the character normally incident
to the kind of business conducted by the Obligors or any of their
Subsidiaries which, if adversely determined, would not singly or in the
aggregate have a Materially Adverse Effect, and there are no strikes or
walkouts in progress, pending or contemplated, relating to any labor
contracts to which any Obligor or any of its Subsidiaries is a party,
relating to any labor contracts being negotiated, or otherwise.
(l) Tax Returns and Payments. Except as set forth on SCHEDULE
6.1(L), all United States federal, state and local as well as foreign
national, provincial and local and other tax returns of each Obligor
and each of its Subsidiaries required by Applicable Law to be filed
have been duly filed, and all United States federal, state and local
and foreign national, provincial and local and other taxes, assessments
and other governmental charges or levies upon each Obligor and each of
its Subsidiaries and each Obligor's and any of its Subsidiaries'
property, income, profits and assets which are due and payable have
been paid, except any such nonpayment which is at the time permitted
under SECTION 9.6. The charges, accruals and reserves on the books of
each Obligor and each of its Subsidiaries in respect of United States
federal, state and local and foreign national, provincial and local
taxes for all fiscal years and portions thereof since the organization
of each Obligor and each of its Subsidiaries are in the judgment of
each Obligor adequate, and no Obligor knows of any reason to anticipate
any additional assessments for any of such years which, singly or in
the aggregate, might have a Materially Adverse Effect.
(m) Burdensome Provisions. Neither any Obligor nor any of its
Subsidiaries is a party to any indenture, agreement, lease or other
instrument entered into after the Petition Date, or subject to any
charter or corporate restriction, Governmental Approval or Applicable
Law compliance with the terms of which might have a Materially Adverse
Effect.
(n) Financial Statements.
(i) The Obligors have furnished to the Agent and the
Lenders (A) copies of the annual audited consolidated balance
sheet of Tultex and its Consolidated Subsidiaries as of
January 2, 1999 and the related audited consolidated
statements of operations, cash flows and shareholder's equity
for the fiscal year ended on such date,
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reported on by PricewaterhouseCoopers LLC and (B) copies of
the unaudited consolidated balance sheet of Tultex and its
Consolidated Subsidiaries as of October 2, 1999 and of the
related statements of operations and cash flows for the
nine-month period then ended. Such financial statements
present fairly, in all material respects, as of their
respective dates and in accordance with GAAP (subject to
year-end adjustments and but for the omission of footnotes in
the unaudited statements) the consolidated financial condition
of Tultex and its Consolidated Subsidiaries as of such dates
and the consolidated results of operations of Tultex and its
Consolidated Subsidiaries for the periods ended on such dates.
(ii) The Obligors have furnished to the Agent and the
Lenders copies of the Projections. The Projections have been
be prepared by Tultex in light of the past operations of the
business of Tultex and its Consolidated Subsidiaries and
represent as of the respective dates thereof the good faith
opinion of Tultex and its senior management concerning the
most probable course of business of Tultex and its
Consolidated Subsidiaries.
(iii) Except as disclosed or reflected in the financial
statements described in CLAUSES (I) and (II) above, no Obligor
nor any of its Subsidiaries has any material liabilities,
contingent or otherwise, and there were no material unrealized
or anticipated losses of any Obligor or any of its
Subsidiaries.
(o) Adverse Change. Since the date of the audited financial
statements of the Obligors delivered to the Agent pursuant to SECTION
6.1(N)(I), (i) no material adverse change has occurred in the business,
assets, liabilities, financial condition, results of operations or
business prospects of any Obligor or any of its Subsidiaries, and (ii)
no event has occurred or failed to occur which has had, or may have,
singly or in the aggregate, a Materially Adverse Effect.
(p) ERISA. Except to the extent of any of the following which
may arise as a result of a default under the PBGC Agreement:
(i) Neither any Obligor nor any Related Company maintains
or contributes to any Benefit Plan other than those listed on
SCHEDULE 6.1(P).
(ii) No Benefit Plan has been terminated or partially
terminated, and no Multiemployer Plan is insolvent or in
reorganization, nor have any proceedings been instituted to
terminate any Benefit Plan or to reorganize any Multiemployer
Plan.
(iii) Neither any Obligor nor any Related Company has
withdrawn from any Benefit Plan or Multiemployer Plan, nor has
a condition occurred which if continued would result in a
withdrawal.
(iv) Neither any Obligor nor any Related Company has
incurred any withdrawal liability, including contingent
withdrawal liability, to any Multiemployer Plan pursuant to
Title IV of ERISA.
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(v) Neither any Obligor nor any Related Company has
incurred any liability to the PBGC other than for required
insurance premiums which have been paid when due.
(vi) No Reportable Event has occurred with respect to a
Plan.
(vii) No Benefit Plan has an "accumulated funding
deficiency" (whether or not waived) as defined in Section 302
of ERISA or in Section 412 of the Internal Revenue Code.
(viii) Each Plan is in substantial compliance with ERISA,
and neither any Obligor nor any Related Company has received
any communication from a governmental agency asserting that a
Plan is not in compliance with ERISA.
(ix) Each Plan which is intended to be a qualified Plan
has been determined by the IRS to be qualified under Section
401(a) of the Internal Revenue Code as currently in effect or
will be submitted to the IRS for such determination prior to
the end of the remedial amendment period under Section 401(b)
of the Internal Revenue Code and the regulations promulgated
thereunder and neither any Obligor nor any Related Company
knows or has reason to know why each such Plan should not
continue to be so qualified, and each trust related to such
Plan that has been submitted to the IRS for determination of
exempt status has been determined to be exempt from federal
income tax under Section 501(a) of the Internal Revenue Code
or will be submitted to the IRS for a determination of exempt
status.
(x) Except as provided on SCHEDULE 6.1(P), neither any
Obligor nor any Related Company maintains or contributes to
any employer welfare benefit plan within the meaning of
Section 3(l) of ERISA which provides benefits to employees
after termination of employment other than as required by
Section 601 of ERISA.
(xi) Schedule B to the most recent annual report filed
with the IRS with respect to each Benefit Plan and furnished
to the Lender is complete and accurate. Since the date of each
such Schedule B, there has been no adverse change in funding
status or financial condition of the Benefit Plan relating to
such Schedule B.
(xii) Neither any Obligor nor any Related Company has
failed to make a required installment under Subsection (m) of
Section 412 of the Internal Revenue Code or any other payment
required under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment,
except to the extent any such failure has been cured.
(xiii) Neither any Obligor nor any Related Company is
required to provide security to a Benefit Plan under Section
401(a)(29) of the Internal Revenue Code due to a Benefit Plan
amendment that results in an increase in current liability for
the plan year.
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(xiv) Neither any Obligor, nor any Related Company, nor
any other "party-in-interest" or "disqualified person" has
engaged in a nonexempt "prohibited transaction," as such terms
are defined in Section 4975 of the Internal Revenue Code and
Section 406 of ERISA, in connection with any Plan or has taken
or failed to take any action which would constitute or result
in a Termination Event.
(xv) Neither any Obligor nor any Related Company has
failed to comply with the health care continuation coverage
requirements of Section 4980B of the Internal Revenue Code in
respect of employees and former employees of such Obligor or
such Related Company and their dependents and beneficiaries
which alone or in the aggregate would subject such Obligor or
such Related Company to any material liability.
(xvi) Neither any Obligor nor any Related Company has (i)
failed to make a required contribution or payment to a
Multiemployer Plan or (ii) made a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan. Except as provided on SCHEDULE 6.1(P), to
the best knowledge of each Obligor after due inquiry, neither
any Obligor nor any Related Company shall have any obligation
to (A) make contributions to any Multiemployer Plan on or
after the Effective Date, or (B) pay withdrawal liability to
any Multiemployer Plan in an amount in excess of a "de minimis
amount" as such term is defined in Section 4209 of ERISA
(q) Absence of Defaults. Neither any Obligor nor any of its
Subsidiaries is in default under its articles or certificate of
incorporation or by-laws and no post-Petition Date event has occurred,
which has not been remedied, cured or waived, (i) which constitutes a
Default or an Event of Default, or (ii) which constitutes, or which
with the passage of time or giving of notice or both would constitute,
a default or event of default by any Obligor or any of its Subsidiaries
under any material agreement entered into after the Petition Date
(other than this Agreement) or judgment, decree or order to which any
Obligor or any of its Subsidiaries is a party or by which any Obligor,
any of its Subsidiaries or any of their properties may be bound or
which would require any Obligor, or any of its Subsidiaries to make any
payment under any such agreement, judgment, decree or order prior to
the scheduled maturity date therefor, except for defaults resulting
from the filing of the Chapter 11 Case, and except, in the case only of
any such agreement, for alleged defaults arising from actions which are
permitted by the Bankruptcy Code or the Court or which are being
contested in good faith by appropriate proceedings and with respect to
which reserves in respect of any Obligor's or such Subsidiary's
reasonably anticipated liability have been established on the books of
such Obligor or Subsidiary.
(r) Accuracy and Completeness of Information.
(i) All written information, reports and other papers and
data produced by or on behalf of the Obligors and furnished to
the Agent or any Lender were, at the time the same were so
furnished, complete and correct in all material respects, to
the extent necessary to give the recipient a true and accurate
knowledge of the subject matter. No fact is known to any
Obligor which has had, or may in the future have (so far as
such Obligor can foresee), a Materially Adverse Effect which
has not been set forth in the
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financial statements or disclosure delivered prior to the
Effective Date, in each case referred to in SECTION 6.1(N), or
in such written information, reports or other papers or data
or otherwise disclosed in writing to the Agent and the Lenders
prior to the Agreement Date. No document furnished or written
statement made to the Agent or any Lender by any Obligor or
any of its Subsidiaries in connection with the negotiation,
preparation or execution of this Agreement or any of the other
Loan Documents contains or will contain any untrue statement
of a fact material to the creditworthiness of any Obligor or
any of its Subsidiaries or omits or will omit to state a
material fact necessary in order to make the statements
contained therein not misleading.
(ii) No Obligor has any reason to believe that any
document furnished or written statement made to the Agent or
any Lender by any Person other than the Obligors in connection
with the negotiation, preparation or execution of this
Agreement or any of the other Loan Documents contained any
incorrect statement of a material fact or omitted to state a
material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not
misleading.
(s) Receivables.
(i) Status.
(A) Each Receivable reflected in the computations
included in any Borrowing Base Certificate meets the
criteria enumerated in the definition of Eligible
Receivables, except as disclosed in such Borrowing Base
Certificate or as disclosed in a timely manner in a
subsequent Borrowing Base Certificate or otherwise in
writing to the Agent.
(B) No Obligor has any knowledge of any fact or
circumstance not disclosed to the Agent in a Borrowing
Base Certificate or otherwise in writing which would
impair the validity or collectibility of any Eligible
Receivables of $50,000 or more or of Eligible Receivables
which (regardless of the individual amount thereof)
aggregate $100,000 or more.
(ii) Chief Executive Office. The chief executive office of
each Obligor and the books and records relating to the
Receivables (and the General Intangibles and Tax Refund
Claims) are located at the address or addresses set forth on
SCHEDULE 6.1(S); no Obligor has maintained its chief executive
office or books and records relating to any Receivables at any
other address at any time during the five years immediately
preceding the Agreement Date except as disclosed on SCHEDULE
6.1(S).
(t) Inventory.
(i) Schedule of Inventory. All Inventory included in any
Schedule of Inventory or Borrowing Base Certificate delivered
to the Agent pursuant to SECTION 8.12 meets the criteria
enumerated in the definition of Eligible Inventory, except as
disclosed in such Schedule of Inventory or Borrowing Base
Certificate or in a
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subsequent Schedule of Inventory or Borrowing Base
Certificate, or as otherwise specifically disclosed in writing
to the Agent.
(ii) Condition. All Eligible Inventory is in good
condition, meets all standards imposed by any governmental
agency, or department or division thereof, having regulatory
authority over such goods, their use or sale, and is currently
either usable or salable in the normal course of the
applicable Obligor's business, except to the extent reserved
against in the financial statements referred to in SECTION
6.1(N) or delivered pursuant to ARTICLE 10 or as disclosed on
a Schedule of Inventory delivered to the Agent pursuant to
SECTION 8.12(B).
(iii) Location. All Inventory is located on the premises
set forth on SCHEDULE 6.1(T) or is Inventory in transit to one
of such locations, except as otherwise disclosed in writing to
the Agent. No Obligor has, in the last four months, located
such Inventory at premises other than those set forth on
SCHEDULE 6.1(T).
(u) Equipment. All Equipment is in good order and repair in
all material respects and is located on the premises set forth on
SCHEDULE 6.1(U).
(v) Real Property. No Obligor or any of its Subsidiaries owns
any Real Estate or leases any Real Estate other than that described on
SCHEDULE 6.1(V).
(w) Corporate and Fictitious Names. Except as otherwise
disclosed on SCHEDULE 6.1(W), during the five-year period preceding the
Agreement Date, no Obligor, nor any predecessor thereof, has been known
as or used any corporate or fictitious name other than the corporate
names of the Obligors on the Effective Date.
(x) Federal Reserve Regulations. No Obligor nor any of its
Subsidiaries is engaged and none will engage, principally or as one of
its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" (as each of
the quoted terms is defined or used in Regulation U of the Board of
Governors of the Federal Reserve System). No part of the proceeds of
any of the Loans will be used for so purchasing or carrying margin
stock or, in any event, for any purpose which violates, or which would
be inconsistent with, the provisions of Regulation T, U or X of such
Board of Governors. If requested by the Agent or any Lender, the
Obligors will furnish to the Agent and the Lenders a statement or
statements in conformity with the requirements of said Regulation T, U
or X to the foregoing effect.
(y) Investment Company Act. No Obligor nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in
the Investment Company Act of 1940, as amended).
(z) Employee Relations. Each Obligor and each of its
Subsidiaries has a stable work force in place and is not, except as set
forth on SCHEDULE 6.1(Z), party to any collective bargaining agreement
nor has any labor union been recognized as the representative of any
Obligor's or any of its Subsidiaries' employees, and no Obligor knows
of any pending,
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threatened or contemplated strikes, work stoppage or other labor
disputes involving any Obligor's or any of its Subsidiaries' employees.
(aa) Proprietary Rights. SCHEDULE 6.1(AA) sets forth a correct
and complete list of all of the Obligor's Proprietary Rights. None of
the Obligor's Proprietary Rights is subject to any licensing agreement
or similar arrangement except as set forth on SCHEDULE 6.1(AA) or as
entered into in the sale or distribution of any Obligor's Inventory in
the ordinary course of business. To the best of each Obligor's
knowledge, none of the Proprietary Rights infringes on or conflicts
with any other Person's property, and no other Person's property
infringes on or conflicts with the Proprietary Rights. The Proprietary
Rights described on SCHEDULE 6.1(AA) constitute all of the property of
such type necessary to the current and anticipated future conduct of
each Obligor's business.
(bb) Trade Names. All trade names or styles under which any
Obligor sells Inventory or Equipment or creates Receivables, or to
which instruments in payment of Receivables are made payable, are
listed on SCHEDULE 6.1(BB).
(cc) Bank Accounts, Lockboxes, Etc. SCHEDULE 6.1(CC) is a
complete and correct list of all checking accounts, deposit accounts,
lockboxes and other bank accounts maintained by any Obligor.
(dd) Year 2000 Compliance. Each Obligor (i) has initiated a
review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by
suppliers, vendors and customers) that could be adversely affected by
the "Year 2000 Problem" (that is, the risk that computer applications
used by such Obligor or any of its Subsidiaries (or suppliers, vendors
and customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) has developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Based on the
foregoing, each Obligor believes that all computer applications
(including those of its suppliers, vendors and customers) that are
material to its or any of its Subsidiaries' business and operations are
reasonably expected on a timely basis to be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 compliant").
(ee) Subordinated Indebtedness. The Secured Obligations
constitute "Funded Debt" as defined in the Convertible Subordinated
Notes.
SECTION 6.2. Survival of Representations and Warranties, Etc.
All representations and warranties set forth in this ARTICLE 6 and all
statements contained in any certificate, financial statement, or other
instrument, delivered by or on behalf of any Obligor pursuant to or in
connection with this Agreement or any of the other Loan Documents (including any
such representation, warranty or statement made in or in connection with any
amendment thereto) shall constitute representations and warranties made under
this Agreement. All representations and warranties made under this Agreement
shall be made or deemed to be made at and as of the Agreement Date, at and as of
the Effective Date, and at and as of the date of each Loan, except that
representations and warranties which, by their terms are applicable only to one
such date shall be deemed to be made only at and as of such date. All
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representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Agent or any Lender, or any
borrowing hereunder.
ARTICLE 7
SECURITY INTEREST
SECTION 7.1. Security Interest.
(a) To secure the payment, observance and performance of the
Secured Obligations, each Obligor hereby mortgages, pledges and assigns
all of its right, title and interest in and to the Collateral to the
Agent, for the benefit of the Secured Creditors, and grants to the
Agent, for the benefit of the Secured Creditors, a continuing security
interest in, and a continuing Lien upon, all of its right, title and
interest in and to the Collateral.
(b) As additional security for all of the Secured Obligations,
each Obligor grants to the Agent, the Lenders and the Affiliates of the
Lenders, for the benefit of the Secured Creditors, a security interest
in, and assigns to the Agent, the Lenders and the Affiliates of the
Lenders, for the benefit of the Secured Creditors, all of such
Obligor's right, title and interest in and to, any deposits or other
sums at any time credited by or due from the Agent, each Lender and
each Affiliate of a Lender to such Obligor, or credited by or due from
any participant of any Lender to such Obligor, with the same rights
therein as if the deposits or other sums were credited by or due from
such Lender. Each Obligor hereby authorizes the Agent, each Lender and
each Affiliate of such Lender and each participant to pay or deliver to
the Agent, for the account of the Secured Creditors, without any
necessity on the Agent's or any Lender's part to resort to other
security or sources of reimbursement for the Secured Obligations, at
any time during the continuation of any Event of Default or in the
event that the Agent, on behalf of the Secured Creditors, should make
demand for payment hereunder and without further notice to any Obligor
(such notice being expressly waived), any of the aforesaid deposits
(general or special, time or demand, provisional or final) or other
sums for application to any Secured Obligation, irrespective of whether
any demand has been made or whether such Secured Obligation is mature,
and the rights given the Agent, the Lenders, their Affiliates and
participants hereunder are cumulative with such Person's other rights
and remedies, including other rights of setoff. The Agent will promptly
notify the Borrowers' Agent of its receipt of any such funds for
application to the Secured Obligations, but failure to do so will not
affect the validity or enforceability thereof. The Agent may give
notice of the above grant of a security interest in and assignment of
the aforesaid deposits and other sums, and authorization, to, and make
any suitable arrangements with, any Lender, any such Affiliate of any
Lender or participant for effectuation thereof, and each Obligor hereby
irrevocably appoints the Agent as its attorney to collect any and all
such deposits or other sums to the extent any such payment is not made
to the Agent or any Lender by such Lender, Affiliate or participant.
SECTION 7.2. Continued Priority of Security Interest.
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(a) The Security Interest granted by each Obligor shall at all
times be valid, perfected and enforceable against each Obligor and all
third parties in accordance with the terms of this Agreement, as
security for the Secured Obligations, and the Collateral shall not at
any time be subject to any Liens that are prior to, on a parity with or
junior to the Security Interest, other than Permitted Liens.
(b) Each Obligor shall, at its sole cost and expense, take all
action that may be necessary or desirable, or that the Agent may
reasonably request, so as at all times to maintain the validity,
perfection, enforceability and rank of the Security Interest in the
Collateral in conformity with the requirements of SECTION 7.2(A), or to
enable the Agent and the Lenders to exercise or enforce their rights
hereunder, including: (i) paying all taxes, assessments and other
claims lawfully levied or assessed on any of the Collateral, except to
the extent that such taxes, assessments and other claims constitute
Permitted Liens, (ii) obtaining, after the Agreement Date, Collateral
Access Agreements and consents and sublicense agreements from licensors
of Proprietary Rights to such Obligor, (iii) delivering to the Agent,
for the benefit of the Secured Creditors, endorsed or accompanied by
such instruments of assignment as the Agent may specify, and stamping
or marking, in such manner as the Agent may specify, any and all
chattel paper, instruments, letters and advices of guaranty and
documents evidencing or forming a part of the Collateral, and (iiii)
executing and delivering financing statements, pledges, designations,
hypothecations, notices and assignments in each case in form and
substance satisfactory to the Agent relating to the creation, validity,
perfection, maintenance or continuation of the Security Interest under
the Uniform Commercial Code or other Applicable Law.
(c) The Agent is hereby authorized to file one or more
financing or continuation statements or amendments thereto without the
signature of or in the name of any Obligor for any purpose described in
SECTION 7.2(B). The Agent will give the Borrowers' Agent notice of the
filing of any such statements or amendments, which notice shall specify
the locations where such statements or amendments were filed. A carbon,
photographic, xerographic or other reproduction of this Agreement or of
any of the Security Documents or of any financing statement filed in
connection with this Agreement is sufficient as a financing statement.
(d) Each Obligor shall xxxx its books and records as directed
by the Agent and as may be necessary or appropriate to evidence,
protect and perfect the Security Interest and shall cause its financial
statements to reflect the Security Interest.
ARTICLE 8
COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner provided in SECTION 16.11:
SECTION 8.1. Collection of Receivables
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(a) At the request of the Agent, the Obligors will cause all
monies, checks, notes, drafts and other payments relating to or
constituting proceeds of trade accounts receivable to be forwarded to a
Lockbox for deposit in an Agency Account in accordance with the
procedures set out in the corresponding Agency Account Agreement. The
Obligors will promptly cause all monies, checks, notes, drafts and
other payments relating to or constituting proceeds of Receivables, of
any other Collateral, and of any trade accounts receivable that are not
forwarded to a Lockbox, to be transferred to or deposited in an Agency
Account. In particular, each Obligor will: (i) advise each Account
Debtor on trade accounts receivable to address all remittances with
respect to amounts payable on account thereof to a specified Lockbox,
(ii) advise each other Account Debtor that makes payment to such
Obligor by wire transfer, automated clearinghouse transfer or similar
means to make payment directly to an Agency Account, (iii) stamp all
invoices relating to trade accounts receivable with a legend
satisfactory to the Agent indicating that payment is to be made to such
Obligor via a specified Lockbox, and (iv) cause all monies, checks,
notes, drafts and other payments received at any retail store to be
transferred to a single Agency Account established by the Obligors for
all collections from retail stores.
(b) The Obligors and the Agent shall cause all collected
balances in each Agency Account to be transmitted daily by wire
transfer, depository transfer check or other means in accordance with
the procedures set forth in the corresponding Agency Account Agreement,
to the Agent at the Agent's Office: (i) for application, on account of
(x) the Pre-Petition Loans (together with the accrued interest and fees
related thereto), and thereafter, to (y) the Secured Obligations, as
provided in SECTIONS 2.3(C), 12.2, and 12.3, such credits to be entered
as of the Business Day they are received if they are received prior to
1:30 p.m. and to be conditioned upon final payment in cash or solvent
credits of the items giving rise to them, and (ii) with respect to the
balance, so long as no Default or Event of Default has occurred and is
continuing, for transfer by wire transfer or depository transfer check
to a Disbursement Account.
(c) Any monies, checks, notes, drafts or other payments
referred to in SUBSECTION (A) of this SECTION 8.1 which,
notwithstanding the terms of such subsection, are received by or on
behalf of an Obligor will be held in trust for the Agent and will be
delivered to the Agent or a Clearing Bank, as promptly as possible, in
the exact form received, together with any necessary endorsements for
application by the Agent directly to the Pre-Petition Loans and the
Secured Obligations, as applicable, or, if applicable, for deposit in
the Agency Account maintained with a Clearing Bank and processing in
accordance with the terms of the corresponding Agency Account
Agreement.
(d) Notwithstanding the foregoing, the foregoing subsections
shall not apply to Tultex Canada, but, instead, the provisions of this
SUBSECTION (D) shall apply to Tultex Canada. Upon written notice given
by the Agent to Tultex Canada (which may be given by notice to the
Borrowers' Agent) of the occurrence of an Event of Default (the
"Notice"), Tultex Canada will cause all moneys, checks, notes, drafts
and other payments relating to or constituting proceeds of Receivables,
or of any other Collateral, to be forwarded to a Lockbox for deposit in
an Agency Account in accordance with the procedures set out in the
corresponding Agency Account Agreement, and in particular Tultex Canada
will (i) advise each Account Debtor to address all remittances with
respect to amounts payable on account of any Receivables to a
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specified Lockbox, (ii) advise each other Account Debtor that makes
payment to Tultex Canada by wire transfer, automated clearinghouse
transfer or similar means to make payment directly to an Agency
Account, and (iii) stamp all invoices relating to any such amounts with
a legend satisfactory to the Agent indicating that payment is to be
made to Tultex Canada via a specified Lockbox. After the giving of the
Notice, Tultex Canada and the Agent shall cause all collected balances
in each such Agency Account to be transmitted daily by wire transfer or
depository transfer check or Automated Clearing House transfer in
accordance with the procedures set forth in the corresponding Agency
Account Agreement to the Agent at the Agent's Office for application,
on account of the Pre-Petition Loans and the Secured Obligations as
provided in SUBSECTION (B) above. Any moneys, checks, notes, drafts or
other payments referred to above which are received by or on behalf of
Tultex Canada will be held in trust for the Agent and, after the giving
of the Notice, will be delivered to the Agent at the Agent's Office as
promptly as possible in the exact form received, together with any
necessary endorsements.
SECTION 8.2. Verification and Notification. The Agent shall
have the right at any time and from time to time, (a) in the name of the Agent,
the Lenders or in the name of any Obligor, to verify the validity, amount or any
other matter relating to any Receivables by mail, telephone, telegraph or
otherwise, (b) to review, audit and make extracts from all records and files
related to any of the Receivables, and (c) to notify the Account Debtor under
any Receivables of the assignment of such Receivables to the Agent, for the
benefit of the Secured Creditors, and to direct such Account Debtor to make
payment of all amounts due or to become due thereunder directly to the Agent,
for the account of the Secured Creditors, and, upon such notification and at the
expense of the Obligors, to enforce collection of any such Receivables and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as the Obligors might have done.
SECTION 8.3. Disputes, Returns and Adjustments.
(a) In the event any amounts due and owing under any
Receivable for an amount in excess of $100,000 are in dispute between
an Account Debtor and an Obligor, the Borrowers' Agent shall provide
the Agent with prompt written notice thereof.
(b) The Borrowers' Agent shall notify the Agent promptly of
all returns and credits in excess of $100,000 in respect of any
Receivable (other than any re-xxxx or correction arising in the
ordinary course of the Obligors' business), which notice shall specify
the Receivable affected.
(c) The Obligors may, in the ordinary course of business
unless a Default or an Event of Default has occurred and is continuing,
grant any extension of time for payment of any Receivable or
compromise, compound or settle the same for less than the full amount
thereof, or release wholly or partly any Person liable for the payment
thereof, or allow any credit or discount whatsoever therein; PROVIDED
that (i) no such action results in the reduction of more than $100,000
in the amount payable with respect to any Receivable or of more than
$2,000,000 with respect to all Receivables in fiscal year 1999 or
$1,000,000 in any fiscal year thereafter (in each case, excluding the
allowance of credits or discounts generally available to Account
Debtors in the ordinary course of the Obligors' business and
appropriate adjustments to the accounts of Account Debtors in the
ordinary course of business), and (ii) the Agent is promptly notified
of the amount of such adjustments and the Receivable(s) affected
thereby.
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SECTION 8.4. Invoices.
(a) No Obligor will use any invoices other than invoices in
the form delivered to the Agent prior to the Agreement Date without
giving the Agent at least 30 days prior notice of the intended use of a
different form of invoice together with a copy of such different form.
(b) Upon the request of the Agent, each Obligor shall deliver
to the Agent, at the Obligors' expense, copies of customers' invoices
or the equivalent, original shipping and delivery receipts or other
proof of delivery, customers' statements, customer address lists, the
original copy of all documents, including repayment histories and
present status reports, relating to Receivables and such other
documents and information relating to the Receivables as the Agent
shall specify.
SECTION 8.5. Delivery of Instruments. In the event any
Receivable is at any time evidenced by a promissory note, trade acceptance or
any other instrument for the payment of money, the Obligors will immediately
thereafter deliver such instrument to the Agent, appropriately endorsed to the
Agent, for the benefit of the Secured Creditors.
SECTION 8.6. Sales of Inventory. All sales of Inventory will
be made in compliance with all requirements of Applicable Law.
SECTION 8.7. Ownership and Defense of Title.
(a) Except for Permitted Liens, the Obligors shall at all
times be the sole owner or lessee of each and every item of Collateral
and shall not create any lien on, or sell, lease, exchange, assign,
transfer, pledge, hypothecate, grant a security interest or security
title in or otherwise dispose of, any of the Collateral or any interest
therein, except for sales of Inventory in the ordinary course of
business, for cash or on open account or on terms of payment ordinarily
extended to its customers, and except for dispositions that are
otherwise expressly permitted under this Agreement. The inclusion of
"proceeds" of the Collateral under the Security Interest shall not be
deemed a consent by the Agent or the Lenders to any other sale or other
disposition of any part or all of the Collateral.
(b) Each Obligor shall defend its title or leasehold interest
in and to, and the Security Interest in, the Collateral against the
claims and demands of all Persons.
SECTION 8.8. Insurance.
(a) The Obligor shall at all times maintain insurance on the
Inventory and Equipment against loss or damage by fire, theft
(excluding theft by employees), burglary, pilferage, loss in transit
and such other hazards as the Agent shall reasonably specify, in
amounts not to exceed those obtainable at commercially reasonable rates
and under policies issued by insurers acceptable to the Agent in the
exercise of its reasonable judgment. All premiums on such insurance
shall be paid by the Obligors and copies of the policies delivered to
the Agent. The Obligors will not use or permit the Inventory to be used
in violation of Applicable Law or in any manner which might render
inapplicable any insurance coverage.
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(b) All insurance policies required under SECTION 8.8(A) shall
name the Agent, for the benefit of the Secured Creditors, as an
additional insured and shall contain loss payable clauses in the form
submitted to the Obligors by the Agent, or otherwise in form and
substance satisfactory to the Agent, naming the Agent, for the benefit
of the Secured Creditors, as loss payee, as its interests may appear,
and providing that (i) all proceeds thereunder shall be payable to the
Agent, for the benefit of the Secured Creditors, (ii) no such insurance
shall be affected by any act or neglect of the insurer or owner of the
property described in such policy, and (iii) such policy and loss
payable clauses may be canceled, amended or terminated only upon at
least 30 days prior written notice given to the Agent.
(c) Any proceeds of insurance referred to in this SECTION 8.8
which are paid to the Agent, for the account of the Secured Creditors,
shall be, at the option of the Required Lenders in their sole
discretion, either (i) applied to replace the damaged or destroyed
property, or (ii) applied to the payment or prepayment of the Secured
Obligations; PROVIDED that in the event that the proceeds from any
single casualty do not exceed $100,000, then, upon the Borrowers'
Agent's written request to the Agent, provided that no Default or Event
of Default shall have occurred and be continuing, such proceeds shall
be disbursed by the Agent to the Obligors pursuant to such procedures
as the Agent shall reasonably establish for application to the
replacement of the damaged or destroyed property.
SECTION 8.9. Location of Offices and Collateral.
(a) No Obligor will change the location of its chief executive
office or the place where it keeps its books and records relating to
the Collateral or change its name, its identity or corporate structure
without giving the Agent at least 60 days prior written notice thereof.
(b) All Inventory and Equipment, other than Inventory in
transit to any such location, will at all times be kept by each Obligor
at the locations set forth on SCHEDULES 6.1(T) and (U), and shall not,
without the prior written consent of the Agent, be removed therefrom
except pursuant to sales of Inventory permitted under SECTION 8.7(A).
(c) If any Inventory is in the possession or control of any of
an agent or processor of an Obligor, such Obligor shall notify such
agent or processor of the Security Interest (and shall promptly provide
copies of any such notice to the Agent and the Lenders) and, upon the
occurrence of an Event of Default, shall instruct them (and cause them
to acknowledge such instruction) to hold all such Inventory for the
account of the Lenders, subject to the instructions of the Agent.
SECTION 8.10. Records Relating to Collateral.
(a) Each Obligor will at all times (i) keep complete and
accurate records of Inventory on a basis consistent with past practices
of such Obligor so as to permit comparison of Inventory records
relating to different time periods, itemizing and describing the kind,
type and quantity of Inventory and such Obligor's cost therefor and a
current price list for such Inventory, and (ii) keep complete and
accurate records of all other Collateral.
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(b) Each Obligor will prepare a physical listing of all
Inventory, wherever located, at least annually, and shall deliver such
listing to the Agent promptly after completion thereof.
SECTION 8.11. Inspection. The Agent and each Lender (by any of
their officers, employees or agents) shall have the right, to the extent that
the exercise of such right shall be within the control of the Obligors, at any
time or times to: (a) visit the properties of the Obligors and their
Subsidiaries, inspect the Collateral and the other assets of the Obligors and
their Subsidiaries, and inspect and make extracts from the books and records of
the Obligors and their Subsidiaries, including management letters prepared by
independent accounts, all during customary business hours at such premises; (b)
discuss the Obligors' and their Subsidiaries' business, assets, liabilities,
financial condition, results of operations and business prospects, insofar as
the same are reasonably related to the rights of the Agent or the Lenders
hereunder or under any of the other Loan Documents, with the Obligors' and their
Subsidiaries' (i) principal officers, (ii) independent accountants, and (iii)
any other Person (except that any such discussion with any third parties shall
be conducted only in accordance with the Agent's or such Lender's standard
operating procedures relating to the maintenance of the confidentiality of
confidential information of borrowers); and (c) verify the amount, quantity,
value and condition of, or any other matter relating to, any of the Collateral
and in this connection to review, audit and make extracts from all records and
files related to any of the Collateral. The Obligors will deliver to the Agent,
for the benefit of the Lenders, any instrument necessary for the Agent to obtain
records from any service bureau maintaining records on behalf of the Obligors or
any of their Subsidiaries (or any of them) .
SECTION 8.12. Information and Reports.
(a) Schedule of Receivables. The Borrowers' Agent shall
deliver to the Agent, not later than the 20th day of each fiscal month,
a Schedule of Receivables which (i) shall be as of the last Business
Day of the immediately preceding fiscal month, (ii) shall be reconciled
to the Borrowing Base Certificate as of such last Business Day, and
(iii) shall set forth a detailed aged trial balance of all of the
Obligors' then existing Receivables, specifying the names, addresses
and balance due for each Account Debtor obligated on a Receivable so
listed.
(b) Schedule of Inventory. The Borrowers' Agent shall deliver
to the Agent, not later than the 20th day of each fiscal month, a
Schedule of Inventory as of the last Business Day of the immediately
preceding fiscal month, itemizing and describing the kind, type and
quantity of the Obligors' Inventory, the Obligors' cost thereof, and
the location thereof
(c) Accounts Payable Listings. The Borrowers' Agent shall
deliver to the Agent, no later than 20 days after the end of each
fiscal month of the Obligors, a listing of all of the Obligors' then
existing trade payables as of the last Business Day of such fiscal
month, specifying the name of and balance due to each trade creditor of
the Obligors and the invoice number of each trade payable. Upon the
Agent's request, the Borrowers' Agent shall deliver to the Agent
monthly detailed trade payable agings in form acceptable to the Agent.
(d) Borrowing Base Certificate. The Borrowers' Agent shall
deliver to the Agent a Borrowing Base Certificate, (i) on a daily basis
with respect to Receivables, prepared and updated as of the immediately
preceding Business Day, (ii) by the third Business Day of each calendar
week with respect to Inventory, prepared and updated as of the last day
of the
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immediately preceding fiscal week, and (iii) not later than the 20th
day of each fiscal month, reconciled against the aged trial balance of
all the Obligors' then existing Receivables as of the last Business Day
of the immediately preceding fiscal month.
(e) Additional Information. The Agent may in its discretion
from time to time request that the Obligors deliver the schedules,
certificates and listings described in SECTIONS 8.12(A), (B), (C) and
(D) more or less often and on different schedules than specified in
such Sections and the Obligors will comply with such requests. The
Obligors will also furnish to the Agent and each Lender such other
information with respect to the Collateral as the Agent or such Lender
may from time to time reasonably request.
(f) Inventory Appraisals and Reports. At any time upon the
request of the Agent or the Required Lenders, the Obligors shall, at
their expense, promptly provide the Agent with (i) current appraisals
of all of the Obligors' Inventory (on an orderly liquidation value
basis and/or such other bases as the Agent may request), which
appraisals shall be prepared by an appraisal firm satisfactory to the
Agent or the Required Lenders, as the case may be (the "Inventory
Appraiser") and shall be in form and scope satisfactory to the Agent or
the Required Lenders, as the case may be, and (ii) updates to the Xxxxx
Xxxxxx inventory report delivered to the Agent prior to the Agreement
Date, which updates shall be prepared by Xxxxx Xxxxxx and shall be in
form and scope satisfactory to the Agent or the Required Lenders, as
the case may be, provided no such updates to the Xxxxx Xxxxxx inventory
report shall be required after the date on which the Obligors have
replaced and/or updated their standard inventory costing system with a
system which, in the Agent's opinion, is capable of accurately
reflecting the cost of the Obligors' Inventory for purposes of
calculating the Borrowing Base.
SECTION 8.13. Power of Attorney. Each Obligor hereby appoints
the Agent as its attorney, with power (a) to endorse the name of such Obligor on
any checks, notes, acceptances, money orders, drafts or other forms of payment
or security that may come into the Agent's or any Lender's possession, and (b)
to sign the name of such Obligor on any invoice or xxxx of lading relating to
any Receivable, Inventory or other Collateral, on any drafts against customers
related to letters of credit, on schedules and assignments of Receivables
furnished to the Agent or any Lender by the Obligors (or any of them), on
notices of assignment, financing statements and other public records relating to
the perfection or priority of the Security Interest, and verifications of
account and notices to or from customers.
SECTION 8.14. Assignment of Claims Act. Upon the request of
the Agent, the Obligors (or any of them) shall execute any documents or
instruments and shall take such steps or actions reasonably required by the
Agent so that all monies due or to become due under any contract with the United
States of America, the District of Columbia or any state, county, municipality
or other domestic or foreign governmental entity, or any department, agency or
instrumentality thereof, will be assigned to the Agent, for the benefit of the
Secured Creditors, and notice given thereof in accordance with the requirements
of the Assignment of Claims Act of 1940, as amended, or any other laws, rules or
regulations relating to the assignment of any such contract and monies due to or
to become due.
ARTICLE 9
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AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner provided for in SECTION 16.11, each
Obligor will, and will cause each of its Subsidiaries to:
SECTION 9.1. Preservation of Corporate Existence and Similar
Matters. Preserve and maintain its corporate existence, rights, franchises,
licenses and privileges in the jurisdiction of its incorporation and qualify and
remain qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization.
SECTION 9.2. Compliance with Applicable Law. Comply with all
Applicable Law relating to it, except to the extent being contested in good
faith by appropriate proceedings and for which reserves in respect of such
Obligor's or such Subsidiary's reasonably anticipated liability therefor have
been appropriately established.
SECTION 9.3. Maintenance of Property. In addition to, and not
in derogation of, the requirements of SECTION 8.7 and of the Security Documents,
(a) protect and preserve all properties material to its business, including
Copyrights, Patents, and Trademarks, and maintain in good repair, working order
and condition in all material respects, with reasonable allowance for wear and
tear, all tangible properties, and (b) from time to time make or cause to be
made all needed and appropriate repairs, renewals, replacements and additions to
such properties necessary for the conduct of its business, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times.
SECTION 9.4. Conduct of Business. At all times carry on its
business in an efficient manner and engage only in the business described in
SECTION 6.1(F).
SECTION 9.5. Insurance. Maintain, in addition to the coverage
required by SECTION 8.8 and the Security Documents, insurance with responsible
insurance companies against such risks and in such amounts as is customarily
maintained by similar businesses (including business interruption insurance) or
as may be required by Applicable Law, and from time to time deliver to the Agent
or any Lender upon its request a detailed list of the insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
SECTION 9.6. Payment of Taxes and Claims. Pay or discharge
when due (a) all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or upon any properties belonging to it,
except that real property ad valorem taxes shall be deemed to have been so paid
or discharged if the same are paid before they become delinquent, and (b) all
lawful claims of materialmen, mechanics, carriers, warehousemen and landlords
for labor, materials, supplies and rentals which, if unpaid, might become a Lien
on any of its properties; PROVIDED that this SECTION 9.6 shall not require the
payment or discharge of any such tax, assessment, charge, levy or claim (i)
which is being contested in good faith by appropriate proceedings and for which
reserves in respect of the reasonably anticipated liability therefor have been
appropriately established, or (ii) to the extent nonpayment thereof is permitted
by the Bankruptcy Code.
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SECTION 9.7. Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and accounts
(which shall be true and complete), as may be required or as may be necessary to
permit the preparation of financial statements in accordance with GAAP.
SECTION 9.8. Use of Proceeds.
(a) Use the proceeds of (i) the initial Revolving Credit Loan
to pay amounts authorized to be paid by the Court pursuant to the
Interim Order and the orders listed on Schedule 5.1(j), (ii) the
initial Revolving Credit Loan after entry of the Final Order to pay all
amounts due under the Original Loan Agreement, and (iii) all other
Loans only for working capital and general business purposes.
(b) Not use any part of such proceeds to purchase or, to carry
or reduce or retire or refinance any credit incurred to purchase or
carry, any margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System) or, in any event, for
any purpose which would involve a violation of such Regulation U or of
Regulation T or X of such Board of Governors, or for any purpose
prohibited by law or by the terms and conditions of this Agreement.
SECTION 9.9. Hazardous Waste and Substances; Environmental
Requirements.
(a) In addition to, and not in derogation of, the requirements
of SECTION 9.2 and of the Security Documents, comply with all
Environmental Laws and all Applicable Laws relating to occupational
health and safety (except for instances of noncompliance that are being
contested in good faith by appropriate proceedings if reserves in
respect of such Obligor's or such Subsidiary's reasonably anticipated
liability therefor have been appropriately established), promptly
notify the Agent of its receipt of any notice of a violation of any
such Environmental Laws or other such Applicable Laws, and indemnify
and hold the Agent and the Lenders harmless from all loss, cost,
damage, liability, claim and expense incurred by or imposed upon the
Agent or any Lender on account of such Obligor's or Subsidiary's
failure to perform its obligations under this SECTION 9.9.
(b) Whenever such Obligor gives notice to the Agent pursuant
to this SECTION 9.9 with respect to a matter that reasonably could be
expected to result in liability to such Obligor or Subsidiary in excess
of $250,000 in the aggregate, such Obligor shall, at the Agent's
request and the Obligors' expense (i) cause an independent
environmental engineer acceptable to the Agent to conduct an
assessment, including tests where necessary, of the site where the
noncompliance or alleged noncompliance with Environmental Laws has
occurred and prepare and deliver to the Agent a report setting forth
the results of such assessment, a proposed plan to bring such Obligor
or Subsidiary into compliance with such Environmental Laws (if such
assessment indicates noncompliance) and an estimate of the costs
thereof, and (ii) provide to the Agent a supplemental report of such
engineer whenever the scope of the noncompliance, or the response
thereto or the estimated costs thereof, shall materially adversely
change.
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SECTION 9.10. Year 2000 Compliance. Promptly notify the Agent
in the event such Obligor discovers or determines that any computer application
(including those of its suppliers, vendors and customers) that is material to
its or any of its Subsidiaries' business and operations will not be Year 2000
compliant (as defined in SECTION 6.1(DD)).
SECTION 9.11. Indenture Trustees. The Borrowers' Agent will,
promptly after learning thereof, notify the Agent in writing of any change in
any Person serving as an Indenture Trustee or the address of any Indenture
Trustee for notice purposes under any Indenture.
SECTION 9.12. Standard Inventory Costing System. On or before
the end of the Obligors' second fiscal quarter of their 2000 fiscal year, the
Obligors shall replace and/or update their standard inventory costing system
with a system which, in the Agent's opinion, is capable of accurately reflecting
the cost of the Obligors' Inventory for purposes of calculating the Borrowing
Base.
SECTION 9.13. Post Closing Deliveries. The Borrowers shall
deliver to the Agent (a) promptly upon request of the Agent, the Financing
Statements duly executed by the Obligors, and (b) within ten (10) Business Days
after the entry of the Final Order, an opinion of bankruptcy counsel to the
Borrowers, addressed to the Agent, the Issuing Bank and the Lenders, in
substantially the form of EXHIBIT E attached hereto.
SECTION 9.14. Post-Petition Date Motions. Prior to the final
hearing before the Court to approve the transactions contemplated by this
Agreement, the Borrowers and the Debtor Guarantors will file, and diligently
pursue, a motion to recover against the Noteholder Priority Collateral (as
defined in the Intercreditor Agreement) the costs and expenses of preserving
such property pursuant to Section 506(c) of the Bankruptcy Code.
ARTICLE 10
INFORMATION
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner set forth in SECTION 16.11, the Obligors
will furnish to the Agent and to each Lender at the offices then designated for
such notices pursuant to SECTION 16.1:
SECTION 10.1. Financial Statements.
(a) Audited Year-End Statements. As soon as available, but not
later than two Business Days after the date that Tultex is required to
file its Form 10-K with the Securities and Exchange Commission or any
successor commission (or, if earlier, 120 days after the end of each
fiscal year of Tultex), copies of the consolidating and consolidated
balance sheets of Tultex and its Consolidated Subsidiaries as at the
end of such fiscal year, together with copies of the consolidated and
consolidating statements of operations and shareholders' equity and
consolidated statements of cash flows of Tultex and its Consolidated
Subsidiaries for such fiscal year, in each case setting forth in
comparative form the figures for the previous fiscal year, reported on
without qualification (other than qualifications that would customarily
be given during the pendency of a chapter 11 case under the Bankruptcy
Code) by independent certified
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public accountants of nationally recognized standing; PROVIDED, for
fiscal year end 1999 only, the above-referenced financial statements
may be unaudited if accompanied by a certification of independent
certified public accountants of nationally recognized standing as to
the Receivables and Inventory of the Borrowers, in form and substance
acceptable to the Agent.
(b) Monthly Financial Statements. As soon as available after
the end of each month, but in any event within 30 days after the end of
each fiscal month of Tultex (60 days in the case of the fiscal month
end which is also the fiscal year end), copies of the unaudited
consolidating and consolidated balance sheet of Tultex and its
Consolidated Subsidiaries as at the end of such fiscal month and the
related unaudited consolidating and consolidated statements of
operations and consolidated statements of cash flows for Tultex and its
Consolidated Subsidiaries for such fiscal month and for the portion of
the fiscal year through such fiscal month, certified by the Financial
Officer as presenting fairly the financial condition and results of
operations of Tultex and its Consolidated Subsidiaries (subject to
normal year-end audit adjustments).
(c) Quarterly Budget. As soon as available, but in any event
no later than 30 days prior to the end of each fiscal quarter of
Tultex, an operating budget for Tultex and its Consolidated
Subsidiaries for the following fiscal quarter (on a weekly basis), in
the form customarily prepared by management of Tultex consistent with
past practice and acceptable to the Agent, together with a projection
of the outstanding Loan balance for each such period and a statement of
the assumptions upon which such budget was prepared.
All such financial statements referred to in CLAUSES (A) and (B) shall be
complete and correct in all material respects and prepared in accordance with
GAAP (except, with respect to interim financial statements described in CLAUSE
(B), for the omission of footnotes and for the effect of normal year-end audit
adjustments) applied consistently throughout the periods reflected therein.
SECTION 10.2. Accountants' Certificate. Together with the
financial statements referred to in SECTION 10.1(a) (except for the 1999 fiscal
year end financial statements), the Obligors shall deliver a certificate of such
accountants addressed to the Agent stating (a) that in making the examination
necessary for the certification of such financial statements, nothing has come
to their attention to lead them to believe that any Default or Event of Default
exists and, in particular, they have no knowledge of any Default or Event of
Default or, if such is not the case, specifying such Default or Event of Default
and its nature, and (b) whether or not the Obligors were in compliance with the
covenants contained in SECTIONS 11.1, 11.2, 11.5, 11.10, and 11.11 , as at the
date of such financial statements.
SECTION 10.3. Officer's Certificate. At the time that the
Obligors furnish the financial statements pursuant to SECTION 10.1(B), the
Obligors shall also furnish a certificate of the Financial Officer,
substantially in the form of EXHIBIT F, (a) setting forth whether or not the
Obligors were in compliance with the requirements of SECTIONS 11.1, 11.2, 11.5,
11.10, and 11.11, as at the end of each respective period, (b) stating that the
information on the schedules to this Agreement are complete and accurate as of
the date of such certificate or, if such is not the case, attaching to such
certificate updated schedules, and (c) stating that, based on a reasonably
diligent examination, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default and its nature,
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when it occurred, whether it is continuing and the steps being taken by the
Obligors with respect to such Default or Event of Default.
SECTION 10.4. Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if
any, submitted to any Obligor or its Board of Directors by its
independent public accountants, including any management report.
(b) As soon as practicable, copies of all financial statements
and reports that any Obligor shall send to its shareholders generally
and of all registration statements and all regular or periodic reports
which any Obligor shall file with the Securities and Exchange
Commission or any successor commission.
(c) From time to time and as soon as reasonably practicable
following each request, such forecasts, data, certificates, reports,
statements, opinions of counsel, documents or further information
regarding the business, assets, liabilities, financial condition,
results of operations or business prospects of any Obligor or any of
its Subsidiaries as the Agent or any Lender may reasonably request and
that any Obligor has or (except in the case of legal opinions relating
to the perfection or priority of the Security Interest) without
unreasonable expense can obtain. The rights of the Agent and the
Lenders under this SECTION 10.4 are in addition to and not in
derogation of their rights under any other provision of this Agreement
or of any other Loan Document.
(d) If requested by the Agent or any Lender, the Obligors will
furnish to the Agent and the Lenders statements in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U of
the Board of Governors of the Federal Reserve System.
(e) Copies of all monthly reports, projections, or other
reports respecting any Obligor's business or financial condition or
prospects filed with the Court, or provided to the U.S. Trustee or the
Committee, at the time such document is filed with the Court or
provided to the U.S. Trustee or the Committee.
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SECTION 10.5. Notice of Litigation and Other Matters. Prompt
notice of:
(a) (i) the commencement, to the extent any Obligor is aware
of the same, of all proceedings and investigations by or before any
governmental or non-governmental body and all actions and proceedings
in any court or before any arbitrator against or in any other way
relating to or affecting any Obligor, any of its Subsidiaries or any of
any Obligor's or any of its Subsidiaries' properties, assets or
businesses, which might, singly or in the aggregate, result in the
occurrence of a Default or an Event of Default, or have a Materially
Adverse Effect, and (ii) the filing or commencement of any material
contested matter or adversary proceeding in the Chapter 11 Case (but
the foregoing may be satisfied by including the Agent and its counsel
in a "core service group," to receive copies of all pleadings under any
order establishing notice and service requirements in the Chapter 11
Case), and such additional information with respect to such matters as
the Agent or the Lenders may reasonably request,
(b) any amendment of the articles of incorporation or by-laws
(or other constitutive documents) of any Obligor or any of its
Subsidiaries,
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of any Obligor
or any of its Subsidiaries which has had or may have, singly or in the
aggregate, a Materially Adverse Effect and any change in the executive
officers of any Obligor or any of its Subsidiaries, and
(d) any Default or Event of Default or any event which
constitutes or which with the passage of time or giving of notice or
both would constitute a post-Petition Date default or event of default
(whether or not any Borrower has received notice thereof from any other
Person but not including defaults that result from any act or failure
to act of any Borrower which is permitted by the Bankruptcy Code) by
any Obligor or any of its Subsidiaries under any material agreement
entered into after the Petition Date (other than this Agreement, to
which such Obligor or any of its Subsidiaries is a party or by which
such Borrower, any of its Subsidiaries or any of their properties may
be bound.
SECTION 10.6. ERISA. As soon as possible and in any event
within 30 days after any Obligor knows, or has reason to know, that: (a) any
Termination Event with respect to a Plan has occurred or will occur, or (b) any
Plan has or will become subject to an additional premium payable to the PBGC
under Section 4006(a)(3)(E), or (c) any Obligor or any of its Subsidiaries is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan required by reason of any Obligor's or such Subsidiary's
complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA)
from such Multiemployer Plan, a certificate of the Financial Officer setting
forth the details of such event and the action which is proposed to be taken
with respect thereto, together with any notice or filing which may be required
by the PBGC or other agency of the United States government with respect to such
event.
SECTION 10.7. Accuracy of Information. All written
information, reports, statements and other papers and data furnished to the
Agent or any Lender, whether pursuant to this ARTICLE 10 or any other provision
of this Agreement or of any other Loan Document, shall be, at the time the same
is
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so furnished, complete and correct in all material respects to the extent
necessary to give the Agent and the Lenders true and accurate knowledge of the
subject matter.
SECTION 10.8. Revisions or Updates to Schedules. Should any of
the information or disclosures provided on any of the Schedules originally
attached hereto become outdated or incorrect in any material respect, the
Obligors shall deliver to the Agent and the Lenders as part of the officer's
certificate required pursuant to SECTION 10.3 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 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 Required Lenders in their sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedule(s).
ARTICLE 11
NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner set forth in SECTION 16.11, the Obligors
will not directly or indirectly and will not permit any of their Subsidiaries
to:
SECTION 11.1. Financial Ratios.
(a) Minimum Sales. As of the last day of the December
1999 fiscal month, and the end of each fiscal month
thereafter, permit the net sales of Tultex and its
Consolidated Subsidiaries for the previous two fiscal month
period then ended to be less than 85% of the net sales for
such period set forth in the Projections.
(b) Maximum Loan Balance. As of the last day of any
fiscal month, permit the aggregate outstanding amount of
Letter of Credit Obligations and Revolving Credit Loans to be
greater than 108% of the aggregate amount of Letter of Credit
Obligations and Revolving Credit Loans set forth in the
Projections for such date.
SECTION 11.2. Indebtedness for Money Borrowed. Create, assume,
or otherwise become or remain obligated in respect of, or permit or suffer to
exist or to be created, assumed or incurred or to be outstanding any
Indebtedness for Money Borrowed, except that this SECTION 11.2 shall not apply
to: (a) Indebtedness for Money Borrowed represented by the Loans and the Notes,
(b) Indebtedness for Money Borrowed represented by the Bonds, PROVIDED there
shall be no increase in the principal amount thereof, (c) Indebtedness for Money
Borrowed existing on the Petition Date and reflected on SCHEDULE 6.1(J)
(excluding any such Indebtedness that is to be paid in full on the Effective
Date), and refinancings thereof (without any increase in the then outstanding
principal balance thereof) upon terms fully disclosed to the Agent and the
Lenders and which are no less favorable to the applicable Obligor or Subsidiary
than those with respect to the Indebtedness being refinanced, (d) Permitted
Purchase Money Indebtedness, (e) Subordinated Indebtedness, and (f) Indebtedness
under
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Hedge Agreements which are acceptable to the Agent, with a Lender, in order to
manage existing or anticipated interest rate or exchange rate risks and not for
speculative purposes.
SECTION 11.3. Guaranties. Become or remain liable with respect
to any Guaranty of any obligation of any other Person, except for (a) Guarantees
of the Secured Obligations by the Guarantors, (b) Guarantees by the Obligors
(other than Tultex) of the Indebtedness for Money Borrowed represented by the
Bonds, and (c) Guarantees by an Obligor of the obligations of any of its
Subsidiaries under real property lease agreements or other agreements arising in
the ordinary course of business, provided such Subsidiary is a Borrower or a
Guarantor hereunder.
SECTION 11.4. Investments. Acquire, after the Agreement Date,
any Business Unit or Investment or, after such date, maintain any Investment
other than Permitted Investments.
SECTION 11.5. Capital Expenditures. Make or incur any Capital
Expenditures in the aggregate in excess of $1,000,000 during fiscal year 2000 or
during any fiscal year thereafter.
SECTION 11.6. Restricted Dividend Payments and Purchases, Etc.
Declare or make any Restricted Dividend Payment, Restricted Payment or
Restricted Purchase.
SECTION 11.7. Merger, Consolidation and Sale of Assets. Merge
or consolidate with any other Person or sell, lease, transfer or otherwise
dispose of any of its assets to any Person, other than (a) sales of Inventory in
the ordinary course of business, (b) sales of the Logo Athletic Note and Vendor
Note for fair market value, PROVIDED the proceeds of any such sale of the Logo
Athletic Note or Vendor Note are applied as set forth in SECTION 4.9, and (c)
sales of any Noteholder Priority Collateral (as defined in the Intercreditor
Agreement), provided such sale is authorized by order of the Court and consented
to by the applicable Noteholders (as defined in the Intercreditor Agreement).
SECTION 11.8. Transactions with Affiliates. Effect any
transaction with any Affiliate on a basis less favorable to any Obligor than
would be the case if such transaction had been effected with a Person not an
Affiliate.
SECTION 11.9. Liens. Create, assume or permit or suffer to
exist or to be created or assumed any Lien on any of the Collateral or other
assets of an Obligor or any of its Subsidiaries, other than Permitted Liens. The
prohibition provided for in this SECTION 11.9 specifically includes, but is not
limited to, any efforts by any Debtor, or any order entered for the benefit of
the Committee or any other party-in-interest in the Chapter 11 Case, to "prime"
or create pari passu to any claims or interests of the Lenders under this
Agreement any Lien (other than for allowed Senior Claims and for the Carve-Out
Expenses up to the Carve-Out Amount) irrespective of whether such claims or
interests may be "adequately protected."
SECTION 11.10. Capitalized Lease Obligations. Incur or permit
to exist any Capitalized Lease Obligations if such Capitalized Lease Obligation
when added to existing Capitalized Lease Obligations and Permitted Purchase
Money Indebtedness of the Obligors and their Subsidiaries would exceed
$1,000,000 aggregate.
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SECTION 11.11. Operating Leases. Enter into any Operating
Lease if the aggregate annual rental payable under all Operating Leases of the
Obligors and their Subsidiaries would exceed $15,000,000 in the aggregate at any
time.
SECTION 11.12. Limitation on Certain Restrictions on
Subsidiaries. Create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by an Obligor or any Subsidiary
of an Obligor, or pay any Indebtedness owed to an Obligor or a Subsidiary of an
Obligor, (b) make loans or advances to an Obligor or any of an Obligor's
Subsidiaries, or (c) transfer any of its properties or assets to an Obligor,
except for such encumbrances or restrictions existing under or by reason of (i)
Applicable Laws, and (ii) this Agreement and the other Loan Documents.
SECTION 11.13. Plans. Intentionally Omitted.
SECTION 11.14. Sales and Leasebacks. Enter into any
arrangement with any Person providing for any Obligor's or its Subsidiaries'
leasing from such Person any real or personal property which has been or is to
be sold or transferred, directly or indirectly, by such Obligor or Subsidiaries
to such Person.
SECTION 11.15. Amendments of Other Agreements. Amend in any
way (a) the subordination provisions applicable to any Subordinated
Indebtedness, (b) the interest rate (or formula pursuant to which such interest
rate is determined) or principal amount or schedule of payments of principal and
interest with respect to any Subordinated Indebtedness, the Bonds, or any other
Indebtedness for Money Borrowed, other than to reduce the principal amount or
interest rate or extend the schedule of payments with respect thereto, or (c)
any other provision of the Indentures if, in the Agent's reasonable judgment,
such amendment would adversely affect the Agent or any of the other Secured
Creditors.
SECTION 11.16. Fiscal Year. Change the end of its fiscal year
from the Saturday closest to December 31.
SECTION 11.17. Repayments. Except with respect to the Orders
of the Court referenced in SCHEDULE 5.1(J) or on the effective date of any
confirmed reorganization plan in the Chapter 11 Case and except as specifically
permitted hereunder, the Debtors shall not, without the express prior written
consent of the Super-Majority Lenders, make any payment or transfer in an
aggregate amount in excess of $100,000 during the term of this Agreement with
respect to any Lien or Indebtedness incurred or arising prior to the filing of
the Chapter 11 Case, whether by way of "adequate protection" under the
Bankruptcy Code or otherwise; provided that the foregoing shall not prohibit the
Debtors from complying with Bankruptcy Code Section 365 with respect to
unexpired leases of the Debtors.
ARTICLE 12
DEFAULT
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SECTION 12.1. Events of Default. Notwithstanding the
provisions of Section 362 of the Bankruptcy Code and without application or
motion to the Court or any notice to any Borrower, the occurrence of any one or
more of the following events, regardless of the reason therefor, shall
constitute an immediate and automatic "Event of Default" hereunder:
(a) Default in Payment. The Borrowers shall default in any
payment of principal of or interest on any Loan or any Note when and as
due (whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Any Obligor shall default in the
payment, as and when due, of any other Secured Obligation, and such
default shall continue for a period of 5 days after written notice
thereof has been given to the Borrowers' Agent by the Agent.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by any Obligor under this Agreement or any other Loan
Document, or any amendment hereto or thereto, shall at any time prove
to have been incorrect or misleading in any material respect when made.
(d) Default in Performance. Any Obligor shall default in the
performance or observance of any term, covenant, condition or agreement
to be performed by the Obligors (or any of them), contained in:
(i) except as specifically set forth in CLAUSE (II) below,
ARTICLES 7, 8, 9, 10 or 11 of this Agreement, provided that
the Agent may, in its sole discretion, waive any default under
SECTIONS 8.12 or 10.1 as long as such default is not
outstanding more than 10 days;
(ii) SECTIONS 8.3, 8.4(A), 8.9(B), 8.9(C) or 10.8 of this
Agreement and such default shall continue for a period of 10
days after written notice thereof has been given to the
Borrowers' Agent by the Agent; or
(iii) any other provision of this Agreement or any other
Loan Document (other than as specifically provided for
otherwise in this SECTION 12.1) and such default shall
continue for a period of 30 days after written notice thereof
has been given to the Borrowers' Agent by the Agent.
(e) Voluntary Bankruptcy Proceeding. Any Non-Debtor Guarantor
shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (ii) file a petition seeking to take
advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition for
adjustment of debts, (iii) consent to or fail to contest in a timely
and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its
property, domestic or foreign, (v) admit in writing its inability to
pay its debts as they become due, (vi) make a general assignment for
the benefit of creditors, or (vii) take any action for the purpose of
authorizing any of the foregoing.
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(f) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against any Non-Debtort Guarantor in any
court of competent jurisdiction seeking (i) relief under the federal
bankruptcy laws (as now or hereafter in effect) or under any other
laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like
of such Non-Debtor Guarantor or of all or any substantial part of the
assets, domestic or foreign, of such Non-Debtor Guarantor, and such
case or proceeding shall continue undismissed or unstayed for a period
of 60 consecutive calendar days, or an order granting the relief
requested in such case or proceeding against such Non-Debtor Guarantor
(including an order for relief under such federal bankruptcy laws)
shall be entered.
(g) Failure of Agreements. Any Obligor shall challenge the
validity and binding effect of any provision of any Loan Document after
delivery thereof or shall state its intention to make such a challenge
in writing, or any Loan Document, after delivery thereof hereunder,
shall for any reason (except to the extent permitted by the terms
thereof) cease to create a valid and perfected first priority Lien
(except for Permitted Liens) on, or security interest in, any of the
Collateral purported to be covered thereby.
(h) Judgment. A final, unappealable judgment or order for the
payment of money in an amount which exceeds $200,000 shall be entered
after the Petition Date against any Obligor or any of its Subsidiaries
by any court and such judgment or order shall continue undischarged or
unstayed for 30 days.
(i) Attachment. A warrant or writ of attachment or execution
or similar process which exceeds $200,000 in value shall be issued
after the Petition Date against any property of any Obligor or any of
its Subsidiaries and such warrant or process shall continue
undischarged or unstayed for 30 days.
(j) ERISA.
(i) Any Termination Event with respect to a Plan shall
occur that, after taking into account the excess, if any, of
(A) the fair market value of the assets of any other Plan with
respect to which a Termination Event occurs on the same day
(but only to the extent that such excess is the property of
the Obligors) over (B) the present value on such day of all
vested nonforfeitable benefits under such other Plan, results
in an Unfunded Vested Accrued Benefit in excess of $0, or
(ii) any Plan shall incur an "accumulated funding
deficiency" (as defined in Section 412 of the Internal Revenue
Code or Section 302 of ERISA) for which a waiver has not been
obtained in accordance with the applicable provisions of the
Internal Revenue Code and ERISA, or
(iii) any Obligor or any of its Subsidiaries is in
"default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan resulting from an
Obligor's or any of its Subsidiaries complete or partial
withdrawal (as described in Section 4203 or 4205 of ERISA)
from such Multiemployer Plan.
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(k) Change in Control. At any time after the Agreement Date,
(i) a Person or "group" of Persons (within the meaning of Section 13(d)
of the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder), shall acquire, beneficially or of record, 25%
or more of the outstanding voting stock (stock entitled to vote for
election of directors excluding rights subject to a contingency) of
Tultex, or (ii) during any calendar year, individuals who at the
beginning of such period constituted the Board of Directors of any
Obligor (together with any new directors whose election by the Board of
Directors of such Obligor or whose nomination for election by the
shareholders of such Obligor, as the case may be, was approved by a
vote of a majority of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors of such Obligor, as
the case may be, then in office, or (iii) Tultex ceases to own,
directly or indirectly, 100% of the capital stock of each other Obligor
(less any qualifying shares), or such ownership shall cease to vest in
Tultex voting control over any such Obligor, or (iv) a "Change of
Control" as defined in either of the Indentures occurs, or (v) a
"change of control" as defined in the Convertible Subordinated Notes
occurs.
(l) Change in Management. For any reason the person serving as
the President or Chief Financial Officer of Tultex is no longer
actively involved in such role, unless a replacement reasonably
satisfactory to the Required Lenders is appointed within 90 days.
(m) General Insecurity. The occurrence of any act, omission,
circumstance, event or condition or series of acts, omissions,
circumstances, events or conditions which have, or could reasonably be
expected to have, either individually or in the aggregate, a Materially
Adverse Effect.
(n) Events in the Chapter 11 Case.
(i) the bringing of a motion, or the filing of any plan of
reorganization or disclosure statement attendant thereto by
any Borrower in the Chapter 11 Case: (w) to obtain additional
financing under Section 364(c) or (d) of the Bankruptcy Code;
(x) to grant any Lien upon or affecting any Collateral other
than Permitted Liens; or (y) to use cash collateral of the
Agent under Section 363(c) of the Bankruptcy Code without the
consent of the Agent and the Lenders; or (z) any other action
or actions adverse to the Agent and the Lenders or their
rights and remedies hereunder or their interest in the
Collateral that would, individually or in the aggregate, have
a Materially Adverse Effect; or
(ii) the filing of any plan of reorganization or
disclosure statement attendant thereto by any Borrower or any
other Person which does not require repayment in full of all
the Secured Obligations under this Agreement; or
(iii) the entry of an order confirming a plan of
reorganization that does not require repayment in full of all
of the Secured Obligations under this Agreement; or
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(iv) the entry of an order amending, supplementing,
staying, vacating or otherwise modifying the Loan Documents or
the Interim Order or the Final Order without the written
consent of the Super-Majority Lenders; or
(v) the allowance of any claim or claims under Section
506(c) of the Bankruptcy Code against or with respect to any
of the Collateral of the Secured Creditors; or
(vi) the appointment of an interim or permanent trustee in
the Chapter 11 Case or the appointment of an examiner in the
Chapter 11 Case with expanded powers to operate or manage the
financial affairs, the business, or reorganization of any
Borrower; or
(vii) the sale without the Agent's and the Lenders'
consent, of all or substantially all of any Borrower's assets
either through a sale under Section 363 of the Bankruptcy
Code, through a confirmed plan of reorganization in the
Chapter 11 Case, or otherwise; or
(viii) the dismissal of the Chapter 11 Case, or the
conversion of the Chapter 11 Case from one under Chapter 11 to
one under Chapter 7 of the Bankruptcy Code; or
(ix) the entry of an order by the Court granting relief
from or modifying the automatic stay of Section 362 of the
Bankruptcy Code (x) to allow any creditor to execute upon or
enforce a Lien on any Collateral, or (y) with respect to any
Lien of or the granting of any Lien on any Collateral to any
State or local environmental or regulatory agency or
authority, which in either case would have a Materially
Adverse Effect; or
(x) the commencement of a suit or action against the
Agent, any Lender or any Issuing Bank and, as to any suit or
action brought by any Person other than an Obligor, or an
officer or employee of an Obligor, the continuation thereof
without dismissal for thirty (30) days after service thereof
on the Agent, such Lender or such Issuing Bank, that assert,
by or on behalf of any Obligor, any federal or state
governmental agency, or any official committee in the Chapter
11 Case, any claim or legal or equitable remedy which
challenges the validity or seeks subordination of the claim or
Lien of the Agent or any of the Secured Creditors pursuant to
this Agreement, the Interim Order or the Final Order.
SECTION 12.2. Remedies. If any Event of Default shall have
occurred, and during the continuance of any such Event of Default, the Agent
may, and at the direction of the Required Lenders in their sole and absolute
discretion shall, do any of the following:
(a) declare the principal of and interest on the Loans and any
Note at the time outstanding, and all other amounts owed to the Agent,
the Issuing Bank and the Lenders under this Agreement or any of the
other Loan Documents and all other Secured Obligations, to be forthwith
due and payable, whereupon the same shall immediately become due and
payable
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without presentment, demand, protest or other notice of any kind, all
of which are expressly waived, anything in this Agreement or the other
Loan Documents to the contrary notwithstanding;
(b) terminate the Revolving Credit Facility and any other
right of the Borrowers to request Borrowings and Letters of Credit
hereunder;
(c) notify, or request the Obligors to notify, in writing or
otherwise, any Account Debtor with respect to any one or more of the
Receivables to make payment to the Agent, for the benefit of the
Secured Creditors, or any agent or designee of the Agent, at such
address as may be specified by the Agent and if, notwithstanding the
giving of any notice, any Account Debtor shall make payments to the
Obligors, the Obligors shall hold all such payments they receive in
trust for the Agent, for the account of the Secured Creditors, without
commingling the same with other funds or property of, or held by, the
Obligors, and shall deliver the same to the Agent or any such agent or
designee of the Agent immediately upon receipt by the Obligors in the
identical form received, together with any necessary endorsements;
(d) settle or adjust disputes and claims directly with Account
Debtors on Receivables for amounts and on terms which the Agent
considers advisable and in all such cases only the net amounts received
by the Agent, for the account of the Secured Creditors, in payment of
such amounts, after deductions of costs and attorneys' fees, shall
constitute Collateral and the Obligors shall have no further right to
make any such settlements or adjustments or to accept any returns of
merchandise;
(e) enter upon any premises at which Inventory or Equipment
may be located and, without resistance or interference by the Obligors,
take physical possession of any or all thereof and maintain such
possession on such premises or move the same or any part thereof to
such other place or places as the Agent shall choose, without being
liable to the Obligors on account of any loss, damage or depreciation
that may occur as a result thereof, so long as the Agent shall act
reasonably and in good faith;
(f) require the Obligors to and the Obligors shall, without
charge to the Agent or any Lender, assemble the Inventory or Equipment
and maintain or deliver it into the possession of the Agent or any
agent or representative of the Agent at such place or places as the
Agent may designate and as are reasonably convenient to both the Agent
and the Obligors;
(g) at the expense of the Obligors, cause any of the Inventory
or Equipment to be placed in a public or field warehouse, and the Agent
shall not be liable to the Obligors on account of any loss, damage or
depreciation that may occur as a result thereof, so long as the Agent
shall act reasonably and in good faith;
(h) without notice, demand or other process, and without
payment of any rent or any other charge, enter any of the Obligors'
premises and, without breach of the peace, until the Agent, on behalf
of the Secured Creditors, completes the enforcement of its rights in
the Collateral, take possession of such premises or place custodians in
exclusive control thereof, remain on such premises and use the same and
any of the Obligors' Equipment, for the purpose of (A) completing any
work in process, preparing any Inventory for disposition, and disposing
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thereof, and (B) collecting any Receivable, and the Agent for the
benefit of the Secured Creditors is hereby granted a license or
sublicense and all other rights as may be necessary, appropriate or
desirable to use the Proprietary Rights in connection with the
foregoing, and the rights of the Obligors under all licenses,
sublicenses and franchise agreements shall inure to the Agent for the
benefit of the Secured Creditors; PROVIDED, HOWEVER, that any use of
any federally registered trademarks as to any goods shall be subject to
the control as to the quality of such goods of the owner of such
trademarks and the goodwill of the business symbolized thereby;
(i) exercise any and all of its rights under any and all of
the Security Documents;
(j) apply all funds in the Cash Collateral Account and any
other Collateral consisting of cash to the payment of the Secured
Obligations in any order in which the Agent, on behalf of the Secured
Creditors, may elect or use such cash in connection with the exercise
of any of its other rights hereunder or under any of the Security
Documents;
(k) establish or cause to be established one or more Lockboxes
or other arrangement for the deposit of proceeds of Receivables, and,
in such case, the Obligors shall cause to be forwarded to the Agent at
the Agent's Office, on a daily basis, copies of all checks and other
items of payment and deposit slips related thereto deposited in such
Lockboxes, together with collection reports in form and substance
satisfactory to the Agent; and
(l) exercise all of the rights and remedies of a secured party
under the Uniform Commercial Code, the Interim Order and the Final
Order and under any other Applicable Law, including the right, without
notice except as specified below and with or without taking the
possession thereof, to sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any location chosen by
the Agent, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as the Agent may deem
commercially reasonable. The Obligors agree that, to the extent notice
of sale shall be required by law, at least 10 days notice to the
Borrowers' Agent of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification, but notice given in any other reasonable manner or at any
other reasonable time shall constitute reasonable notification. The
Agent shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. The Agent may adjourn any public
or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
; provided, however, notwithstanding anything to the contrary contained herein,
the Agent shall be permitted to exercise any remedy in the nature of a
liquidation of, or foreclosure on, any of the Collateral only to the extent
permitted by the Interim Order or the Final Order, as applicable.
SECTION 12.3. Application of Proceeds. All proceeds from each
sale of, or other realization upon, all or any part of the Collateral following
an Event of Default shall be applied or paid over as follows: (a) first: to the
payment of all costs and expenses incurred in connection with such sale or other
realization, including reasonable attorneys' fees, (b) second: to the payment of
the Secured Obligations (with the Obligors remaining liable for any deficiency)
in accordance with SECTION 4.8(D), and (c) third: the balance (if any) of such
proceeds shall be paid to the Obligors, subject to any
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duty imposed by law, or otherwise to whomsoever shall be entitled thereto. The
Obligors shall remain jointly and severally liable and will pay, on demand, any
deficiency remaining in respect of the Secured Obligations, together with
interest thereon at a rate per annum equal to the highest rate then payable
hereunder on such Secured Obligations, which interest shall constitute part of
the Secured Obligations.
SECTION 12.4. Power of Attorney. In addition to the
authorizations granted to the Agent under SECTION 8.13 or under any other
provision of this Agreement or of any other Loan Document, during the
continuance of an Event of Default, each Obligor hereby irrevocably designates,
makes, constitutes and appoints the Agent (and all Persons designated by the
Agent from time to time) as such Obligor's true and lawful attorney, and agent
in fact, and the Agent, or any agent of the Agent, may, without notice to any
Obligor, and at such time or times as the Agent or any such agent in its sole
discretion may determine, in the name of such Obligor, another Obligor, the
Agent or the Lenders, (a) demand payment of the Receivables, (b) enforce payment
of the Receivables by legal proceedings or otherwise, (c) exercise all of the
Obligors' rights and remedies with respect to the collection of Receivables, (d)
settle, adjust, compromise, extend or renew any or all of the Receivables, (e)
settle adjust or compromise any legal proceedings brought to collect the
Receivables, (f) discharge and release the Receivables or any of them, (g)
prepare, file and sign the name of any Obligor on any proof of claim in
bankruptcy or any similar document against any Account Debtor, (h) prepare, file
and sign the name of any Obligor on any notice of Lien, assignment or
satisfaction of Lien, or similar document in connection with any of the
Collateral, (i) endorse the name of any Obligor upon any chattel paper,
document, instrument, notice, freight xxxx, xxxx of lading or similar document
or agreement relating to the Receivables, the Inventory or any other Collateral,
(j) use the stationery of any Obligor and sign the name of any Obligor to
verifications of the Receivables and on any notice to the Account Debtors, (k)
open the Obligors' mail, (l) notify the post office authorities to change the
address for delivery of the Obligors' mail to an address designated by the
Agent, and (m) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Receivables, Inventory or other Collateral to which any Obligor has access.
SECTION 12.5. Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Agent
and the Lenders under this Agreement, the Notes and each of the other
Loan Documents shall be cumulative and not exclusive of any rights or
remedies which it or they would otherwise have. In exercising such
rights and remedies the Agent and the Lenders may be selective and no
failure or delay by the Agent or any Lender in exercising any right
shall operate as a waiver of it, nor shall any single or partial
exercise of any power or right preclude its other or further exercise
or the exercise of any other power or right.
(b) Waiver of Marshaling. Each Obligor hereby waives any right
to require any marshaling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this ARTICLE
12 or elsewhere in this Agreement or in any of the other Loan Documents
shall be construed as requiring or obligating the Agent, any Lender or
any agent or designee of the Agent or any Lender to make any demand, or
to make any inquiry as to the nature or sufficiency of any payment
received by it, or to present or file any claim or notice or take any
action, with respect to any Receivable or any other Collateral or the
monies due or to become due thereunder or in connection therewith,
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or to take any steps necessary to preserve any rights against prior
parties, and the Agent, the Lenders and their agents or designees shall
have no liability to the Obligors (or any of them) for actions taken
pursuant to this ARTICLE 12, any other provision of this Agreement or
any of the other Loan Documents so long as the Agent or such Lender
shall act reasonably and in good faith.
(d) Appointment of Receiver. In any action under this ARTICLE
12, the Agent shall be entitled during the continuance of an Event of
Default to seek the appointment of a receiver, without notice of any
kind whatsoever, to take possession of all or any portion of the
Collateral and to exercise such power as the Court shall confer upon
such receiver.
ARTICLE 13
ASSIGNMENTS
SECTION 13.1. Successors and Assigns; Participations.
(a) This Agreement, the other Loan Documents, and all security
interests or Liens created hereby or pursuant to any other Loan
Documents shall be binding upon Borrower, the estate of Borrower, and
any trustee or successor in interest of Borrower in the Chapter 11 Case
or any subsequent case commenced under Chapter 7 of the Bankruptcy
Code, and shall not be subject to Section 365 of the Bankruptcy Code.
This Agreement and the other Loan Documents shall be binding upon, and
inure to the benefit of, the Agent, each Lender and Issuing Bank, and
their respective successors, assigns, transferees and endorsees. The
security interests and Liens created in this Agreement and the other
Loan Documents shall remain valid and perfected in the event of the
substantive consolidation or conversion of the Chapter 11 Case or any
other bankruptcy case of Borrower to a case under Chapter 7 of the
Bankruptcy Code or in the event of dismissal of the Chapter 11 Case or
the release of any Collateral from the property of Borrower or
jurisdiction of the Court for any reason, without the necessity that
the Agent file financing statements or otherwise perfect the security
interests or Liens of the Agent, Lenders and Issuing Banks under
applicable law. No Obligor may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
each Lender.
(b) Each Lender may, with the consent of the Borrowers' Agent
(which shall not be unreasonably withheld, and which shall not be
necessary if an Event of Default exists) and the Agent's consent,
assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including all
or a portion of the Loans at the time owing to it and the Notes held by
it); PROVIDED, HOWEVER, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Lender's
rights and obligations under this Agreement, (ii) the amount of the
Commitment of the assigning Lender that is subject to each such
assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Agent) shall in no
event be less than the Minimum Commitment, (iii) in the case of a
partial assignment, the amount of the Commitment that is retained by
the assigning Lender (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Agent)
shall in no event be less than the Minimum Commitment, (iv) the parties
to each such assignment shall execute and
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deliver to the Agent, for its acceptance and recording in the Register
(as hereinafter defined) an Assignment and Acceptance, together with
any Note or Notes subject to such assignment, (v) such assignment shall
not, without the consent of the Borrowers' Agent, require any Obligor
to file a registration statement with the Securities and Exchange
Commission or apply to or qualify the Loans or the Notes under the blue
sky laws of any state, (vi) the representation contained in SECTION
13.2 hereof shall be true with respect to any such proposed assignee,
and (vii) the parties to such assignment shall deliver to the Agent a
processing fee of $5,000. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof, (x) the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment
and Acceptance, have the rights and obligations of a Lender hereunder,
and (y) the Lender assignor thereunder shall, to the extent provided in
such assignment, be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i)
other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, such Lender assignor makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such Lender
assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Obligors
(or any of them) or the performance or observance by the Obligors (or
any of them) of any of their obligations under this Agreement or any
other Loan Document; (iii) such assignee confirms that it has received
a copy of this Agreement, together with copies of the financial
statements referred to in SECTION 6.1(N) and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the
Agent, such Lender assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it
as a Lender.
(d) The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the
names and addresses of the Lenders and the Commitment Percentage of,
and principal amount of the Loans owing to, each Lender from time to
time (the "Register"). The entries in the Register shall be conclusive,
in the absence of manifest error, and the Obligors, the Agent and the
Lenders may treat each person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Obligors or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
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(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Eligible Assignee together with any Note
or Notes subject to such assignment, the fee described in CLAUSE (VII)
of SECTION 13.1(B), and the written consent of the Agent to such
assignment and, if applicable, the written consent of the Borrowers'
Agent, the Agent shall, if such Assignment and Acceptance has been
completed and is in the form of EXHIBIT A, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the
Register, (iii) give prompt notice thereof to the Lenders and the
Borrowers' Agent, and (iv) promptly deliver a copy of such Assignment
and Acceptance to the Borrowers' Agent. Within five Business Days after
receipt of notice, the Borrowers shall execute and deliver to the Agent
in exchange for the surrendered Note or Notes a new Note or Notes to
the order of such Eligible Assignee in amounts equal to the Commitment
Percentage assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and a new Note or Notes to the order of the
assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note
or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the
assigned Notes delivered to the assignor Lender. Each surrendered Note
or Notes shall be cancelled and returned to the Borrowers' Agent.
(f) Each Lender may, without the consent of the Obligors, sell
participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including
all or a portion of its commitments hereunder and the Loans owing to it
and the Notes held by it); PROVIDED, HOWEVER, that (i) each such
participation shall be in an amount not less than the Minimum
Commitment, (ii) such Lender's obligations under this Agreement
(including its commitments hereunder) shall remain unchanged, (iii)
such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iv) such Lender shall remain
the holder of the Notes held by it for all purposes of this Agreement,
(v) the Obligors, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement; PROVIDED, that
such Lender may agree with any participant that such Lender will not,
without such participant's consent, agree to or approve any waivers or
amendments which would reduce the principal of or the interest rate on
any Loans, extend the term or increase the amount of the commitments of
such participant, reduce the amount of any fees to which such
participant is entitled, extend any scheduled payment date for
principal or release Collateral securing the Loans (other than
Collateral disposed of pursuant to SECTION 8.7 hereof or otherwise in
accordance with the terms of this Agreement or the Security Documents),
and (vi) any such disposition shall not, without the consent of the
Borrowers' Agent, require any Obligor to file a registration statement
with the Securities and Exchange Commission to apply to qualify the
Loans or the Notes under the blue sky law of any state. Any Lender
selling a participation to any bank or other entity that is not an
Affiliate of such Lender shall give prompt notice thereof to the
Borrowers' Agent.
(g) Any Lender may, in connection with any assignment,
proposed assignment, participation or proposed participation pursuant
to this SECTION 13.1, disclose to the assignee, participant, proposed
assignee or proposed participant, any information relating to the
Obligors and their Subsidiaries furnished to such Lender by or on
behalf of the Obligors; PROVIDED that,
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prior to any such disclosure, each such assignee, proposed assignee,
participant or proposed participant shall agree with the Obligors or
such Lender (which in the case of an agreement with only such Lender,
the Obligors shall be recognized as a third party beneficiary thereof)
to preserve the confidentiality of any confidential information
relating to the Obligors and their Subsidiaries received from such
Lender.
(h) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.
SECTION 13.2. Representation of Lenders. Each Lender hereby
represents that it will make each Loan hereunder as a commercial loan for its
own account in the ordinary course of its business; PROVIDED, HOWEVER, that
subject to SECTION 13.1 hereof, the disposition of the Notes or other evidence
of the Secured Obligations held by any Lender shall at all times be within its
exclusive control.
ARTICLE 14
AGENT
SECTION 14.1. Appointment of Agent. Each of the Lenders hereby
irrevocably designates and appoints Bank of America as the agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Agent, as the agent for such Lender to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and such other Loan
Documents, including to make determinations as to the eligibility of Inventory
and Receivables and to adjust the advance ratios contained in the definition of
"Borrowing Base" (so long as such advance ratios, as adjusted, do not exceed
those set forth in the definition of "Borrowing Base"), together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement or such other Loan Documents, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Agent.
SECTION 14.2. Delegation of Duties. The Agent may execute any
of its duties under this Agreement and the other Loan Documents 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.
SECTION 14.3. Exculpatory Provisions. Neither the Agent nor
any of its trustees, officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall (a) be liable to any Lender (or any Lender's participants)
for any action lawfully taken or omitted to be taken by it or such Person
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under or in connection with this Agreement or the other Loan Documents (except
for its or such Person's own gross negligence or willful misconduct), (b) be
responsible in any manner to any Lender (or any Lender's participants) for any
recitals, statements, representations or warranties made by the Obligors or any
of their Subsidiaries or any officer thereof contained in this Agreement or the
other Loan Documents 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 the other Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of the Obligors or any of their
Subsidiaries to perform their obligations hereunder or thereunder, or (c) have
any obligation whatsoever to any of the Lenders to assure that the Collateral
exists or is owned by any Obligor or is cared for, protected or insured or has
been encumbered, or that the Agent's Liens have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Agent pursuant to any
of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion, given the Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
the Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing; PROVIDED that the foregoing clause (c) shall not relieve
the Agent of liability with respect to its gross negligence or willful
misconduct. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Obligors or any of their Subsidiaries.
SECTION 14.4. 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 to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrowers or any of its
Subsidiaries), 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
purposes unless such Note shall have been transferred in accordance with SECTION
13.1. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents 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 this Agreement
and the Notes in accordance with a request of the Required Lenders, 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 14.5. 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 or the Borrowers'
Agent 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 promptly give 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 that unless and until the Agent shall have received such directions,
the
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Agent may (but shall not be obligated to) continue making Revolving Credit
Loans to the Borrowers on behalf of the Lenders in reliance on the provisions of
SECTION 4.7 and take such other 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.
SECTION 14.6. 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
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Obligors and their
Subsidiaries, 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 Obligors and their
Subsidiaries 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 the other Loan Documents, 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
Obligors and their Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder or by
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Obligors and their Subsidiaries which may come into the possession of the Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
SECTION 14.7. Indemnification. The Lenders agree to indemnify
the Agent in its capacity as such (to the extent not reimbursed by the Obligors
and without limiting the obligation of the Obligors to do so), ratably according
to their respective Commitment Percentages, 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 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 this Agreement or the other Loan Documents, 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 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 resulting solely
from the Agent's gross negligence or willful misconduct or resulting solely from
transactions or occurrences that occur at a time after such Lender has assigned
all of its interests, rights and obligations under this Agreement pursuant to
SECTION 13.1 or, in the case of a Lender to which an assignment is made
hereunder pursuant to SECTION 13.1, at a time before such assignment. The
agreements in this subsection shall survive the payment of the Notes, the
Secured Obligations and all other amounts payable hereunder and the termination
of this Agreement.
SECTION 14.8. 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 Obligors and
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their Subsidiaries as if the Agent were not the Agent hereunder. With respect to
its Commitment, the Loans made or renewed by it and any Note issued to it and
any Letter of Credit issued by it, the Agent shall have and may exercise the
same rights and powers under this Agreement and the other Loan Documents and is
subject to the same obligations and liabilities as and to the extent set forth
herein and in the other Loan Documents for any other Lender. The terms "Lenders"
or "Required Lenders" or any other term shall, unless the context clearly
otherwise indicates, include the Agent in its individual capacity as a Lender or
one of the Required Lenders.
SECTION 14.9. Successor Agent. The Agent may resign as Agent
upon 5 days written notice to the Lenders and the Borrowers' Agent; PROVIDED,
HOWEVER, that such resignation shall not take effect until a successor agent has
been appointed. If the Agent shall resign as Agent under this Agreement, then
the Required Lenders shall appoint from among the Lenders a successor agent for
the Lenders which successor agent shall be approved by the Borrowers' Agent
(which approval shall not be unreasonably withheld), 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 its appointment, 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. If the Required Lenders
have failed to appoint a successor agent within 30 days after the resignation
notice given by the Agent as provided above, then the Agent shall be entitled to
appoint a successor agent from among the Lenders. After any Agent's resignation
hereunder as Agent, the provisions of ARTICLE 14 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
SECTION 14.10. Notices from Agent to Lenders. The Agent shall
promptly, upon the written request from any Lender, forward to each Lender
copies of any written notices, reports or other information supplied to it by
the Borrowers or other Obligors (but which the Borrowers or other Obligors are
not required to supply directly to the Lenders).
SECTION 14.11. Field Examination Reports; Disclaimer by
Lenders. Each Lender: (a) is deemed to have requested that the Agent furnish
such Lender, promptly after it becomes available, a copy of each field
examination report (each a "Report" and collectively, "Reports") prepared by the
Agent or its agents; (b) expressly agrees and acknowledges that neither the
Agent nor Bank of America makes any representation or warranty as to the
accuracy of any Report or shall be liable for any information contained in any
Report; (c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding the
Obligors and will rely significantly upon the Obligors' books and records, as
well as on representations of the Obligors' personnel; (d) agrees to keep all
Reports confidential and strictly for its internal use, and not to distribute
(except to its participants) or use any Report in any other manner; and (e)
without limiting the generality of any other indemnification provision contained
in this Agreement, agrees (i) to hold the Agent and Bank of America harmless
from any action the indemnifying Lender may take or conclusion the indemnifying
Lender may reach or draw from any Report in connection with any Loans or other
credit accommodations that the indemnifying Lender has made or may make to the
Obligors, or the indemnifying Lender's participation in Letters of Credit, and
(ii) to pay and protect, and indemnify, defend and hold the Agent and Bank of
America harmless from and against, the claims, actions, proceedings, damages,
costs, expenses and other amounts (including, without limitation reasonable
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attorneys' fees) incurred by the Agent and Bank of America as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
ARTICLE 15
GUARANTEE
SECTION 15.1. Guarantee. The Guarantors hereby jointly and
severally guarantee to the Agent and the other Secured Creditors the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Loans and all of the other Secured Obligations, including any
interest, fees and expenses accrued or incurred after the filing by or against
any Obligor of any petition seeking relief in bankruptcy or under any act or law
pertaining to insolvency or debtor relief, regardless of whether such interest,
fees and expenses are allowable in any such proceeding (collectively, the
"Guaranteed Obligations"), in each case strictly in accordance with the terms of
this Agreement and the other Loan Documents. The Guarantors hereby further
jointly and severally agree that if any Borrower shall fail to pay in full when
due (whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Guarantors will promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
Notwithstanding anything to the contrary herein provided, the "Guaranteed
Obligations" of Tultex Canada hereunder shall only include and relate to the
Loans and other Secured Obligations of Tultex and the guarantee and joint and
several liability of Tultex Canada shall not constitute any guarantee of or
joint and several liability in respect of any Loans or Guaranteed Obligations of
any other Person.
SECTION 15.2. Obligations Unconditional. The obligations of
the Guarantors hereunder are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Borrowers under this Agreement or any other Loan
Document or any substitution, release or exchange of any other guarantee of or
security for any of the Guaranteed Obligations, and, to the fullest extent
permitted by Applicable Law, irrespective of any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this SECTION 15.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional, and
joint and several, under all circumstances. Without limiting the generality of
the foregoing, it is agreed that each Guarantor's obligations hereunder shall be
absolute and unconditional irrespective of: (a) any lack of validity or
enforceability of any Loan Document or any other agreement or instrument
relating thereto; (b) any change in the time, manner or place of payments of, or
in any other term of, all or any part of the Guaranteed Obligations, or any
other amendment or waiver thereof or any consent to departure therefrom,
including any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Borrower or otherwise; (c) any taking,
exchange, release or non-perfection of any collateral, or any release or
amendment or waiver of or consent to departure from any guaranty for all or any
of the Guaranteed Obligations; (d) any change, restructuring or termination of
the corporate structure or existence of any Obligor; or (e) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, any Guarantor.
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SECTION 15.3. Waiver of Suretyship Defenses. Each Guarantor
agrees that the joint and several liability of the Guarantors provided for in
SECTION 15.1 shall not be impaired or affected by any modification, supplement,
extension or amendment or any contract or agreement to which the other Obligors
may hereafter agree (other than an agreement signed by the Agent and the Lenders
specifically releasing such liability), nor by any delay, extension of time,
renewal, compromise or other indulgence granted by the Agent or any Lender with
respect to any of the Guaranteed Obligations, nor by any other agreements or
arrangements whatever with the other Obligors or with anyone else, each
Guarantor hereby waiving all notice of such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each Guarantor is direct and unconditional as to
all of the Guaranteed Obligations, and may be enforced without requiring the
Agent or any Lender first to resort to any other right, remedy or security. Each
Guarantor hereby expressly waives promptness, diligence, notice of acceptance
and any other notice (except to the extent expressly provided for herein or in
another Loan Document) with respect to any of the Guaranteed Obligations, this
Agreement or any other Loan Document and any requirement that the Agent or any
Lender protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against any Borrower or any
other Person or any collateral, including any rights any Guarantor may otherwise
have under O.C.G.A. ss. 10-7-24 or any successor statute or any analogous
statute in any jurisdiction under the laws of which any Guarantor is
incorporated or in which any Guarantor conducts business.
SECTION 15.4. Reinstatement. The obligations of the Guarantors
hereunder shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Obligor in respect of any of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and the Guarantors jointly and
severally agree that they will indemnify each of the Agent and the Lenders on
demand for all reasonable costs and expenses (including fees of counsel)
incurred by the Agent and the Lenders in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
SECTION 15.5. Remedies. The Guarantors jointly and severally
agree that, as between the Guarantors and the Agent and the Lenders, the
Guaranteed Obligations may be declared to be forthwith due and payable as
provided herein (and shall be deemed to have become automatically due and
payable in the circumstances provided herein) for purposes hereof,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such Guaranteed Obligations from becoming automatically due and
payable) as against any Borrower and that, in the event of such declaration
(whether or not the Guaranteed Obligations are then due and payable by any
Borrower), the Guaranteed Obligations shall forthwith become due and payable by
the Guarantors for purposes hereof.
SECTION 15.6. Continuing Guaranty. The guaranty set forth
herein is a continuing guaranty, and shall apply to all Guaranteed Obligations,
whenever and howsoever arising.
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ARTICLE 16
MISCELLANEOUS
SECTION 16.1. Notices.
(a) Method of Communication. Except as specifically provided
in this Agreement or in any of the other Loan Documents, all notices
and the communications hereunder and thereunder shall be in writing or
by telephone, subsequently confirmed in writing. Notices in writing
shall be delivered personally or sent by certified or registered mail,
postage pre-paid, or by overnight courier, telex or facsimile
transmission and shall be deemed received in the case of personal
delivery, when delivered, in the case of mailing, when receipted for,
in the case of overnight delivery, on the next Business Day after
delivery to the courier, and in the case of telex and facsimile
transmission, upon transmittal, PROVIDED that in the case of notices to
the Agent, notice shall be deemed to have been given only when such
notice is actually received by the Agent. A telephonic notice to the
Agent, as understood by the Agent, will be deemed to be the controlling
and proper notice in the event of a discrepancy with or failure to
receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent
to it at the following addresses, or any other address of which all the
other parties are notified in writing:
If to a Borrower or Tultex Corporation, as Borrowers' Agent
any other Obligor: 000 Xxxxxxxxxxxx Xxxx.
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: O. Xxxxxxxx Xxxxxxx
Facsimile No.: 000-000-0000
with a courtesy copy to: Xxxxx, Day, Xxxxxx & Xxxxx
North Point 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: 000-000-0000
If to the Agent: Bank of America, N.A.
Business Credit Division
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxx
Facsimile No.: 000-000-0000
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with a courtesy copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Suite 2400
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx, III, Esq.
Facsimile No.: 000-000-0000
If to a Lender: At the address of such Lender set forth on the
signature page hereof.
(a) Agent's Office. The Agent hereby designates its office
located at 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, or any
subsequent office which shall have been specified for such purpose by
written notice to the Borrowers' Agent, as the office to which payments
due are to be made and at which Loans will be disbursed.
SECTION 16.2. Expenses. The Obligors jointly and severally
agree to pay or reimburse on demand all costs and expenses incurred by the
Agent, including the reasonable fees and disbursements of counsel, in connection
with (a) the negotiation, preparation, execution, delivery, administration,
syndication, enforcement and termination of this Agreement and each of the other
Loan Documents, whenever the same shall be executed and delivered, including (i)
the out-of-pocket costs and expenses incurred in connection with the
administration, syndication and interpretation of this Agreement and the other
Loan Documents; (ii) the costs and expenses of appraisals of the Collateral;
(iii) the costs and expenses of lien searches; and (iv) all taxes, fees and
other charges for recording the Mortgages and filing the Financing Statements
and continuations, and the costs and expenses of taking other actions to
perfect, protect, and continue the Security Interests; (b) the preparation,
execution and delivery of any waiver, amendment, supplement or consent by the
Agent and the Lenders relating to this Agreement or any of the other Loan
Documents; (c) sums paid or incurred to pay any amount or take any action
required of the Obligors under the Loan Documents that the Obligors fails to pay
or take; (d) costs of inspections and verifications of the Collateral, including
standard per diem fees charged by the Agent and all out-of-pocket expenses for
travel, lodging and meals in connection with inspections of the Collateral and
the Obligors' operations and books and records by the Agent's employees or
agents up to four times per year and whenever an Event of Default exists; (e)
costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining each Disbursement Account,
Agency Account and Lockbox; (f) costs and expenses of preserving and protecting
the Collateral; and (g) consulting, after the occurrence of a Default, with one
or more Persons, including appraisers, accountants and lawyers, concerning the
value of any Collateral for the Secured Obligations or related to the nature,
scope or value of any right or remedy of the Agent or any Lender hereunder or
under any of the other Loan Documents, including any review of factual matters
in connection therewith, which expenses shall include the fees and disbursements
of such Persons.
The Obligors further jointly and severally agree to pay or reimburse on demand
all costs and expenses incurred by the Agent, the Issuing Bank and the Lenders,
including the reasonable fees and disbursements of counsel, experts and other
consultants to the Agent, the Issuing Bank and any Lender, in connection with
(a) any Default or Event of Default or any modification, amendment, waiver,
restructuring or forbearance with respect to any of the Loan Documents in
connection with such Default or Event of Default, and (b) any actions taken to
obtain payment of the Secured Obligations,
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enforce the Security Interests, sell or otherwise realize upon the Collateral,
and otherwise enforce the provisions of the Loan Documents, or to prosecute or
defend any claim in any way arising out of, related to or connected with, this
Agreement or any of the other Loan Documents (except to the extent such
reimbursement may be prohibited by the terms of the Interim Order or the Final
Order). Additionally, the Obligors jointly and severally agree to pay or
reimburse on demand all costs and expenses incurred by the Lenders, including
the reasonable fees and disbursements of counsel, in connection with the review
of this Agreement and the other Loan Documents.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Obligors. Each Borrower
hereby authorizes the Agent and the Lenders to debit such Borrower's Loan
Accounts (by increasing the principal amount of the Revolving Credit Loans) in
the amount of any such costs and expenses owed by the Borrowers and other
Obligors when due.
SECTION 16.3. Stamp and Other Taxes. The Obligors jointly and
severally agree to pay any and all stamp, registration, recordation and similar
taxes, fees or charges, and shall jointly and severally indemnify the Agent and
the Lenders against any and all liabilities with respect to or resulting from
any delay in the payment or omission to pay any such taxes, fees or charges,
which may be payable or determined to be payable in connection with the
execution, delivery, performance or enforcement of this Agreement and any of the
other Loan Documents or the perfection of any rights or security interest
thereunder, including the Security Interest.
SECTION 16.4. Setoff. In addition to any rights now or
hereafter granted under Applicable Law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender, any
participant with such Lender in the Loans and each Affiliate of each Lender are
hereby authorized by each Obligor at any time or from time to time, without
notice to any Obligor or to any other Person, any such notice being hereby
expressly waived, to setoff and to appropriate and to apply any and all deposits
(general or special, including indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by any Lender or any Affiliate of any Lender or any participant to
or for the credit or the account of any Obligor against and on account of the
Secured Obligations irrespective or whether or not (h) the Agent or such Lender
shall have made any demand under this Agreement or any of the other Loan
Documents, or (i) the Agent or such Lender shall have declared any or all of the
Secured Obligations to be due and payable as permitted by SECTION 12.2 and
although such Secured Obligations shall be contingent or unmatured. Each Lender
acknowledges that the provisions of this Section shall, as between such Lender
and the Agent and other Lenders, be subject to the provisions of SECTION 16.24.
SECTION 16.5. Litigation. THE ObligorS, THE AGENT, THE ISSUING
BANK AND THE LENDERS HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL
BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH
AN ACTION MAY BE COMMENCED BY OR AGAINST THE ObligorS (OR ANY OF THEM), THE
AGENT, THE ISSUING BANK OR THE LENDERS ARISING OUT OF THIS AGREEMENT, THE
COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR DISPUTE
WHATSOEVER BETWEEN THE ObligorS (OR ANY OF THEM) AND THE AGENT, THE ISSUING BANK
OR ANY LENDER OF ANY KIND OR NATURE. THE OBLIGORS, THE AGENT, THE ISSUING BANK
AND THE LENDERS HEREBY AGREE THAT THE FEDERAL COURT OF THE WESTERN DISTRICT OF
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VIRGINIA OR, AT THE OPTION OF THE AGENT, THE ISSUING BANK OR ANY LENDER, ANY
COURT IN WHICH THE AGENT, THE ISSUING BANK OR SUCH LENDER SHALL INITIATE LEGAL
OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY, SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE OBLIGORS (OR ANY OF THEM) AND THE
AGENT, THE ISSUING BANK OR SUCH LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING THEREFROM.
EACH Obligor EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL
SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN
AND AGREEING THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR
PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWERS'
AGENT AT THE ADDRESS OF THE ObligorS SET FORTH IN SECTION 16.1. SHOULD ANY
Obligor FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO
SERVED WITHIN 30 DAYS AFTER THE MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT
AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR
IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE NONEXCLUSIVE CHOICE OF FORUM
SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY
JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.
SECTION 16.6. Waiver of Rights. EACH Obligor HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH SUCH Obligor HAS UNDER
CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR
PROVISION OF APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR TO THE
ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE AGENT OR ANY LENDER, OR THE
SUCCESSORS AND ASSIGNS OF THE AGENT OR SUCH LENDER TO POSSESSION OF THE
COLLATERAL UPON AN EVENT OF DEFAULT. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT WHICH THE AGENT OR THE LENDERS
MAY HAVE, EACH Obligor CONSENTS THAT IF THE AGENT OR ANY LENDER FILES A PETITION
FOR AN IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH SECTIONS 00-00-000 AND
00-00-000 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR PROVISION OF
APPLICABLE LAW, AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH PETITION AND
ATTACHED THERETO, THE COURT BEFORE WHICH SUCH PETITION IS FILED MAY DISPENSE
WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN
IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH CHAPTER 14 OF TITLE 44 OF THE
OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY SIMILAR PROVISION OF
APPLICABLE LAW, WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE
REQUIRED BY SECTION 00-00-000 OF THE OFFICIAL CODE OF GEORGIA OR BY ANY SIMILAR
PROVISION UNDER APPLICABLE LAW. EACH Obligor HEREBY ACKNOWLEDGES THAT IT HAS
READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND THE EFFECT HEREOF.
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SECTION 16.7. Consent to Advertising and Publicity. With the
prior written consent of the Borrowers' Agent, which consent shall not be
unreasonably withheld, the Agent, on behalf of the Lenders, may issue and
disseminate to the public information describing the credit accommodation
entered into pursuant to this Agreement, including the name and address of each
Obligor, the amount, interest rate, maturity, collateral and a general
description of the Obligors' business.
SECTION 16.8. Reversal of Payments. The Agent and each Lender
shall have the continuing and exclusive right to apply, reverse and re-apply any
and all payments to any portion of the Secured Obligations in a manner
consistent with the terms of this Agreement. To the extent any Obligor makes a
payment or payments to the Agent, for the account of the Lenders, or any Lender
receives any payment or proceeds of the Collateral for the Obligors' benefit,
which payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to 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
payment or proceeds received, the Secured Obligations or part thereof intended
to be satisfied shall be revived and continued in full force and effect, as if
such payment or proceeds had not been received by the Agent or such Lender.
SECTION 16.9. Injunctive Relief. Each Obligor recognizes that,
in the event such Obligor fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy at law may prove to
be inadequate relief to the Agent and the Lenders; therefore, each Obligor
agrees that if any Event of Default shall have occurred and be continuing, the
Agent and the Lenders, if the Agent or any Lender so requests, shall be entitled
to temporary and permanent injunctive relief without the necessity of proving
actual damages.
SECTION 16.10. Accounting Matters. All financial and
accounting calculations, measurements and computations made for any purpose
relating to this Agreement, including all computations utilized by the Obligors
to determine whether they are in compliance with any covenant contained herein,
shall, unless this Agreement otherwise provides or unless Required Lenders shall
otherwise consent in writing, be performed in accordance with GAAP.
SECTION 16.11. Amendments.
(a) Except as set forth in SUBSECTION (B) below, any term,
covenant, agreement or condition of this Agreement or any of the other
Loan Documents may be amended or waived, and any departure therefrom
may be consented to by the Required Lenders, if, but only if, such
amendment, waiver or consent is in writing signed by the Required
Lenders and, in the case of an amendment (other than an amendment
described in SECTION 16.11(D)), by the Borrowers' Agent or the
Obligors, and in any such event, the failure to observe, perform or
discharge any such term, covenant, agreement or condition (whether such
amendment is executed or such waiver or consent is given before or
after such failure) shall not be construed as a breach of such term,
covenant, agreement or condition or as a Default or an Event of
Default; PROVIDED that (i) without the written consent of the Issuing
Bank, no amendment or waiver shall be made to any provision of ARTICLE
3 hereof or any of the Issuing Bank's rights or obligations with
respect to Letters of Credit, (ii) without the written consent of Bank
of America, no amendment or waiver shall be made to any of Bank of
America's rights or obligations with respect to Non-Ratable Loans, and
(iii) without the written consent of the Agent, no amendment or waiver
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shall be made to any provision of ARTICLE 14 as such provisions apply
to the Agent or to any other provision of any Loan Document as such
provisions relate to the rights and obligations of the Agent. Unless
otherwise specified in such waiver or consent, a waiver or consent
given hereunder shall be effective only in the specific instance and
for the specific purpose for which given. In the event that any such
waiver or amendment is requested by the Obligors, the Agent and the
Lenders may require and charge a fee in connection therewith and
consideration thereof in such amount as shall be determined by the
Agent and the Required Lenders in their discretion.
(b) Except as otherwise set forth in this Agreement, without
the prior unanimous written consent of the Lenders, (i) no amendment,
consent or waiver shall affect the amount or extend the time of the
obligation of the Lenders to make Loans, extend the originally
scheduled time or times of payment of the principal of any Loan, alter
the time or times of payment of interest on any Loan or the amount of
the principal thereof or the rate of interest thereon or the amount of
any commitment fee payable hereunder, permit any subordination of the
principal or interest on any Loan, permit the subordination of the
Security Interests in any material Collateral (meaning Collateral
having a then fair market value in excess of $5,000,000), or amend the
provisions of ARTICLE 12 or of this SECTION 16.11(B), (ii) no material
Collateral (meaning Collateral having a then fair market value in
excess of $5,000,000) shall be released by the Agent other than
releases of Collateral in connection with the sale of any such
Collateral in the ordinary course of an Obligor's business or as
otherwise specifically permitted in this Agreement, (iii) no amendment
shall be made to the definitions of "Commitment", "Commitment
Percentage", "Proportionate", "Ratable", "Required Lenders" or "Secured
Obligations", (iv) neither the Agent nor any Lender shall consent to
any amendment to or waiver of the amortization, deferral or
subordination provisions of any Subordinated Indebtedness or any other
instrument or agreement evidencing or relating to obligations of the
Obligors that are expressly subordinate to any of the Secured
Obligations if such amendment or waiver would be adverse to the Lenders
in their capacities as Lenders hereunder; and (v) no amendment shall be
made that increases the advance rates set forth in the definition of
"Borrowing Base"; PROVIDED, HOWEVER, that anything herein to the
contrary notwithstanding, the Required Lenders shall have the right to
waive any Default or Event of Default (unless such Default or Event of
Default arises out of a provision of this Agreement which can only be
amended with the unanimous consent of the Lenders) and the consequences
hereunder of such Default or Event of Default and shall have the right
to enter into an agreement with the Obligors providing for the
forbearance from the exercise of any remedies provided hereunder or
under the other Loan Documents without waiving any Default or Event of
Default.
(c) The making of Loans hereunder by the Lenders (or the
issuance of Letters of Credit) during the existence of a Default or
Event of Default shall not be deemed to constitute a waiver of such
Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or any
other Loan Document to the contrary, no consent, written or otherwise,
of the Obligors shall be necessary or required in connection with any
amendment to ARTICLE 14 or SECTION 4.7, and any amendment to such
provisions shall be effected solely by and among the Agent and the
Required Lenders (or Lenders, as the case may be), PROVIDED that no
such amendment shall impose any obligation on the Obligors.
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SECTION 16.12. Assignment. Subject to the provisions of
ARTICLE 13, all the provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that no Obligor may assign or transfer any of its rights under
this Agreement.
SECTION 16.13. Performance of Obligors' Duties.
(a) The Obligors' obligations under this Agreement and each of
the other Loan Documents shall be performed by the Obligors at their
sole cost and expense.
(b) If the Obligors shall fail to do any act or thing which
they have covenanted to do under this Agreement or any of the other
Loan Documents, the Agent, on behalf of the Lenders, may (but shall not
be obligated to) do the same or cause it to be done either in the name
of the Agent or the Lenders or in the name and on behalf of the
Obligors, and the Obligors hereby irrevocably authorize the Agent so to
act.
SECTION 16.14. Indemnification. The Obligors jointly and
severally agree to reimburse the Agent, the Issuing Bank and the Lenders and
each of their Affiliates, agents, employees, officers, directors, Subsidiaries,
successors and assigns (the "Indemnitees") for all costs and expenses, including
reasonable counsel fees and disbursements, incurred, and to indemnify and hold
the Indemnitees harmless from and against all losses suffered by, any Indemnitee
in connection with (a) the exercise by the Agent, the Issuing Bank or any Lender
of any right or remedy granted to it under this Agreement or any of the other
Loan Documents, (b) any claim, and the prosecution or defense thereof, arising
out of or in any way connected with this Agreement or any of the other Loan
Documents, including any claim relating to Environmental Laws, and (c) the
collection or enforcement of the Secured Obligations or any of them, other than
such costs, expenses and liabilities arising out of such Indemnitee's gross
negligence or willful misconduct. The agreements in this Section shall survive
the payment of the Notes, the Secured Obligations and all other amounts payable
hereunder and the termination of this Agreement.
SECTION 16.15. All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Agent and the Lenders and any
Persons designated by the Agent or the Lenders pursuant to any provisions of
this Agreement or any of the other Loan Documents shall be deemed coupled with
an interest and shall be irrevocable so long as any of the Secured Obligations
remain unpaid or unsatisfied.
SECTION 16.16. Survival. Notwithstanding any termination of
this Agreement, (a) until all Secured Obligations have been irrevocably paid in
full or otherwise satisfied, the Agent, for the benefit of the Secured
Creditors, shall retain its Security Interest and shall retain all rights under
this Agreement and each of the Security Documents with respect to such
Collateral as fully as though this Agreement had not been terminated, (b) the
indemnities to which the Agent, the Lenders and the other indemnitees are
entitled under the provisions of this ARTICLE 16 and any other provision of this
Agreement and the other Loan Documents shall continue in full force and effect
and shall protect the Agent, the Lenders and the other indemnitees against
events arising after such termination as well as before, and (c) in connection
with the termination of this Agreement and the release and termination of the
Security Interests, the Agent, on behalf of itself as agent and the Secured
Creditors, may require
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such assurances and indemnities as it shall reasonably deem necessary or
appropriate to protect the Agent and the Secured Creditors against loss on
account of such release and termination, including with respect to credits
previously applied to the Secured Obligations that may subsequently be reversed
or revoked.
SECTION 16.17. Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
SECTION 16.18. Severability of Provisions. Any provision of
this Agreement or any other Loan Document which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 16.19. Governing Law. This Agreement, the Notes and
each of the other Loan Documents shall be construed in accordance with and
governed by the law of the State of Georgia.
SECTION 16.20. Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the same agreement.
SECTION 16.21. Reproduction of Documents. This Agreement, each
of the other Loan Documents and all documents relating thereto, including (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Agent or any Lender, and (c) financial statements,
certificates and other information previously or hereafter furnished to the
Agent or any Lender, may be reproduced by the Agent or such Lender by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and such Person may destroy any original document so produced.
Each party hereto stipulates that, to the extent permitted by Applicable Law,
any such reproduction shall be as admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the original shall
be in existence and whether or not such reproduction was made by the Agent or
such Lender in the regular course of business), and any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 16.22. Term of Agreement. This Agreement shall remain
in effect from the Agreement Date through the Termination Date and thereafter
until all Secured Obligations shall have been irrevocably paid and satisfied in
full. No termination of this Agreement shall affect the rights and obligations
of the parties hereto arising prior to such termination.
SECTION 16.23. Contribution and Indemnification among the
Obligors. Each Obligor is obligated to repay the Secured Obligations as joint
and several obligors under this Agreement. To the extent that any Obligor shall,
under this Agreement as a joint and several obligor, repay any of the Secured
Obligations constituting Loans made to another Obligor hereunder or other
Secured Obligations incurred directly and primarily by any other Obligor (an
"Accommodation Payment"),
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then the Obligor making such Accommodation Payment shall be entitled to
contribution and indemnification from, and be reimbursed by, each of the other
Obligors in an amount, for each of such other Obligors, equal to a fraction of
such Accommodation Payment, the numerator of which fraction is such other
Obligor's "Allocable Amount" (as defined below) and the denominator of which is
the sum of the Allocable Amounts of all of the Obligors. As of any date of
determination, the "Allocable Amount" of each Obligor shall be equal to the
maximum amount of liability for Accommodation Payments which could be asserted
against such Obligor hereunder without (a) rendering such Obligor "insolvent"
within the meaning of Section 101(31) of Title 11 of the United States Code
entitled "Bankruptcy" (the "Bankruptcy Code"), Section 2 of the Uniform
Fraudulent Transfer Act (the "UFTA"), Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), or Section 18-2-22 of the Official Code of Georgia
Annotated, (b) leaving such Obligor with unreasonably small capital or assets,
within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA,
or Section 4 of the UFCA, or (c) leaving such Obligor unable to pay its debts as
they become due within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification and reimbursement under this SECTION 16.23 shall
be subordinate in right of payment to the prior payment in full of the Secured
Obligations.
SECTION 16.24. Restrictions on Actions by Lenders; Sharing of
Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of the Required Lenders, and that it shall, to the
extent it is lawfully entitled to do so, upon the request of the
Required Lenders, setoff against the Secured Obligations, any amounts
owing by such Lender to any Obligor or any accounts of any Obligor now
or hereafter maintained with such Lender. Each of the Lenders further
agrees that it shall not, unless specifically requested to do so by the
Agent, take or cause to be taken any action to enforce its rights under
this Agreement or against any Obligor, including the commencement of
any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) Each Lender agrees that if, as a result of the exercise of
a right of setoff, banker's lien or counterclaim or other similar right
or the receipt of a secured claim it receives any payment in respect of
the Secured Obligations, it shall promptly notify the Agent thereof
(and the Agent shall promptly notify the other Lenders). If, as a
result of such payment, such Lender receives a greater percentage of
the Secured Obligations owed to it under this Agreement than the
percentage received by any other Lender, such Lender shall purchase a
participation (which it shall be deemed to have purchased
simultaneously upon the receipt of such payment) in the Secured
Obligations then held by such other Lenders so that all such recoveries
of principal and interest with respect to all Secured Obligations owed
to each Lender shall be pro rata on the basis of its respective amount
of the Secured Obligations owed to all Lenders, PROVIDED that if all or
part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered by or on behalf of the
Obligors from such Lender, such purchase shall be rescinded and the
purchase price paid for such participation shall be returned to such
Lender to the extent of such recovery, but without interest.
(c) Each Lender which receives such a secured claim shall
exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this SECTION
16.24 to share in the benefits of any recovery on such secured claim.
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(d) Each Obligor expressly consents to the foregoing
arrangements and agrees that any holder of a participation in any
Secured Obligation so purchased or otherwise acquired may exercise any
and all rights of banker's lien, setoff or counterclaim with respect to
any and all monies owing by such Obligor to such holder as fully as if
such holder were a holder of such Secured Obligation in the amount of
the participation held by such holder.
SECTION 16.25. Agency for Perfection. Each Lender hereby
appoints each other Lender as its agent for the purpose of perfecting the
Lenders' security interest in assets which, in accordance with Article 9 of the
Uniform Commercial Code can be perfected only by possession. Should any Lender
(other than the Agent) obtain possession of any such Collateral, such Lender
shall notify the Agent thereof, and, promptly upon the Agent's request therefor
shall deliver such Collateral to the Agent or in accordance with the Agent's
instructions.
SECTION 16.26. Taxes. Except as otherwise required by
Applicable Law, each payment by the Obligors under this Agreement or the other
Loan Documents or in respect of the Letters of Credit shall be made without
setoff or counterclaim and without withholding for or on account of any present
or future taxes imposed by or within the jurisdiction in which any Obligor is
domiciled, any jurisdiction from which the Obligors make any payment hereunder,
or (in each case) any political subdivision or taxing authority thereof or
therein (excluding any such tax imposed on the overall net income of the Agent
or the Lenders). If any such withholding is so required, the Obligors shall make
the withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon, and
forthwith pay such additional amount as may be necessary to ensure that the net
amount actually received free and clear of such taxes (including such taxes on
such additional amount) is equal to the amount which Agent or the Lenders would
have received had such withholding not been made. If the Agent or the Lenders
pay any amount in respect of any such taxes, penalties or interest, the Obligors
shall reimburse the Agent or the Lenders (as appropriate) for that payment on
demand in the currency in which such payment was made. If an Obligor pays any
such taxes, penalties or interest, it shall deliver official tax receipts
evidencing that payment or certified copies thereof to the Agent on or before
the thirtieth day after payment.
SECTION 16.27. Final Agreement. This Agreement and the other
Loan Documents are intended by the parties hereto as the final, complete and
exclusive expression of the agreement among them with respect to the subject
matter hereof and thereof, it being understood that the Fee Letter shall survive
the execution, delivery and closing of this Agreement. This Agreement and the
other Loan Documents supersede any and all prior oral or written agreements
between the parties hereto relating to the subject matter hereof and thereof;
provided, however, that (a) the terms of the Original Loan Agreement shall
continue in full force and effect until all Secured Obligations (as defined in
the Original Loan Agreement) are paid in full, (b) expenses incurred prior to
the date hereof and during the effective term of the Original Loan Agreement
shall be reimbursable to the Agent in accordance with the terms thereof, (c) all
indemnification obligations of the Obligors under the Original Loan Agreement
and all other provisions of the Original Loan Agreement which expressly survive
the termination thereof shall continue; and (d) notwithstanding the execution
and delivery hereof, this Agreement shall not be binding upon the parties unless
and until entry of the first to be entered of the Interim Order or the Final
Order in accordance with the terms hereof.
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SECTION 16.28. Waiver of Consequential Damages, Etc. THE
OBLIGORS AGREE NOT TO ASSERT ANY CLAIM AGAINST THE AGENT, THE ISSUING BANK, ANY
LENDER, ANY OF THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS AND AGENTS, ON ANY THEORY OF LIABILITY, FOR SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING
TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR IN THE ORIGINAL LOAN AGREEMENT
OR IN ANY OTHER LOAN DOCUMENT OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF
THE LOANS.
[Signatures commence on next page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers in several counterparts all as of the
day and year first written above.
BORROWERS: TULTEX CORPORATION
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
President and Chief Executive Officer
CALIFORNIA SHIRT SALES, INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
DOMINION STORES, INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
TULTEX/T-SHIRT CITY, INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
TRACK GEAR INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Chairman and Chief Executive Officer
GUARANTORS: AKOM, LTD.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
DOMINION DISTRIBUTION, INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
LIGA MAYOR DE MEXICO, S.A. DE C.V.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Legal Representative
TULTEX SUBSIDIARY (VA), INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
TULTEX SUBSIDIARY (MASS), INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
TULTEX CANADA INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
TULTEX INTERNATIONAL, INC.
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
SWEATJET INCORPORATED
By:
-----------------------------------
O. Xxxxxxxx Xxxxxxx
Vice President
AGENT: BANK OF AMERICA, N.A.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Address: 000 Xxxxxxxxx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxxx Xxxx, Business Credit
Facsimile No.: 000-000-0000
LENDERS: BANK OF AMERICA, N.A.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Address: 000 Xxxxxxxxx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxxx Xxxx, Business Credit
Facsimile No.: 000-000-0000
GENERAL ELECTRIC CAPITAL CORPORATION
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Address:
CONGRESS FINANCIAL CORPORATION (SOUTHERN)
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Address:
PNC BANK NATIONAL ASSOCIATION
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Address:
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Address:
FINOVA CAPITAL CORPORATION
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Address:
