Exhibit 10.5
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 14, 1997
among
ANVIL KNITWEAR, INC.,
as Borrower,
ANVIL HOLDINGS, INC.,
and certain Subsidiaries,
as Guarantors,
THE BANKS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Agent,
AND
BANK OF AMERICA ILLINOIS,
BANQUE NATIONALE DE PARIS and
XXXXXX FINANCIAL, INC.,
as Co-Agents
TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS AND ACCOUNTING TERMS....................................1
1.1 Definitions.......................................................1
1.2 Computation of Time Periods, etc.................................24
1.3 Accounting Terms.................................................24
SECTION 2 CREDIT FACILITIES..................................................25
2.1 Revolving Loans..................................................25
2.2 Interest.........................................................27
2.3 Conversion.......................................................27
2.4 Letter of Credit Subfacility.....................................28
2.5 Conditions of Lending............................................33
2.6 Termination of Commitments.......................................34
2.7 Fees.............................................................34
2.8 Prepayments......................................................35
2.9 Increased Costs, Illegality, etc.................................36
2.10 Capital Adequacy................................................37
2.11 Compensation....................................................38
2.12 Taxes...........................................................39
2.13 Indemnification; Nature of Issuing Bank's Duties................41
2.14 Change of Lending Office........................................43
2.15 Payments and Computations.......................................43
2.16 Pro Rata Treatment..............................................44
2.17 Sharing of Payments.............................................44
SECTION 3 GUARANTEE..........................................................45
3.1 The Guarantee....................................................45
3.2 Obligations Unconditional........................................45
3.3 Reinstatement....................................................47
3.4 Certain Additional Waivers.......................................47
3.5 Remedies.........................................................47
3.6 Continuing Guarantee.............................................48
3.7 Rights of Contribution...........................................48
SECTION 4 CONDITIONS PRECEDENT TO INITIAL LOANS AND INITIAL
LETTERS OF CREDIT....................................................49
4.1 Executed Credit Documents........................................49
4.2 No Default; Representations and Warranties.......................49
4.3 Opinion of Counsel...............................................49
4.4 Solvency.........................................................49
4.5 Liability and Casualty Insurance.................................50
4.6 Corporate Documents..............................................50
4.7 Recapitalization.................................................51
4.8 Availability.....................................................51
4.9 Payment of Fees..................................................52
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SECTION 5 REPRESENTATIONS AND WARRANTIES.....................................52
5.1 Organization and Good Standing...................................52
5.2 Due Authorization................................................52
5.3 No Conflicts.....................................................52
5.4 Consents.........................................................53
5.5 Enforceable Obligations..........................................53
5.6 Financial Condition..............................................53
5.7 No Default.......................................................53
5.8 Liens............................................................53
5.9 Indebtedness.....................................................54
5.10 Litigation......................................................54
5.11 Material Agreements.............................................54
5.12 Taxes...........................................................54
5.13 Compliance with Law.............................................55
5.14 ERISA...........................................................55
5.15 Subsidiaries....................................................55
5.16 Use of Proceeds; Margin Stock...................................55
5.17 Government Regulation...........................................56
5.18 Hazardous Substances............................................56
5.19 Patents, Franchises, etc........................................56
5.20 Solvency........................................................57
5.21 No Material Misstatements.......................................57
SECTION 6 AFFIRMATIVE COVENANTS..............................................57
6.1 Information Covenants............................................57
6.2 Preservation of Existence and Franchises.........................60
6.3 Books, Records and Inspections...................................60
6.4 Compliance with Law..............................................60
6.5 Payment of Taxes and Other Indebtedness..........................60
6.6 Insurance........................................................61
6.7 Maintenance of Property..........................................61
6.8 Performance of Obligations.......................................61
6.9 ERISA............................................................61
6.10 Use of Proceeds.................................................62
6.11 Financial Covenants.............................................62
6.12 Additional Subsidiary Guarantors................................63
6.13 Pledged Assets..................................................64
6.14 Title Commitment, Survey and Flood Hazard Certification.........65
6.15 Equity Transactions.............................................65
6.16 Anvil (Czech), Inc..............................................65
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SECTION 7 NEGATIVE COVENANTS.................................................66
7.1 Indebtedness.....................................................66
7.2 Liens............................................................67
7.3 Nature of Business...............................................67
7.4 Consolidation, Merger, Sale of Assets, etc.......................67
7.5 Investments......................................................69
7.6 Prepayments of Indebtedness, etc.................................69
7.7 Restricted Payments..............................................70
7.8 Transactions with Affiliates.....................................71
7.9 Ownership of Subsidiaries........................................71
7.10 Fiscal Year.....................................................71
7.11 Exchange Debentures.............................................72
SECTION 8 EVENTS OF DEFAULT..................................................72
8.1 Events of Default................................................72
8.2 Acceleration; Remedies...........................................75
SECTION 9 AGENCY PROVISIONS..................................................76
9.1 Appointment......................................................76
9.2 Delegation of Duties.............................................76
9.3 Exculpatory Provisions...........................................76
9.4 Reliance on Communications.......................................77
9.5 Notice of Default................................................77
9.6 Non-Reliance on Agent and Other Banks............................78
9.7 Indemnification..................................................78
9.8 Agent in Its Individual Capacity.................................79
9.9 Successor Agent..................................................79
9.10 Co-Agents.......................................................79
SECTION 10 MISCELLANEOUS.....................................................80
10.1 Notices.........................................................80
10.2 Right of Set-Off................................................81
10.3 Benefit of Agreement............................................81
10.4 No Waiver; Remedies Cumulative..................................83
10.5 Payment of Expenses, etc........................................84
10.6 Amendments, Waivers and Consents................................84
10.7 Counterparts....................................................85
10.8 Headings........................................................85
10.9 Survival of Indemnification.....................................85
10.10 Governing Law; Submission to Jurisdiction; Venue...............85
10.11 Severability...................................................86
10.12 Entirety.......................................................86
10.13 Survival of Representations and Warranties.....................86
10.14 Confidentiality................................................87
10.15 Waiver of Jury Trial...........................................87
10.16 Binding Effect; Termination of Existing Credit Agreement.......87
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Schedules
---------
Schedule 1.1A Existing Letters of Credit
Schedule 2.1(a) Lenders
Schedule 2.1(b) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.3 Form of Notice of Conversion
Schedule 5.9 Indebtedness
Schedule 5.10 Litigation
Schedule 5.13 Compliance with Laws
Schedule 5.15 Subsidiaries
Schedule 5.18 Environmental Disclosures
Schedule 5.19 Intellectual Property
Schedule 6.1(d) Form of Borrowing Base Certificate
Schedule 6.1(e) Form of Officer's Certificate
Schedule 6.6 Insurance
Schedule 6.12 Form of Joinder Agreement
Schedule 7.2 Existing Liens
Schedule 10.3(b) Form of Assignment and Acceptance
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AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 14, 1997
(the "Credit Agreement"), is by and among ANVIL KNITWEAR, INC., a Delaware
corporation (the "Borrower"), ANVIL HOLDINGS, INC., a Delaware corporation (the
"Parent Company"), the Subsidiaries of the Borrower identified on the signature
pages hereto and such other Subsidiaries of the Borrower which may hereafter
become a Guarantor in accordance with the terms hereof (hereinafter together
with the Parent Company sometimes referred to individually as a "Guarantor" and
collectively as the "Guarantors"), the various banks and lending institutions
identified on the signature pages hereto (each a "Bank" and collectively, the
"Banks"), NATIONSBANK, N.A. (successor in interest to NationsBank, N.A.
(Carolinas)), as agent for the Banks (in such capacity, the "Agent") and BANK OF
AMERICA ILLINOIS, BANQUE NATIONALE DE PARIS and XXXXXX FINANCIAL, INC., as
co-agents for the Banks (in such capacities, the "Co-Agents").
W I T N E S S E T H
WHEREAS, the Borrower and the Guarantors have requested that the Banks
provide an $55,000,000 credit facility for the purposes hereinafter set forth;
WHEREAS, the Banks have agreed to make the requested credit facility
available to the Borrower, and the Agent has accepted its duties hereunder, all
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Acquisition" means the purchase (whether for cash, property,
services, assumption of Indebtedness, securities or otherwise) of (i) all
or substantially all of the assets of another
Person or (ii) shares of capital stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of another Person.
"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date, as provided in Section 6.12.
"Adjusted Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate equal to
the rate obtained by dividing (a) the offered quotation to first-class
banks by NationsBank for deposits in U.S. dollars in the London interbank
Eurodollar market at 11:00 A.M. (London time) (or as soon thereafter as is
practicable), in each case two Business Days before the first day of such
Interest Period, in an amount substantially equal to such Eurodollar Loan
comprising part of such borrowing (including conversions, extensions and
renewals) and for a period equal to such Interest Period (rounded to the
nearest 1/16th of 1%) by (b) a percentage equal to 100% minus the Adjusted
Eurodollar Rate Reserve Percentage for such Interest Period. As used
herein, "Adjusted Eurodollar Rate Reserve Percentage" for the Interest
Period for each Eurodollar Loan comprising part of the same borrowing
(including conversions, extensions and renewals), means the percentage
applicable two Business Days before the first day of such Interest Period
under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member bank of
the Federal Reserve System in New York City with respect to liabilities or
assets consisting of or including eurocurrency liabilities, as such term
is defined in Regulation D (or with respect to any other category of
liabilities which includes deposits by reference to which the interest
rate on Eurodollar Loans is determined) having a term equal to the
Interest Period for which such Adjusted Eurodollar Reserve Percentage is
determined.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by or under direct or
indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly,
the power (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii) to direct
or cause direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means the agent for the Banks under this Credit Agreement as
identified in the recital of parties hereinabove, and any successors and
assigns in such capacity pursuant to Section 9.9.
"Agent's Fee Letter" means the letter agreement, dated as of
February 12, 1997, between the Agent and the Borrower, as amended,
modified, supplemented or replaced from time to time.
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"Agent's Fees" shall have such meaning as provided in Section
2.7(a).
"Applicable Margin" means, for purposes of calculating the
applicable interest rate for any day for any Revolving Loan, the
applicable rate of the Commitment Fee for any day for purposes of Section
2.7(b) or the applicable rate of the Standby Letter of Credit Fee for any
day for purposes of Section 2.7(c)(i), the appropriate applicable
percentage corresponding to the Ave. Funded Debt to Consolidated EBITDA
Ratio in effect as of the most recent Calculation Date:
Applicable Margin
Ave. Funded Debt
Pricing to Consolidated Eurodollar Base Rate Standby Commitment
Level EBITDA Ratio Revolving Loans Revolving Loans Letters of Credit Fee
I > 4.75 2.50% 1.50% 2.75% 0.50 %
II > 4.25 but < = 4.75 2.25% 1.25% 2.50% 0.50 %
III > 3.75 but < = 4.25 2.00% 1.00% 2.25% 0.50 %
IV > 3.25 but < = 3.75 1.75% 0.75% 2.00% 0.375 %
V > 2.75 but < = 3.25 1.50% 0.50% 1.75% 0.375 %
VI < = 2.75 1.25% 0.25% 1.50% 0.3125 %
The Applicable Margins shall be determined and adjusted quarterly on the
date (each a "Calculation Date") five Business Days after the date by
which the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 6.1(e); provided, however that
the initial Applicable Margins shall be based on Pricing Level I (as shown
above) and shall remain at Pricing Level I until the first Calculation
Date subsequent to the Closing Date and, thereafter, the Pricing Level
shall be determined by the then current Ave. Funded Debt to Consolidated
EBITDA Ratio. Each Applicable Margin shall be effective from one
Calculation Date until the next Calculation Date.
"Asheville Property" means the property owned by the Borrower in
Swannanoa, Buncombe County, North Carolina.
"Asset Sale" means the sale, lease, conveyance or other disposition
of any assets, including, without limitation, (i) by way of a sale and
leaseback, (ii) any disposition by means of a merger, consolidation or
similar transaction, (iii) the sale or other transfer of any of the
capital stock of any Subsidiary and (iv) any "Asset Sale" as defined in
any Recapitalization Document; provided that Asset Sales shall not include
any Specified Sale, any Recovery Event or any Equity Transaction.
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"Ave. Funded Debt" means, as of the date of determination, the
arithmetic average of Consolidated Funded Debt (except with respect to the
fiscal quarter ended February 1, 1997, which for purposes of the
calculation of Ave. Funded Debt hereunder, Consolidated Funded Debt for
the fiscal quarter ended February 1, 1997, shall be deemed to be the
aggregate amount of Consolidated Funded Debt on the Closing Date
immediately after giving effect to the initial Extensions of Credit
hereunder, the Recapitalization and the issuance of the Senior Notes) as
of (i) the end of the fiscal quarter most recently ended, commencing with
the fiscal quarter ended February 1, 1997, and (ii) the end of each of the
three fiscal quarters immediately preceding such fiscal quarter, except
that prior to January 31, 1998, as of the end of the fiscal quarters
occurring after February 1, 1997.
"Ave. Funded Debt to Consolidated EBITDA Ratio" means, at the end of
each fiscal quarter, the ratio of (i) Ave. Funded Debt as of such date to
(ii) Consolidated EBITDA for the period of four consecutive quarters then
ended.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time
to time.
"Base Rate" means, for any day, a rate per annum (rounded if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
greater of (a) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1% or (b) the Prime Rate in effect on such day. If for any reason
the Agent shall have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the Federal Funds
Effective Rate for any reason, including the inability or failure of the
Agent to obtain sufficient quotations in accordance with the terms hereof,
the Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loan" means a Revolving Loan which bears interest based
on the Base Rate.
"Borrower" means Anvil Knitwear, Inc., a Delaware corporation as
identified and defined in the opening paragraph hereof.
"Borrower Obligations" means, without duplication, (i) all of the
obligations of the Borrower to the Banks, the Agent and the Issuing Bank
(including the obligations to pay principal of and interest on the
Revolving Loans, to pay LOC Obligations, to pay all Fees, to provide cash
collateral in respect of Letters of Credit, to pay certain expenses and
the obligations arising in connection with various indemnities in respect
thereof) whenever arising, under this Credit Agreement, the Revolving
Notes or any of the other Credit Documents to which the Borrower is a
party and (ii) all liabilities and obligations, whenever
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arising, owing from the Borrower to any Bank, or any Affiliate of a Bank,
arising under any Hedging Agreement.
"Borrowing Base" means, as of any day, the sum of (i) 85% of
Eligible Receivables, plus (ii) 60% of Eligible Raw Materials Inventory,
plus (iii) 50% of Eligible Finished Goods Inventory plus (iv) 50% of
Eligible Equipment plus (v) 50% of Eligible Real Estate, in each case as
set forth in the most recent Borrowing Base Certificate delivered to the
Agent and the Banks in accordance with the terms of Section 6.1(d).
"BRS" means Xxxxxxxxx, Xxxxxx & Xxxxxxxx & Co., L.P., a Delaware
limited partnership, and its Affiliates (including for this purpose, all
of their respective employees, partners, officers and directors and family
members and relatives of such Persons).
"Business Day" means any day other than a Saturday, a Sunday, a
legal holiday or a day on which banking institutions are authorized or
required by law or other governmental action to close in Charlotte, North
Carolina or New York, New York; except that in the case of Eurodollar
Loans, such day is also a day on which dealings between banks are carried
on in U.S. dollar deposits in the London interbank market.
"Capital Expenditures" means all expenditures which in accordance
with generally accepted accounting principles would be classified as
capital expenditures, including without limitation, Capital Lease
Obligations.
"Capital Lease Obligations" means, as of any date, any lease of
property, real or personal, which should be capitalized as indebtedness on
a balance sheet of the lessee prepared as of such date, in accordance with
generally accepted accounting principles.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (ii) U.S.
dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar
certificates of deposit of (y) any domestic commercial bank of recognized
standing having capital and surplus in excess of $100,000,000 or (z) any
bank whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Xxxxx'x is at least P-1 or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than 270 days from the date of acquisition, (iii)
commercial paper and variable or fixed rate notes issued by any Approved
Bank (or by the parent company thereof) or any variable rate notes issued
by, or guaranteed by any domestic corporation rated A-2 (or the equivalent
thereof) or better by S&P or P-2 (or the equivalent thereof) or better by
Moody's and maturing within six months of the date of acquisition, (iv)
repurchase agreements with a bank or trust company (including any of the
Banks) or recognized securities dealer having capital and surplus in
excess of $100,000,000 for direct obligations issued by or fully
guaranteed by the United States of America in which the Borrower shall
have a perfected first priority security
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interest (subject to no other liens or encumbrances) and having, on the
date of purchase thereof, a fair market value of at least 100% of the
amount of the repurchase obligations and (v) investments in money market
funds substantially all of whose assets are comprised of securities of the
types described in clauses (i) -(iv) above.
"Certificate of Designation" means that certain Certificate of
Designation of the Powers, Preferences and Relative, Participating,
Optional and Other Special Rights of 13.00% Senior Exchangeable Preferred
Stock and Qualifications, Limitations and Restrictions Thereof, dated as
of the Closing Date and executed by the Parent Company, as amended,
modified, extended or replaced from time to time.
"Change of Control" means any of the following events:
(i) prior to a Qualifying Public Equity Offering, (a) the
failure of the Investors to beneficially own, directly or
indirectly, at least 51%, in the aggregate, of the Voting Stock of
the Parent Company (or in the case of a merger or consolidation
between the Parent Company and the Borrower, then of the survivor of
such merger or consolidation) or (b) the failure of the Investors,
collectively, to retain and exercise the unconditional right to
elect a majority of the Board of Directors of the Parent Company (or
in the case of a merger or consolidation between the Parent Company
and the Borrower, then of the survivor of such merger or
consolidation), or
(ii) after a Qualifying Public Equity Offering, (a) the
failure of the Investors to beneficially own, directly or
indirectly, at least 33 1/3%, in the aggregate, of the Voting Stock
of the Parent Company (or in the case of a merger or consolidation
between the Parent Company and the Borrower, then of the survivor of
such merger or consolidation) or (b) a Person or group (as such term
is defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) other than the Investors shall beneficially own,
directly or indirectly, in the aggregate, a greater percentage of
the Voting Stock of the Parent Company (or in the case of a merger
or consolidation between the Parent Company and the Borrower, then
of the survivor of such merger or consolidation) than the percentage
of such Voting Stock owned by the Investors;
(iii) at any time, a "Change of Control" shall occur under and
as defined in any Recapitalization Document.
"Closing Date" means the date hereof.
"Co-Agents" means the co-agents for the Banks under this Credit
Agreement as identified in the recital of parties hereinabove.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
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"Commitment" means the commitments of the Banks to make Revolving
Loans, of the Issuing Bank to issue Letters of Credit and of the Banks to
purchase participation interests in such Letters of Credit.
"Commitment Fee" shall have such meaning as provided in Section
2.7(b).
"Commitment Percentage" means, for any Bank, the percentage
identified as its Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 10.3.
"Consistent Basis" or "consistent basis" means, with regard to the
application of generally accepted accounting principles, accounting
principles consistent with those used and applied in preparation of the
audited consolidated financial statements of the Parent Company referred
to in Section 5.6(i).
"Consolidated Borrower Group" means the Parent Company, the Borrower
and the Guarantors.
"Consolidated EBIT" means, for a period of four consecutive quarters
ending as of the date of determination, Consolidated Net Income plus the
sum of (i) Consolidated Interest Expense, and (ii) provisions for Federal,
state, local and other taxes, in each case for the Consolidated Borrower
Group on a consolidated basis determined in accordance with generally
accepted accounting principles applied on a consistent basis.
"Consolidated EBITDA" means, for a period of four consecutive
quarters ending as of the date of determination, the sum of Consolidated
EBIT plus depreciation, amortization and all other non-cash expenses or
charges, including without limitation, any accrual necessary for purposes
of conforming with Financial Accounting Standards Board Statement Number
106 and 112 (as defined by generally accepted accounting principles) to
the extent that the accrued portion thereof constitutes a non-cash expense
or charge, any cost of sales arising from a step-up of inventory values as
a result of applying purchase accounting and any non-cash compensation
expense or charge for the Consolidated Borrower Group on a consolidated
basis as determined in accordance with generally accepted accounting
principles applied on a consistent basis; provided that each of the
foregoing items shall be added to Consolidated EBITDA only if, and to the
extent, such items were deducted in arriving at Consolidated EBIT for such
period.
"Consolidated Fixed Charge Coverage Ratio" means, at the end of each
fiscal quarter, the ratio of (i) Consolidated Net Income Available for
Fixed Charges for the period of four consecutive quarters then ended to
(ii) Consolidated Fixed Charges for the period of four consecutive
quarters then ended.
"Consolidated Fixed Charges" means, for a period of four consecutive
quarters ending as of the date of determination, the sum of (i)
Consolidated Interest Expense and (ii) scheduled principal payments of
Funded Debt and, without duplication, scheduled
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principal payments under Capital Lease Obligations, in each case for the
Consolidated Borrower Group on a consolidated basis as determined in
accordance with generally accepted accounting principles applied on a
consistent basis.
"Consolidated Funded Debt" means, at the end of each fiscal quarter,
Funded Debt then outstanding for the Consolidated Borrower Group on a
consolidated basis.
"Consolidated Interest Coverage Ratio" means, at the end of each
fiscal quarter, the ratio of (i) Consolidated EBITDA for the period of
four consecutive quarters then ended to (ii) Consolidated Interest Expense
for the period of four consecutive quarters then ended.
"Consolidated Interest Expense" means, for a period of four
consecutive quarters ending as of the date of determination, all cash
interest expense, including the cash interest component under Capital
Lease Obligations (but excluding, in any event, interest which is paid in
kind rather than in cash, amortization of debt discount, deferred
financing costs and fees and stock dividends on preferred stock and any
and all fees and expenses paid in connection with the incurrence and
maintenance of interest rate protection agreements), for the Consolidated
Borrower Group on a consolidated basis determined in accordance with
generally accepted accounting principles applied on a consistent basis.
"Consolidated Net Income" means, for a period of four consecutive
quarters ending as of the date of determination, the net income (or loss,
as the case may be) for such period for the Consolidated Borrower Group on
a consolidated basis determined in accordance with generally accepted
accounting principles applied on a consistent basis, but for purposes of
determining compliance with or the calculation of, as the case may be, the
Ave. Funded Debt to Consolidated EBITDA Ratio, the Consolidated Fixed
Charge Coverage Ratio and the Consolidated Interest Coverage Ratio
(including the determination of amounts calculated from the financial
definitions included therein), excluding:
(a) any extraordinary gains or losses on the sale or other
disposition of assets, and any taxes on such excluded gains and any
tax deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) the expense or charge resulting from interest rate
protection agreements; and
(d) any income or expense of foreign operations.
"Consolidated Net Income Available for Fixed Charges" means, for a
period of four consecutive quarters ending as of the date of
determination, Consolidated EBITDA minus (x) cash taxes actually paid and
minus (y) the amount of Capital Expenditures actually paid in cash during
such period, in each case for the Consolidated Borrower Group on a
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consolidated basis as determined in accordance with generally accepted
accounting principles applied on a consistent basis.
"Controlled Group" means (i) the controlled group of corporations as
defined in Section 414(b) of the Code and the applicable regulations
thereunder, or (ii) the group of trades or businesses under common control
as defined in Section 414(c) of the Code and the applicable regulations
thereunder, of which the Borrower is a part or becomes a part.
"Credit Documents" means this Credit Agreement, the Revolving Notes,
the LOC Documents, any Joinder Agreement, the Security Agreement, the
Mortgages and all other related agreements and documents issued or
delivered hereunder or thereunder or pursuant hereto or thereto.
"Credit Party" means each of the Borrower and each of the
Guarantors.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Documentary Letter of Credit Fee" shall have such meaning as
provided in Section 2.7(c)(ii).
"Domestic Credit Party" means a Credit Party formed and existing
under the laws of the United States or any state or commonwealth thereof
or under the laws of the District of Columbia.
"Domestic Subsidiary" means a Subsidiary of the Borrower, whether
direct or indirect, which is organized and existing under the laws of the
United States or any state or commonwealth thereof or under the laws of
the District of Columbia.
"Eligible Assignee" means any Bank or Affiliate or Subsidiary of a
Bank, and any other commercial bank, financial institution or "accredited
investor" (as defined in Regulation D of the Securities and Exchange
Commission) reasonably acceptable to the Agent and the Borrower.
"Eligible Equipment" means, as of any date of determination, (i) the
sum of (A) $30,079,700 plus (B) the aggregate cumulative gross dollar
value (valued at total purchase price (including cash and noncash
consideration)) paid for all equipment, furniture and fixtures acquired by
any Credit Party after the Closing Date minus (ii) the aggregate
cumulative gross cash purchase price (including cash and noncash
consideration) received for any all equipment, furniture and fixtures
sold, transferred or otherwise disposed of by any Credit Party; provided
that, in no event, shall Eligible Equipment include any equipment,
furniture or fixture (x) subject to any Lien (other than a Permitted
Lien), (y) not useable or saleable at prices approximating their cost
(after taking into account, without duplication, the amount of any
reserves for obsolescence, unsaleability or decline in value) or (z)
located outside of the United States.
- 9 -
"Eligible Finished Goods Inventory" means, as of any date of
determination, the gross dollar value (valued at the lower of cost or fair
market value (on a FIFO basis) of all finished goods inventory (including
for purposes hereof, finished goods inventory which is in transit back to
a Credit Party) of the Borrower or other Credit Party less appropriate
reserves determined in accordance with generally accepted accounting
principles applied on a Consistent Basis but excluding in any event and
without duplication, to the extent not treated accordingly by such
generally accepted accounting principles, (i) inventory subject to any
Lien (other than a Permitted Lien), (ii) inventory which fails to meet
standards for sale or use imposed by governmental agencies, departments or
divisions having regulatory authority over such goods, (iii) inventory
which is not useable or saleable at prices approximating their cost (after
taking into account, without duplication, the amount of any reserves for
obsolescence, unsaleability or decline in value), (iv) inventory located
outside of the United States (unless in transit back to a Credit Party),
(v) inventory in the possession of domestic contractors (other than a
Credit Party) or other third parties, and (vi) all work in process.
"Eligible Raw Materials Inventory" means, as of any date of
determination, the gross dollar value (valued at the lower of cost or fair
market value (on a FIFO basis) of all raw materials (including for
purposes hereof, uncut dyed or greige cloth) of the Borrower or other
Credit Party less appropriate reserves determined in accordance with
generally accepted accounting principles applied on a Consistent Basis but
excluding in any event, to the extent not treated accordingly by such
generally accepted accounting principles and without duplication, (i)
inventory subject to any Lien (other than a Permitted Lien), (ii)
inventory which fails to meet standards for sale or use imposed by
governmental agencies, departments or divisions having regulatory
authority over such goods, (iii) inventory which is not useable or
saleable at prices approximating their cost (after taking into account,
without duplication, the amount of any reserves for obsolescence,
unsaleability or decline in value), (iv) inventory located outside of the
United States (unless in transit back to a Credit Party), (v) inventory in
the possession of domestic contractors (other than a Credit Party) or
other third parties, and (vi) all work in process (except uncut dyed or
greige cloth).
"Eligible Real Estate" means, as of any date of determination, (i)
the sum of (A) $13,625,000 plus (B) the aggregate cumulative gross dollar
value (valued at total purchase price (including cash and noncash
consideration)) of all real property acquired by any Credit Party after
the Closing Date, minus (ii) the aggregate cumulative gross cash purchase
price (including cash and noncash consideration) of any Eligible Real
Estate sold, transferred or otherwise disposed of by any Credit Party;
provided that, in no event, shall Eligible Real Estate include (i) real
property subject to any Lien (other than a Permitted Lien), (ii) real
property located outside of the United States, (iii) real property the
value of which is materially and adversely impaired by (A) any "release"
of any "hazardous substances" (as such terms are defined in the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. xx.xx. 9601 et seq., as amended, and the regulations
promulgated thereunder) or (B) any federal, state or local regulation with
respect to the presence of stored, leaked or spilled petroleum products,
waste materials or debris,
- 10 -
"PCB's" or PCB items (as such term is defined in 40 C.F.R. ss.763.3),
underground storage tanks, "asbestos" (as such term is defined in 40
C.F.R. ss.763.63) or the past or present accumulation, spillage or leakage
of any such substance, or (iv) real property with respect to which the
Agent and the Banks shall not have received all items required to be
delivered pursuant to Sections 6.14; provided, however, that the
provisions of the foregoing clause (iii) shall not be deemed to exclude
the Asheville Property (on the basis of, and only so long as the Borrower
is to be indemnified for, information relating to such property disclosed
in the Phase I Environmental Report previously delivered to the Agent and
the Banks).
"Eligible Receivables" means, as of any date of determination, the
aggregate gross amount of all accounts receivable, receivables and
obligations for payment created or arising from the sale of inventory or
the rendering of services in the ordinary course of business, owned by or
owing to the Borrower or other Credit Party, net of allowances and
reserves for doubtful or uncollectible accounts and sales adjustments
consistent with the Borrower's internal policies and in any event in
accordance with generally accepted accounting principles applied on a
Consistent Basis (hereinafter sometimes referred to collectively as
"Receivables"), but excluding, without duplications in any event (i)
Receivables (a) not subject to a perfected, first priority Lien in favor
of the Agent or (b) subject to any other Lien that is not a Permitted
Lien, (ii) Receivables which are outstanding more than 90 days from the
due date of the original invoice or more than 180 days from the date of
shipment, (iii) Receivables evidenced by notes, chattel paper or other
instruments, unless such notes, chattel paper or instruments have been
delivered to and are in the possession of the Agent or collateral agent
designated by the Banks, (iv) Receivables with respect to which the
account debtor is not solvent or is the subject of any bankruptcy or
insolvency proceedings of any kind, (v) Receivables owing by an account
debtor located outside of the United States (unless payment for the goods
shipped is secured by an irrevocable letter of credit in a form and from
an institution acceptable to the Agent), (vi) Receivables which are
contingent or subject to offset, deduction, counterclaim, dispute or other
defense to payment, in each case to the extent of such offset, deduction,
counterclaim dispute or other defense, and (vii) Receivables arising out
of transactions with Subsidiaries or Affiliates of the Borrower.
"Equity Transaction" means (i) the issuance by the Parent Company,
the Borrower or any of its Subsidiaries of new shares of its capital
stock, unless such new shares are being issued as a dividend or in
exchange for an ownership interest in another Person or in exchange for
substantially all of the assets of another Person in connection with an
acquisition not prohibited by Section 7.4, (ii) an issuance by the Parent
Company, the Borrower or any of its Subsidiaries of any shares of its
capital stock pursuant to the exercise of options or warrants and (iii) an
issuance by the Parent Company, the Borrower or any of its Subsidiaries of
any shares of its capital stock pursuant to the conversion of any debt
securities (including without limitation any Subordinated Debt) to equity,
provided, however, Equity Transactions shall not include, (A) the issuance
and sale by the Parent Company of common capital stock pursuant to, and to
the extent permitted by, Section 2.2(d) of the Recapitalization Agreement,
(B) the Units Offering (and the payment of dividends-in-kind on the
securities issued thereunder), (C) the issuance of shares of capital stock
or options or warrants or similar rights in respect thereof to any
Investors, (D) the
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issuance of shares of capital stock of a Credit Party other than the
Parent Company to another Credit Party and (E) the issuance of shares of
capital stock (other than pursuant to a public offering of such capital
stock registered under the Securities Act of 1933, as amended), to the
extent the Net Proceeds therefrom are used to purchase or otherwise
acquire new assets or property, provided that such purchase or acquisition
is committed to within 180 days of receipt of such Net Proceeds and such
purchase or acquisition is consummated within 270 days of such receipt.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.
"ERISA Affiliate" means each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or any Subsidiary of the Borrower
would be deemed to be a member of the same "controlled group" within the
meaning of Section 414(b), (c), (m) and (o) of the Code.
"Eurodollar Loan" means a Revolving Loan which bears interest based
on the Adjusted Eurodollar Rate.
"Event of Default" has the meaning specified in Section 8.
"Exchange Debenture" means any one of the 13.00% Subordinated
Exchange Debentures due 2009, issued by the Parent Company at its option,
if ever, in exchange for Senior Preferred Stock as contemplated by, and to
the extent permitted by, Section "g" of the Certificate of Designation, in
each case as amended, modified, extended or replaced from time to time.
"Exchange Debenture Indenture" means that certain Indenture, dated
as of the Closing Date, by and among the Parent Company and United States
Trust Company of New York, as trustee for the Exchange Debentureholders,
as amended, modified, extended or replaced from time to time.
"Exchange Debentureholder" means, in the event that the Senior
Preferred Stock is exchanged for the Exchange Debentures, any one of the
holders from time to time of the Exchange Debentures.
"Excluded Taxes" shall have such meaning as provided in Section
2.12(a).
"Existing Credit Agreement" means that certain Credit Agreement,
dated as of January 30, 1995, by and among Anvil Knitwear, Inc., Anvil
Holdings, Inc., Anvil (Czech), Inc., certain subsidiaries of Anvil
Knitwear, Inc. as guarantors thereunder, the various banks and lending
institutions party thereto, NationsBank, N.A. (as successor in interest to
NationsBank, N.A. (Carolinas)), as Agent, and The Chase Manhattan Bank,
N.A., as Documentation Agent, as amended from time to time.
- 12 -
"Existing Letters of Credit" means any one of the letters of credit
described by date of issuance, letter of credit number, undrawn amount,
name of beneficiary and date of expiry on Schedule 1.1A.
"Extension of Credit" means any Revolving Loan advance, any issuance
or extension of any Letter of Credit or any purchase of a participation in
any Letter of Credit.
"Federal Funds Effective Rate" means, for any day, the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal Funds brokers as
published for such day by the Federal Reserve Bank of New York, or, if
such rate is not so released for any day which is a Business Day, the
arithmetic average (rounded upwards to the nearest 1/100th of 1%) 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.
"Fees" means all fees payable pursuant to Section 2.7.
"Funded Debt" means, without duplication, as of the date of
determination, (i) the principal amount of all indebtedness for borrowed
money, or indebtedness which has been assumed in connection with the
acquisition of assets, in each case having a final maturity of one or more
years from the date of the obligation with respect to such indebtedness is
created (or which is renewable or extendible at the option of the obligor
for a period or periods more than one year from the date the obligation
with respect to such indebtedness is created), (ii) the present value of
all obligations in respect of Capital Lease Obligations, (iii) all
guaranty and contingent obligations, including letter of credit and
purchase obligations and (iv) outstanding withdrawal liability or
insufficiency under ERISA or under any qualified plan or related trust;
provided, however, that for purposes of determining the appropriate
Applicable Margin, amounts outstanding under this Credit Agreement shall
be calculated as the arithmetic average of the principal amount of
Revolving Loans outstanding as of the date of computation and as of the
end of each of the three immediately preceding fiscal quarters. Funded
Debt shall include, without duplication, payments in respect of Funded
Debt which constitute current liabilities of the obligor under generally
accepted accounting principles. Notwithstanding the foregoing, Funded Debt
shall not include (i) any and all subordinated indebtedness permitted by
Section 7.1(j) and any and all pay-in-kind notes issued in respect
thereof, unless and until such time as the Borrower may be merged with the
Parent Company, at which time such indebtedness shall be included as
Funded Debt hereunder, and (ii) any indebtedness evidenced by interest
rate protection agreements.
"Generally Accepted Accounting Principles" or "generally accepted
accounting principles" means generally accepted accounting principles in
effect in the United States on the Closing Date unless otherwise specified
herein. In the event there shall be a change in such generally accepted
accounting principles or a change in the way they are to be applied, the
Borrower may request, and upon any such request, the Agent and the Banks
will
- 13 -
consider and negotiate in good faith, a modification of the financial
covenants to take into account the effect of any such changes.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
"Government Acts" shall have such meaning as provided in Section
2.13.
"Guarantor" means the Parent Company, each of the parties identified
as "Guarantors" on the signature pages hereto and each Additional Credit
Party which has executed a Joinder Agreement pursuant to Section 6.12.
"Guaranty Obligations" means any obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other monetary obligations of any other
Person in any manner, whether direct or indirect, and including without
limitation any obligation, whether or not contingent, (i) to purchase any
such Indebtedness or other monetary obligation or any property
constituting security therefor, (ii) to advance or provide funds or other
support for the payment or purchase of such Indebtedness or monetary
obligation or to maintain working capital, solvency or other balance sheet
condition of such other Person (including without limitation keep well
agreements, maintenance agreements, comfort letters or similar agreements
or arrangements), (iii) to lease or purchase property, securities or
services primarily for the purpose of assuring the owner of such
Indebtedness or monetary obligation, or (iv) to otherwise assure or hold
harmless the owner of such Indebtedness or monetary obligation against
loss in respect thereof. The amount of Guaranty Obligations hereunder
shall be deemed to be an amount equal to the stated or determinable amount
of the Indebtedness or monetary obligation in respect of which such
Guaranty Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated amount in respect thereof (assuming such other
Person is required to perform thereunder) as determined in good faith.
"Hedging Agreements" means any interest rate protection agreement or
foreign currency exchange agreement between the Borrower and any Bank, or
any Affiliate of a Bank.
"Indebtedness", of any Person, means without duplication, (i) all
indebtedness for borrowed money, (ii) the deferred purchase price of
assets or services which in accordance with generally accepted accounting
principles would be shown to be a liability (or on the liability side of a
balance sheet), (iii) all Guaranty Obligations, (iv) the maximum amount of
all letters of credit issued or acceptance facilities established for the
account of such Person and, without duplication, all drafts drawn
thereunder (other than letters of credit (x) supporting other Indebtedness
of the Borrower or a Credit Party or (y) offset by a like amount of cash
or government securities held in escrow to secure such letter of credit
and draws thereunder), (v) all Capital Lease Obligations, (vi) all
Indebtedness of another Person secured by any Lien on any property of the
Borrower or a Credit Party, whether or not such
- 14 -
Indebtedness has been assumed, (vii) all obligations under take-or-pay or
similar arrangements or (viii) all obligations under interest rate,
currency, or commodities agreements; but specifically excluding from the
foregoing trade payables and accrued expenses arising or incurred in the
ordinary course of business.
"Interest Payment Date" means (i) as to Base Rate Loans, the last
day of each month and on the Termination Date, and (ii) as to Eurodollar
Loans, on the last day of each Interest Period for such Eurodollar Loan
and on the Termination Date, and in addition where the applicable Interest
Period is more than 3 months, then also on the date 3 months from the
beginning of the Interest Period and each 3 months thereafter. If an
Interest Payment Date falls on a date which is not a Business Day, such
Interest Payment Date shall be deemed to be the next succeeding Business
Day, except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding day.
"Interest Period" means, as to Eurodollar Loans, a period of one,
two, three, six or, if available, twelve months' duration, as the Borrower
may elect, commencing in each case, on the date of the borrowing
(including conversions, extensions and renewals); provided, however, (A)
if any Interest Period would end on a day which is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
(except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding Business Day), (B) no Interest Period shall extend beyond the
Termination Date, and (C) in the case of Eurodollar Loans, where an
Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to
end, such Interest Period shall end on the last day of such calendar
month.
"Investments" in any Person means (a) any Acquisition or (b) any
deposit with, or advance, loan or other extension of credit to, such
Person (other than deposits made in connection with the purchase of
equipment or other assets in the ordinary course of business) or (c) any
other capital contribution to or investment in such Person, including,
without limitation, any Guaranty Obligation (including any support for a
Letter of Credit issued on behalf of such Person) incurred for the benefit
of such Person.
"Investors" means, collectively, (i) BRS, (ii) Venture Partners,
(iii) all of the members of the Management Group and (iv) in the case of
any individual included in clauses (i)-(iii) above, any family member or
relative of such individual.
"Issuing Bank" means NationsBank or such other Bank as to which the
Borrower has requested and the Required Banks may agree, which consent
shall not be unreasonably withheld. There shall be no more than one
Issuing Bank at any time; provided, however, that should there be a change
in the Issuing Bank any Letters of Credit then issued and outstanding need
not be replaced, but may remain outstanding.
"Issuing Bank Fees" shall have such meaning as provided in Section
2.7(c).
- 15 -
"Joinder Agreement" means a Joinder Agreement substantially in the
form of Schedule 6.12 hereto executed and delivered by an Additional
Credit Party in accordance with the provisions of Section 6.12.
"Letter of Credit" means (i) each standby letter of credit or
documentary letter of credit issued for the account of the Borrower by an
Issuing Bank pursuant to the letter of credit subfacility provided in
Section 2.4, as such letter of credit may be amended, modified, extended,
renewed or replaced from time to time and (ii) each Existing Letter of
Credit.
"Letter of Credit Fees" means, collectively, the Standby Letter of
Credit Fee and the Documentary Letter of Credit Fee.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof); provided, that any financing statement
or similar statement filed without the consent of a Credit Party shall not
constitute a Lien if such statement does not secure an obligation due and
owing by a Credit Party and such Credit Party shall take prompt action to
have the statements terminated or otherwise removed.
"LOC Committed Amount" shall have such meaning as provided in
Section 2.4(a).
"LOC Documents" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for
(i) the rights and obligations of the parties concerned or at risk or (ii)
any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
(ii) the aggregate amount of all drawings under Letters of Credit honored
by the Issuing Bank but not theretofore reimbursed.
"Management Group" means any bona fide director, officer or employee
of any Credit Party.
"Mandatory Borrowing" shall have such meaning as provided in Section
2.4(e).
- 16 -
"Material Adverse Effect" means a material adverse effect, after
taking into account applicable insurance and/or indemnities, if any, on
(i) the operations, financial condition or business of the Borrower and
its Subsidiaries taken as a whole, (ii) the ability of the Borrower and
the Guarantors, taken as a whole, to perform their respective obligations
to the Banks under this Credit Agreement, or (iii) the validity or
enforceability of this Credit Agreement, any of the other Credit
Documents, or the rights and remedies of the Banks hereunder or
thereunder.
"Moody's" means Xxxxx'x Investors Service, Inc., and any successor
thereof.
"Mortgages" means those Mortgages, Deeds of Trust, Leasehold
Mortgages, Collateral Assignments of Leases (and related Subordination,
Attornment and Non-Disturbance Agreements from the Landlords thereof, if
any) or other similar instruments encumbering real property pledged to
secure the Borrower Obligations, as amended, modified, extended, renewed
or replaced from time to time in connection with the Credit Agreement or
otherwise.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member
of the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be
a member of the Controlled Group during such five year period but only
with respect to the period during which such Person was a member of the
Controlled Group.
"NationsBank" means NationsBank, N.A. (successor in interest to
NationsBank, N.A. (Carolinas)) or its successors.
"Net Proceeds" means, the aggregate cash proceeds (including,
without limitation, any cash received upon the sale or other disposition
of any non-cash consideration) received by any Credit Party in respect of
any Asset Sale, any Recovery Event or any Equity Transaction, net of (i)
direct costs relating thereto (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, (ii) taxes paid or
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), (iii)
Indebtedness (other than Indebtedness of the Banks pursuant to the Credit
Documents) which is secured by the assets which are the subject of such
event to the extent such Indebtedness is paid with a portion of the
proceed therefrom and (iv) with respect to any Asset Sale, any reserve for
adjustment in respect of the sale price of such asset or assets
established in accordance with generally accepted accounting principles.
"Notice of Borrowing" shall have such meaning as provided in
Sections 2.1(b)(i).
"Notice of Conversion" shall have such meaning as provided in
Section 2.3.
"Other Taxes" shall have such meaning as provided in Section
2.12(c).
- 17 -
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA, and any successor thereto.
"Parent Company" means Anvil Holdings, Inc., a Delaware corporation.
"Participation Interest" means the purchase of a participation
hereunder in Letters of Credit or LOC Obligations as provided in Section
2.4(c) or in Revolving Loans as provided in Section 2.17.
"Permitted Acquisition" means an Acquisition by any Credit Party
(other than the Parent Company), provided that (i) the assets, shares of
capital stock or other ownership interests acquired in such Acquisition
relate to a line of business similar to or are logical extensions of the
business of the Borrower and its Subsidiaries engaged in on the Closing
Date, (ii) in the case of an Acquisition of the capital stock or other
ownership interests of another Person, the board of directors (or other
comparable governing body) of such other Person shall have duly approved
such Acquisition, (iii) a knowledgeable financial officer of the Borrower
shall have delivered to the Agent a certificate demonstrating that, upon
giving effect to such Acquisition on a Pro Forma Basis, the Credit Parties
shall be in compliance with all of the covenants set forth in Section
6.11, (iv) the representations and warranties made by the Credit Parties
in any Credit Document shall be true and correct in all material respects
at and as if made as of the date of such Acquisition (after giving effect
thereto) except to the extent such representations and warranties
expressly relate to an earlier date and (v) the aggregate cumulative cash
paid (including cash payments on non-cash consideration or assumed
indebtedness when and as paid) for all such Acquisitions occurring after
the Closing Date shall not exceed $20,000,000.
"Permitted Investments" means (i) cash and Cash Equivalents, (ii)
receivables owing to any Credit Party or any of its receivables and
advances to suppliers, in each case if created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance
with customary trade terms, (iii) subject to the limitations set forth in
Section 7.4, if any, Investments in a Domestic Credit Party (other than
the Parent Company except as permitted by Section 7.7), including any
Investment in a corporation which, after giving effect to such Investment,
will become an Additional Credit Party (provided such Additional Credit
Party shall execute a Joinder Agreement), (iv) Investments in the usual
and ordinary course of business to officers, directors and employees of
any Credit Party for expenses (including moving expenses related to a
transfer) incidental to carrying on the business of such Credit Party in
an aggregate amount not to exceed $500,000 at any time outstanding for all
of the Credit Parties, (v) Investments (including debt obligations)
received in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business, (vi) Permitted Acquisitions, (vii) additional Investments of a
nature not contemplated by the foregoing clauses (i)-(vi) hereof, provided
that such Investments made pursuant to this clause (vii) shall not exceed
an aggregate amount at any time outstanding equal to $7,750,000, (viii)
non-cash proceeds
- 18 -
from asset sales not prohibited by the terms of this Credit Agreement,
(ix) any Investment occurring as a result of any and all Hedging
Agreements, (x) any pledges or deposits permitted by Section 7.2, to the
extent considered an Investment, (xi) Guaranty Obligations permitted by
Section 7.1, and (xii) purchase money loans to any member of the
Management Group to the extent that, in the case of any such loan, such
loan evidences payment for capital stock issued by any Credit Party and
only if, and to the extent, such loan merely evidences a purchase money
obligation therefor and not cash advanced.
"Permitted Liens" means (i) Liens created by, under or in connection
with this Credit Agreement or the other Credit Documents; (ii) Liens
described on Schedule 7.2 attached hereto and Liens created in connection
with the refinancing, renewal, refunding or replacement of the
Indebtedness which is secured by such Liens described on Schedule 7.2 to
the extent permitted hereunder; (iii) Liens for taxes not yet delinquent
or Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
generally accepted accounting principles have been established; (iv) Liens
in respect of property imposed by law arising in the ordinary course of
business such as materialmen's, mechanics', warehousemen's and other like
Liens provided that such Liens secure only amounts not yet due and
payable; (v) pledges or deposits made to secure payment of worker's
compensation insurance, unemployment insurance, pensions or social
security programs; (vi) Liens arising from good faith deposits in
connection with or to secure performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds, and securing liabilities to
insurance carriers under insurance or self-insurance arrangements and
other similar obligations incurred in the ordinary course of business
(other than obligations in respect of the payment of borrowed money);
(vii) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
such property for its intended purposes or interfering with the ordinary
conduct of business of the Borrower and its Subsidiaries and such other
restrictions or exceptions set forth in the title insurance policies or
title commitments delivered to the Agent on the Closing Date; (viii) Liens
arising from UCC financing statements regarding leases permitted by this
Credit Agreement; (ix) leases or subleases granted to others in the
ordinary course of business not interfering in any material respect with
the business or operations of the Borrower and its Subsidiaries; (x)
purchase money Liens securing purchase money Indebtedness to the extent
permitted under Section 7.1; (xi) any Lien existing on any property or
asset prior to the acquisition thereof by the Borrower and its
Subsidiaries to the extent such Liens and the Indebtedness relating
thereto are permitted by Section 7.1; (xii) Liens arising from and out of
judgments or decrees in existence at such time not constituting an Event
of Default, (xiii) other Liens securing Indebtedness which does not exceed
$100,000 in the aggregate at any time outstanding and (xiv) other Liens
arising in the ordinary course of business of any of the Credit Parties
which are not incurred in connection with the borrowing of money or the
obtaining of advances or credit and which do not materially detract from
the value of its property or assets or materially impair the use thereof
in the operation of its business.
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"Person" means any individual, partnership, joint venture, firm,
limited liability company, corporation, association, trust or other
enterprise (whether or not incorporated), or any government or political
subdivision or any agency, department or instrumentality thereof.
"Plan" means any single-employer plan as defined in Section 4001(15)
of ERISA, which is maintained, or at any time during the five calendar
years preceding the date of this Credit Agreement was maintained, for
employees of the Borrower or any Subsidiary.
"Plan Year" means, with respect to each Plan, such term as defined
in such Plan.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by NationsBank as its prime rate in effect at its
principal office in Charlotte, North Carolina; each change in the Prime
Rate shall be effective on the date such change is publicly announced as
effective.
"Pro Forma Basis" means, with respect to any Acquisition, that such
Acquisition shall be deemed to have occurred as of the first day of the
four fiscal quarter period ended as of the most recent date of
determination preceding the date of such Acquisition with respect to which
the Agent and the Banks have received the most recent financial
information required by the terms of Section 6.1(a) and (b), together with
the related officer's certificate required to be delivered by the terms of
Section 6.1(f). For purposes of any such calculation, the principles set
forth in Section 1.3 shall be applicable.
"pro rata" or "pro rata share" or "ratable" means, at any time, (i)
as to the Total Revolving Obligations, with respect to each of the
respective Total Revolving Obligations (i.e. Revolving Loans, LOC
Obligations and Participation Interests), the proportion that such
respective Total Revolving Obligations bear to all Total Revolving
Obligations then outstanding, and (ii) as to each Bank, with respect to
each of the respective Total Revolving Obligations, the proportion that
the Total Revolving Obligations of such Bank bear to all such Total
Revolving Obligations then outstanding; provided that with respect to LOC
Obligations, as to Banks other than the Issuing Bank, each such Bank's
respective Participation Interest therein shall be treated as a direct
interest, and as to the Issuing Bank, only the portion of the LOC
Obligations which is not subject to Participation Interests of the other
Banks shall be treated as its interest therein.
"Qualifying Public Equity Offering" means a primary public offering
of common equity of the Parent Company (or in the case of a merger or
consolidation between the Parent Company and the Borrower, then of the
survivor of such merger or consolidation) which results in receipt by the
Parent Company of at least $30,000,000 in gross proceeds.
"Recapitalization" means the recapitalization of the Parent Company
pursuant to the terms of the Recapitalization Agreement, together with the
transactions contemplated by Section 2.2 thereof and the performance of
the obligations contemplated thereby.
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"Recapitalization Agreement" means that certain Recapitalization
Agreement, dated as of February 12, 1997, by and among the Parent Company,
Anvil VT, Inc., Vestar Equity Partners, L.P., Venture Partners, certain
members of the Management Group party thereto, BRS and the other existing
stockholders of the Parent, as amended, modified, extended or replaced
from time to time.
"Recapitalization Documents" means the Recapitalization Agreement,
the Senior Note Purchase Agreement, the Senior Note Indenture, the Units
Purchase Agreement, the Certificate of Designation, the Units Registration
Rights Agreement, the Units Stockholders Agreement and, if the Exchange
Debentures are issued, the Exchange Debenture Indenture.
"Receivables" shall have such meaning as provided in the definition
of "Eligible Receivables".
"Recovery Event" means the receipt by any Credit Party of any cash
insurance proceeds or condemnation award payable by reason of theft, loss,
physical destruction or damage, taking or similar event with respect to
any property or assets of any Credit Party.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of the Closing Date, by and among Venture
Partners, BRS, Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and
certain members of the Management Group party thereto, as amended,
modified, extended or replaced from time to time.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to
all or a portion of establishing margin requirements.
"Reportable Event" means a "reportable event" as defined Section
4043 of ERISA with respect to which the notice requirements to the PBGC
have not been waived.
"Required Banks" means, at any time, (i) prior to termination of the
Commitments in their entirety hereunder, Banks holding 51% or more of the
aggregate of the Commitments (determined for purposes hereof based on each
Bank's Commitment
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Percentage), or (ii) after termination of the Commitments in their
entirety hereunder, Banks holding 51% or more of the Total Revolving
Obligations then outstanding (taking into account, and counting as direct
interests for purposes hereof the Participation Interests therein).
"Restricted Payment" means (i) any payment by any member of the
Consolidated Borrower Group of a dividend (other than a dividend payable
solely in stock) on, or any payment on account of the purchase, redemption
or retirement of, or any other distribution on (other than a distribution
of capital stock), any shares of any class of stock of any Credit Party,
except if and to the extent not prohibited by Section 7.7, and (ii) any
loan, advance or other payment by any member of the Consolidated Borrower
Group to any Affiliate of the Borrower or the Parent Company other than
(x) Permitted Investments, (y) any loan, advance or other payment referred
to in Section 7.8 or (z) any payment of interest-in-kind and/or
dividends-in-kind.
"Revolving Committed Amount" shall have such meaning as provided in
Section 2.1(a).
"Revolving Loan" shall have such meaning as provided in Section 2.1.
"Revolving Note" shall have such meaning as provided in Section
2.1(e).
"S&P" means Standard & Poors Corporation, and any successor thereof.
"Security Agreement" means, collectively, the Amended and Restated
Security and Pledge Agreement dated as of the date hereof given by the
Parent Company and the Credit Parties in favor of the Agent for the Banks
to secure the Borrower Obligations, and any financing statements, notices
of security interest or similar documents given in connection with the
interests granted pursuant to the Security Agreement, in each case as
amended, modified, extended, renewed or replaced from time to time in
connection with the Credit Agreement or otherwise.
"Senior Note" means any one of the 10 7/8% Senior Notes due 2007, in
an aggregate principal amount of $130,000,000, issued by the Borrower in
favor of the Senior Noteholders pursuant to the Senior Note Purchase
Agreement, in each case as amended, modified, extended or replaced from
time to time
"Senior Note Purchase Agreement" means that certain Purchase
Agreement, dated as of the Closing Date, by and among the Borrower and
each of the initial purchasers of the Senior Notes, as amended, modified,
extended or replaced from time to time.
"Senior Note Indenture" means that certain Indenture Agreement,
dated as of the Closing Date, by and among the Borrower and United States
Trust Company of New York, as trustee for the Senior Noteholders, as
amended, modified, extended or replaced from time to time.
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"Senior Noteholder" means any one of the holders from time to time
of the Senior Notes.
"Senior Preferred Stock" means, collectively, (i) up to 1,400,000
shares of senior preferred capital stock of the Parent Company issued in
connection with Units Offering and the Recapitalization and (ii) up to
500,000 additional shares of senior preferred capital stock of the Parent
Company which are authorized, but not issued, as of the Closing Date.
"Specified Sales" means (i) the sale, transfer, lease or other
disposition of inventory and materials in the ordinary course of business,
(ii) the sale, transfer, lease or other disposition of machinery, parts
and equipment no longer useful in the conduct of the business of such
Credit Party or is uneconomic or obsolete, (iii) the sale, transfer or
other disposition of Permitted Investments, and (iv) licenses or
sublicenses by the Borrower and its Subsidiaries of intellectual property
in the ordinary course of business.
"Standby Letter of Credit Fee" shall have such meaning as provided
in Section 2.7(c)(i).
"Stockholders Agreement" means that certain Stockholders Agreement,
dated as of the Closing Date, by and among the Parent Company, Venture
Partners, BRS and certain members of the Management Group party thereto,
as amended, modified, extended or replaced from time to time.
"Subordinated Debt" means (i) upon issuance thereof in accordance
with Section 7.11, the Exchange Debentures and (ii) other Indebtedness of
the Parent Company (a) incurred in connection with the repurchase by the
Parent Company of its capital stock from an employee, officer or director
of the Parent Company or any of its Subsidiaries and (b) which by its
terms is subordinated to the Total Revolving Obligations in a manner and
to an extent acceptable to the Required Banks.
"Subsidiary" means, as to any Person, (i) any corporation more than
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person directly or indirectly through other Subsidiaries, and (ii) any
partnership, association, joint venture or other entity in which such
person directly or indirectly through other Subsidiaries has more than 50%
equity interest at any time. Except as otherwise expressly provided, all
references herein to "Subsidiary" shall mean a Subsidiary of the Borrower.
"Termination Date" means March 14, 2002.
"Threshold Requirement" shall have such meaning as provided in
Section 6.12.
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"Total Revolving Obligations" means, collectively, Revolving Loans,
LOC Obligations and Participation Interests.
"Units Offering" means the issuance and sale by the Parent Company
on the Closing Date of up to 1,400,000 shares of Senior Preferred Stock
and up to 390,000 shares of Class B Common Stock pursuant to the Units
Purchase Agreement.
"Units Purchase Agreement" means that certain Purchase Agreement,
dated as of the Closing Date, by and among the Parent Company and the
initial purchasers named therein, as amended, modified, extended or
replaced from time to time.
"Units Registration Rights Agreement" means that certain
Registration Rights Agreement, dated as of the Closing Date, by and among
the Parent Company, the Borrower and Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation, as amended, modified, extended or replaced from
time to time.
"Units Stockholders Agreement" means that certain Registration
Rights and Securityholders Agreement, dated as of the Closing Date, by and
among the Parent Company, Venture Partners, BRS and the initial purchasers
party to the Units Purchase Agreement, as amended, modified, extended or
replaced from time to time.
"Venture Partners" means 399 Venture Partners, Inc., a Delaware
corporation, and its Affiliates (including for this purpose, all of their
respective employees, partners, officers and directors and family members
and relatives of such Persons).
"Voting Stock" means shares of voting stock or other securities of
any class or classes, the holders of which are ordinarily, in the absence
of contingencies, entitled to elect the corporate directors (or Persons
performing similar functions).
1.2 Computation of Time Periods, etc.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, accounting terms used but
not otherwise defined herein shall have the meanings provided by, and be
construed in accordance with, generally accepted accounting principles.
Notwithstanding the foregoing, the parties hereto acknowledge and agree
that, for purposes of all calculations made in determining compliance with the
financial covenants set forth in Section 6.11 (including without limitation for
purposes of the definitions of "Applicable Margin" and of "Pro Forma Basis" set
forth in Section 1.1), (i) with respect to any Indebtedness incurred by any
Credit Party in connection with an Acquisition, (A) such Indebtedness shall be
- 24 -
included and deemed to have been incurred as of the first day of the applicable
period and (B) if such Indebtedness has a floating or formula rate, then the
implied rate of interest for such Indebtedness shall be determined by utilizing
the rate which is or would be in effect with respect to such Indebtedness as at
the relevant date of determination, (ii) Indebtedness which is retired in
connection with any Acquisition shall be excluded and deemed to have been
retired as of the first day of the applicable period and (iii) to the extent not
included in the corresponding figures for the Consolidated Borrower Group,
income statement items (whether positive or negative) attributable to any Person
acquired in an Acquisition shall be included to the extent relating to any
portion of the relevant period for such calculations occurring prior to such
Acquisition.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to and upon the terms and
conditions and relying upon the representations and warranties herein set
forth, each Bank severally agrees, from time to time in accordance with
the terms hereof from the Closing Date until the Termination Date to make
revolving credit loans (each a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower for the purposes hereinafter set forth;
provided, however, that (i) with regard to the Banks collectively, the
amount of Revolving Loans outstanding shall not at any time exceed
FIFTY-FIVE MILLION DOLLARS ($55,000,000) in the aggregate (as such
aggregate maximum amount may be reduced from time to time as hereinafter
provided, the "Revolving Committed Amount"), and (ii) with regard to each
Bank individually, each such Bank's pro rata share of outstanding
Revolving Loans plus LOC Obligations shall not at any time exceed such
Bank's Commitment Percentage of the Revolving Committed Amount; and
provided, further, that notwithstanding anything herein to the contrary,
(A) the sum of Revolving Loans plus LOC Obligations shall not at any time
exceed (B) the lesser of the aggregate Revolving Committed Amount or the
Borrowing Base.
(b) Revolving Loan Advances.
(i) Notices. Whenever the Borrower desires a Revolving Loan
advance hereunder, it shall give written notice (or telephone notice
promptly confirmed in writing) to the Agent (a "Notice of Borrowing") not
later than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day
of the requested advance in the case of Base Rate Loans and on the third
Business Day prior to the requested advance in the case of Eurodollar
Loans. Each such notice shall be irrevocable and shall specify (i) that a
Revolving Loan is requested, (ii) the date of the requested advance (which
shall be a Business Day), (iii) the aggregate principal amount of
Revolving Loans requested, and (iv) whether the Revolving Loan requested
shall consist of Base Rate Loans, Eurodollar Loans or a combination
thereof, and if Eurodollar Loans are requested, the Interest Periods with
respect thereto. If the Borrower
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shall fail to specify in any Notice of Borrowing (A) an applicable
Interest Period in the case of a Eurodollar Loan, then such notice shall
be deemed to be a request for an Interest Period of one month or (B) the
type of Revolving Loan requested, then such notice shall be deemed to be a
request for a Base Rate Loan hereunder. The Agent shall as promptly as
practicable give each Bank notice of each requested Revolving Loan
advance, of such Bank's pro rata share thereof and of the other matters
covered in the Notice of Borrowing.
(ii) Minimum Amounts. Revolving Loan advances shall be in a
minimum aggregate amount of $500,000 and integral multiples of $100,000 in
excess thereof.
(iii) Advances. Each Bank will make its pro rata share of each
Revolving Loan advance available to the Agent by 2:00 P.M. (Charlotte,
North Carolina time) on the date specified in the Notice of Borrowing by
deposit in U.S. dollars of immediately available funds at the offices of
the Agent in Charlotte, North Carolina, or at such other address in the
United States as the Agent may designate in writing. All Revolving Loan
advances shall be made by the Banks pro rata on the basis of each Bank's
Commitment Percentage of the Revolving Committed Amount. No Bank shall be
responsible for the failure or delay by any other Bank in its obligation
to make Revolving Loan advances hereunder; provided, however, that the
failure of any Bank to fulfill its commitments hereunder shall not relieve
any other Bank of its commitments hereunder. The Agent will make such
funds available to the Borrower immediately upon receipt from the Banks on
the applicable date of advance. Unless the Agent shall have been notified
by any Bank prior to the date of any such Revolving Loan advance that such
Bank does not intend to make available to the Agent its portion of the
Revolving Loan advance to be made on such date, the Agent may assume that
such Bank has made such amount available to the Agent on the date of such
Revolving Loan advance, and the Agent, in reliance upon such assumption,
may (in its sole discretion without any obligation to do so) make
available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by a Bank on such date,
the Agent shall promptly demand payment from such Bank and shall be
entitled to recover such corresponding amount from such Bank. If such Bank
does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent will promptly notify the Borrower and the Borrower
shall immediately pay such corresponding amount to the Agent. The Agent
shall also be entitled to recover from such Bank or the Borrower, as the
case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Agent to
the Borrower to the date such corresponding amount is recovered by the
Agent, at a per annum rate equal to (i) if paid by such Bank, within two
(2) Business Days of making such corresponding amount available to the
Borrower, the overnight Federal Funds Effective Rate, and thereafter the
Base Rate, and (ii) if paid by the Borrower, the then applicable rate
calculated in accordance with Section 2.2.
(c) Repayment of the Revolving Loans. The Revolving Loans shall be
due and payable in full on the Termination Date.
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(d) Interest on the Revolving Loans. The Revolving Loans shall bear
interest as provided in Section 2.2.
(e) Revolving Notes. Revolving Loans by each Bank shall be evidenced
by a duly executed promissory note of the Borrower to each such Bank dated
as of the Closing Date in an original principal amount equal to such
Bank's Commitment Percentage of the Revolving Committed Amount and
substantially in the form of Schedule 2.1(e) (such promissory note, as
amended, modified, extended, renewed or replaced from time to time is
hereinafter referred to individually as a "Revolving Note" and
collectively as the "Revolving Notes").
2.2 Interest.
The Revolving Loans shall bear interest at a per annum rate equal to:
(a) Base Rate Loans. During such periods as Revolving Loans shall
consist of Base Rate Loans, the sum of the Base Rate plus the Applicable
Margin; and
(b) Eurodollar Loans. During such periods as Revolving Loans shall
consist of Eurodollar Loans, the sum of the Adjusted Eurodollar Rate plus
the Applicable Margin;
provided, however, that from and after any failure to make any payment of
principal or interest in respect of any of the Revolving Loans hereunder when
due, whether at scheduled or accelerated maturity or on account of any mandatory
prepayment, the principal of and, to the extent permitted by law, interest on,
the Revolving Loans shall bear interest, payable on demand, at a per annum rate
two percent (2%) in excess of the rate otherwise applicable hereunder. Interest
on the Revolving Loans shall be payable in arrears on each Interest Payment
Date.
2.3 Conversion.
The Borrower shall have the option, on any Business Day, to extend
existing Revolving Loans into a subsequent Interest Period or to convert
Revolving Loans into Revolving Loans of another type; provided, however, that
(i) except as provided in Sections 2.9(i) and (iii), Eurodollar Loans may be
converted into Revolving Loans of another type only on the last day of an
Interest Period applicable thereto, (ii) Eurodollar Loans may be extended, and
Revolving Loans may be converted into Eurodollar Loans only if no Default or
Event of Default is in existence on the date of extension or conversion, (iii)
Revolving Loans extended as, or converted into, Eurodollar Loans shall be in
such minimum amounts as provided in Section 2.1(b)(ii), and (iv) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Each such extension or conversion shall be effected by the Borrower by
giving written notice (or telephone notice promptly confirmed in writing) to the
Agent (including requests for extensions and renewals, a "Notice of Conversion")
prior to 11:00 A.M. (Charlotte, North Carolina time) on the Business Day of, in
the case of Base Rate Loans, and on the third Business Day prior to, in the case
of Eurodollar Loans, the date of the proposed extension or conversion,
specifying the date of the proposed extension or conversion, the
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Revolving Loans to be so extended or converted, the types of Revolving Loans
into which such Revolving Loans are to be converted and, if appropriate, the
applicable Interest Periods with respect thereto. Each request for extension or
conversion shall be deemed to be a reaffirmation by the Borrower that no Default
or Event of Default then exists and is continuing. In the event the Borrower
fails to request extension or conversion of any Eurodollar Loan in accordance
with this Section, or any such conversion or extension is not permitted or
required by this Section, then such Revolving Loans shall be automatically
converted into Base Rate Loans at the end of their Interest Period. The Agent
shall give each Bank notice as promptly as practicable of any such proposed
conversion or extension affecting any Revolving Loans.
2.4 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the
Issuing Bank may reasonably require, the Issuing Bank will issue and the
Banks will participate in the issuance by the Issuing Bank from time to
time, of such Letters of Credit from the Closing Date until the
Termination Date as the Borrower may request in a customary form
reasonably acceptable to the Issuing Bank; provided, however, that (i) the
aggregate amount of LOC Obligations shall not at any time exceed FIVE
MILLION DOLLARS ($5,000,000) (the "LOC Committed Amount"), (ii) with
regard to each Bank individually, each such Bank's pro rata share of
outstanding Revolving Loans plus LOC Obligations shall not at any time
exceed such Bank's Commitment Percentage of the Revolving Committed
Amount, (iii) the sum of Revolving Loans plus LOC Obligations shall not at
any time exceed the lesser of the aggregate Revolving Committed Amount or
the Borrowing Base, and (iv) Letters of Credit shall be issued solely in
the ordinary course of business for the benefit of the Borrower. Except as
otherwise expressly agreed upon by all the Banks, no standby Letters of
Credit shall have an original expiry date more than one year from the date
of issuance and no documentary Letters of Credit shall have an original
expiry date more than 180 days following the date of issuance, provided,
however, that no Letter of Credit as originally issued or as extended,
shall have an expiry date extending beyond the Termination Date. Each
Letter of Credit shall comply with the related LOC Documents. The issuance
and expiry date of each Letter of Credit shall be a Business Day.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted to the Issuing Bank at least three (3) Business
Days prior to the requested date of issuance. The Issuing Bank will, at
least quarterly and more frequently upon request, provide to the Agent for
dissemination to the Banks a detailed report specifying the Letters of
Credit which are then issued and outstanding and any activity with respect
thereto which may have occurred since the date of the prior report, and
including therein, among other things, the account party, the beneficiary,
the face amount, expiry date, as well as any payment, reimbursement or
expiration which may have occurred. The Issuing Banks will further provide
to the Agent promptly upon request copies of the Letters of Credit. Each
Issuing Bank, by acceptance of its position as such, acknowledges that the
nature of the credit provided pursuant to this Credit Agreement
necessitates that the Agent be kept informed as to the nature and extent
of credit extended hereunder, including particularly
- 28 -
LOC Obligations. To that end each Issuing Bank agrees to provide to the
Agent at least weekly, and more frequently upon request, a summary report
of the nature and extent of LOC Obligations then outstanding.
(c) Participations. Each Bank, upon issuance of a Letter of Credit
(or, in the case of each Existing Letter of Credit, on the Closing Date),
shall be deemed to have purchased without recourse a risk participation
from the Issuing Bank in such Letter of Credit and the obligations arising
thereunder and any collateral relating thereto, in each case in an amount
equal to its pro rata share of the face amount of the obligations under
such Letter of Credit (based on the respective Commitment Percentage of
each Bank) and shall absolutely, unconditionally and irrevocably assume
and be obligated to pay to the Issuing Bank therefor and discharge when
due (without regard to whether the Borrower has reimbursed or is able to
reimburse, the Issuing Bank therefor), its pro rata share of the
obligations arising under such Letter of Credit. Without limiting the
scope and nature of each Bank's participation in any Letter of Credit, to
the extent that the Issuing Bank has not been reimbursed as required
hereunder or under any such Letter of Credit, each such Bank shall pay to
the Issuing Bank its pro rata share of such unreimbursed drawing in same
day funds on the day of notification by the Issuing Bank of an
unreimbursed drawing pursuant to the provisions of subsections (d) and (e)
hereof. The obligation of each Bank to so reimburse the Issuing Bank shall
be absolute and unconditional and shall not be affected by the occurrence
of a Default, an Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise impair the obligation of
the Borrower to reimburse the Issuing Bank under any Letter of Credit,
together with interest as hereinafter provided. As of the Closing Date,
each Existing Letter of Credit shall be deemed for all purposes of the
Credit Agreement and the other Credit Documents to be a Letter of Credit.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Bank will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Bank of its intent to
otherwise reimburse the Issuing Bank, the Borrower shall be deemed to have
requested a Revolving Loan in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be used to satisfy the
reimbursement obligations. The Borrower shall reimburse the Issuing Bank
on the day of drawing under any Letter of Credit (either with the proceeds
of a Revolving Loan obtained hereunder or otherwise) in same day funds as
provided herein or in the LOC Documents. If the Borrower shall fail to
reimburse the Issuing Bank as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to
the Base Rate plus two percent (2%). The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional under all
circumstances irrespective of any rights of set-off, counterclaim or
defense to payment the Borrower may claim or have against the Issuing
Bank, the Agent, the Banks, the beneficiary of the Letter of Credit drawn
upon or any other Person, including without limitation any defense based
on any failure of the Borrower to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit. The
Issuing Bank will promptly notify the other Banks of the amount of any
unreimbursed drawing and each Bank shall promptly pay to the Agent for the
account of the
- 29 -
Issuing Bank in Dollars and in immediately available funds, the amount of
such Bank's pro rata share of such unreimbursed drawing. Such payment
shall be made on the day such notice is received by such Bank from the
Issuing Bank if such notice is received at or before 2:00 p.m. (Charlotte,
North Carolina time) otherwise such payment shall be made at or before
12:00 noon, (Charlotte, North Carolina time) on the Business Day next
succeeding the day such notice is received. If such Bank does not pay such
amount to the Issuing Bank in full upon such request, such Bank shall, on
demand, pay to the Agent for the account of the Issuing Bank interest on
the unpaid amount during the period from the date of such drawing until
such Bank pays such amount to the Issuing Bank in full at a rate per annum
equal to, if paid within two (2) Business Days of the date of drawing, the
Federal Funds Effective Rate and thereafter at a rate equal to the Base
Rate. Each Bank's obligation to make such payment to the Issuing Bank, and
the right of the Issuing Bank to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and
without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or
the acceleration of the Total Revolving Obligations hereunder and shall be
made without any offset, abatement, withholding or reduction whatsoever.
(e) Repayment with Revolving Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, a Revolving Loan
advance to reimburse a drawing under a Letter of Credit, the Agent shall
give notice to the Banks that a Revolving Loan has been requested or
deemed requested in connection with a drawing under a Letter of Credit, in
which case a Revolving Loan advance comprised solely of Base Rate Loans
(each such borrowing, a "Mandatory Borrowing") shall be immediately made
from all Banks (without giving effect to any termination of the
Commitments pursuant to Section 8.2) pro rata based on each of the Banks'
respective Commitment Percentage of the Revolving Committed Amount
(determined before giving effect to any termination of the Commitments
pursuant to Section 8.2) and the proceeds thereof shall be paid directly
to the appropriate Issuing Bank(s) for application to the respective LOC
Obligations. Each such Bank hereby irrevocably agrees to make such
Revolving Loans immediately upon any such request or deemed request on
account of each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such date
notwithstanding (i) the amount of Mandatory Borrowing may not comply with
the minimum amount for advances of Revolving Loans otherwise required
hereunder, (ii) whether any conditions specified in Section 2.5 are then
satisfied, (iii) whether a Default or an Event of Default then exists,
(iv) failure for any such request or deemed request for a Revolving Loan
to be made by the time otherwise required in Section 2.1(b)(ii), (v) the
date of such Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount after any such Letter of Credit may have been drawn upon;
provided, however, that in the event any such Mandatory Borrowing should
be less than the minimum amount for advances of Revolving Loans otherwise
provided in Section 2.1(b)(ii), the Borrower shall pay to the Agent for
its own account an administrative fee of $500. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower or any other Credit Party), then each such Bank hereby agrees
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that it shall forthwith fund (as of the date the Mandatory Borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the
Issuing Bank(s) such participations in the outstanding LOC Obligations as
shall be necessary to cause each such Bank to share in such LOC
Obligations ratably based upon its respective Commitment Percentage of the
Revolving Committed Amount (determined before giving effect to any
termination of the Commitments pursuant to Section 8.2), provided that at
the time any funding of participations pursuant to this sentence is
actually made, the purchasing Bank shall be required to pay to the Issuing
Bank interest on the principal amount of such participation for each day
from and including the day upon which the Mandatory Borrowing would
otherwise have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid with two (2) Business Days of
the date of the Revolving Loan advance, the Federal Funds Effective Rate,
and thereafter at a rate equal to the Base Rate.
(f) Uniform Customs and Practices. The Issuing Bank may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published by the International Chamber of Commerce
(Publication No. 500 or the most recent publication) (the "UCP"), in which
case the UCP may be incorporated therein and deemed in all respects to be
a part thereof.
(g) Provisions Relating to Documentary Letters of Credit.
(i) Each of the respective Credit Parties agrees to procure or
to cause the beneficiaries of each documentary Letter of Credit to procure
promptly any necessary import and export or other licenses for the import
or export or shipping of any goods referred to in or pursuant to a
documentary Letter of Credit and to comply and to cause the beneficiaries
to comply with all foreign and domestic governmental regulations with
respect to the shipment and warehousing of such goods or otherwise
relating to or affecting such documentary Letter of Credit, including
governmental regulations pertaining to transactions involving designated
foreign countries or their nationals, and to furnish such certificates in
that respect as the Issuing Bank thereof may at any time reasonably
require, and to keep such goods adequately covered by insurance in
amounts, with carriers and for such risks as shall be customary in the
industry and to cause the Issuing Bank's interest to be endorsed on such
insurance and to furnish the Issuing Bank at its request with reasonable
evidence thereof. Should such insurance (or lack thereof) upon said goods
for any reason not be reasonably satisfactory to such Issuing Bank, the
Issuing Bank may (but is not obligated to) obtain, at such Credit Party's
expense, insurance reasonably satisfactory to the Issuing Bank.
(ii) In connection with each documentary Letter of Credit,
neither any Issuing Bank nor any of their correspondents shall be
responsible for: (A) the existence, character, quality, quantity,
condition, packing, value or delivery of the property purporting to be
represented by documents; (B) any difference in character, quality,
quantity condition or value of the property from that expressed in
documents; (C) the time, place, manner or order in which shipment of the
property is made; (D) partial or incomplete shipment referred to in such
credit; (E) the character, adequacy or responsibility of any insurer, or
any
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other risk connected with insurance; (F) any deviation from instructions,
delay, default or fraud by the beneficiary or any one else in connection
with the property or the shipping thereof; (G) the solvency,
responsibility or relationship to the property of any party issuing any
documents in connection with the property; (H) delay in arrival or failure
to arrive of either the property or any of the documents relating thereto;
(I) delay in giving or failure to give notice of arrival or any other
notice; (J) any breach of contract between the shippers or vendors and the
respective Credit Party; (K) any laws, customs, and regulations which may
be effective in any jurisdiction where any negotiation and/or payment of
such documentary Letter of Credit occurs; (L) failure of documents (other
than documents required by the terms of the documentary Letter of Credit)
to accompany any draft at negotiation; or (M) failure of any person to
note the amount of any document, or drafts on the reverse of such
documentary Letter of Credit or to surrender or to take up such
documentary Letter of Credit or to forward documents other than documents
required by the terms of the documentary Letter of Credit. In connection
with each documentary Letter of Credit, no Issuing Bank shall be
responsible for any error, neglect or default of any of their
correspondents. None of the above shall affect, impair or prevent the
vesting of any of the Issuing Bank's rights or powers hereunder. If a
documentary Letter of Credit provides that payment is to be made by the
Issuing Bank's correspondent, neither the Issuing Bank nor such
correspondent shall be responsible for the failure of any of the documents
specified in such documentary Letter of Credit to come into the Issuing
Bank's hands, or for any delay in connection therewith, and Credit Parties
respective obligations to make reimbursements shall not be affected by
such failure or delay in the receipt of any such documents.
(iii) Notwithstanding but without limiting any of the
foregoing, with respect to any documentary Letter of Credit, the Credit
Parties shall have a claim against the respective Issuing Bank, and such
Issuing Bank shall be liable to such Credit Parties, to the extent, but
only to the extent, of any direct, as opposed to indirect or
consequential, damages suffered by the Credit Parties caused by the
Issuing Bank's willful misconduct or gross negligence.
2.5 Conditions of Lending.
(a) Conditions. The obligation to make any Extensions of Credit
hereunder is subject to satisfaction of the following conditions:
(i) receipt of a Notice of Borrowing pursuant to Section
2.1(b)(i) or request for a Letter of Credit pursuant to
Section 2.4;
(ii) the representations and warranties set forth in
Section 5 hereof shall be true and correct in all material
respects as of such date (except for those which expressly
relate to an earlier date);
(iii) immediately after giving effect to the requested
Extension of Credit, (A) with regard to each Bank
individually, the Bank's pro rata share of the sum of the
outstanding Revolving Loans plus interest in LOC
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Obligations shall not exceed such Bank's Commitment Percentage
of the Revolving Committed Amount, and (B) with regard to the
Banks collectively, (I) the sum of Revolving Loans plus LOC
Obligations then outstanding shall not exceed the lesser of
the Revolving Committed Amount or the Borrowing Base, and (II)
the aggregate amount of LOC Obligations shall not exceed the
LOC Committed Amount;
(iv) no Default or Event of Default shall exist and be
continuing either prior to or immediately after giving effect
thereto; and
(v) since January 31, 1996, there shall not have been a
material adverse change in or an event or condition materially
and adversely affecting the condition (financial or otherwise)
of, the properties, business or results of operations of the
Parent Company, the Borrower and the Guarantors, taken as a
whole.
(b) Reaffirmation. Each request for a Revolving Loan advance
pursuant to a Notice of Borrowing or a Notice of Conversion and for
issuance, extension or modification of a Letter of Credit shall be deemed
to be a representation and warranty of the correctness of the matters
specified in this subsections (a)(ii), (iii), (iv)and (v) hereof.
2.6 Termination of Commitments.
(a) Voluntary Reductions. The Borrower may from time to time,
without premium or penalty permanently terminate the Revolving Committed
Amount and/or the LOC Committed Amount in whole or in part (in minimum
aggregate amounts of $500,000 and integral multiples of $100,000 in excess
thereof) upon 5 Business Days' prior written notice to the Agent.
(b) Mandatory Reductions. On any date that the Revolving Loans are
required to be prepaid pursuant to Section 2.8(b)(ii) or are prepaid
pursuant to Section 6.15, the Revolving Committed Amount shall
automatically be permanently reduced by the amount of such prepayment or
reduction.
2.7 Fees.
(a) Agent's Fees. The Borrower agrees to pay to the Agent, for its
own account and NationsBanc Capital Markets, Inc., as applicable, the fees
referred to in the Agent's Fee Letter (the "Agent's Fees").
(b) Commitment Fee. In consideration for the Commitments by the
Banks hereunder, the Borrower agrees to pay to the Agent quarterly in
arrears on the 15th day following the last day of each of the Borrower's
fiscal quarters for the ratable benefit of the Banks a commitment fee (the
"Commitment Fee") at a rate equal to the Applicable Margin on the average
daily unused amount of the Revolving Committed Amount for such prior
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quarter. For purposes of computing the Commitment Fee hereunder, the face
amount of outstanding Letters of Credit shall be considered usage under
the Revolving Committed Amount.
(c) Letter of Credit Fees.
(i) Standby Letter of Credit Fee. In consideration of the
issuance of standby Letters of Credit hereunder, the Borrower or
other Credit Party agrees to pay to the Issuing Bank a fee (the
"Standby Letter of Credit Fee") at a rate equal to the Applicable
Margin computed on a per annum basis on the average daily maximum
amount available to be drawn under each such Letter of Credit from
the date of issuance to the date of expiration. Of such Standby
Letter of Credit Fee, the Issuing Bank shall retain for its own
account without sharing with the other Banks one-fourth of one
percent (1/4%) per annum thereon and shall promptly pay over to the
Agent for the ratable benefit of the Banks (including the Issuing
Bank) the remaining portion thereon. The Standby Letter of Credit
Fee will be payable quarterly in arrears on the 15th day following
the last day of each of the Borrower's fiscal quarters.
(ii) Documentary Letter of Credit Fee. In consideration of the
issuance of documentary Letters of Credit hereunder, the Borrower or
other Credit Party agrees to pay to the Issuing Bank a fee (the
"Documentary Letter of Credit Fee") equal to one-half of one percent
(1/2%) of the amount of each drawing under any such documentary
Letter of Credit (of if such Letter of Credit shall expire undrawn,
then on the face amount of the Letter of Credit payable 30 days
after the expiry thereof). Of such Documentary Letter of Credit Fee,
the Issuing Bank shall pay over to the Agent for the ratable benefit
of the Banks (including the Issuing Bank) one-fourth of one percent
(1/4%) thereof and the Issuing Bank may retain for its own account
without sharing by the other Banks one-fourth of one percent (1/4%)
thereof. The Documentary Letter of Credit Fee will be collected by
the Issuing Bank on the date of each drawing or if such Letter of
Credit shall expire undrawn, then 30 days after the expiry thereof,
the Banks' portion of which will be paid over to the Agent quarterly
on the last day of each calendar quarter for distribution to the
Banks (including the Issuing Bank). Payment to the Agent of the
Banks' portion of the Documentary Letter of Credit Fee will be
accompanied by a report providing the appropriate information
necessary for computation of such Fee.
(iii) Issuing Bank Fees. In addition to the Letter of Credit
Fees payable pursuant to subsections (i) and (ii) above, the
Borrower shall pay to the Issuing Bank for its own account without
sharing by the other Banks the customary administrative charges from
time to time of the Issuing Bank with respect to the issuance,
amendment, transfer, administration, cancellation and conversion of,
and drawings under, such Letters of Credit (collectively, the
"Issuing Bank Fees").
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2.8 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to
prepay Revolving Loans in whole or in part from time to time without
premium or penalty; provided, however, that (A) Eurodollar Loans may be
prepaid only on the last day of an Interest Period applicable thereto and
(B) each such partial prepayment shall be a minimum principal amount of
$100,000 (or the amount then outstanding, if less).
(b) Mandatory Prepayments.
(i) Revolving Committed Amount and Borrowing Base Limitations.
If at any time (1) the sum of Revolving Loans plus LOC Obligations
shall exceed the lesser of the Revolving Committed Amount or the
Borrowing Base, or (2) the aggregate amount of LOC Obligations shall
exceed the LOC Committed Amount, then in any such instance the
Borrower shall immediately (A) make payment on the Revolving Loans
in an amount equal to such excess or (B) in respect of the LOC
Obligations, establish a cash collateral account in an amount equal
to such excess as provided in Section 8.2(iv). Payments made
hereunder shall be applied to the Revolving Loans and then to a cash
collateral account in respect of the LOC Obligations.
(ii) Asset Sales. Other than with respect to Specified Sales,
the Borrower will make payment on the Revolving Loans in an amount
equal to 100% of the Net Proceeds received by the Credit Parties
from any Asset Sale to the extent such Net Proceeds exceed the
threshold amounts provided in Section 7.4(a)(ii). Any such payment
hereunder shall be made to the Agent promptly upon (but in any event
not later than five (5) Business Days following) receipt by any
Credit Party of the Net Proceeds from any such Asset Sale (taking
into account any periods permitted for reinvestment thereof as
provided in Section 7.4(a)).
(c) Notice. The Borrower will provide notice to the Agent of any
prepayment by 11:00 a.m. (Charlotte, North Carolina time) on the date of
prepayment. Amounts paid on the Revolving Loans under subsections (a) and
(b)(i) hereof may be reborrowed in accordance with the provisions hereof.
Amounts paid on the Revolving Loans under subsections (b)(ii) hereof or
pursuant to Section 6.15 may not be reborrowed. Amounts otherwise applied
under this Section 2.8 or Section 6.15, but as to which the Borrower shall
have failed to specify the manner of application, shall be applied first
to Base Rate Loans, then to Eurodollar Loans in direct order of Interest
Period Maturities.
2.9 Increased Costs, Illegality, etc.
In the event any Bank shall determine (which determination shall be final
and conclusive and binding on all the parties hereto absent manifest error)
that:
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(i) Unavailability. On any date for determining the
appropriate Adjusted Eurodollar Rate for any Interest Period, that
by reason of any changes arising on or after the date of this Credit
Agreement affecting the London interbank Eurodollar market, dollar
deposits in the principal amount requested are not generally
available in the London interbank Eurodollar Market or adequate and
fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Adjusted
Eurodollar Rate, then Eurodollar Loans will no longer be available,
and requests for a Eurodollar Loan shall be deemed requests for Base
Rate Loans, until such time as such Bank shall notify the Borrower
that the circumstances giving rise thereto no longer exist.
(ii) Increased Costs. At any time that such Bank shall incur
increased costs or reductions in the amounts received or receivable
hereunder with respect to any Eurodollar Loans because of (x) any
change since the date of this Credit Agreement in any applicable
law, governmental rule, regulation, guideline or order (or in the
interpretation or administration thereof, whether or not having the
force of law, if the effect of which would have a similar effect,
and including the introduction of any new law or governmental rule,
regulation, guideline or order) including without limitation the
imposition, modification or deemed applicability of any reserves,
deposits or similar requirements as related to Eurodollar deposits
(such as, for example, but not limited to, a change in official
reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the
computation of the Adjusted Eurodollar Rate) and/or (y) other
circumstances affecting such Bank, the London interbank Eurodollar
market or the position of such Bank in such market; provided,
however, none of the foregoing shall include any taxes in respect of
the net income or profits of such Bank; then the Borrower shall pay
to such Bank promptly upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Bank may determine in
its sole discretion) as may be required to compensate such Bank for
such increased costs or reductions in amounts receivable hereunder
(written notice as to the additional amounts owed to such Bank,
showing the basis for calculation thereof, shall, absent manifest
error, be final and conclusive and binding on all parties hereto;
provided, however, that such determinations are made on a reasonable
basis).
(iii) Illegality. At any time, that the making or continuance
of any Eurodollar Loan has become unlawful by compliance by such
Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental
rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful),
or has become impractical as a result of a contingency occurring
after the date of this Credit Agreement which materially and
adversely affects the interbank Eurodollar market; then Eurodollar
Loans will no longer be available, requests for Eurodollar Loans
shall be deemed requests for Base Rate Loans and the Borrower may,
and upon direction of the Bank, shall, as promptly as possible and,
in any event within
- 36 -
the time period required by law, have any such Eurodollar Loans then
outstanding converted into Base Rate Loans.
2.10 Capital Adequacy.
If after the date hereof, any Bank has determined that the adoption or
effectiveness of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Bank could have achieved
but for such adoption, effectiveness, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Bank, the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank for
such reduction. Upon determining in good faith that any additional amounts will
be payable pursuant to this Section, such Bank will give prompt written notice
thereof to the Borrower, which notice shall set forth the basis of the
calculation of such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrower's obligations to pay
additional amounts pursuant to this Section. Determination by any such Bank of
amounts owing under this Section shall, absent manifest error, be final and
conclusive and binding on the parties hereto; provided, however, that such
determinations are made in good faith using averaging and attribution methods
which are reasonable. Failure on the part of any Bank to demand compensation for
any period hereunder shall not constitute a waiver of such Bank's rights to
demand any such compensation in such period or in any other period, except that
no Bank shall be entitled to compensation under this Section for any costs
incurred or reductions suffered with respect to any date unless such Bank shall
have notified the Borrower that it will demand compensation for such costs or
reductions not more than six months after the later of (i) such date or (ii) the
date on which such Bank shall have become aware of such costs or reductions.
2.11 Compensation.
The Borrower shall compensate each Bank, upon its written request (which
request shall set forth the basis for requesting such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by the Bank to fund its Eurodollar Loans)
which such Bank may sustain:
(i) if for any reason (other than a default by such Bank or the
Agent) a borrowing of Eurodollar Loans or a conversion to or extension of
Eurodollar Loans, does not occur on a date specified therefor in a Notice
of Borrowing or Notice of Conversion;
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(ii) if any repayment or conversion of any Eurodollar Loan occurs on
a date which is not the last day of an Interest Period applicable thereto
including without limitation in connection with any demand, acceleration
or otherwise;
(iii) if any prepayment of any Eurodollar Loan is not made on any
date specified in a notice of prepayment given by the Borrower; or
(iv) as a consequence of (x) any other default by the Borrower to
repay its Revolving Loans when required by the terms of this Credit
Agreement or (y) an election made pursuant to this Section.
Calculation of all amounts payable to a Bank under this Section shall be made as
though the Bank has actually funded its relevant Eurodollar Loan through the
purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate in an
amount equal to the amount of that Revolving Loan, having a maturity comparable
to the relevant Interest Period and in the case of Eurodollar Loans, through the
transfer of such Eurodollar deposit from an offshore office of that Bank to a
domestic office of that Bank in the United States of America; provided, however,
that each Bank may fund each of its Eurodollar Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section.
2.12 Taxes.
(a) Each payment or prepayment hereunder and under the Revolving
Notes shall be made free and clear of, and without deduction for, any
present or future withholding or other taxes, duties or charges of any
nature imposed on such payments or prepayments by or on behalf of any
governmental authority thereof or therein, except for and excluding taxes
upon or determined by reference to the Bank's net income or franchise
taxes imposed by the United States, any political subdivision thereof or
any taxing authority with respect to any of them, or any jurisdiction in
which any such Bank is organized or has a principal or registered office
or branch profit taxes imposed by the United States (such excluded taxes
hereinafter being referred to as the "Excluded Taxes"). If any such taxes,
duties or charges (other than Excluded Taxes) are so levied or imposed on
any payment or prepayment to any Bank, the Borrower will make additional
payments in such amounts as may be necessary so that the net amount
received by such Bank, after withholding or deduction for or on account of
all such applicable taxes, duties or charges, (other than Excluded Taxes)
including deductions applicable to additional sums payable under this
Section 2.12 will be equal to the amount provided for herein or in such
Bank's Revolving Note provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Bank that is not
organized under the laws of the United States of America or a state
thereof if such Bank fails to comply with the requirements of paragraph
(b) of this subsection, or to the extent that such Bank or Agent, as the
case may be, determines in its sole reasonable discretion, that it can,
after notice from the Borrower, through reasonable efforts eliminate or
reduce the amount of taxes payable (without additional costs or expenses
(unless the Borrower agrees to bear such costs or expenses) or other
disadvantages or risks (economic or otherwise) to such Bank or Agent).
Whenever
- 38 -
any taxes, duties or charges are payable by the Borrower with respect to
any payments or prepayments hereunder or under any of the Revolving Notes,
the Borrower shall furnish promptly to the Agent for the account of the
applicable Bank information, including originals or certified copies of
official receipts (to the extent that the relevant governmental authority
delivers such receipts), evidencing payment of any such taxes, duties or
charges so withheld or deducted. If the Borrower fails to pay any such
taxes, duties or charges when due to the appropriate taxing authority or
fails to remit to the Agent for the account of the applicable Bank the
required information evidencing payment of any such taxes, duties or
charges so withheld or deducted, the Borrower shall indemnify the affected
Bank for any such applicable incremental taxes, duties, charges, interest
or penalties that may become payable by such Bank as a result of any such
failure.
(b) Each Bank (which, for purposes of this Section 2.12, shall
include any Affiliate of a Bank that makes any Eurodollar Loan pursuant to
the terms of this Credit Agreement) that is not a "United States person"
(as such term is defined in Section 7701(a)(30) of the Code) shall submit
to the Borrower and the Agent on or before the Closing Date (or, in the
case of a Person that becomes a Bank after the Closing Date by assignment,
promptly upon such assignment), two duly completed and signed copies of
(A) either (1) Form 1001 of the United States Internal Revenue Service
entitling such Bank to a complete exemption from withholding on all
amounts to be received by such Bank pursuant to this Agreement and/or the
Revolving Notes or (2) Form 4224 of the United States Internal Revenue
Service relating to all amounts to be received by such Bank pursuant to
this Agreement and/or the Revolving Notes and (B) an Internal Revenue
Service Form W-8 or W-9 entitling such Bank to receive a complete
exemption from United States backup withholding tax. Each such Bank shall,
from time to time after submitting either such form, submit to the
Borrower and the Agent such additional duly completed and signed copies of
such forms (or such successor forms or other documents as shall be adopted
from time to time by the relevant United States taxing authorities) as may
be (1) reasonably requested in writing by the Borrower or the Agent and
(2) appropriate under then current United States laws or regulations. Upon
the reasonable request of the Borrower or the Agent, each Bank that has
not provided the forms or other documents, as provided above, on the basis
of being a United States person shall submit to the Borrower and the Agent
a certificate to the effect that it is such a "United States person."
(c) The Borrower agrees to pay any present or future stamp or
documentary taxes, any intangibles tax or any other sales, excise or
property taxes, charges or similar levies now or hereafter assessed that
arise from and are attributable to any payment made hereunder, under the
Revolving Notes or from the execution, delivery of, or otherwise with
respect to, this Credit Agreement, the Revolving Notes or other Credit
Documents and any and all recording fees relating thereto ("Other Taxes").
(d) The Borrower shall indemnify each Bank and the Agent for the
full amount of any taxes, duties or charges other than Excluded Taxes
(including, without limitation, any taxes other than Excluded Taxes
imposed by any jurisdiction on amounts payable under this Section 2.12)
duly paid or payable by such Bank or the Agent and any liability
- 39 -
(including penalties, interest and expenses) arising therefrom or with
respect thereto whether or not such taxes, duties or charges or other
taxes are correctly or legally asserted. If a Bank in its sole and
reasonable discretion determines that such taxes, duties or charges are
incorrectly or illegally asserted against it, and the Bank has made a
claim against the Borrower for such amounts, then the Bank shall have the
obligation to seek a refund and to deliver such refund, if received, to
the Borrower. Indemnification payments shall be made within 30 days from
the date such Bank or the Agent makes written demand therefor.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.12 shall survive the payment in full of
principal and interest hereunder and under the Revolving Notes
indefinitely.
(f) If any Bank receives a refund in respect of any taxes for which
it has received payment from the Borrower hereunder, such Bank shall
promptly notify the Borrower of such refund and such Bank shall repay the
amount of such refund to the Borrower; provided, that the Borrower, upon
the request of such Bank, agrees to return such refund (plus any
penalties, interest or other charges) to such Bank in the event such Bank
is required to repay such refund. The determination as to whether any such
Bank has received a refund shall be made by such Bank and such
determination shall be conclusive absent manifest error.
(g) Notwithstanding any other provision of this Credit Agreement, if
the Bank fails to provide a certificate, document or other evidence
required pursuant to Section 2.12(b), (x) the Borrower shall be entitled
to deduct or withhold on payments to such Bank as a result of such
failure, as required by law, and (y) the Borrower shall not be required to
make payments of additional amounts with respect to such withheld taxes
pursuant to Section 2.12(a) hereof to the extent such withholding is
required by reason of the failure of such Bank to provide the necessary
certificate, document or other evidence.
2.13 Indemnification; Nature of Issuing Bank's Duties.
(a) In addition to its other obligations under Section 2.4, the
Borrower hereby agrees to protect, indemnify, pay and save each Issuing
Bank harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Bank may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of the Issuing Bank to honor a drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"Government Acts").
(b) As between the Borrower and the Issuing Bank, the Borrower shall
assume all risks of the acts, omissions or misuse of any Letter of Credit
by the beneficiary thereof. The Issuing Bank shall not be responsible: (i)
for the form, validity, sufficiency, accuracy,
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genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (iii) for failure of the
beneficiary of a Letter of Credit to comply fully with conditions required
in order to draw upon a Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or not they be in
cipher; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (vii) for any consequences arising from causes beyond the
control of the Issuing Bank, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting of
the Issuing Bank's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
the Issuing Bank, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put
such Issuing Bank under any resulting liability to the Borrower. It is the
intention of the parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Bank against any and all
risks involved in the issuance of the Letters of Credit, all of which
risks are hereby assumed by the Borrower, including, without limitation,
any and all risks of the acts or omissions, whether rightful or wrongful,
of any present or future Government Acts. The Issuing Bank shall not, in
any way, be liable for any failure by the Issuing Bank or anyone else to
pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Bank.
(d) Nothing in this Section 2.13 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.4(d)
hereof. The obligations of the Borrower under this Section 2.13 shall
survive the termination of this Credit Agreement. No act or omissions of
any current or prior beneficiary of a Letter of Credit shall in any way
affect or impair the rights of the Issuing Bank to enforce any right,
power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 2.13, the Borrower shall have no obligation to indemnify any
Issuing Bank in respect of any liability incurred by such Issuing Bank
arising out of the gross negligence or willful misconduct of the Issuing
Bank or as a result of a wrongful dishonor of a drawing under a Letter of
Credit by the Issuing Bank, as determined by a court of competent
jurisdiction.
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2.14 Change of Lending Office.
Each Bank agrees that, upon the occurrence of any event giving rise to the
operation of Section 2.9(ii) or (iii) or 2.12, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Bank) to designate another lending office for any Revolving Loans affected
by such event, provided that such designation is made on such terms that such
Bank and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Except in the case of a change of
lending office made at the request of the Borrower, no change in lending office
will be made if greater costs and expenses would result under Section 2.9(ii) or
(iii) or 2.12 on account of any such change in designation. Nothing in this
Section shall affect or postpone any of the obligations of the Borrower or the
right of any Bank provided in Section 2.9 or 2.12.
2.15 Payments and Computations.
Except as otherwise specifically provided herein, all payments hereunder
shall be made to the Agent in U.S. dollars in immediately available funds at its
offices at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx Center, NC1-001-15-04,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 not later than 2:00 p.m. (Charlotte, North
Carolina time) on the date when due. Payments received after such time shall be
deemed to have been received on the next succeeding Business Day. The Agent may
(but shall not be obligated to) debit the amount of any such payment which is
not made by such time to any ordinary deposit account of the Borrower maintained
with the Agent (with notice to the Borrower); provided, however, that failure to
give any such notice shall not limit or otherwise affect the right to make any
such debit or set-off. The Borrower shall, at the time it makes any payment
under this Credit Agreement, specify to the Agent the Revolving Loans, LOC
Obligations, Fees or other amounts payable by the Borrower hereunder to which
such payment is to be applied (and in the event that it fails so to specify, or
if such application would be inconsistent with the terms hereof, the Agent shall
distribute such payment to the Banks in such manner as the Agent may determine
to be appropriate in respect of obligations owing by the Borrower hereunder,
subject to the terms of Section 2.17). The Agent will thereafter cause to be
distributed promptly like funds relating to the payment of principal,
reimbursement of drawings under Letters of Credit, or interest or fees ratably
to the Banks entitled to receive such payments in accordance with the terms of
this Credit Agreement. Whenever any payment hereunder shall be stated to be due
on a day which is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day (subject to accrual of interest and Fees for
the period of such extension), except that in the case of Eurodollar Loans, if
the extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day. All payments made by the Borrower hereunder shall be made without setoff or
counterclaim. Except as expressly provided otherwise herein, all computations of
interest and fees shall be made on the basis of actual number of days elapsed
over a year of 360 days, except with respect to the computation of interest on
Base Rate Loans which shall be calculated based on a year of 365 or 366 days, as
appropriate. Interest shall accrue from and include the date of advance, but
exclude the date of payment.
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2.16 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Revolving Loans. Each Revolving Loan advance (including without
limitation each Mandatory Borrowing), each payment or prepayment of
principal of any Revolving Loan, each payment of interest on the Revolving
Loans, each payment of Commitment Fees or Letter of Credit Fees (except
for the portion retained by the Issuing Bank for its own account), each
reduction of the Revolving Committed Amount, and each conversion or
continuation of any Revolving Loan, shall be allocated pro rata, after
giving effect to any assignment, among the relevant Banks in accordance
with the respective Commitment Percentages (or, if the Commitments of such
Banks have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Revolving Loans and Participation
Interests of such Banks); and
(b) Letters of Credit. Each Bank shall be entitled to its pro rata
share of each payment of unreimbursed drawings in respect of LOC
Obligations; provided that, if any Bank shall have failed to pay its
applicable pro rata share of any drawing under any Letter of Credit, then
any amount to which such Bank would otherwise be entitled pursuant to this
subsection (b) shall instead be payable to the Issuing Bank; provided
further, that in the event any amount paid to any Bank pursuant to this
subsection (b) is rescinded or must otherwise be returned by the Issuing
Bank, each Bank shall, upon the request of the Issuing Bank, repay to the
Agent for the account of the Issuing Bank the amount so paid to such Bank,
with interest for the period commencing on the date such payment is
returned by the Issuing Bank until the date the Issuing Bank receives such
repayment at a rate per annum equal to, during the period to but excluding
the date two (2) Business Days after such request, the Federal Funds
Effective Rate, and thereafter, the Base Rate plus two percent (2%).
2.17 Sharing of Payments.
The Banks agree among themselves that, in the event that any Bank shall
obtain payment in respect of any Revolving Loan or unreimbursed drawing or
obligation to provide cash collateral with respect to any LOC Obligations owing
to such Bank under this Credit Agreement through the exercise of a right of
set-off, banker's lien, counterclaim or otherwise in excess of its pro rata
share as provided for in this Credit Agreement, such Bank shall promptly
purchase from the other Banks a participation in such Revolving Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Banks
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Banks further agree among themselves
that if payment to a Bank obtained by such Bank through the exercise of a right
of set-off, banker's lien, counterclaim or otherwise as aforesaid shall be
rescinded or must otherwise be restored, each Bank which shall have shared the
benefit of such payment shall, by repurchase of a participation theretofore
sold, return its share of that benefit to each Bank whose payment shall have
been rescinded or otherwise restored. The Borrower and each other Credit Party
agrees that any Bank so purchasing such a participation may, to the fullest
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extent permitted by law, exercise all rights of payment, including set-off,
banker's lien or counterclaim, with respect to such participation as fully as if
such Bank were a holder of such Revolving Loan, LOC Obligation or other
obligation in the amount of such participation. Except as otherwise expressly
provided in this Credit Agreement, if any Bank or the Agent shall fail to remit
to the Agent or any other Bank an amount payable by such Bank or the Agent to
the Agent or such other Bank pursuant to this Credit Agreement on the date when
such amount is due, such payments shall be made together with interest thereon
for each date from the date such amount is due until the date such amount is
paid to the Agent or such other Bank at a rate per annum equal to the Federal
Funds Effective Rate.
SECTION 3
GUARANTEE
3.1 The Guarantee.
Each of the Guarantors hereby jointly and severally guarantees to each
Bank, the Agent and the Issuing Bank as hereinafter provided the prompt payment
of the Borrower Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. The Guarantors hereby
further agree that if any of the Borrower Obligations are not paid in full when
due (whether at stated maturity, as a mandatory prepayment, by acceleration, as
a mandatory cash collateralization or otherwise), the Guarantors will, jointly
and severally, 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 Borrower Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) in accordance with the terms of
such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
3.2 Obligations Unconditional.
The obligations of the Guarantors under Section 3.1 hereof are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents, or any
other agreement or instrument referred to therein, or any substitution, release
or exchange of any other guarantee of or security for any of the Borrower
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 3.2 that the obligations of the Guarantors
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hereunder shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Borrower Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents or any other agreement or instrument
referred therein shall be done or omitted;
(iii) the maturity of any of the Borrower Obligations shall be
accelerated, or any of the Borrower Obligations shall be modified,
supplemented or amended in any respect, the amendment or
modification of this Credit Agreement or any other Credit Documents,
or any right under any of the Credit Documents or any other
agreement or instrument referred to therein shall be waived or any
other guarantee of any of the Borrower Obligations or any security
therefor shall be released or exchanged in whole or in part or
otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Bank or Banks as security for any of the Borrower Obligations shall
fail to attach or be perfected; or
(v) any of the Borrower Obligations shall be determined to be
void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Bank exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents
or any other agreement or instrument referred to therein, or against any other
Person under any other guarantee of, or security for, any of the Borrower
Obligations.
3.3 Reinstatement.
The obligations of the Guarantors under this Section 3 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Borrower Obligations is rescinded
or must be otherwise restored by any holder of any of the Borrower Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and each Guarantor agrees that it will indemnify the Agent and each
Bank on demand for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred by the Agent or such Bank in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
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constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
3.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4, each
Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. xx.xx. 26-7
through 26-9, inclusive, to the extent applicable. Each Guarantor agrees that
such Guarantor shall have no right of recourse to security for the Borrower
Obligations. Each Guarantor further agrees that it shall have no right of
subrogation, reimbursement or indemnity, nor any right of recourse to security,
if any, for the Borrower Obligations, so long as any amounts payable to the
Agent or the Banks in respect of the Borrower Obligations shall remain
outstanding and until all of the Commitments under the Credit Agreement shall
have been terminated.
3.5 Remedies.
The Guarantors agree that, as between the Guarantors, on the one hand, and
the Agent and the Banks, on the other hand, the Borrower Obligations may be
declared to be forthwith due and payable as provided in Section 8.2 hereof (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 8.2) for purposes of Section 3.1 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Borrower Obligations from becoming automatically
due and payable) as against any other Person and that, in the event of such
declaration (or such Borrower Obligations being deemed to have become
automatically due and payable), such Borrower Obligations (whether or not due
and payable by any other Person) shall forthwith become due and payable by the
Guarantors for purposes of said Section 3.1.
3.6 Continuing Guarantee.
The guarantee in this Section 3 is a continuing guarantee, and shall apply
to all Borrower Obligations whenever arising.
3.7 Rights of Contribution.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this Section 3.7 shall be subordinate
and subject in right of payment to the prior payment in full to the Agent and
the Banks of the Guaranteed Obligations (as defined below), and none of the
Guarantors shall exercise any right or remedy under this Section 3.7 against any
other Guarantor until payment and satisfaction in full of all of such Guaranteed
Obligations. For purposes of this Section 3.7, (a) "Guaranteed Obligations"
shall mean any obligations arising under the other provisions of this Section 3;
(b) "Excess Payment" shall mean the amount paid by any Guarantor in excess of
its Pro Rata Share of such Guaranteed Obligations; (c) "Pro Rata Share" shall
mean, for any Guarantor in
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respect of any payment of Guaranteed Obligations, the ratio (expressed as a
percentage) as of the date of such payment of Guaranteed Obligations of (i) the
amount by which the aggregate present fair salable value of all of its assets
and properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of the Borrower and all of the Guarantors exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Guarantors hereunder) of the Borrower and all of the Guarantors; provided,
however, that, for purposes of calculating the Pro Rata Shares of the Guarantors
in respect of any payment of Guaranteed Obligations, any Guarantor that became a
Guarantor subsequent to the date of any such payment shall be deemed to have
been a Guarantor on the date of such payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor shall be
utilized for such Guarantor in connection with such payment; and (d)
"Contribution Share" shall mean, for any Guarantor in respect of any Excess
Payment made by any other Guarantor, the ratio (expressed as a percentage) as of
the date of such Excess Payment of (i) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Borrower and all of the
Guarantors other than the maker of such Excess Payment exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Guarantors hereunder) of the Borrower and all of the Guarantors other than the
maker of such Excess Payment; provided, however, that, for purposes of
calculating the Contribution Shares of the Guarantors in respect of any Excess
Payment, any Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on the date of such
Excess Payment and the financial information for such Guarantor as of the date
such Guarantor became a Guarantor shall be utilized for such Guarantor in
connection with such Excess Payment. This Section 3.7 shall not be deemed to
affect any right of subrogation, indemnity, reimbursement or contribution that
any Guarantor may have under applicable law against the Borrower in respect of
any payment of Guaranteed Obligations or in respect of any Excess Payment.
SECTION 4
CONDITIONS PRECEDENT TO INITIAL LOANS AND INITIAL LETTERS OF CREDIT
The obligations of the Banks and the Issuing Bank to make the initial
Extensions of Credit on the Closing Date are subject to satisfaction of the
following conditions (in form and substance acceptable to the Banks) on the
Closing Date:
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4.1 Executed Credit Documents.
Receipt by the Agent of executed copies of this Credit Agreement, the
Revolving Notes and the other Credit Documents (in sufficient numbers to provide
a fully executed original of each, for each Bank).
4.2 No Default; Representations and Warranties.
Both at the time of the making of such initial Extensions of Credit and
after giving effect thereto (i) there shall exist no Default or Event of Default
and (ii) all representations and warranties contained herein or in the other
Credit Documents then in effect shall be true and correct in all material
respects.
4.3 Opinion of Counsel.
Receipt by the Agent of an opinion, or opinions, in form and substance
reasonably satisfactory to the Banks, addressed to the Agent and the Banks and
dated as of the Closing Date from counsel to the Borrower and the Guarantors (in
sufficient numbers to provide a fully executed original to each Bank).
4.4 Solvency.
Receipt by the Agent of (a) an opinion from Xxxxxx, Xxxxxx & Co. in usual
and customary form as to the financial condition, solvency and related matters
of the Borrower and the Parent Company, together with each of their respective
Subsidiaries on a consolidated basis, after giving effect on the Closing Date to
the initial Extensions of Credit hereunder, the Recapitalization, the issuance
of the Senior Notes and the Units Offering and (b) a certificate of a
knowledgeable financial officer of the Borrower, in form and substance
satisfactory to the Agent and the Required Banks, as to the financial condition,
solvency and related matters of each Credit Party and each of its Subsidiaries,
both collectively and individually after giving effect on the Closing Date to
the initial Extensions of Credit hereunder, the Recapitalization, the issuance
of the Senior Notes and the Units Offering
4.5 Liability and Casualty Insurance.
Copies of insurance policies or certificates of insurance evidencing
liability and casualty insurance meeting the requirements set forth in the
Mortgages. Satisfactory evidence of premium payments must also be provided.
- 48 -
4.6 Corporate Documents.
Receipt by the Agent of the following:
(a) Charter Documents. Copies of the articles of incorporation or
charter documents of the Borrower and the Guarantors certified to be true
and complete as of a recent date by the appropriate governmental authority
of the state of its incorporation.
(b) Resolutions. Copies of resolutions of the Board of Directors of
the Borrower and the Guarantors approving and adopting the Credit
Documents, the transactions contemplated therein and authorizing execution
and delivery thereof, certified by a secretary or assistant secretary as
of the Closing Date to be true and correct and in force and effect as of
such date together with an incumbency certificate.
(c) Bylaws. A copy of the bylaws of the Borrower and the Guarantors
certified by a secretary or assistant secretary as of the Closing Date to
be true and correct and in force and effect as of such date.
(d) Good Standing. Copies of (i) certificates of good standing,
existence or its equivalent with respect to the Borrower and the
Guarantors certified as of a recent date by the appropriate governmental
authorities of the state of incorporation and each other state in which
the failure to so qualify and be in good standing in such state would have
a material adverse effect on the business or operations of the Borrower
and the Guarantors, taken as a whole, and (ii) to the extent available at
the Closing Date, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities or evidence that such certificate has been
requested.
4.7 Recapitalization.
(a) Receipt by the Agent of certified copies of the Recapitalization
Agreement, the Stockholders Agreement and the Registration Rights Agreement, in
each case together with all exhibits and schedules thereto and in form and
substance satisfactory to the Agent and the Banks, together with evidence
satisfactory to the Agent that (i) the Recapitalization shall have been
consummated in accordance with the terms of the Recapitalization Agreement and
(ii) BRS shall have made a cash equity investment of at least $13,000,000 in the
Parent Company.
(b) Receipt by the Agent of certified copies of the Units Purchase
Agreement, the Units Registration Rights Agreement, the Units Stockholders
Agreement and the Certificate of Designation, in each case together with all
exhibits and schedules thereto and in form and substance satisfactory to the
Agent and the Banks, together with evidence satisfactory to it that (i) the
Units Offering shall have been consummated in accordance with the terms of the
Units Purchase Agreement and (ii) the Parent Company shall have received no more
than $35,000,000 from the Units Offering.
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(c) Receipt by the Agent of certified copies of the Senior Note Purchase
Agreement and the Senior Note Indenture, in each case together with all exhibits
and schedules thereto and in form and substance satisfactory to the Agent and
the Banks, together with evidence satisfactory to it that (i) the issuance of
the Senior Notes shall have been consummated in accordance with the terms of the
Senior Note Purchase Agreement and (ii) the Borrower shall have received up to
$130,000,000 in proceeds from the issuance of the Senior Notes.
(d) Receipt by the Agent of a certified copy of the Exchange Debenture
Indenture, together with all exhibits and schedules thereto, in form and
substance satisfactory to the Agent and the Banks.
4.8 Availability.
Evidence satisfactory to the Agent and the Banks that immediately after
giving effect to the acquisition, the commitments under this Credit Agreement
will be sufficient to meet the ongoing needs of the Borrower and its
Subsidiaries, and in any event there will be availability under the Revolving
Committed Amount of at least $17,500,000 immediately after giving effect to the
initial Extensions of Credit on the Closing Date.
4.9 Payment of Fees.
Payment to the Agent of all fees payable to it or the Banks on the Closing
Date in connection with the establishment of the credit facilities hereby.
SECTION 5
REPRESENTATIONS AND WARRANTIES
Each Credit Party hereby represents and warrants to the Agent and each
Bank that:
5.1 Organization and Good Standing.
Such Credit Party is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its organization, is duly
qualified and in good standing as a foreign corporation authorized to do
business in every jurisdiction where the failure to so qualify would have a
Material Adverse Effect, and has the requisite corporate power and authority to
own its properties and to carry on its business as now conducted and as proposed
to be conducted.
5.2 Due Authorization.
Such Credit Party (i) has the requisite corporate power and authority to
execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party and to incur the obligations herein and therein
provided for, and (ii) is duly authorized to, and has been
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authorized by all necessary corporate action, to execute, deliver and perform
this Credit Agreement and the other Credit Documents to which it is a party.
5.3 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party (to the
extent such Credit Party is a party thereto) will (i) violate or conflict with
any provision of its charter documents or bylaws, (ii) violate, contravene or
materially conflict with any law, regulation (including without limitation
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it the violation of which would have a Material Adverse
Effect, (iii) violate, contravene or materially conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, the violation of which would
have a Material Adverse Effect, (iv) result in or require the creation of any
lien, security interest or other charge or encumbrance (other than those
contemplated in or created in connection with the Credit Documents) upon or with
respect its properties, the creation of which would have a Material Adverse
Effect.
5.4 Consents.
No consent, approval, authorization or order of, or filing, registration
or qualification with, any court or governmental authority or third party in
respect of such Credit Party is required in connection with the execution,
delivery or performance of this Credit Agreement or any of the other Credit
Documents by the Borrower or any Guarantor, or if required, such consent,
approval and authorization has been obtained or if not obtained would not have a
Material Adverse Effect.
5.5 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
such Credit Party enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy or insolvency laws or
similar laws affecting creditors' rights generally or by general equitable
principles.
5.6 Financial Condition.
The financial statements and financial information provided to the Banks,
consisting of, among other things, (i) an audited combined balance sheet of the
Consolidated Borrower Group dated as of January 27, 1996 together with related
combined statements of earnings and of cash flows certified by Delloite & Touche
LLP, certified public accountants, and (ii) a company-prepared combined balance
sheet of the Consolidated Borrower Group dated as of February 1, 1997, together
with related combined statements of income and of cash flows, present fairly the
combined financial position, results of operations and cash flows of the
Consolidated Borrower Group as of such date and for the period indicated,
subject in the case of the financial statements
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described in clause (ii) to normal year-end adjustments and the absence of
footnotes; such financial statements were prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as noted
therein); and since January 31, 1996 there have occurred no changes or
circumstances which have had or are likely to have a Material Adverse Effect.
5.7 No Default.
No Default or Event of Default presently exists.
5.8 Liens.
Except for Permitted Liens, such Credit Party owns or has a right to use
all properties and assets which are material to the operation of the business of
the Borrower and its Subsidiaries taken as a whole, free and clear of all liens,
encumbrances, mortgages, pledges, security interests and other adverse claims of
any nature.
5.9 Indebtedness.
As of the Closing Date, immediately after giving effect to the
Recapitalization, such Credit Party has no Indebtedness except (i) as disclosed
in the financial statements referenced in Section 5.6, (ii) Indebtedness arising
under the Senior Note Purchase Agreements and the Senior Notes and (iii) the
Indebtedness as set forth in Schedule 5.9.
5.10 Litigation.
Except as disclosed in Schedule 5.10, there are no actions, suits or
legal, equitable, arbitration or administrative proceedings, pending or, to the
knowledge of such Credit Party, threatened against such Credit Party which, if
adversely determined, would likely have a Material Adverse Effect. Since the
date of this Credit Agreement (or the date of the most recent update hereunder),
there has been no material adverse change in the status of any actions, suits,
investigations, litigation or proceedings disclosed hereunder the effect of
which is likely to result in a Material Adverse Effect.
5.11 Material Agreements.
Such Credit Party is not in default in any material respect under any
material contract, lease, loan agreement, indenture, mortgage, security
agreement or other material agreement or obligation to which it is a party or by
which any of its properties is bound which default would have a Material Adverse
Effect.
5.12 Taxes.
Such Credit Party has filed, or caused to be filed, all material tax
returns (federal, state, local and foreign) required to be filed and paid all
amounts of taxes shown thereon to be due (including interest and penalties) and
has paid all other material taxes, fees, assessments and other
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governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) owing (or necessary to preserve any liens in favor
of the Banks or the collateral agent designated by the Banks) by such Credit
Party for which it has received a notice from a taxing authority except for such
taxes (i) which are not yet delinquent, (ii) as are being contested in good
faith and by proper proceedings, and against which adequate reserves are being
maintained in accordance with generally accepted accounting principles or (iii)
as would not have a Material Adverse Effect. As of the date hereof, such Credit
Party is not aware of any proposed material tax assessments against it or any of
its Subsidiaries.
5.13 Compliance with Law.
Except as set forth on Schedule 5.13, such Credit Party is in compliance
with all laws, rules, regulations, orders and decrees (including without
limitation environmental laws) applicable to it, or to its properties, the
failure to comply with which would have a Material Adverse Effect.
5.14 ERISA.
(i) No Reportable Event has occurred and is continuing with respect to any
Plan; (ii) no Plan has an accumulated funding deficiency determined under
Section 412 of the Code, (iii) no proceedings have been instituted, or, to the
knowledge of such Credit Party, are threatened or planned, to terminate any
Plan, (iv) neither such Credit Party nor any member of a Controlled Group, nor
any duly-appointed administrator of a Plan has instituted or intends to
institute proceedings to withdraw from any Multiemployer Plan; and (v) each Plan
has been maintained and funded in all material respects with its terms and with
the provisions of ERISA applicable thereto where, with respect to any of the
foregoing representations and warranties of this Section 5.14, the liability for
a failure thereof or as a result thereof would have a Material Adverse Effect.
Notwithstanding the foregoing, any representation or warranty of this Section
5.14 with respect to any Plan which is a Multiemployer Plan shall be made to the
best knowledge of the Credit Party.
5.15 Subsidiaries.
Set forth in Schedule 5.15 is a complete and accurate list of all
Subsidiaries of each Credit Party as of the date hereof. Information on the
attached Schedule includes jurisdiction of incorporation; the number of shares
of each class of capital stock or other equity interests outstanding; the number
and percentage of outstanding shares of each class owned (directly or
indirectly) by such Credit Party; and the number and effect, if exercised, of
all outstanding options, warrants, rights of conversion or purchase and similar
rights. The outstanding capital stock and other equity interests of all such
Subsidiaries is validly issued, fully paid and non-assessable and is owned by
such Credit Party, directly or indirectly, free and clear of all liens, security
interests and other charges or encumbrances (other than Permitted Liens).
5.16 Use of Proceeds; Margin Stock.
The proceeds of the Revolving Loans hereunder will be used solely for the
purposes specified in Section 6.10. None of such proceeds will be used for the
purpose of purchasing or
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carrying any "margin stock" as defined in Regulation U, Regulation X or
Regulation G, or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry "margin stock" or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of Regulation U, Regulation X or Regulation G. Such Credit Party does
not own "margin stock".
5.17 Government Regulation.
Such Credit Party is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940 or the Interstate Commerce Act, each as amended. In addition, such
Credit Party is not (i) an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company," or a "Subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "Subsidiary" or a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.18 Hazardous Substances.
Except as disclosed on Schedule 5.18 or except as would not reasonably be
expected to have a Material Adverse Effect, the real property owned or leased by
such Credit Party and its Subsidiaries or on which it or its Subsidiaries
operates (the "Subject Property") (i) is free from "releases" of "hazardous
substances" as such terms are defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. xx.xx. 9601 et seq.,
as amended, and the regulations promulgated thereunder; (ii) no portion of the
Subject Property is subject to federal, state or local regulation or liability
because of the presence of stored, leaked or spilled petroleum products, waste
materials or debris, "PCB's" or PCB items (as defined in 40 C.F.R. ss.763.3),
underground storage tanks, "asbestos" (as defined in 40 C.F.R. ss.763.63) or the
past or present accumulation, spillage or leakage of any such substance; (iii)
such Credit Party and its Subsidiaries are in substantial compliance with all
federal, state and local requirements relating to protection of health or the
environment in connection with the operation of their businesses; and (iv) such
Credit Party knows of no complaint or investigation regarding real property
which it or any other Credit Party owns or leases or on which it or any other
Credit Party operates.
5.19 Patents, Franchises, etc.
Except as disclosed on Schedule 5.19, to the best knowledge of each Credit
Party, the Borrower (i) possesses or has the right to use in the United States
all material patents, trademarks, service marks, trade names, copyrights,
licenses and other rights, free from burdensome restrictions, that are
reasonably necessary for the operation of its business as presently conducted
and (ii) has obtained all material licenses, permits, franchises or other
governmental authorizations in the United States necessary to the ownership of
its respective property and to the conduct of its business except as would not
reasonably be expected to have a Material Adverse Effect.
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5.20 Solvency.
Such Credit Party and each of its Subsidiaries, both collectively and
individually, is and, after consummation of this Credit Agreement and after
giving effect to all Indebtedness incurred hereunder, will be solvent.
5.21 No Material Misstatements.
As of the Closing Date, there is no fact known to the Borrower that the
Borrower has not disclosed in writing to the Agent that, so far as the Borrower
can reasonably foresee, would have a Material Adverse Effect.
SECTION 6
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that until the Revolving
Loans and LOC Obligations, together with interest, and fees hereunder, have been
paid in full and the Commitments hereunder shall have terminated:
6.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the Agent
and each Bank:
(a) Annual Financial Statements. As soon as available and in any
event within 90 days after the close of each fiscal year of the Borrower,
beginning with the fiscal year ending February 1, 1997, a consolidated
balance sheet of the Parent Company, the Borrower and their Subsidiaries
as at the end of such fiscal year together with related consolidated
statements of income and retained earnings and of cash flows for such
fiscal year, setting forth in comparative form consolidated figures for
the preceding fiscal year, all in reasonable detail and audited by KPMG
Peat Marwick, Deloitte & Touche, LLP or other independent certified public
accountants of recognized national standing reasonably acceptable to the
Required Banks and whose opinion shall be to the effect that such
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles then in effect applied on a
Consistent Basis (except for changes with which such accountants concur).
In addition, as soon as available and in any event within 90 days after
the close of each fiscal year of the Borrower, an unaudited
company-prepared consolidating balance sheet of the Parent Company, the
Borrower and their Subsidiaries (and a combined balance sheet for the
Consolidated Borrower Group) as at the end of such fiscal year together
with related consolidating (and, for the Consolidated Borrower Group,
combined) statements of income and retained earnings and of cash flows for
such fiscal year, setting forth in comparative form consolidating (and for
the Consolidated Borrower Group, combined) figures for the preceding
fiscal year.
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(b) Monthly Financial Statements. As soon as available and in any
event within 30 days after the end of each month, a combined balance sheet
for the Consolidated Borrower Group as at the end of such monthly period
together with related combined statements of income and retained earnings
and of cash flows for the Consolidated Borrower Group for such monthly
period and for the portion of the fiscal year ending with such period, in
each case setting forth in comparative form combined figures for the
corresponding period of the preceding fiscal year, all in reasonable form
and detail reasonably acceptable to the Required Banks, and accompanied by
a certificate of a knowledgeable financial officer of the Borrower having
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (unless otherwise disclosed therein),
subject to changes resulting from audit and normal year-end adjustments
and the absence of footnotes and to the best of his knowledge and belief,
as being true and correct in all material respects.
(c) Annual Budget Plan. As soon as available, but in any event no
more than 30 days after the end of each fiscal year, a copy of the
detailed annual budget or plan for the next fiscal year, in form and
detail reasonably acceptable to the Required Banks, together with a
summary of the material assumptions made in the preparation of the budget
or plan.
(d) Borrowing Base Certificates. As soon as practicable and in any
event within 25 days after the end of each calendar month, a statement of
the Borrowing Base and its components as of the end of the immediately
preceding monthly accounting period, substantially in the form of Schedule
6.1(d) hereto, certified by a knowledgeable financial officer of the
Borrower to be true and correct in all material respects as of such date.
(e) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 6.1(a) and (b) hereof, a certificate
of a knowledgeable financial officer of the Borrower substantially in the
form of Schedule 6.1(e) to the effect that to the best of his knowledge
and belief no Default or Event of Default exists, or if any Default or
Event of Default does exist specifying the nature and extent thereof and
what action the Borrower proposes to take with respect thereto. In
addition, within 45 days after the end of each fiscal quarter of the
Borrower, the Borrower shall deliver an officer's certificate which
demonstrates compliance with the financial covenants contained in Section
6.11 by calculation thereof on or attached to such certificate as of the
end of each such fiscal period which certificate shall also include a
summary of any differences in the application of generally accepted
accounting principles as applied in such financial statements delivered
from those required by this Credit Agreement, an estimation of their
effect and a reconciliation therefor as to the financial covenants setout
in Section 6.11 hereof.
(f) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 6.1(a), a certificate of
the accountants conducting the annual audit stating whether, in the course
of their audit, they have become aware of any Default or Event of Default
(insofar as any such terms or provisions pertain to accounting matters)
and, if any such Default or Event of Default exists, specifying the nature
and extent (if quantifiable) thereof.
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(g) Auditor's Reports. Promptly upon request, a copy of any other
report or "management letter" submitted by independent accountants to the
Parent Company, the Borrower or a Subsidiary in connection with any
annual, interim or special audit of the consolidated financial statements
of the Parent Company, the Borrower or any of their Subsidiaries.
(h) SEC and Other Reports. Promptly upon transmission thereof,
copies of any filings and registrations with, and reports to, the
Securities and Exchange Commission, or any successor agency, by the Parent
Company, the Borrower or any of its Subsidiaries, and copies of all
financial statements, proxy statements, notices and reports as the Parent
Company, the Borrower or its Subsidiaries shall send to its shareholders
or to the holders of any other Indebtedness (including specifically
without limitation, any Subordinated Debt) in their capacity as such
holders.
(i) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of the Borrower and its Subsidiaries as the Agent or
the Required Banks may reasonably request.
(j) Notice of Default or Litigation. Upon any Credit Party obtaining
knowledge thereof, it will give written notice to the Agent (i)
immediately, of the occurrence of an event or condition consisting of a
Default or Event of Default, specifying the nature and existence thereof
and what action the Borrower proposes to take with respect thereto, and
(ii) promptly, but in any event within 5 Business Days, of the occurrence
of any of the following with respect to any of the Credit Parties: (A) the
pendency or commencement of any litigation, arbitral or governmental
proceeding which if adversely determined is likely to have a Material
Adverse Effect, (B) any levy of an attachment, execution or other process
against its assets having a value of $500,000 or more, (C) the occurrence
of an event or condition which shall constitute a default or event of
default under any Indebtedness in an amount greater than $1,000,000, (D)
any development in its business or affairs which has resulted in, or which
will likely result in, a Material Adverse Effect, or (E) the institution
of any proceedings with respect to, or the receipt of notice by such
Person of potential liability or responsibility for violation, or alleged
violation of any federal, state or local law, rule or regulation,
including but not limited to, regulations promulgated under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. xx.xx. 6901 et seq.,
regulating the generation, handling or disposal of any toxic or hazardous
waste or substance or the release into the environment or storage of any
toxic or hazardous waste or substance, which liability, violation or
alleged violation of which would likely have a Material Adverse Effect, or
(F) any notice or determination concerning the imposition of any
withdrawal liability by a Multiemployer Plan against any of the Credit
Parties, the determination that a Multiemployer Plan is, or is expected to
be, in reorganization within the meaning of Title IV or ERISA, the
termination of any Plan, and the amount of liability incurred or which may
be incurred in connection with any such event in each case, only to the
extent that any of the foregoing subjects a Credit Party to a liability
which would have a Material Adverse Effect.
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6.2 Preservation of Existence and Franchises.
Except as otherwise permitted under Section 7.4, each of the Credit
Parties will do all things necessary to preserve and keep in full force and
effect its existence, material rights, franchises and authority.
6.3 Books, Records and Inspections.
Each of the Credit Parties will keep proper books and records of its
transactions in accordance with good accounting practices. Each of the Credit
Parties will permit on reasonable notice and, prior to the occurrence of an
Event of Default, at reasonable times during normal business hours, officers or
designated representatives of the Agent or any Bank to visit and inspect its
books of account and records and any of its properties or assets (in whomever's
possession) and to discuss the affairs, finances and accounts of such Credit
Parties with, and be advised as to the same by, its and their officers,
directors and independent accountants.
6.4 Compliance with Law.
Each of the Credit Parties will comply with all applicable laws, rules,
regulations and orders of, and all applicable restrictions imposed by all
applicable Governmental Authorities applicable to it and its property (including
applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls) if noncompliance with any such law, rule,
regulation or restriction would have a Material Adverse Effect.
6.5 Payment of Taxes and Other Indebtedness.
Each of the Credit Parties will pay and discharge (i) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (ii) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien or charge upon any of its
properties, and (iii) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that a Credit Party
shall not be required to pay any such tax, assessment, charge, levy, claim or
Indebtedness (A) which is being contested in good faith by appropriate
proceedings and as to which adequate reserves therefor have been established in
accordance with generally accepted accounting principles, or (B) if the failure
to make any such payment would not have a Material Adverse Effect.
6.6 Insurance.
Each of the Credit Parties will, at all times maintain in full force and
effect insurance or self-insurance (including worker's compensation insurance,
liability insurance, casualty insurance and business interruption insurance) in
such amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are reasonable and adequate in the Credit Party's
reasonable discretion unless higher limits or other types of coverage are
usually maintained by
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companies of similar size in a similar industry, in which case, the Required
Banks may require such Credit Party to maintain insurance in accordance with
such standards. The present coverage is outlined as to carrier, policy number,
expiration date, type and amount on Schedule 6.6 hereto and is acceptable to the
Banks as of the Closing Date. Each such policy shall name the Agent as
additional insured, or if the Agent shall request, as loss payee, and shall
provide that the Agent shall request, as loss payee, and shall provide that the
Agent will be provided with 30 days' prior written notice in the case of
cancellation. Unless otherwise requested, liability insurance shall name the
Agent as additional insured and casualty insurance shall name the Agent as loss
payee.
6.7 Maintenance of Property.
Except as otherwise permitted by Section 7.4, each of the Credit Parties
will maintain and preserve its properties and equipment material to the conduct
of its business in good repair, working order and condition, normal wear and
tear excepted, and will make, or cause to be made, in such properties and
equipment from time to time all repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto as may be needed or proper, to
the extent and in the manner customary for companies in similar businesses.
6.8 Performance of Obligations.
Each of the Credit Parties will perform in all material respects all of
its obligations (including, except as may be otherwise prohibited or
contemplated hereunder, payment of Indebtedness in accordance with its terms)
under the terms of all material agreements, indentures, mortgages, security
agreements or other debt instruments to which it is a party or by which it is
bound, except where the failure to do so would not have a Material Adverse
Effect.
6.9 ERISA.
Each Credit Party will, (a) at all times, make prompt payment of all
contributions required under all employee pension benefit plans (as defined in
Section 3(2) of ERISA) ("Pension Plans") and be required to meet the minimum
funding standard set forth in ERISA with respect to each Plan, except where the
failure to do so would not have a Material Adverse Effect; (b) promptly upon
request, furnish the Agent and the Banks copies of each annual report/return
(Form 5500 Series), as well as all schedules and attachments required to be
filed with the Department of Labor and/or the Internal Revenue Service pursuant
to ERISA, and the regulations promulgated thereunder, in connection with each of
its Pension Plans for each Plan Year; (c) notify the Agent within ten (10)
Business Days of any fact, including, but not limited to, any Reportable Event
arising in connection with any of its Plans, which might constitute grounds for
termination thereof by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such Plan, together with a
statement, if requested by the Bank, as to the reason therefor and the action,
if any, proposed to be taken with respect thereof; and (d) as soon as reasonably
possible furnish to the Agent, upon its request, such additional information
concerning any of its Plans as may be reasonably requested by the Agent.
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6.10 Use of Proceeds.
Extensions of Credit hereunder may be used to (i) refinance Indebtedness
outstanding under the Existing Credit Agreement, (ii) pay fees and expenses
incurred in connection with this Credit Agreement, and (iii) provide for working
capital and other general corporate purposes not prohibited by this Credit
Agreement.
6.11 Financial Covenants.
(a) Ave. Funded Debt to Consolidated EBITDA. As of the end of each
fiscal quarter set forth below, there shall be maintained an Ave. Funded
Debt to Consolidated EBITDA Ratio of not greater than the ratio specified
below:
Fiscal Quarter Ending Ratio
--------------------- -----
May 3, 1997 and each fiscal quarter ending 6.00 : 1.00
thereafter until but including the fiscal
quarter ending November 1, 1997
January 31, 1998 and each fiscal quarter ending 5.25 : 1.00
thereafter until but including the fiscal
quarter ending October 31, 1998
January 30, 1999 and each fiscal quarter ending 4.75 : 1.00
thereafter until but including the fiscal
quarter ending October 30, 1999
January 29, 2000 and each fiscal quarter ending 4.50 : 1.00
thereafter until but including the fiscal
quarter ending October 28, 2000
January 27, 2001 and each fiscal quarter ending 4.25 : 1.00
thereafter until but including the fiscal
quarter ending October 27, 2001
February 2, 2002 and thereafter 4.00 : 1.00
(b) Consolidated Fixed Charge Coverage Ratio. As of the end of each
fiscal quarter, there shall be maintained a Consolidated Fixed Charge
Coverage Ratio of not less than the ratio specified below:
Fiscal Quarter Ending Ratio
--------------------- -----
May 3, 1997 and each fiscal quarter ending 1.10 : 1.00
thereafter until but including the fiscal
quarter ending October 30, 1999
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January 29, 2000 and each fiscal quarter ending 1.15 : 1.00
thereafter until but including the fiscal
quarter ending October 27, 2001
February 2, 2002 and thereafter 1.20 : 1.00
(c) Consolidated Interest Coverage Ratio. As of the end of each
fiscal quarter, there shall be maintained a Consolidated Interest Coverage
Ratio of not less than the ratio specified below:
Fiscal Quarter Ending Ratio
--------------------- -----
May 3, 1997 and each fiscal quarter ending 1.50 : 1.00
thereafter until but including the fiscal
quarter ending October 30, 1999
January 29, 2000 and each fiscal quarter ending 1.75 : 1.00
thereafter until but including the fiscal
quarter ending October 27, 2001
February 2, 2002 and thereafter 2.00 : 1.00
6.12 Additional Subsidiary Guarantors.
The Borrower will cause each of its Domestic Subsidiaries (other than
Anvil (Czech), Inc.), whether newly formed, after acquired or otherwise
existing, to promptly become a "Guarantor" hereunder by way of execution of a
Joinder Agreement. The obligations of any such Additional Credit Party shall be
secured by a pledge of 100% of the capital stock of its Domestic Subsidiaries
and, subject to the terms of Section 6.13, 65% of the capital stock (or other
equity interest) of its other Subsidiaries, to the extent any such pledge is
permissible under applicable law. Each Additional Credit Party shall deliver
such other documentation as the Agent may reasonably request in connection with
the foregoing, including, without limitation, appropriate UCC-1 financing
statements, certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above and the perfection of the
Agent's liens thereunder), all in form, content and scope reasonably
satisfactory to the Agent.
6.13 Pledged Assets.
Each Credit Party will cause (i) all of its owned real properties and
personal property (other than fixtures located at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 10017) located in the United States, (ii) to the extent deemed to
be material by the Agent in its sole reasonable discretion, all of its other
owned real properties and personal property and (iii) all of its leased real
properties located in the United States to be subject at all times to first
priority, perfected
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and, in the case of real property (whether leased or owned), title insured Liens
in favor of the Agent pursuant to the terms and conditions hereunder or under
any of the other Credit Documents or, with respect to any such property acquired
subsequent to the Closing Date, such other additional security documents as the
Agent shall reasonably request. Without limiting the generality of the above,
the Credit Parties will cause 100% of the capital stock (or other equity
interests) in each of their direct or indirect Domestic Subsidiaries and, to the
extent permitted by applicable law, 65% of the capital stock (or other equity
interests) in each of their direct Foreign Subsidiaries to be subject at all
times to a first priority, perfected Lien in favor of the Agent pursuant to the
terms and conditions hereunder, under any of the other Credit Documents or under
such other security documents as the Agent shall reasonably request; provided
that, notwithstanding the foregoing, the Credit Parties shall not be required to
cause the Agent's Lien in 65% of the equity interests of A.K.H., S.A. to be
perfected unless, if A.K.H., S.A. has any assets, A.K.H., S.A. shall not have
been dissolved by the first anniversary of the Closing Date.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire any
intellectual property, securities, instruments, chattel paper or other personal
property required to be delivered to the Agent as collateral hereunder or under
any of the other Credit Documents or (b) acquire or lease any real property, the
Borrower shall promptly (and in any event within three (3) Business Days after
any officer of a Credit Party acquires knowledge of same) notify the Agent of
same. Each Credit Party shall take such action, at its own expense, as requested
by the Agent to ensure that the Banks have a first priority perfected Lien in
(i) all owned real properties and personal property of the Credit Parties
located in the United States, (ii) to the extent deemed to be material by the
Agent in its sole reasonable discretion, all other owned real properties and
personal property of the Credit Parties and (iii) all leased real properties
located in the United States, subject in each case only to Permitted Liens.
6.14 Title Commitment, Survey and Flood Hazard Certification.
As soon as available and in any event within sixty (60) days of the
Closing Date, the Credit Parties will furnish, or cause to be furnished, to the
Agent and each Bank:
(a) A standard ALTA mortgagee title insurance commitment (or
sufficient endorsements to existing title insurance policies) as to the
premises owned and leased by the Borrower which are the subject of the
Mortgages from a company or companies reasonably acceptable to the Agent
and the Banks, providing coverage for the most recently appraised value of
such premises and containing no title exceptions not reasonably acceptable
to the Agent and the Banks.
(b) A copy of a recent survey (or a recent certification as to the
accuracy of an existing survey) of the premises owned and leased by the
Borrower which are the subject of the Mortgages prepared by a registered
engineer or land surveyor in a form reasonably acceptable to the Agent and
the Banks and including thereon a certificate that none of the
improvements on the subject premises are located within any area
designated by the Director of the Federal Emergency Management Agency as a
"special flood hazard" area unless then the Credit Party will provide a
flood insurance policy naming the Agent as
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mortgagee. The survey shall include reasonably satisfactory evidence that
such premises abut and have fully adequate direct and free access to a
dedicated public street and thoroughfare.
6.15 Equity Transactions.
Promptly upon (but in any event not later than five (5) Business Days
following) receipt of any Net Proceeds in connection with any Equity Transaction
by the Parent Company, the Borrower or any of their Subsidiaries, the Credit
Parties will prepay (with a corresponding commitment reduction in the case of
any revolving Funded Debt) Funded Debt of the Borrower or any of its
Subsidiaries, as the Borrower may elect, in an aggregate amount equal to 100% of
the Net Proceeds actually received by the Parent Company, the Borrower and/or
their Subsidiaries therefrom. To the extent that the Revolving Loans are prepaid
with any Net Proceeds pursuant to the terms hereof, such amounts shall be
applied in accordance with the terms of Section 2.8(c) and may not be
reborrowed.
6.16 Anvil (Czech), Inc.
As soon as is reasonably practical, the Borrower will cause Anvil (Czech),
Inc. to be dissolved.
SECTION 7
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that until the Revolving
Loans and LOC Obligations, together with interest, and fees hereunder, have been
paid in full and the Commitments hereunder shall have terminated:
7.1 Indebtedness.
None of the Credit Parties will contract, create, incur, assume or permit
to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness arising under the Senior Note Purchase Agreement,
the Senior Note Indenture and the Senior Notes;
(c) Indebtedness existing as of the Closing Date as referenced in
Section 5.9 (and renewals, refinancings or extensions thereof on terms and
conditions no more favorable in any material respect (taken as a whole) to
such Person than such existing Indebtedness (taking into account
reasonable market conditions existing at such time) and
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in a principal amount not in excess of that Indebtedness outstanding
thereunder as of the date of such renewal, refinancing or extension);
(d) Indebtedness in respect of current accounts payable or accrued
expenses (other than for borrowed money or purchase money obligations)
incurred in the ordinary course of business;
(e) purchase money Indebtedness incurred to finance the purchase of
fixed assets and Capital Lease Obligations generally (other than, and in
addition to, as provided in Section 7.1(c)) and any renewals, refinancings
or extensions thereof, provided that (i) the total of all such
Indebtedness and Capital Lease Obligations permitted by this subsection
(e) shall not exceed the sum of an aggregate principal amount of
$1,000,000 at any one time outstanding; (ii) such Indebtedness and Capital
Lease Obligations when incurred shall not exceed the purchase price of the
asset financed plus reasonable transaction expenses related thereto; and
(iii) no such Indebtedness and Capital Lease Obligations shall be
refinanced for a principal amount in excess of the Indebtedness
outstanding thereon at the time of such refinancing;
(f) Indebtedness owing by the Borrower to a Guarantor, by a
Guarantor to the Borrower or by a Guarantor to another Guarantor;
(g) Guaranty Obligations of Indebtedness for borrowed money and
Capital Lease Obligations, each to the extent otherwise permitted by this
Section 7.1;
(h) other Indebtedness (and including any letters of credit issued
outside of this Credit Agreement) which does not exceed $1,000,000 in the
aggregate at any time outstanding;
(i) obligations of the Borrower in respect of Hedging Agreements
entered into in order to manage existing or anticipated interest rate or
exchange rate risks and not for speculative purposes; and
(j) Indebtedness of the Parent Company in respect of the
Subordinated Debt.
Notwithstanding the foregoing, nothing in this Section 7.1 shall be deemed to
permit the Borrower or any of its Subsidiaries to have any Guaranty Obligations
in respect of any Subordinated Debt.
7.2 Liens.
None of the Credit Parties will create, incur, assume or permit to exist
any Lien with respect to any of its property or assets of any kind (whether real
or personal, tangible or intangible), whether now owned or after acquired,
except for Permitted Liens.
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7.3 Nature of Business.
None of the Credit Parties will engage in a business substantially
different from the business conducted by the Credit Parties as of the Closing
Date other than reasonable expansions and extensions. The Parent Company shall
not engage in any business, activity or operations other than owning and holding
capital stock of the Borrower, actions necessary for consummation of the
Recapitalization, incurring Subordinated Debt to the extent permitted by Section
7.1(j), guaranteeing Indebtedness of the Borrower, pledging its assets as
security for obligations under the Credit Documents, and activities related
thereto.
7.4 Consolidation, Merger, Sale of Assets, etc.
None of the Credit Parties will
(a) dissolve, liquidate, or wind up its affairs, sell, transfer,
lease or otherwise dispose of all or any substantial part of its property
or assets outside the ordinary course of its business or agree to do so at
a future time except the following, without duplication, shall be
expressly permitted:
(i) Specified Sales; and
(ii) other Asset Sales, provided that in the event the Net Proceeds
resulting therefrom in any twelve-month period exceed $500,000
in any single instance or $1,000,000 in the aggregate during
any twelve-month period, then such Net Proceeds shall be used
to repay Indebtedness of the Borrower or any Subsidiary who is
a Credit Party; however, notwithstanding the foregoing, in the
event such Net Proceeds are the result of a Recovery Event or
otherwise, the Borrower or any Subsidiary who is a Credit
Party may use all or any part of such Net Proceeds to repair
or replace damaged property or to purchase or otherwise
acquire new assets or property provided that such purchase or
acquisition is committed to by such Credit Party with 180 days
of the receipt of such Net Proceeds and such purchase or
acquisition is consummated within 270 days of such receipt;
as used herein, "substantial part" shall mean if the book value of such
assets, when added to the book value of all other assets sold, leased or
otherwise disposed of by the Credit Parties, taken as a whole (other than
in the ordinary course of business), during the 12-month period ending
with the date of such Asset Sale exceeds 5% of consolidated assets,
determined as of the end of the immediately preceding fiscal year; or
(b) enter into any transaction of merger or consolidation, or agree
to a merger or consolidation at a future time, except for (i) the merger
or consolidation of a Credit Party (other than the Parent Company) into
the Borrower, provided that the Borrower shall be the surviving or
continuing corporation, (ii) the merger or consolidation of a Credit Party
(other than the Parent Company or the Borrower) into another Credit Party
(other than the Parent
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Company or the Borrower), (iii) the merger or consolidation of another
Person into a Credit Party (other than the Parent Company) made in
connection with an acquisition by such Credit Party permitted by Section
7.5, provided that such Credit Party shall be the surviving or continuing
corporation and (iv) the Borrower may merge with the Parent Company in
connection with a Qualifying Public Equity Offering if (a) the Borrower
shall be the continuing or surviving corporation, (b) after giving effect
thereto, no Default or Event of Default exists and (c) the Borrower shall
prepay (with a corresponding commitment reduction in the case of any
revolving Funded Debt) Funded Debt of the Borrower and its Subsidiaries
with 100% of the Net Proceeds from the Qualifying Public Equity Offering
as contemplated by the terms of Section 6.15.
7.5 Investments.
None of the Credit Parties will make any Investment in any Person, except
for Permitted Investments.
7.6 Prepayments of Indebtedness, etc.
None of the Credit Parties will
(a) if any Default or Event of Default has occurred and is
continuing or would be directly or indirectly caused as a result thereof,
(i) after the issuance thereof, amend or modify (or permit the amendment
or modification of) any of the terms of any Indebtedness if such amendment
or modification would add or change any terms in a manner adverse to the
Banks, including, but not limited to, shortening the final maturity or
average life to maturity or requiring any payment to be made sooner than
originally scheduled or increasing the interest rate applicable thereto or
changing any subordination provision thereof, or (ii) except as set forth
in Section 6.15, make (or give any notice with respect thereto) any
voluntary or optional payment or any prepayment or any redemption or any
acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect thereto
before due for the purpose of paying when due), refund, refinance or
exchange of any other Indebtedness;
(b) after the issuance thereof, amend or modify, or permit the
amendment or modification of
(i) any of the subordination provisions of any Subordinated
Debt; or
(ii) any other material terms of any Subordinated Debt, except
(A) for a waiver by the holder of such Subordinated Debt with
respect to compliance with the terms thereof, and (B) after fifteen
(15) days prior written notice to the Agent and each of the Banks,
of any such amendment or modification which is not adverse to either
the issuer thereof or to the interests of the Banks in their
capacity as the holders of any of the Total Revolving Obligations,
or
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(c) make any payment, prepayment, redemption, acquisition for
value of (including without limitation, by way of depositing money
or securities with the trustee with respect thereto before due for
the purpose of paying when due), refund, refinance or exchange of
any Subordinated Debt (including, without limitation, interest
thereon); provided, however, the foregoing shall not prohibit the
following, (i) any payment, prepayment, redemption, acquisition made
from and to the extent of the Net Proceeds of any Equity Transaction
as permitted by Section 7.7(iv), (ii) in the case of Subordinated
Debt owing to a member of the Management Group, to the extent
permitted in Section 7.7(iii), and (iii) upon issuance of the
Exchange Debentures, payments-in-kind of interest on the Exchange
Debentures, but only to the extent such payments are not prohibited
by Section 10.3 of the Exchange Debenture Indenture.
7.7 Restricted Payments.
None of the Credit Parties will make any Restricted Payments; except (i)
Subsidiaries of the Borrower may pay dividends or make other payments or
advances to the Borrower, (ii) the Borrower may pay dividends or make payments
to the Parent Company (A) pursuant to an intercompany tax sharing arrangement
but only to an extent that the amount of such dividend or other payment reflects
the applicable tax liability of the Parent Company and its consolidated
Subsidiaries which dividend or payment will be paid by the Parent Company, (B)
to enable the Parent Company to pay ordinary and necessary expenses associated
with the limited activities of the Parent Company, such as reasonable accounting
and professional expenses to third parties and director's fees and reasonable
expenses which director's fees
(1) in the case of directors which are Investors or officers,
directors or employees of an Investor, directors' fees shall not
exceed $50,000 in the aggregate in any single calendar year; and
(2) in the case of directors which are not Investors or
officers, directors or employees of an Investor, directors' fees
shall not be in excess of amounts which would be reasonable and
customary for outside directors of similarly situated companies,
and any and all state franchise taxes and similar taxes, and (C) in an amount
necessary to redeem or otherwise purchase capital stock of the Management Group
to the extent permitted by clause (iii) of this Section 7.7, (iii) any Credit
Party may redeem or otherwise purchase capital stock of members of the
Management Group in an aggregate cash amount (including in connection herewith
payment or prepayment of Subordinated Debt owing to members of the Managing
Group under Section 7.1(j) of up to $500,000 in any calendar year (or if less
than such amount is paid in any year, the "unused" portion may be carried-over
for a period of three (3) successive calendar years and serve to increase
amounts otherwise permitted in such subsequent years, with purchases and
redemptions in a given year being applied first to carry-over amounts, beginning
with the oldest carry-over amounts and working forward to the most recent
carry-over amounts, and then to the amount permitted for the year in which they
are made), but not to exceed $2,500,000 during the term of this Credit
Agreement, provided, that the aggregate amount of any such redemptions may be
increased in a given fiscal year by an amount equal to actual cash consideration
received in such
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fiscal year from members of the Management Group from the sale of capital stock,
(iv) the portion of Net Proceeds from any Equity Transaction which is not paid
to the Banks for application to the Revolving Loans may used to prepay (with a
corresponding commitment reduction in the case of any revolving Funded Debt)
Funded Debt of the Borrower and/or its Subsidiaries in accordance with the
provisions of Section 6.15, (v) upon issuance of the Exchange Debentures in
accordance with Section 7.11, the Parent Company may repurchase fractional
shares of and pay accrued dividends owing with respect to the Senior Preferred
Stock and (vi) pursuant to the terms of the Recapitalization Agreement, any
payments made in connection with the Recapitalization.
7.8 Transactions with Affiliates.
None of the Credit Parties will enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
officer, director, shareholder of any Credit Party or to any Subsidiary which is
not a Credit Party or Affiliate of any Credit Party (other than another Credit
Party) other than on terms and conditions substantially as favorable than would
be obtainable in a comparable arm's-length transaction with a Person other than
an Affiliate, except that the restriction contained in this Section 7.8 shall
not apply to (i) Permitted Investments, (ii) transactions permitted by Section
7.5 and 7.7, (iii) transactions contemplated by the Recapitalization Agreement,
including any and all payments required to be paid pursuant to the terms
thereof, (iv) transaction fees and reimbursement of expenses paid to such
officer, director, shareholder or Affiliate in connection with the transactions
contemplated by the Recapitalization Agreement (and the agreements executed in
connection therewith) in an amount not to exceed $4,000,000, (v) transactions
contemplated by the Stockholders Agreement, the Registration Rights Agreement,
the Units Registration Rights Agreement or the Units Stockholders Agreement,
(vi) transactions with employees or officers of any Credit Party in the ordinary
course of business so long as any material transactions have been approved by
the Board of Directors of such Credit Party, (vii) transactions among and
between the Credit Parties, (viii) the redemption or other purchase of capital
stock of members of the Management Group to the extent permitted by Section 7.7
and (ix) the sale of equity securities by the Parent Company.
7.9 Ownership of Subsidiaries.
Neither the Parent Company, the Borrower nor any of their Subsidiaries
will sell, transfer or otherwise dispose of, any shares of capital stock or
permit the Borrower or any Subsidiaries to issue, sell or otherwise dispose of,
any shares of capital stock of any Subsidiary, except (i) the Units Offering,
(ii) in the case of a Subsidiary, capital stock that is issued, sold or
transferred to the Borrower or any other Subsidiary of the Borrower, (iii)
pursuant to any Equity Transaction so long as the Net Proceeds therefrom are, to
the extent required, applied to prepay (with a corresponding commitment
reduction in the case of any revolving Funded Debt) Funded Debt of the Borrower
and its Subsidiaries pursuant to Section 6.15, (iv) by the Parent Company, the
Borrower or any of its Subsidiaries expressly for the purpose of acquiring new
assets or property, provided that such purchase or acquisition is committed to
within 180 days of receipt of such Net Proceeds therefrom and such purchase or
acquisition is consummated within 270 days of such receipt, and (v) in any
transaction not constituting an Equity Transaction. Neither the Borrower nor any
of its Subsidiaries will create, form or acquire a Subsidiary unless such
Subsidiary is or would be a Subsidiary.
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7.10 Fiscal Year.
Unless required by applicable law, none of the Credit Parties will change
its fiscal year without the consent of the Agent, which consent shall not be
unreasonably withheld or delayed.
7.11 Exchange Debentures.
So long as any Default or Event of Default shall exist and be continuing,
no Credit Party will permit the Senior Preferred Stock to be exchanged for
Exchange Debentures.
SECTION 8
EVENTS OF DEFAULT
8.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall:
(i) default in the payment when due of any principal of any of
the Revolving Loans or of any reimbursement obligations arising from
drawings under Letters of Credit, or in providing cash collateral
when due pursuant to Section 8.2(iv) (or payment of any guaranty
obligations in respect thereof), or
(ii) default, and such default shall continue for three or
more Business Days, in the payment when due of any interest on the
Revolving Loans, or of any fees or other amounts owing hereunder,
under any of the other Credit Documents or in connection herewith
(or payment of any guaranty obligations in respect thereof); or
(b) Representations. Any representation, warranty or statement made
or deemed to be made by any Credit Party herein, in any of the other
Credit Documents, or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto shall prove untrue in any
material respect on the date as of which it was deemed to have been made;
or
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 6.1(j), 6.2, 6.11 or 7.1
through 7.11, inclusive, or
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(ii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) this Section 8.1) contained in any
Credit Document and such default shall continue unremedied for a
period of at least 30 days after the earlier of a responsible
officer of a Credit Party becoming aware of such default or notice
thereof to the Borrower by the Agent; or
(d) Other Credit Documents. Any Credit Document shall fail to be in
full force and effect or to give the Agent and/or the Banks the security
interests, liens, rights, powers and privileges purported to be created
thereby; or
(e) Guaranties and Subordination Provisions. The guaranty given by
the Credit Parties hereunder or by any Additional Credit Party hereafter
or any provision thereof shall cease to be in full force and effect, or
any guarantor thereunder or any Person acting by or on behalf of such
guarantor shall deny or disaffirm such guarantor's obligations under such
guaranty, or any guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed
or observed pursuant to any guaranty; or the subordination provisions of
the Subordinated Debt permitted under Section 7.1 or any material
provision thereof shall cease to be in full force and effect (other than
as a result of payment in full permitted by the terms of this Credit
Agreement); or
(f) Bankruptcy, etc. A Credit Party shall commence a voluntary case
concerning itself under the Bankruptcy Code; or an involuntary case is
commenced against a Credit Party under the Bankruptcy Code and the
petition is not dismissed within 60 days, after commencement of the case;
or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of all or substantially all of the property of a Credit
Party; or a Credit Party commences any other proceeding under any
reorganization, arrangement, adjustment of the debt, relief of creditors,
dissolution, insolvency or similar law of any jurisdiction whether now or
hereafter in effect relating to a Credit Party; or there is commenced
against a Credit Party any such proceeding which remains undismissed for a
period of 60 days; or a Credit Party is adjudicated insolvent or bankrupt;
or any order of relief or other order approving any such case or
proceeding is entered; or a Credit Party suffers appointment of any
custodian or the like for it or for any substantial part of its property
to continue unchanged or unstayed for a period of 60 days; or a Credit
Party makes a general assignment for the benefit of creditors; or any
corporate action is taken by a Credit Party for the purpose of effecting
any of the foregoing; or
(g) Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under any Credit
Document) of the Credit Parties in a principal amount in excess of
$1,000,000, (i) a Credit Party shall (A) default in any payment (beyond
the applicable grace period with respect thereto, if any) with respect to
any such Indebtedness, or (B) default (after giving effect to any
applicable grace period) in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition shall occur
or condition exist, the effect of which default or other event or
condition is to cause,
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or permit, the holder or holders of such Indebtedness (or trustee or agent
on behalf of such holders) to cause (determined without regard to whether
any notice or lapse of time is required), any such Indebtedness to become
due prior to its stated maturity; or (ii) any such Indebtedness shall be
declared due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity
thereof; or
(h) Judgments. One or more judgments, orders, or decrees shall be
entered against any Credit Party involving a liability of $500,000 or more
in the aggregate (to the extent not paid or covered by insurance provided
by a carrier who has not denied coverage) shall be rendered by a court of
competent jurisdiction and such judgments, orders or decrees shall
continue unsatisfied, undischarged and unstayed for a period ending on the
first to occur of (i) the last day on which such judgment, order or decree
becomes final and unappealable or (ii) 60 days; or
(i) ERISA. Any Credit Party or any member of the Controlled Group
shall fail to pay when due an amount or amounts aggregating which it shall
have become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans which in the aggregate have unfunded liabilities
(individually and collectively, a "Material Plan") shall be filed under
Title IV of ERISA by any such Credit Party or any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material Plan
must be terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
with respect to, one or more Multiemployer Plans; provided, however, a
default shall only exist as a result of the occurrence of any of the
events referred to in this clause (i) if the effect of such event would
result in a Material Adverse Effect; or
(j) Recapitalization Documents. There shall occur and be continuing
any Event of Default under and as defined in any Recapitalization
Document; or
(k) Ownership. There shall occur a Change of Control.
8.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the Required Banks or
cured to the satisfaction of the Required Banks, the Agent may, and shall, upon
the request and direction of the Required Banks, by written notice to the
Borrower take any of the following actions without prejudice to the rights of
the Agent or any Bank to enforce its claims against the Credit Parties, except
as otherwise specifically provided for herein:
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(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately
terminated.
(ii) Acceleration of Revolving Loans. Declare the unpaid
principal of and any accrued interest in respect of all Revolving
Loans and unreimbursed drawings in respect of LOC Obligations and
any and all other indebtedness or obligations of any and every kind
owing by the Borrower to any of the Banks hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
(iii) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
(iv) Cash Collateral. Direct the Credit Parties to pay (and
the Credit Parties agree that upon receipt of such notice, or upon
the occurrence of an Event of Default under Section 8.1(f), they
will immediately pay) to the Agent additional cash, to be held by
the Agent, for the benefit of the Banks, in a cash collateral
account as additional security for the LOC Obligations for
subsequent drawings under all then outstanding Letters of Credit in
an amount equal to the maximum aggregate amount which may be drawn
under all Letters of Credits then outstanding.
Notwithstanding the foregoing, if an Event of Default specified in Section
8.1(f) shall occur, then the Commitments shall automatically terminate and all
Revolving Loans and LOC Obligations, all accrued interest in respect thereof,
all accrued and unpaid Fees and other indebtedness or obligations owing to the
Banks hereunder shall immediately become due and payable without the giving of
any notice or other action by the Agent or the Banks.
SECTION 9
AGENCY PROVISIONS
9.1 Appointment.
Each Bank hereby designates and appoints NationsBank, N.A. as agent (in
such capacity as Agent hereunder, the "Agent") of such Bank to act as specified
herein and the other Credit Documents, and each such Bank hereby authorizes the
Agent, as the agent for such Bank, to take such action on its behalf under the
provisions of this Credit Agreement and the other Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein and in the other Credit Documents, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Bank, and no implied covenants,
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functions, responsibilities, duties, obligations or liabilities shall be read
into this Credit Agreement or any of the other Credit Documents, or shall
otherwise exist against the Agent. To the extent the provisions of this Section
relate to intercreditor or other issues as between and among the Agent and the
Banks, the provisions of this Section are solely for the benefit of the Agent
and the Banks and none of the Credit Parties shall have any rights as a third
party beneficiary of the provisions hereof. In performing its functions and
duties under this Credit Agreement and the other Credit Documents, the Agent
shall act solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with or
for the Borrower or any other Credit Party.
9.2 Delegation of Duties.
The Agent may execute any of its duties hereunder or under the other
Credit 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 them with reasonable care.
9.3 Exculpatory Provisions.
Neither the Agent nor any of its respective officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection herewith or in connection with any of the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by any of the Credit Parties contained herein
or in any of the other Credit 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 herewith or in connection with the other Credit Documents, or
enforceability or sufficiency hereof or of any of the other Credit Documents, or
for any failure of the Borrower or the Guarantors to perform their obligations
hereunder or thereunder. The Agent shall not be responsible to any Bank for the
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Banks or by or on behalf of the Credit
Parties to the Agent or any Bank or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Revolving Loans or of the existence or possible existence of any
Default or Event of Default or to inspect the properties, books or records of
the Credit Parties.
9.4 Reliance on Communications.
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
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genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower or any of the other Credit Parties,
independent accountants and other experts selected by the Agent with reasonable
care). The Agent may deem and treat the Banks as the owner of its interests
hereunder for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Agent in accordance with Section
10.3(b) hereof. The Agent shall be fully justified in failing or refusing to
take any action under this Credit Agreement or under any of the other Credit
Documents unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks 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, hereunder or under any of the other Credit Documents in accordance with
a request of the Required Banks (or to the extent specifically provided in
Section 10.6, all the Banks) and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Banks (including their
successors and assigns).
9.5 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 Bank or a Credit Party referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Agent receives such a notice, the
Agent shall give prompt notice thereof to the Banks. The Agent shall take such
action with respect to such Default or Event of Default as shall be directed by
the Required Banks.
9.6 Non-Reliance on Agent and Other Banks.
Each Bank expressly acknowledges that neither the Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Agent or any affiliate thereof hereinafter taken, including any review of
the affairs of the Borrower or other Credit Parties, shall be deemed to
constitute any representation or warranty by the Agent to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Credit Parties and made its own decision
to make its Revolving Loans hereunder and enter into this Credit Agreement. Each
Bank also represents that it will, independently and without reliance upon the
Agent or any other Bank, 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 Credit
Agreement, and to make such investigation as it deems necessary to inform itself
as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial or
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other conditions, prospects or creditworthiness of the Borrower which may come
into the possession of the Agent or any of its respective officers, directors,
employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification.
The Banks agree to indemnify the Agent in its capacity as such (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to its Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following the payment
of the Total Revolving Obligations) be imposed on, incurred by or asserted
against the Agent in its capacity as such in any way relating to or arising out
of this Credit Agreement or the other Credit 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 Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the payment of the Total Revolving Obligations and all other amounts
payable hereunder and under the other Credit Documents.
9.8 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 Borrower or any other Credit
Party as though the Agent were not the Agent hereunder. With respect to the
Revolving Loans made and all Total Revolving Obligations owing to it, the Agent
shall have the same rights and powers under this Credit Agreement as any Bank
and may exercise the same as though it were not Agent, and the terms "Bank" and
"Banks" shall include the Agent in its individual capacity.
9.9 Successor Agent.
The Agent may, at any time, resign upon 20 days' written notice to the
Borrower and the Banks, and be removed with or without cause by the Required
Banks upon 30 days' written notice to the Borrower and the Agent. Upon any such
resignation or removal, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment, within 30 days after
the notice of resignation or notice of removal, as appropriate, then the
retiring Agent shall select a successor Agent provided such successor is a Bank
hereunder or a commercial bank organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers,
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privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations as Agent under this Credit Agreement
and the other Credit Documents and the provisions of this Section 9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Credit Agreement.
9.10 Co-Agents.
The Co-Agents, in their capacities as such, shall have no rights, powers,
duties or obligations under this Credit Agreement or any of the other Credit
Documents.
SECTION 10
MISCELLANEOUS
10.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of the Borrower and the Agent, set forth below, and in
the case of the Banks, set forth on Schedule 2.1(a), or at such other address as
such party may specify by written notice to the other parties hereto:
if to the Borrower or the Guarantors:
Anvil Knitwear, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Agent:
NationsBank, N.A.
000 X. Xxxxx Xxxxxx
Independence Center
NC1-001-15-04
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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with a copy to:
NationsBank, N.A.
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
10.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
and during the continuance of an Event of Default and the commencement of
remedies described in Section 8.2 hereof, each Bank is authorized at any time
and from time to time, without presentment, demand, protest or other notice of
any kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Bank (including, without
limitation branches, agencies or Affiliates of such Bank wherever located) to or
for the credit or the account of the Borrower against obligations and
liabilities of the Borrower to such Bank hereunder, under the Revolving Notes,
the other Credit Documents or otherwise, irrespective of whether such Bank shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books of such Bank
subsequent thereto. Amounts received by a Bank pursuant to an exercise of rights
under this Section are subject to the sharing provisions of Section 2.17. The
Borrower hereby agrees that any Person purchasing a participation in the
Revolving Loans and Commitments hereunder pursuant to Section 10.3(c) or Section
2.17 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Bank hereunder.
10.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that the Borrower may not assign
and transfer any of its interests without prior written consent of all of
the Banks; provided further that the rights of each Bank to transfer,
assign or grant participations in its rights and/or obligations hereunder
shall be limited as set forth in this Section 10.3, provided however that
nothing herein shall prevent or prohibit any Bank from (i) pledging its
Revolving Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank, or (ii)
granting assignments or participation in such Bank's Revolving Loans
and/or Commitments hereunder to its parent company and/or to any affiliate
of such Bank which is at least 50% owned by such Bank or its parent
company.
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(b) Assignments. Each Bank may, with the prior written consent of
the Borrower, which consent shall not be unreasonably withheld or delayed,
assign all or a portion of its rights and obligations hereunder pursuant
to an assignment agreement substantially in the form of Schedule 10.3(b)
to one or more Eligible Assignees, provided that any such assignment shall
be in a minimum aggregate amount of $5,000,000 of the Commitments and in
integral multiples of $1,000,000 above such amount. Such assignments need
not be pro rata across all the facilities. Any assignment hereunder shall
be effective upon delivery to the Agent of written notice of the
assignment together with a transfer fee of $3,500 payable to the Agent for
its own account. The assigning Bank will give prompt notice to the Agent
and the Borrower of any such assignment. Upon the effectiveness of any
such assignment (and after notice to the Borrower as provided herein), the
assignee shall become a "Bank" for all purposes of this Credit Agreement
and the other Credit Documents and, to the extent of such assignment, the
assigning Bank shall be relieved of its obligations hereunder to the
extent of the Revolving Loans and Commitment components being assigned.
Along such lines the Borrower agrees that upon notice of any such
assignment and surrender of the appropriate Revolving Note or Revolving
Notes, it will promptly provide to the assigning Bank and to the assignee
separate promissory notes in the amount of their respective interests
substantially in the form of the original Revolving Note (but with
notation thereon that it is given in substitution for and replacement of
the original Revolving Note or any replacement notes thereof).
By executing and delivering an assignment agreement in accordance with
this Section 10.3(b), the assigning Bank thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the
other parties hereto as follows: (i) such assigning Bank warrants that it
is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim and the assignee warrants that it is
an Eligible Assignee; (ii) except as set forth in clause (i) above, such
assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, any
of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition
of any Credit Party or the performance or observance by any Credit Party
of any of its obligations under this Credit Agreement, any of the other
Credit Documents or any other instrument or document furnished pursuant
hereto or thereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement,
the other Credit Documents and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into such assignment agreement; (v) such assignee will independently
and without reliance upon the Agent, such assigning Bank or any other
Bank, 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 Credit Agreement and the other
Credit Documents; (vi) such assignee appoints and authorizes the
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Agent to take such action on its behalf and to exercise such powers under
this Credit Agreement or any other Credit Document as are delegated to the
Agent by the terms hereof or 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 the obligations which by the
terms of this Credit Agreement and the other Credit Documents are required
to be performed by it as a Bank.
(c) Participations. Each Bank may sell, transfer, grant or assign
participations in all or any part of such Bank's interests and obligations
hereunder; provided that (i) such selling Bank shall remain a "Bank" for
all purposes under this Credit Agreement (such selling Bank's obligations
under the Credit Documents remaining unchanged) and the participant shall
not constitute a Bank hereunder, (ii) no such participant shall have, or
be granted, rights to approve any amendment or waiver relating to this
Credit Agreement or the other Credit Documents except to the extent any
such amendment or waiver would (A) reduce the principal of or rate of
interest on or fees in respect of any Revolving Loans in which the
participant is participating, (B) postpone the date fixed for any payment
of principal (including extension of the Termination Date or the date of
any mandatory prepayment), interest or fees in which the participant is
participating, or (C) release all or substantially all of the collateral
or guaranties (except as expressly provided in the Credit Documents)
supporting any of the Revolving Loans or Commitments in which the
participant is participating, and (iii) sub-participations by the
participant (except to an affiliate, parent company or affiliate of a
parent company of the participant) shall be prohibited. In the case of any
such participation, the participant shall not have any rights under this
Credit Agreement or the other Credit Documents (the participant's rights
against the selling Bank in respect of such participation to be those set
forth in the participation agreement with such Bank creating such
participation) and all amounts payable by the Borrower hereunder shall be
determined as if such Bank had not sold such participation, provided,
however, that such participant shall be entitled to receive additional
amounts under Sections 2.9, 2.10, 2.11 and 2.12 to the same extent that
the Bank from which such participant acquired its participation would be
entitled to the benefit of such cost protection provisions; provided, that
the Borrower shall not be required to reimburse the participant pursuant
to Sections 2.9, 2.10, 2.11 or 2.12 in an amount which exceeds the amount
that would have been payable thereunder to such selling Bank had such Bank
not sold such participation.
10.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Bank in exercising any
right, power or privilege hereunder or under any other Credit Document and no
course of dealing between the Borrower or any Guarantor and the Agent or any
Bank shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any Bank would otherwise have. No notice to or demand on the
Borrower in any case shall entitle the Borrower or any Guarantor to any other
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or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the Banks to any other or further action in
any circumstances without notice or demand.
10.5 Payment of Expenses, etc.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses of the Agent in connection with the negotiation, preparation, execution
and delivery of this Credit Agreement and the other Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and expenses of Xxxxx & Xxx Xxxxx, special counsel to the
Agent) and any amendment, waiver or consent relating hereto and thereto
including, but not limited to, any such amendments, waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the performance by the Borrower under this Credit Agreement and of the Agent
and the Banks in connection with enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Agent and each of the Banks); (ii) pay and hold each of the
Banks harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and save each of the Banks
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such Bank)
to pay such taxes; and (iii) indemnify each Bank, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, (A) any investigation, litigation or other proceeding (whether or not
any Bank is a party thereto) related to the entering into and/or performance of
any Credit Document or the use of any Extension of Credit hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding or (B) the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence of any Hazardous
Substance on, under or about any property or operations of the Borrower or any
of its Subsidiaries or any property leased to the Borrower or any of its
Subsidiaries (but excluding in the case of either clause (A) or (B) above, any
such losses, liabilities, claims, damages or expenses to the extent incurred by
reason of gross negligence or willful misconduct on the part of the Person to be
indemnified). For purposes of this Section 10.5, "Hazardous Substance" means any
substance which is or becomes designated as "hazardous" or "toxic" under any
federal, state or local law.
10.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing signed by the Required Banks, provided that no such amendment, change,
waiver, discharge or termination shall, without the consent of each Bank, (i)
extend the scheduled maturities (including the final maturity and any mandatory
prepayments) of any Revolving Loan, or any portion thereof, or extend the expiry
date for a Letter of Credit beyond the period permitted by the terms of Section
2.4(a), or reduce the rate or extend
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the time of payment of interest (other than as a result of waiving the
applicability of any post-default increase in interest rates) thereon or fees
hereunder or reduce the principal amount thereof, or increase the Commitments of
the Banks over the amount thereof in effect (it being understood and agreed that
a waiver of any Default or Event of Default or of a mandatory reduction in the
total commitments shall not constitute a change in the terms of any Commitment
of any Bank), (ii) release of any material portion of collateral securing the
Total Revolving Obligations hereunder, (iii) release any Guarantor from its
guaranty obligations hereunder, (iv) amend, modify or waive any provision of
this Section or Section 2.9, 2.10, 2.11, 2.12, 2.13, 2.16, 2.17, 8.1(a), 9.7,
10.2 and 10.3, (v) reduce any percentage specified in, or otherwise modify, the
definition of Required Banks or (vi) consent to the assignment or transfer by
the Borrower (or Guarantor) of any of its rights and obligations under (or in
respect of) this Credit Agreement. No provision of Section 9 may be amended
without the consent of the Agent.
10.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts, each
of which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
10.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
10.9 Survival of Indemnification.
All indemnities set forth herein, including, without limitation, in
Section 2.10, 2.11, 2.12 or 10.5 shall survive the execution and delivery of
this Credit Agreement, and the making of the Revolving Loans, the repayment of
the Total Revolving Obligations and the termination of the Commitments
hereunder.
10.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the courts
of the State of New York sitting in New York City or of the federal courts
of the United States sitting in New York City and, by execution and
delivery of this Credit Agreement, each party hereby irrevocably accepts
for itself and in respect of its property, generally and unconditionally,
the jurisdiction of such courts. Each party further irrevocably consents
to the service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof
- 81 -
by registered or certified mail, postage prepaid, to it at the address set
out notices pursuant to Section 10.1. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law.
(b) Each party hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Credit
Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
10.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
10.12 Entirety.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
10.13 Survival of Representations and Warranties.
All representatives and warranties made by the Borrower herein shall
survive delivery of the Revolving Notes and the making of the Revolving Loans
hereunder.
10.14 Confidentiality.
The Agent and each Bank will hold all non-public information, obtained
pursuant to the requirements of this Credit Agreement and which has been
identified by the Borrower as such (and including the financial information), in
accordance with its customary procedure for handling confidential information of
such nature and in accordance with safe and sound banking practices, but may, in
any event, make disclosure (i) to its officers, directors, employees, agents,
representatives and advisers (including regular and special accountants and
legal counsel), (ii) to any transferee or participant, or prospective transferee
or participant, in connection with the contemplated transfer of the Total
Revolving Obligations and Commitments hereunder or participations thereof,
provided such transferees or participants, or prospective transferees or
participants, shall consent in writing to be bound by the terms of this Section
10.14, (iii) as required or requested by any governmental agency or
representative thereof in the ordinary course of the Bank's regulatory
compliance, or (iv) pursuant to legal process provided that such party shall, to
the extent reasonably possible, give the Borrower five days prior written notice
thereof; provided,
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further, however, that the failure to give any such notice shall not give rise
to any action or claim on account of any such failure; provided that, neither
the Agent nor any of the Banks shall have any obligation under this Section to
the extent that any such information becomes available on a non-confidential
basis from a source other than the Parent Company, the Borrower or their
Subsidiaries, or that any such information becomes publicly available other than
by breach of this Section.
10.15 Waiver of Jury Trial.
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE AGENT, EACH OF
THE BANKS AND EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
10.16 Binding Effect; Termination of Existing Credit Agreement.
This Credit Agreement shall become effective as such time on the Closing
Date when it shall have been executed by each of the Credit Parties and the
Agent, and the Agent shall have received copies hereof (telefaxed or otherwise)
which, when taken together, bear the signatures of each Bank (including the
Issuing Bank), and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of each Credit Party, each Bank (including the Issuing
Bank) and the Agent, together with their respective successors and assigns. The
Credit Parties and the Banks (including the Issuing Bank) party to the Existing
Credit Agreement each hereby agrees that, at such time as this Credit Agreement
shall have become effective pursuant to the terms of the immediately preceding
sentence, (i) the Existing Credit Agreement automatically shall be deemed
amended and restated in its entirety by this Credit Agreement, (ii) the
Commitments under the Existing Credit Agreement and as defined therein
automatically shall be terminated and (iii) all of the promissory notes executed
by the Borrower in connection with the Existing Credit Agreement automatically
shall be canceled.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: ANVIL KNITWEAR, INC.
a Delaware corporation
By /s/ Xxxxx Xxxxxxxxx
---------------------------------
Xxxxx Xxxxxxxxx, Executive Vice President
GUARANTORS: ANVIL HOLDINGS, INC.,
a Delaware corporation
By /s/ Xxxxx Xxxxxxxxx
---------------------------------
Xxxxx Xxxxxxxxx, Vice President
COTTONTOPS, INC.,
a Delaware corporation
By /s/ Xxxxx Xxxxxxxxx
---------------------------------
Xxxxx Xxxxxxxxx, Vice President
[Signatures Continue]
BANKS: NATIONSBANK, N.A.,
individually in its capacity as a
Bank and in its capacity as Agent
By /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, Vice President
[Signatures Continue]
BANK OF AMERICA ILLINOIS,
individually in its capacity as a
Bank and in its capacity as Co-Agent
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice-President
[Signatures Continue]
BANQUE NATIONALE DE PARIS,
individually in its capacity as a
Bank and in its capacity as Co-Agent
By /s/ Xxxx Hustasch
---------------------------------
Name: Xxxx Hustasch
Title: VP
By /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: AVP
[Signatures Continue]
XXXXXX FINANCIAL, INC.,
individually in its capacity as a
Bank and in its capacity as Co-Agent
By /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Assistant Vice President
[Signatures Continue]
THE CHASE MANHATTAN BANK, N.A.
By /s/ Xxxxxxx Xxxxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxxxx
Title: V.P.
[Signatures Continue]
FLEET NATIONAL BANK
By /s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
Title: V.P.
