1
Exhibit 4.2
CREDIT AGREEMENT
among
GERBER CHILDRENSWEAR, INC.
and
AUBURN HOSIERY XXXXX, INC.
as Borrowers,
AND
GCIH, INC.
AND
THE DOMESTIC SUBSIDIARIES OF GCIH, INC. AND THE BORROWERS
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Administrative Agent
DATED AS OF DECEMBER 17, 1997
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TABLE OF CONTENTS
-----------------
SECTION 1 ............................................................... -1-
1.1 Definitions ....................................................... -1-
1.2 Computation of Time Periods and Other Definitional Provisions ..... -27-
1.3 Accounting Terms .................................................. -27-
SECTION 2 ............................................................... -27-
2.1 Revolving Loans ................................................... -28-
2.2 Letter of Credit Subfacility ...................................... -29-
2.3 Swing Line Loans Subfacility ...................................... -36-
2.4 Term Loans ........................................................ -37-
2.5 Continuations and Conversions ..................................... -38-
2.6 Minimum Amounts ................................................... -39-
2.7 Notes ............................................................. -39-
2.8 Joint and Several Liability of the Borrowers ...................... -40-
SECTION 3 ............................................................... -41-
3.1 Interest .......................................................... -41-
3.2 Place and Manner of Payments ...................................... -42-
3.3 Prepayments ....................................................... -42-
3.4 Fees .............................................................. -45-
3.5 Payment in full at Maturity ....................................... -46-
3.6 Computations of Interest and Fees ................................. -46-
3.7 Pro Rata Treatment ................................................ -47-
3.8 Sharing of Payments ............................................... -48-
3.9 Capital Adequacy .................................................. -49-
3.10 Inability To Determine Interest Rate .............................. -49-
3.11 Illegality ........................................................ -50-
3.12 Requirements of Law ............................................... -50-
3.13 Taxes ............................................................. -51-
3.14 Compensation ...................................................... -54-
3.15 Substitution of Lender ............................................ -54-
SECTION 4 ............................................................... -55-
4.1 Guaranty of Payment ............................................... -55-
4.2 Obligations Unconditional ......................................... -55-
4.3 Modifications ..................................................... -56-
4.4 Waiver of Rights .................................................. -57-
4.5 Reinstatement ..................................................... -57-
4.6 Remedies .......................................................... -57-
4.7 Limitation of Guaranty ............................................ -58-
4.8 Rights of Contribution ............................................ -58-
SECTION 5 ............................................................... -58-
5.1 Closing Conditions ................................................ -58-
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5.2 Conditions to All Extensions of Credit ............................ -64-
SECTION 6 ............................................................... -65-
6.1 Financial Condition ............................................... -65-
6.2 No Material Change ................................................ -65-
6.3 Organization and Good Standing .................................... -65-
6.4 Due Authorization ................................................. -66-
6.5 No Conflicts ...................................................... -66-
6.6 Consents .......................................................... -66-
6.7 Enforceable Obligations ........................................... -66-
6.8 No Default ........................................................ -67-
6.9 Ownership ......................................................... -67-
6.10 Indebtedness ...................................................... -67-
6.11 Litigation ........................................................ -67-
6.12 Taxes ............................................................. -67-
6.13 Compliance with Law ............................................... -67-
6.14 ERISA ............................................................. -68-
6.15 Subsidiaries ...................................................... -69-
6.16 Use of Proceeds; Margin Stock ..................................... -69-
6.17 Government Regulation ............................................. -70-
6.18 Environmental Matters ............................................. -70-
6.19 Intellectual Property ............................................. -71-
6.20 Solvency .......................................................... -72-
6.21 Investments ....................................................... -72-
6.22 Location of Collateral ............................................ -72-
6.23 Disclosure ........................................................ -72-
6.24 Licenses, etc ..................................................... -72-
6.25 Collateral Documents .............................................. -73-
SECTION 7 ............................................................... -73-
7.1 Information Covenants ............................................. -73-
7.2 Financial Covenants ............................................... -77-
7.3 Preservation of Existence and Franchises .......................... -78-
7.4 Books and Records ................................................. -78-
7.5 Compliance with Law ............................................... -78-
7.6 Payment of Taxes and Other Indebtedness ........................... -78-
7.7 Insurance ......................................................... -78-
7.8 Maintenance of Property ........................................... -79-
7.9 Performance of Obligations ........................................ -80-
7.10 Collateral ........................................................ -80-
7.11 Use of Proceeds ................................................... -80-
7.12 Audits/Inspections ................................................ -80-
7.13 Additional Credit Parties ......................................... -81-
7.14 Material License Agreements ....................................... -81-
7.15 Purchase Agreements ............................................... -82-
7.16 Foreign Shares .................................................... -82-
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SECTION 8 ............................................................... -82-
8.1 Indebtedness ..................................................... -82-
8.2 Liens ............................................................ -84-
8.3 Nature of Business ............................................... -84-
8.4 Consolidation and Merger ......................................... -84-
8.5 Sale or Lease of Assets .......................................... -85-
8.6 Sale Leasebacks .................................................. -85-
8.7 Advances, Investments and Loans .................................. -85-
8.8 Restricted Payments .............................................. -85-
8.9 Transactions with Affiliates ..................................... -86-
8.10 Fiscal Year; Organizational Documents ............................ -86-
8.11 Ownership of Borrowers ........................................... -86-
8.12 No Limitations ................................................... -86-
8.13 No Other Negative Pledges ........................................ -87-
8.14 Limitation on Foreign Operations ................................. -87-
8.15 Subordinated Debt ................................................ -87-
SECTION 9 ............................................................... -87-
9.1 Events of Default ................................................ -87-
9.2 Acceleration; Remedies ........................................... -91-
9.3 Allocation of Payments After Event of Default .................... -92-
SECTION 10 .............................................................. -93-
10.1 Appointment ...................................................... -93-
10.2 Delegation of Duties ............................................. -93-
10.3 Exculpatory Provisions ........................................... -93-
10.4 Reliance on Communications ....................................... -94-
10.5 Notice of Default ................................................ -95-
10.6 Non-Reliance on Agents and Other Lenders ......................... -95-
10.7 Indemnification .................................................. -95-
10.8 Agents in Their Individual Capacity .............................. -96-
10.9 Successor Agent .................................................. -96-
SECTION 11 .............................................................. -96-
11.1 Notices .......................................................... -97-
11.2 Right of Set-Off ................................................. -97-
11.3 Benefit of Agreement ............................................. -97-
11.4 No Waiver; Remedies Cumulative ................................... -100-
11.5 Payment of Expenses; Indemnification ............................. -100-
11.6 Amendments, Waivers and Consents ................................. -101-
11.7 Counterparts ..................................................... -102-
11.8 Headings ......................................................... -102-
11.9 Defaulting Lender ................................................ -102-
11.10 Survival of Indemnification and Representations and Warranties ... -102-
11.11 Governing Law; Jurisdiction ...................................... -102-
11.12 Waiver of Jury Trial ............................................. -103-
11.13 Time ............................................................. -103-
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11.14 Severability ...................................................... -104-
11.15 Further Assurances ................................................ -104-
11.16 Confidentiality ................................................... -104-
11.17 Entirety .......................................................... -104-
11.18 Binding Effect; Continuing Agreement .............................. -104-
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SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) License Agreements
Schedule 2.2(c) Existing Letters of Credit
Schedule 5.1(g) Mortgaged Properties
Schedule 5.1(j) Consents
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.18 Environmental
Schedule 6.19 Intellectual Property
Schedule 6.21 Investments
Schedule 6.22(a) Real Property Locations
Schedule 6.22(b) Personal Property Locations
Schedule 6.22(c) Chief Executive Offices
Schedule 6.24 Material License Agreements
Schedule 7.7 Insurance
Schedule 8.2 Liens
Schedule 8.9 Affiliate Transactions
Schedule 11.1 Notices
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.3(b) Form of Swing Line Loan Request
Exhibit 2.5 Form of Notice of Continuation/Conversion
Exhibit 2.7(a) Form of Revolving Note
Exhibit 2.7(b) Form of Term Note
Exhibit 2.7(c) Form of Swing Line Note
Exhibit 7.1(c) Form of Borrowing Base Certificate
Exhibit 7.1(d) Form of Officer's Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), is entered into as of
December 17, 1997 among GERBER CHILDRENSWEAR, INC., a Delaware corporation and
AUBURN HOSIERY XXXXX, INC. a Kentucky corporation (individually a "Borrower" and
collectively the "Borrowers"), GCIH, Inc., a Delaware corporation (the "Parent")
and each of the Domestic Subsidiaries of the Parent (other than the Borrowers)
and the Borrowers (individually a "Guarantor" and collectively the
"Guarantors"), the Lenders (as defined herein), NATIONSBANK, N.A., as
Administrative Agent for the Lenders and the Issuing Lenders (as defined
herein).
RECITALS
WHEREAS, the Borrowers and the Guarantors have requested the Lenders to
provide a senior secured credit facility in an amount up to $100 million; and
WHEREAS, the Lenders party hereto have agreed to make the requested senior
secured credit facility available to the Borrowers 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 is 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:
"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date, as provided in Section 7.13.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Administrative Agent" means NationsBank, N.A. (or any successor
thereto) or any successor administrative agent appointed pursuant to
Section 10.9.
"Agency Services Address" means NationsBank, N.A., NC1-001-15-04,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attn: Agency
Services, or such other address as may be identified by written notice
from the Administrative Agent to the Borrowers.
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"Agents" mean the Administrative Agent and the Collateral Agent and
any successors and assigns in such capacity.
"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 (it being understood for purposes
of clarification, that Gerber Products Company is not an Affiliate of any
Credit Party or any of their Subsidiaries. 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.
"Applicable Percentage" means the appropriate applicable percentages
corresponding to the Leverage Ratio in effect as of the most recent
Calculation Date as shown below:
================================================================================================================
Applicable Applicable Applicable Percentage
Pricing Percentage For Percentage For Base for Standby Letter of Applicable Percentage
Level Leverage Ratio Eurodollar Loans Rate Loans Credit Fees For Commitment Fees
----------------------------------------------------------------------------------------------------------------
I < 1.5 to 1.0 .625% 0% .625% .200%
----------------------------------------------------------------------------------------------------------------
II < 2.0 to 1.0 but .750% 0% .750% .250%
>= 1.5 to 1.0
----------------------------------------------------------------------------------------------------------------
III < 2.5 to 1.0 but 1.00% 0% 1.00% .250%
>= 2.0 to 1.0
----------------------------------------------------------------------------------------------------------------
IV < 3.0 to 1.0 but 1.25% 0% 1.25% .250%
>= 2.5 to 1.0
----------------------------------------------------------------------------------------------------------------
V >= 3.0 to 1.0 1.50% 0% 1.50% .375%
================================================================================================================
The Applicable Percentage for Loans, the Letter of Credit Fees and
the Commitment Fees shall, in each case, be determined and adjusted
quarterly on the date (each a "Calculation Date") five Business Days after
the date by which the Borrowers are required to provide the officer's
certificate in accordance with the provisions of Section 7.1(d); provided
that the initial Applicable Percentage for Loans, the Letter of Credit
Fees and the Commitment Fees shall be based on Pricing Level V (as shown
above) and shall remain at Pricing Level V until the first Calculation
Date subsequent to December 31, 1997 and, thereafter, the Pricing Level
shall be determined by the Leverage Ratio calculated as of the most recent
Calculation Date; and provided further that if the Borrowers fail to
provide the officer's certificate required by Section 7.1(d) on or before
the most recent Calculation Date, the Applicable Percentage for Revolving
Loans, the Letter of Credit Fees and the Commitment Fees from such
Calculation Date shall be based on Pricing Level V until such time that an
appropriate officer's certificate is provided whereupon the Pricing Level
shall be determined by the then current Leverage Ratio. Each Applicable
Percentage shall be effective from one Calculation Date until the next
Calculation Date. Any adjustment in the Applicable Percentage shall be
applicable to all existing Loans and Letters of Credit as well as any new
Loans made or Letters of Credit issued.
The Borrowers shall promptly deliver to the Administrative Agent, at
the address set forth on Schedule 11.1 and at the Agency Services Address,
at the time the officer's certificate
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is required to be delivered by Section 7.1(d), information regarding any
change in the Leverage Ratio that would change the existing Pricing Level
pursuant to the preceding paragraph.
"Asset Disposition" means the disposition of any or all of the
assets of a Credit Party or any of its Subsidiaries whether by sale,
lease, transfer or otherwise, other than (a) transfers of assets permitted
by Section 8.5 and (b) losses of assets or destroyed assets permitted by
clauses (a) and (b) of Section 7.7.
"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, the rate per annum (rounded upwards,
if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
greater of (a) the Federal Funds 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
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable after due inquiry to
ascertain the Federal Funds Rate for any reason, including the inability
or failure of the Administrative 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 Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Swing Line Loan and any other Loan
bearing interest at a rate determined by reference to the Base Rate.
"Borrowers" means Gerber Childrenswear, Inc., a Delaware corporation
and Auburn Hosiery Xxxxx, Inc., a Kentucky corporation, in each case,
together with any successors and permitted assigns.
"Borrowing Base Assets" means, at any date of determination, the sum
of (a) 85% of Eligible Accounts Receivable plus (b) 50% of Eligible
Inventory plus (c) 50% of Eligible Documentary Letters of Credit, in each
case as set forth in the most recently delivered Borrowing Base Report.
"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; provided 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.
"Calculation Date" has the meaning set forth in the definition of
Applicable Percentage.
"Capital Expenditures" means all expenditures of the Credit Parties
and their Subsidiaries which, in accordance with GAAP, would be classified
as capital expenditures, including, without limitation, Capital Leases.
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"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person and the amount of such obligation
shall be the capitalized amount thereof determined in accordance with
GAAP.
"Capitalization Ratio" means the ratio of (a) Funded Debt to (b)
Total Capitalization.
"Caribbean Basin" means Antigua and Barbuda, Aruba, Bahamas,
Barbados, Belize, Costa Rica, Dominica, Dominican Republic, El Savador,
Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Montserrat,
Netherlands, Antilles, Nicaragua, Panama, St. Kitts and Nevis, Saint
Lucia, Saint Xxxxxxx and the Grenadines, Trinidad and Tobago, and the
British Virgin Islands.
"Cash Equivalents" means (a) 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, (b) U.S.
dollar denominated time and demand deposits and certificates of deposit of
(i) any Lender, (ii) any domestic commercial bank having capital and
surplus in excess of $500,000,000 or (iii) 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, (c) commercial paper and variable
or fixed rate notes issued by any Approved Bank (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by, any
domestic corporation rated A-1 (or the equivalent thereof) or better by
S&P or P-1 (or the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase agreements
with a bank or trust company (including any of the Lenders) or recognized
securities dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United States of
America in which a Borrower shall have a perfected first priority security
interest (subject to no other Liens) and having, on the date of purchase
thereof, a fair market value of at least 100% of the amount of the
repurchase obligations and (e) Investments, classified in accordance with
GAAP as current assets, in money market investment programs registered
under the Investment Company Act of 1940, as amended, which are
administered by reputable financial institutions having capital of at
least $500,000,000 and the portfolios of which consist substantially of
Investments of the character described in the foregoing subdivisions (a)
through (d).
"Change of Control" means (a) prior to an initial public offering of
Parent's common stock under the Securities Act, Citicorp Venture Capital
Group shall own (on a fully diluted, as if converted, basis) less than 51%
of the Voting Stock of the Parent, (b) subsequent to an initial public
offering by the Parent, any "person" or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), other than the Citicorp
Venture Capital Group, has become, directly or indirectly, the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of all shares
that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), by way of
merger, consolidation or otherwise, of 20% or more of the Voting Stock of
the Parent on a fully-diluted basis, after giving effect to the conversion
and
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exercise of all outstanding warrants, options and other securities of the
Parent (whether or not such securities are then currently convertible or
exercisable) or (c) a change in control (as defined in the documentation
evidencing the Subordinated Debt) occurs.
"Citicorp Venture Capital Group" means CVC, its Affiliates
(including CMP), officers and directors of CVC and independent directors
of the Parent appointed by CVC.
"Closing Date" means the date hereof.
"CMP" means Citicorp Mezzanine Partners, L.P.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended, modified, succeeded or
replaced from time to time.
"Collateral" means all assets of the Credit Parties in which,
pursuant to the Collateral Documents a Lien has been granted in favor of
the Lenders.
"Collateral Agent" means NationsBank, N.A. (or any successor
thereto) or any successor collateral agent appointed pursuant to Section
10.9.
"Collateral Documents" means the Security Agreements, the Pledge
Agreements, the Mortgage Documents, and such other documents executed and
delivered in connection with the attachment and perfection of the Lenders'
security interests in the assets of the Credit Parties, including without
limitation, the Mortgage Policies, UCC financing statements and collateral
assignments of intellectual property.
"Commitment Fees" means the fees payable to the Lenders pursuant to
Section 3.4(a).
"Commitments" means the sum of the commitments of each Lender with
respect to the Revolving Committed Amount and the Term Loan Committed
Amount.
"Credit Documents" means this Credit Agreement, the Notes, any
Joinder Agreement, the Collateral Documents, the LOC Documents, and all
other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto.
"Credit Parties" means the Borrowers and the Guarantors and "Credit
Party" means any one of them.
"Credit Party Obligations" means, without duplication, (a) all of
the obligations of the Credit Parties to the Lenders (including the
Issuing Lender) and the Agents, whenever arising, under this Credit
Agreement, the Notes, the Collateral Documents or any of the other Credit
Documents to which any Credit Party is a party and (b) all liabilities and
obligations owing from such Credit Party to any Lender, or any Affiliate
of a Lender, arising under Hedging Agreements.
"Current Assets" means all current assets of the Parent and its
Subsidiaries, as determined in accordance with GAAP.
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"Current Liabilities" means all current liabilities of the Parent
and its Subsidiaries, other than liabilities constituting Revolving Loans
and Swing Line Loans, as determined in accordance with GAAP.
"Current Maturities of Long Term Debt" means all scheduled principal
payments required to be paid within one year from the date of
determination with respect to any Funded Debt (other than Revolving Loans
or Swing Line Loans).
"Current Ratio" means the ratio of (a) Current Assets to (b) Current
Liabilities.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Debt Issuance" means the issuance of any Indebtedness for borrowed
money by a Credit Party or any of its Subsidiaries, other than
Indebtedness permitted by Section 8.1.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a) has
failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement (but only for so long as
such Loan is not made or such Participation Interest is not purchased),
(b) has failed to pay to the Agents or any Lender an amount owed by such
Lender pursuant to the terms of this Credit Agreement (but only for so
long as such amount has not been repaid) or (c) has been deemed insolvent
or has become subject to a bankruptcy or insolvency proceeding or to a
receiver, trustee or similar official.
"Documentary Letter of Credit" has the meaning set forth in Section
2.2(a).
"Dollars" and "$" means dollars in lawful currency of the United
States of America.
"Domestic Subsidiary" means all direct and indirect Subsidiaries of
the Parent or a Borrower that are domiciled, incorporated or organized
under the laws of any state of the United States or the District of
Columbia whether existing as of the date hereof or hereafter created or
acquired. As of the Closing Date, the Domestic Subsidiaries are as set
forth on Schedule 6.15.
"EBITDA" means, for any period, with respect to the Credit Parties
and their Subsidiaries on a consolidated basis, the sum of (a) Net Income
for such period (excluding the effect of any extraordinary or other
non-recurring gains (including any gain from the sale of property) or
non-cash losses) plus (b) an amount which, in the determination of Net
Income for such period has been deducted for (i) Interest Expense for such
period, (ii) total Federal, state, foreign or other income or franchise
taxes for such period, (iii) all depreciation and amortization for such
period and (iv) all other non-cash charges, including, without limitation,
royalty payments under existing License Agreements, all as determined in
accordance with GAAP.
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"EBITDAR" means, for any period, the sum of EBITDA for such period
plus an amount which in the determination of Net Income for such period
has been deducted for cash Rent Expense for such period, all as determined
in accordance with GAAP.
"Effective Date" means the date on which the conditions set forth in
Section 5.1 shall have been fulfilled (or waived in the sole discretion of
the Lenders) and on which the initial Loans shall have been made and/or
the initial Letters of Credit shall have been issued.
"Eligible Assignee" means (a) any Lender or Affiliate or subsidiary
of a Lender and (b) any other commercial bank, financial institution,
institutional lender or "accredited investor" (as defined in Regulation D
of the Securities and Exchange Commission) with a net worth of at least
$2,000,000,000.
"Eligible Accounts Receivable" means, as of any date of
determination, and without duplication, the amount of all accounts
receivable, receivables, and obligations for payment created or arising
from the sale or shipment of inventory or the rendering of services in the
ordinary course of business (collectively, the "Receivables"), owned by or
owing to the Credit Parties and in which the Lenders have a first priority
perfected security interest, net of any allowances and reserves for
doubtful or uncollectable accounts included in such aggregate value and
sales adjustments consistent with a Credit Party's internal policies and
in any event in accordance with GAAP, but excluding in any event (a)
Receivables subject to any Lien other than Permitted Liens, (b)
Receivables which, at the date of issuance of the invoice with respect
thereto, are payable more than 90 days after the date of issuance of such
invoice, (c) Receivables which are more than 90 days past due or
outstanding more than 90 days after the invoice date if no due date is
specified, (d) 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 Collateral Agent, (e)
Receivables owing by an account debtor which is subject to any bankruptcy
or insolvency proceeding of any kind, unless such account debtor is
classified as a debtor in possession, (f) except as set forth in clause
(g) below, Receivables owing by an account debtor located outside of the
United States (unless (i) payment for the goods shipped is secured by an
irrevocable letter of credit or (ii) export insurance is obtained, in each
case in a form and from an institution reasonably acceptable to the
Collateral Agent), (g) in addition to Receivables permitted by clause (f)
above, (i) Receivables in excess of an aggregate amount of $2,000,000 from
account debtors located in Canada, (ii) Receivables in excess of $200,000
per account debtor or in excess of $750,000 in the aggregate from account
debtors located in Puerto Rico and (iii) Receivables in excess of $100,000
per account debtor or in excess of $500,000 in the aggregate from account
debtors located in Mexico, Argentina or countries in the Caribbean Basin,
(h) 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,
(i) Receivables for which any direct or indirect Subsidiary of the Parent
or any Affiliate of the Parent is the account debtor, (j) Receivables (i)
representing a sale to the government of the United States of America or
any subdivision thereof, or any state, county or municipal government or
(ii) in excess of $400,000 in the aggregate, owing from Navy/Marine and
Army/Air Force Exchanges, (k) all Receivables from an account debtor who
has more than 35% of its Receivables owing to the Credit Parties that are
more than 90 days past due or outstanding more than 90 days after the
invoice date if no due date is specified and (l) Receivables from an
account debtor to the extent such
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14
Receivables exceed, in the aggregate, (i) if the account debtor is
Wal-Mart, sixty percent (60%) of all Eligible Account Receivables as of
such date, (ii) if the account debtor is Toys R Us or Target (but not
both), thirty percent (30%) of all Eligible Account Receivables as of such
date (it being understood that if over 20% of Eligible Accounts Receivable
is owed by Toys R Us then Eligible Receivables owed by Target is subject
to clause (iii) below (and vice versa)) or (iii) with respect to any
account debtor other than Wal-Mart, Toys R Us or Target, twenty percent
(20%) of all Eligible Account Receivable as of such date.
"Eligible Documentary Letters of Credit" means Documentary Letters
of Credit to be used for payment of inventory which has been ordered but
not received.
"Eligible Inventory" means, as of any date of determination and
without duplication, the lower of the aggregate book value (based on a
FIFO or a moving average cost valuation, consistently applied) or fair
market value (provided that the value of any inventory sold between Credit
Parties shall be calculated using the value of the inventory prior to any
such sale between Credit Parties) of all raw materials and finished goods
inventory owned by any Credit Party and in which the Lenders have a first
priority perfected security interest less appropriate reserves determined
in accordance with GAAP, but excluding in any event (a) inventory subject
to any Lien other than Permitted Liens, (b) work in process other than
unpackaged finished goods located in the United States (net of reserves to
be established by the Administrative Agent from time to time), (c)
inventory which is not in usable condition or fails to meet standards for
sale or use imposed by governmental agencies, departments or divisions
having regulatory authority over such goods, (d) inventory which is
discontinued or not useable or saleable at prices approximating their cost
in the ordinary course of the applicable Credit Party's business
(including without duplication the amount of any reserves for
obsolescence, unsalability or decline in value), (e) inventory located
outside of the United States other than inventory owned by a Credit Party
that is being shipped from an overseas manufacturing facility owned or
controlled by a Credit Party to a warehouse in the United States owned or
controlled by a Credit Party, if such inventory is insured for its full
value against loss, damage, hazards and risks from a reputable insurance
company, (f) inventory located at a location not owned or leased by the
applicable Credit Party unless the Collateral Agent has received a waiver
and estoppel agreement, reasonably satisfactory to the Agents, from the
owner/operator of such location, and, if deemed appropriate by the
Collateral Agent, a UCC financing statement has been filed with respect to
such location, (g) inventory located at a location leased by the
applicable Credit Party with respect to which the Collateral Agent shall
not have received a landlord's waiver and estoppel agreement (where
required by the terms of the applicable lease) in a form reasonably
satisfactory to the Collateral Agent; provided that prior to December 31,
1997, inventory located at a leased location in Charlotte, North Carolina
shall constitute Eligible Inventory without such an agreement, (h)
inventory which is leased or on consignment, and (i) inventory which is
subject to a Material License Agreement unless (A) such Material License
Agreement is in full force and effect and (B) the Collateral Agent has
received a consent, if necessary, allowing it (after an Event of Default)
to sell off inventory subject to such Material License Agreement from all
parties to such Material License Agreement, in a form reasonably
satisfactory to the Collateral Agent; provided that with respect to
inventory subject to a Material License Agreement in which Xxxxxx Sporting
Goods Co. is the licensor, the requirement in clause (B) shall not apply
to such inventory, up to an maximum aggregate value of $4,000,000.
-8-
15
"Environmental Claim" means any investigation, written notice,
violation, written demand, written allegation, action, suit, injunction,
judgment, order, consent decree, penalty, fine, lien, proceeding, or
written claim whether administrative, judicial, or private in nature
arising (a) pursuant to, or in connection with, an actual or alleged
violation of, any Environmental Law, (b) in connection with any Hazardous
Material, (c) from any assessment, abatement, removal, remedial,
corrective, or other response action in connection with an Environmental
Law or other order of a Governmental Authority or (d) from any actual or
alleged damage, injury, threat, or harm to human health, employee safety,
natural resources, or the environment.
"Environmental Laws" means any current or future legal requirement
of any Governmental Authority pertaining to (a) the protection of human
health, employee safety, and the indoor or outdoor environment, (b) the
conservation, management, or use of natural resources and wildlife, (c)
the protection or use of surface water and groundwater or (d) the
management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened release,
abatement, removal, remediation or handling of, or exposure to, any
hazardous or toxic substance or material or (e) pollution (including any
release to land surface water and groundwater) and includes, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976 and
Hazardous and Solid Waste Amendments of 1984, 42 USC 6901 et seq., Federal
Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33
USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq.,
Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil
Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National
Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water
Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing
or successor law, and any amendment, rule, regulation, order, or directive
issued thereunder.
"Equity Issuance" means any issuance by a Credit Party to any Person
of (a) shares of its capital stock or other equity interests, (b) any
shares of its capital stock or other equity interests pursuant to the
exercise of options or warrants or (c) any shares of its capital stock or
other equity interests pursuant to the conversion of any debt securities
to equity.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, as interpreted by the rules
and regulations thereunder, all as the same may be in effect from time to
time. References to sections of ERISA shall be construed also to refer to
any successor sections.
"ERISA Affiliate" means an entity, whether or not incorporated,
which is under common control with any Credit Party or any of its
Subsidiaries within the meaning of Section 4001(a)(14) of ERISA, or is a
member of a group which includes any Credit Party or any of its
Subsidiaries and which is treated as a single employer under Sections
414(b), (c), (m), or (o) of the Code.
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"Eurodollar Loan" means a Loan bearing interest based at a rate
determined by reference to the Eurodollar Rate.
"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 determined pursuant to
the following formula:
Eurodollar Rate = London Interbank Offered Rate
---------------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities as
that term is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the interest rate
of Eurodollar Loans is determined), whether or not a Lender has any
Eurocurrency liabilities subject to such reserve requirement at that time.
Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without
benefits of credits for proration, exceptions or offsets that may be
available from time to time to a Lender. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Event of Default" means any of the events or circumstances
specified in Section 9.1.
"Excess Cash Flow" means , with respect to the Parent and its
Subsidiaries on a consolidated basis, an amount equal to (a) EBITDA minus
(b) Capital Expenditures minus (c) cash Interest Expense minus (d)
Federal, state and other income or franchise taxes actually paid minus (e)
Principal Amortization Payments minus (f) voluntary prepayments made with
respect to the Term Loans minus (g) cash payments by the Parent to former
employees of the Parent and its Subsidiaries to repurchase stock if such
payment constitutes a Permitted Investment.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as amended,
modified, succeeded or replaced from time to time.
"Existing Letters of Credit" means the letters of credit described
on Schedule 2.2(c).
"Extension of Credit" means, as to any Lender, the making of a Loan
by such Lender (or a participation therein by a Lender) or the issuance
of, or participation in, a Letter of Credit by such Lender.
"Federal Funds Rate" means for any day the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal
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17
funds brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day; provided that (a) if
such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day and
(b) if no such rate is so published on such next preceding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to
the Administrative Agent on such day on such transactions from three
Federal Funds brokers of recognized standing selected by the
Administrative Agent.
"Fee Letter" means that certain letter agreement between Gerber
Childrenswear, Inc., NMSI and the Administrative Agent dated as of
September 22, 1997.
"First Tier Foreign Subsidiary" means each Foreign Subsidiary which
is owned directly by a Credit Party.
"Fixed Charge Coverage Ratio" means the ratio of (a) EBITDAR less
Capital Expenditures made in cash to (b) cash Interest Expense plus
Current Maturities of Long Term Debt plus cash income taxes plus cash Rent
Expense.
"Foreign Subsidiary" means all Subsidiaries of the Parent or a
Borrower that are not Domestic Subsidiaries.
"Funded Debt" means, without duplication, the sum of (a) all
Indebtedness of the Credit Parties and their Subsidiaries for borrowed
money, (b) all purchase money Indebtedness of the Credit Parties and their
Subsidiaries, (c) the principal portion of all obligations of the Credit
Parties and their Subsidiaries under Capital Leases, (d) all obligations,
contingent or otherwise, relative to the face amount of all letters of
credit (other than letters of credit supporting inventory purchases in the
ordinary course of business), whether or not drawn, and banker's
acceptances issued for the account of a Credit Party or its Subsidiaries
(it being understood that, to the extent an undrawn letter of credit
supports another obligation consisting of Indebtedness, in calculating
aggregated Indebtedness only such other obligation shall be included), (e)
all Guaranty Obligations of the Credit Parties and their Subsidiaries with
respect to Funded Debt of another Person, (f) all Funded Debt of another
entity secured by a Lien on any property of the Credit Parties and their
Subsidiaries whether or not such Funded Debt has been assumed by a Credit
Party or any of its Subsidiaries, (g) all Funded Debt of any partnership
or unincorporated joint venture to the extent a Credit Party or one of its
Subsidiaries is legally obligated or has a reasonable expectation of being
liable with respect thereto, net of any assets of such partnership or
joint venture and (h) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but is classified
as an operating lease in accordance with GAAP.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to Section 1.3.
"Governmental Authority" means any Federal, state, local, provincial
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
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18
"Guarantor" means the Parent, each of the Domestic Subsidiaries of
the Parent and the Borrowers and each Additional Credit Party which has
executed a Joinder Agreement, together with their successors and assigns.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection)
guaranteeing any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (a) to purchase any such Indebtedness or other
monetary obligation or any property constituting security therefor, (b) 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, maintenance agreements, comfort letters, take or pay
arrangements, put agreements or similar agreements or arrangements) for
the benefit of the holder of Indebtedness of such other Person, (c) to
lease or purchase property, securities or services primarily for the
purpose of assuring the owner of such Indebtedness or (d) to otherwise
assure or hold harmless the owner of such Indebtedness or monetary
obligation against loss in respect thereof. The amount of any Guaranty
Obligation hereunder shall (subject to any limitations set forth therein)
be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of
which such Guaranty Obligation is made.
"Hazardous Materials" means any substance, material or waste defined
in or regulated under any Environmental Laws as hazardous, toxic,
corrosive, ignitable, reactive or radioactive or otherwise defined or
regulated because of its harmful or deleterious qualities.
"Hedging Agreements" means, collectively, interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or
option agreements or other interest or exchange rate or commodity price
hedging agreements, in each case, entered into or purchased by a Credit
Party.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made (c) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person to the extent of the value
of such property (other than customary reservations or retentions of title
under agreements with suppliers entered into in the ordinary course of
business), (d) all obligations, other than intercompany items, of such
Person issued or assumed as the deferred purchase price of property or
services purchased by such Person which would appear as liabilities on a
balance sheet of such Person, (e) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed,
(f) all Guaranty Obligations of such Person, (g) the principal portion of
all obligations of such Person under (i) Capital Leases and (ii) any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product of such Person where such
transaction is considered borrowed money indebtedness for tax purposes but
is classified as an operating lease in accordance with GAAP, (h) all net
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obligations of such Person in respect of Hedging Agreements, (i) the
maximum amount of all performance and standby letters of credit issued or
bankers' acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), and (j) the aggregate amount of uncollected accounts
receivable of such Person subject at such time to a sale of receivables
(or similar transaction) regardless of whether such transaction is
effected without recourse to such Person or in a manner that would not be
reflected on the balance sheet of such Person in accordance with GAAP. The
Indebtedness of any Person shall include the Indebtedness of any
partnership or unincorporated joint venture in which such Person is
legally obligated.
"Intercreditor Agreement" means that certain Subordination and
Intercreditor Agreement, dated as of the Closing Date, among Gerber
Childrenswear, Inc., the Parent, Citicorp Mezzanine Partners, L.P. and the
Administrative Agent.
"Interest Expense" means, for any period, with respect to the Credit
Parties and their Subsidiaries on a consolidated basis, all cash interest
expense (paid or accrued to be paid), including the interest component
under Capital Leases, as determined in accordance with GAAP.
"Interest Payment Date" means (a) as to Base Rate Loans, the last
day of each calendar quarter and the Maturity Date and (b) as to
Eurodollar Loans, the last day of each applicable Interest Period and the
Maturity Date and in addition where the applicable Interest Period for a
Eurodollar Loan is greater than three months, then also the date three
months from the beginning of the Interest Period and each three months
thereafter.
"Interest Period" means, as to Eurodollar Loans, a period of one,
two, three or six months' duration, as the Borrowers may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); 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 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 Maturity Date, (c) with regard
to Term Loans, no Interest Period shall extend beyond any Principal
Amortization Payment Date unless the portion of Term Loans comprised of
Base Rate Loans, together with the portion of Term Loans comprised of
Eurodollar Loans with Interest Periods expiring prior to such Principal
Amortization Payment Date is greater than or equal to the Principal
Amortization Payment due on such Principal Amortization Payment Date and
(d) 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 Business Day
of such calendar month.
"Investment" in any Person means (a) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or
otherwise) of assets, shares of capital stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of such other Person 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
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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.
"Issuing Lender" means NationsBank, N.A. or any successor
Administrative Agent, other than with respect to (a) those specific
Existing Letters of Credit set forth on Schedule 2.2(c) in which Bank of
America, FSB or its Affiliate ("BOA") is identified as the Issuing Lender
or (b) those specific Existing Letters of Credit set forth on Schedule
2.2(c) in which NationsBank of Tennessee, N.A. ("NationsBank Tennessee")
is identified as the Issuing Lender. As used herein, the term Issuing
Lender shall mean any of NationsBank, N.A., BOA or NationsBank Tennessee
until the expiry date of such specified Existing Letters of Credit after
which time only NationsBank, N.A. shall be the Issuing Lender. BOA and
NationsBank Tennessee shall have no obligation to issue any Letter of
Credit hereunder other than the Existing Letters of Credit.
"Issuing Lender Fees" has the meaning set forth in Section 3.4(b).
"Joinder Agreement" means a Joinder Agreement substantially in the
form of Exhibit 7.13.
"Junior Subordinated Note" means that certain 12% Junior
Subordinated Note issued by GCIH, Inc. to Gerber Products Company on
January 22, 1996 in the original face amount of $12,500,000.
"Knowledge" means, with respect to the Credit Parties, the actual
knowledge of the Chief Executive Officer, Chief Financial Officer,
Treasurer, Controller or any senior officer of a Credit Party with the
same or substantially the same authority and responsibility as the above
named officers.
"Lender" means any of the Persons identified as a "Lender" on the
signature pages hereto, and any Eligible Assignee which may become a
Lender by way of assignment in accordance with the terms hereof, together
with their successors and permitted assigns.
"Letter of Credit" means a letter of credit issued for the account
of a Credit Party by the Issuing Lender pursuant to Section 2.2 or any
Existing Letter of Credit, as such letter of credit may be amended,
modified, extended, renewed or replaced.
"Leverage Ratio" means, as of the end of each fiscal quarter, the
ratio of (a) total Funded Debt on such date to (b) EBITDA for the twelve
month period ending on such date.
"License Agreements" means those license agreements set forth on
Schedule 1.1(b).
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind, including, without
limitation, any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, and any lease in the nature
thereof.
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21
"Loan" or "Loans" means the Revolving Loans, the Term Loans and the
Swing Line Loans (or a portion of any Revolving Loan, Term Loan or Swing
Line Loan), individually or collectively, as appropriate.
"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
(a) the rights and obligations of the parties concerned or at risk or (b)
any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit (including the Existing Letters of Credit)
then outstanding, assuming compliance with all requirements for drawings
referred to in such Letters of Credit plus (b) the aggregate amount of all
drawings under Letters of Credit honored by an Issuing Lender but not
theretofore reimbursed.
"LOC Participants" means the Lenders.
"London Interbank Offered Rate" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however,
if more than one rate is specified on Telerate Page 3750, the applicable
rate shall be the arithmetic mean of all such rates. If, for any reason,
such rate is not available, the term "London Interbank Offered Rate" shall
mean, with respect to any Eurodollar Loan for the Interest Period
applicable thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean of all
such rates.
"Mandatory Borrowing" has the meaning set forth in Section 2.2(e).
"Material Adverse Effect" means a material adverse effect after
taking into account applicable insurance and indemnities, if any (provided
that (i) the provider of the insurance or indemnification is credit worthy
and has affirmatively given assurances reasonably acceptable to the
Lenders regarding its obligations with respect to such insurance or
indemnification and (ii) if such provider does not meet its full
obligations and it is finally determined that such provider will not meet
its full obligations, then the amount not paid by such provider will be
taken into account for purposes of this definition) and after taking into
account any tax benefits resulting therefrom on (a) the operations,
financial condition, business or prospects of the Credit Parties and their
Subsidiaries taken as a whole, (b) the ability of the Credit Parties taken
as a whole to perform their obligations under this Credit Agreement or any
of the other Credit Documents, or (c) the validity or enforceability of
this Credit Agreement, any of the other
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22
Credit Documents, or the rights and remedies of the Lenders hereunder or
thereunder taken as a whole.
"Material License Agreements" means (a) all license agreements set
forth on Schedule 6.24 and (b) each other license agreement entered into
by a Credit Party in which the annual revenues derived from the sale of
inventory subject to such license agreement exceeds five percent (5%) of
the total annual revenues of the Credit Parties and their Subsidiaries.
"Maturity Date" means October 31, 2002.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating
securities.
"Mortgage Documents" means the Mortgages, the Mortgage Policies and
such other documents and agreements executed or delivered in connection
with the Real Properties.
"Mortgage Policies" has the meaning set forth in Section 5.1(g).
"Mortgages" has the meaning set forth in Section 5.1(g).
"Mortgaged Properties" has the meaning set forth in Section 5.1(g).
"Multiemployer Plan" means a Plan covered by Title IV of ERISA which
is a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of
ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of ERISA,
other than a Multiemployer Plan, which any Credit Party or any of its
Subsidiaries or any ERISA Affiliate and at least one employer other than a
Credit Party or any of its Subsidiaries or any ERISA Affiliate are
contributing sponsors.
"NationsBank" means NationsBank, N.A. or any successor thereto.
"Net Cash Proceeds" means the aggregate cash proceeds received from
an Asset Disposition, an Equity Issuance or a Debt Issuance net of (a)
transaction costs related thereto (including, without limitation, legal,
accounting and investment banking fees and sales commissions) and any
relocation expenses incurred as a result thereof, (b) taxes paid or a good
faith estimate of the taxes payable with respect to such proceeds, (c)
Indebtedness (other than Indebtedness of the Lenders pursuant to the
Credit Documents) which is secured (prior to the date of such event) by
the assets which are the subject of such event to the extent such
Indebtedness is paid with a portion of the cash proceeds therefrom; and
(d) with respect to any Asset Disposition, any reserve required in
connection with a future purchase price adjustment, as established in
accordance with GAAP.
"Net Income" means, for any period, the net income after taxes for
such period of the Credit Parties and their Subsidiaries on a consolidated
basis, as determined in accordance with GAAP.
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"NMSI" means NationsBanc Xxxxxxxxxx Securities, Inc., f/k/a
NationsBanc Capital Markets, Inc.
"Non-Excluded Taxes" has the meaning set forth in Section 3.13.
"Note" or "Notes" means the Revolving Loan Notes, the Term Loan
Notes and the Swing Line Loan Note, individually or collectively, as
appropriate.
"Notice of Borrowing" means a request by the Borrowers for a
Revolving Loan, in the form of Exhibit 2.1(b).
"Notice of Continuation/Conversion" means a request by the Borrowers
to continue an existing Eurodollar Loan to a new Interest Period or to
convert a Eurodollar Loan to a Base Rate Loan (other than a Swing Line
Loan) or a Base Rate Loan (other than a Swing Line Loan) to a Eurodollar
Loan, in the form of Exhibit 2.5.
"Parent" means GCIH, Inc., a Delaware corporation.
"Participation Interest" means the Extension of Credit by a Lender
by way of a purchase of a participation in Letters of Credit or LOC
Obligations as provided in Section 2.2 or in any Loans as provided in
Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
"Permitted Acquisitions" means an acquisition of all or
substantially all of the assets or stock of another Person by a Credit
Party or its Subsidiaries; provided that (a) such acquisition does not
cause or would not be reasonably expected to cause a Default or Event of
Default, (b) after giving effect to such acquisition, the Credit Parties
would be in compliance on a pro forma basis (as such pro forma compliance
is computed in accordance with Regulation S-X of the Securities Act) with
all of the financial covenants set forth in Section 7.2, (c) such Person
must in all material respects engage in a business similar to or a logical
extension of the business of the Credit Parties and their Subsidiaries and
(d) the aggregate amount of all such acquisitions shall not exceed $10
million during the term of this Credit Agreement.
"Permitted Investments" means Investments which are (a) cash or Cash
Equivalents, (b) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance
with customary trade terms, (c) inventory, raw materials and general
intangibles acquired in the ordinary course of business, (d) Investments
by a Credit Party in another Credit Party, (e) Investments by a Foreign
Subsidiary in a Credit Party or another Foreign Subsidiary, (f) a one time
Investment (excluding the purchase price paid by the Parent to acquire
Sport Socks Co. (Ireland) Limited) by a Credit Party in Sport Socks Co.
(Ireland) Limited not to exceed $3,000,000 and additional Investments by
Credit Parties in Foreign Subsidiaries, not to exceed $1,000,000, in the
aggregate, at any one time, (g) loans to directors, officers or employees
in the ordinary course of business for reasonable business expenses, not
to exceed, in the aggregate, $500,000 at any one time; (h) Investments in
Capital Expenditures; (i) Investments by the Parent in capital stock of
the Parent resulting from the
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repurchase of such stock from employees who voluntarily or involuntarily
terminate their employment from the Parent and its Subsidiaries not to
exceed $500,000 (net of any proceeds from the reissuance of any such
shares to other employees of the Parent), in the aggregate, during the
term of this Credit Agreement; (j) Investments in Permitted Acquisitions;
(k) Investments received in connection with the reorganization or
bankruptcy of a customer or supplier of a Credit Party or one of its
Subsidiaries as consideration for prior Indebtedness owed by such supplier
or customer; (l) Investments consisting of Guaranty Obligations otherwise
permitted by Section 8.1; (m) non-cash proceeds received in connection
with an Asset Disposition as long as such non-cash proceeds are pledged to
the Lenders in accordance with the terms of the Collateral Documents and
the value of such non-cash proceeds does not exceed, at any one time,
$1,000,000; and (n) other Investments (in addition to those set forth
above) not to exceed, in the aggregate, $500,000 at any one time.
"Permitted Liens" means (a) Liens securing Credit Party Obligations,
(b) Liens for taxes not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the property
subject to any such Lien is not yet subject to foreclosure, sale,
collection, levy or loss on account thereof), (c) Liens in respect of
property imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's, carrier's, landlords' and other
nonconsensual statutory Liens which are not yet due and payable or which
are being contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been established
(and as to which the property subject to any such Lien is not yet subject
to foreclosure, sale or loss on account thereof), (d) pledges or deposits
made in the ordinary course of business to secure payment of worker's
compensation insurance, unemployment insurance, pensions or social
security programs, (e) Liens arising from good faith deposits in
connection with or to secure performance of tenders, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business (other
than obligations in respect of the payment of borrowed money), (f) Liens
arising from good faith deposits in connection with or to secure
performance of statutory obligations and surety and appeal bonds, (g)
easements, rights-of-way, restrictions (including zoning restrictions),
matters of plat, minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered property for its intended purposes, (h) judgment
Liens that would not constitute an Event of Default, (i) Liens in
connection with Indebtedness permitted by Sections 8.1(e), 8.1(f) and
8.1(k), (j) Liens arising by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights
as to deposit accounts or other funds maintained with a creditor
depository institution, (k) Liens existing on the date hereof and
identified on Schedule 8.2; provided that no such Lien shall extend to any
property other than the property subject thereto on the Closing Date, (l)
Permitted Encumbrances (as defined in any Mortgage Document), (m) Liens
with respect to existing IRB financings set forth on Schedule 6.10 and (n)
Liens on leasehold improvements with respect to a leased facility to be
established in Evergreen, Alabama.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any Governmental Authority.
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"Plan" means any employee benefit plan (as defined in Section 3(3)
of ERISA) which is covered by ERISA and with respect to which any Credit
Party or any of its Subsidiaries or any ERISA Affiliate is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreements" means any Pledge Agreement executed and
delivered by a Credit Party in favor of the Collateral Agent, for the
benefit of the Lenders, to secure its obligations under the Credit
Documents, as amended, modified, extended, renewed or replaced from time
to time.
"Preferred Stock" means 116,452 shares of Series A Preferred Stock,
par value $.01 per share, of the Parent currently issued and outstanding
and up to 950.7 additional shares of such stock which are held in treasury
as of the Closing Date.
"Prime Rate" means the per annum rate of interest established from
time to time by the Administrative Agent at its principal office in
Charlotte, North Carolina (or such other principal office of the
Administrative Agent as communicated in writing to the Borrowers and the
Lenders) as its Prime Rate. Any change in the interest rate resulting from
a change in the Prime Rate shall become effective as of 12:01 a.m. of the
Business Day on which each change in the Prime Rate is announced by the
Administrative Agent. The Prime Rate is a reference rate used by the
Administrative Agent in determining interest rates on certain loans and is
not intended to be the lowest rate of interest charged on any extension of
credit to any debtor.
"Principal Amortization Payment" means a principal payment on the
Term Loans as set forth in Section 2.4(c).
"Principal Amortization Payment Date" means the date a Principal
Amortization payment is due.
"Purchase Agreements" has the meaning set forth in Section 8.1(i).
"Real Properties" means the Mortgaged Properties and such other real
properties as the Credit Parties may lease (as lessee or sublessee) from
third parties from time to time.
"Regulation D, G, U, or X" means Regulation D, G, U or X,
respectively, 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.
"Rent Expense" means, for any period, with respect to the Credit
Parties and their Subsidiaries on a consolidated basis, all rent payable
under an operating lease (whether a lease of real property, personal
property or mixed), as determined in accordance with GAAP.
"Reportable Event" means a "reportable event" as defined in Section
4043 of ERISA with respect to which the notice requirements to the PBGC
have not been waived.
"Required Lenders" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes at least 51% of the Credit Exposure of
all Lenders at such time; provided,
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however, that if any Lender shall be a Defaulting Lender at such time then
there shall be excluded from the determination of Required Lenders the
aggregate principal amount of Credit Exposure of such Lender at such time.
For purposes of the preceding sentence, the term "Credit Exposure" as
applied to each Lender shall mean (a) at any time prior to the termination
of the Commitments, the sum of the Revolving Loan Commitment Percentage of
such Lender multiplied by the Revolving Committed Amount plus the sum of
the Term Loan Commitment Percentage multiplied by the Term Loan Committed
Amount and (b) at any time after the termination of the Commitments, the
sum of (i) the principal balance of the outstanding Loans of such Lender
plus (ii) such Lender's Participation Interests in the face amount of the
outstanding Letters of Credit and Swing Line Loans.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material property is
subject.
"Revolving Loan Commitment Percentage" means, for each Lender, the
percentage identified as its Revolving Loan Commitment Percentage on
Schedule 1.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
"Revolving Committed Amount" means SIXTY MILLION DOLLARS
($60,000,000) or such lesser amount as the Revolving Committed Amount may
be reduced pursuant to Section 2.1(d) or 3.3(c).
"Revolving Loans" means the Revolving Loans made to the Borrowers
pursuant to Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory notes of
the Borrowers in favor of each of the Lenders evidencing the Revolving
Loans provided pursuant to Section 2.1, individually or collectively, as
appropriate, as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to time and as
evidenced in the form of Exhibit 2.7(a)
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. or any successor or assignee of the business
of such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Security Agreements" means any security agreement executed and
delivered by a Credit Party in favor of the Collateral Agent for the
benefit of the Lenders to secure its obligations under the Credit
Documents, as such may be amended, modified, extended, renewed, restated
or replaced from time to time.
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"Senior Subordinated Credit Agreement" means that certain Amended
and Restated Senior Subordinated Credit Agreement, dated as of the Closing
Date, among the Borrowers as borrowers, GCIH, Inc. and the Domestic
Subsidiaries, as guarantors and Citicorp Mezzanine Partners, L.P. as
lender.
"Single Employer Plan" means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a particular date,
that on such date (a) such Person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they mature
in the normal course of business, (b) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (c) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's assets would constitute insufficient capital after
giving due consideration to the prevailing practice in the industry in
which such Person is engaged or is to engage, (d) the fair value of the
assets of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person and
(e) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured. In
computing the amount of contingent liabilities at any time, it is intended
that such liabilities will be computed at the amount which, in light of
all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"Standby Letter of Credit" has the meaning set forth in Section
2.2(a).
"Subordinated Debt" means, collectively, the Indebtedness incurred
pursuant to (a) the Senior Subordinated Credit Agreement and (b) the
Junior Subordinated Note.
"Subsidiary" means, as to any Person, (a) 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 Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
person directly or indirectly through Subsidiaries has more than a 50%
equity interest at any time.
"Swing Line Loans" means the loans made by NationsBank pursuant to
Section 2.3.
"Swing Line Committed Amount" means FIVE MILLION DOLLARS
($5,000,000).
"Swing Line Loan Request" means a request by the Borrowers for a
Swing Line Loan in substantially the form of Exhibit 2.3(b).
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"Swing Line Note" means the promissory note of the Borrowers in
favor of NationsBank evidencing the Swing Line Loans provided pursuant to
Section 2.3, as such promissory note may be amended, modified,
supplemented, extended, renewed or replaced from time to time in and as
evidenced by the form of Exhibit 2.7(c).
"Tangible Net Worth" means, as of any date, shareholders' equity
(including Preferred Stock and accrued but unpaid dividends thereon) or
net worth of the Credit Parties and their Subsidiaries on a consolidated
basis, as determined in accordance with GAAP less the GAAP amount of all
organizational expenses, patents, copyrights, trademarks, licenses,
goodwill, covenants not to compete, research and development costs,
training costs and all unamortized debt discount plus, without
duplication, non-cash dividends accrued on Preferred Stock.
"Term Loans" means the Term Loans made to the Borrowers pursuant to
Section 2.4.
"Term Loan Commitment Percentage" means, for each Lender, the
percentage identified as its Term Loan Commitment Percentage on Schedule
1.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3(b).
"Term Loan Committed Amount" means FORTY MILLION DOLLARS
($40,000,000).
"Term Note" or "Term Notes" means the promissory notes of the
Borrowers in favor of each of the Lenders evidencing the Term Loans
provided pursuant to Section 2.4, individually or collectively, as
appropriate, as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to time as evidenced
in the form of Exhibit 2.7(b).
"Termination Event" means (a) with respect to any Single Employer
Plan, the occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (b) the
withdrawal of any Credit Party or any of its Subsidiaries or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it was
a substantial employer (as such term is defined in Section 4001(a)(2) of
ERISA), or the termination of a Multiple Employer Plan; (c) the
distribution of a notice of intent to terminate or the actual termination
of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (d) the
institution of proceedings to terminate or the actual termination of a
Plan by the PBGC under Section 4042 of ERISA; (e) any event or condition
which might reasonably constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
Plan; or (f) the complete or partial withdrawal of any Credit Party or any
of its Subsidiaries or any ERISA Affiliate from a Multiemployer Plan.
"Title Insurance Company" means Chicago Title Company.
"Total Assets" means all items which in accordance with GAAP would
be classified as assets of the Parent and its Subsidiaries on a
consolidated basis.
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"Total Capitalization" means the sum of (a) all stockholder's equity
(including Preferred Stock and accrued but unpaid dividends thereon) of
the Parent and its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP, plus (b) all Funded Debt of the Parent and its
Subsidiaries on a consolidated basis.
"Unused Commitment" means, for any period, the amount by which (a)
the then applicable aggregate Revolving Committed Amount exceeds (b) the
daily average sum for such period of the outstanding aggregate principal
amount of all Revolving Loans plus the aggregate amount of LOC Obligations
outstanding with respect to Standby Letters of Credit.
"Voting Stock" of a corporation means all classes of the capital
stock of such corporation then outstanding and normally entitled to vote
in the election of directors.
1.2 Computation of Time Periods and Other Definitional Provisions.
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." References in this Agreement to "Articles", "Sections", "Schedules"
or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to
this Agreement unless otherwise specifically provided.
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP. All calculations made for
the purposes of determining compliance with this Credit Agreement shall (except
as otherwise expressly provided herein) (a) be made by application of GAAP as of
the Closing Date, (b) eliminate all transaction costs, not to exceed $1,500,000,
in the aggregate, incurred by the Credit Parties and their Subsidiaries in (i)
acquiring all of the shares of Auburn Hosiery Xxxxx, Inc. and Sport Socks Co.
(Ireland) Limited, (ii) entering into the Credit Documents and (iii) repaying
the Indebtedness owing under the Existing Credit Agreement and (c) be made net
of the effect of any purchase price accounting adjustment as set forth in
Accounting Principles Board Opinion Nos. 16 and 17.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and conditions
set forth herein, each Lender severally agrees to make revolving loans
(each a "Revolving Loan" and collectively the "Revolving Loans") to the
Borrowers, in Dollars, at any time and from time to time, during the
period from and including the Effective Date to but not including the
Maturity Date (or such earlier date if the Revolving Committed Amount has
been terminated as provided herein); provided, however, that (i) the sum
of the aggregate amount of Revolving Loans outstanding plus the aggregate
amount of LOC Obligations outstanding plus the aggregate amount of Swing
Line Loans outstanding shall not exceed the lesser of (A) the Revolving
Committed Amount and (B) the Borrowing Base Assets and (ii) with respect
to each individual Lender, the Lender's pro rata share of outstanding
Revolving Loans plus such Lender's pro rata share of outstanding LOC
Obligations plus such Lender's (other than NationsBank) pro rata share of
outstanding Swing Line Loans shall not exceed such Lender's Revolving Loan
Commitment Percentage of the Revolving
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Committed Amount. Subject to the terms of this Credit Agreement (including
Section 3.3), the Borrowers may borrow, repay and reborrow Revolving
Loans.
(b) Method of Borrowing for Revolving Loans. By no later than 12:00
noon (i) on the date of the requested borrowing of Revolving Loans that
will be Base Rate Loans or (ii) three Business Days prior to the date of
the requested borrowing of Revolving Loans that will be Eurodollar Loans,
the Borrowers shall submit a written Notice of Borrowing in the form of
Exhibit 2.1(b) to the Administrative Agent setting forth (A) the amount
requested, (B) whether such Revolving Loans shall accrue interest at the
Adjusted Base Rate or the Adjusted Eurodollar Rate, (C) with respect to
Revolving Loans that will be Eurodollar Loans, the Interest Period
applicable thereto and (D) certification that the Borrowers have complied
in all respects with Section 5.2. All Revolving Loans made on the
Effective Date shall be Base Rate Loans. Thereafter, all or any portion of
such Revolving Loans may be converted into Eurodollar Loans in accordance
with the terms of Section 2.5.
(c) Funding of Revolving Loans. Upon receipt of a Notice of
Borrowing, the Administrative Agent shall promptly inform the Lenders as
to the terms thereof. Each Lender shall make its Revolving Loan Commitment
Percentage of the requested Revolving Loans available to the
Administrative Agent by 2:00 p.m. on the date specified in the Notice of
Borrowing by deposit, in Dollars, of immediately available funds at the
offices of the Administrative Agent at its principal office in Charlotte,
North Carolina or at such other address as the Administrative Agent may
designate in writing. The amount of the requested Revolving Loans will
then be made available to the Borrowers by the Administrative Agent by
crediting the account of the Borrowers on the books of such office of the
Administrative Agent, to the extent the amount of such Revolving Loans are
made available to the Administrative Agent.
No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make Revolving Loans hereunder; provided,
however, that the failure of any Lender to fulfill its obligations
hereunder shall not relieve any other Lender of its obligations hereunder.
Unless the Administrative Agent shall have been notified by any Lender
prior to the date of any such Revolving Loan that such Lender does not
intend to make available to the Administrative Agent its portion of the
Revolving Loans to be made on such date, the Administrative Agent may
assume that such Lender has made such amount available to the
Administrative Agent on the date of such Revolving Loans, and the
Administrative Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrowers a corresponding amount. If such corresponding amount is not in
fact made available to the Administrative Agent, the Administrative Agent
shall be able to recover such corresponding amount from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent will
promptly notify the Borrowers, and the Borrowers shall immediately pay
such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover from the Lender or the Borrowers,
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
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the Administrative Agent to the Borrowers to the date such corresponding
amount is recovered by the Administrative Agent at a per annum rate equal
to (i) from the Borrowers at the applicable rate for such Revolving Loan
pursuant to the Notice of Borrowing and (ii) from a Lender at the Federal
Funds Rate.
(d) Reductions of Revolving Committed Amount. Upon at least three
Business Days' notice, the Borrowers shall have the right to permanently
reduce, without premium or penalty, all or part of the aggregate unused
amount of the Revolving Committed Amount at any time or from time to time;
provided that (i) each partial reduction shall be in an aggregate amount
at least equal to $5,000,000 and in integral multiples of $1,000,000 above
such amount and (ii) no reduction shall be made which would reduce the
Revolving Committed Amount to an amount less than the aggregate amount of
outstanding Revolving Loans plus the aggregate amount of outstanding LOC
Obligations plus the aggregate amount of Swing Line Loans outstanding. Any
reduction in (or termination of) the Revolving Committed Amount shall be
permanent and may not be reinstated. The Administrative Agent shall
immediately notify the Lenders of any reduction in the Revolving Committed
Amount.
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the
Issuing Lender may reasonably require (so long as such terms and
conditions do not impose any financial obligation on or require any Lien
(not otherwise contemplated by this Agreement) to be given by any Credit
Party or conflict with any obligation of, or detract from any action which
may be taken by, any Credit Party or their Subsidiaries under this
Agreement), the Issuing Lender shall from time to time upon request issue
(from the Effective Date to the Maturity Date and in a form reasonably
acceptable to the Issuing Lender), in Dollars, and the LOC Participants
shall participate in, Letters of Credit for the account of the Borrowers;
provided, however, that (i) the aggregate amount of LOC Obligations shall
not at any time exceed TWENTY MILLION DOLLARS ($20,000,000), (ii) the sum
of the aggregate amount of LOC Obligations outstanding plus Revolving
Loans outstanding plus Swing Line Loans outstanding shall not exceed the
Revolving Committed Amount and (iii) with respect to each individual LOC
Participant, the LOC Participant's pro rata share of outstanding Revolving
Loans plus its pro rata share of outstanding LOC Obligations plus (other
than NationsBank) its pro rata share of Swing Line Loans outstanding shall
not exceed such LOC Participant's Revolving Loan Commitment Percentage of
the Revolving Committed Amount. The Issuing Lender may require the
issuance and expiry date of each Letter of Credit to be a Business Day.
Each Letter of Credit shall be either (A) a standby letter of credit
issued to support the obligations (including pension or insurance
obligations), contingent or otherwise, of a Credit Party or any of its
Subsidiaries (a "Standby Letter of Credit"), or (B) a commercial letter of
credit in respect of the purchase of goods or services by a Credit Party
or any of its Subsidiaries in the ordinary course of business (a
"Documentary Letter of Credit". Except as otherwise expressly agreed upon
by all the LOC Participants, (x) no Standby Letter of Credit shall have an
original expiry date more than one year from the date of issuance;
provided that the Borrowers may request up to $500,000 of Standby Letters
of Credit with an expiry date of two years, (y)
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no Documentary Letter of Credit shall have an original expiry date more
than 270 days from the date of issuance and (z) no Letter of Credit shall
have an expiry date beyond the Maturity Date. Each Letter of Credit shall
comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted to the Issuing Lender at least three Business
Days prior to the requested date of issuance; provided that the Issuing
Lender agrees to issue up to $10 million of Letters of Credit, in the
aggregate at any one time, on the same Business Day as requested. The
Issuing Lender will, at least quarterly and more frequently upon request,
provide to the Administrative Agent for dissemination to the Lenders a
detailed report specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have occurred
since the date of the prior report, and including therein, among other
things, the account party, the beneficiary, the face amount, and the
expiry date as well as any payments or expirations which may have
occurred. The Issuing Lender will further provide to the Administrative
Agent, promptly upon request, copies of the Letters of Credit and the
other LOC Documents.
(c) Participations.
(i) Each LOC Participant acknowledges and confirms that it has
a Participation Interest in the liability of the Issuing Lender
under each Existing Letter of Credit in an amount equal to its
Revolving Loan Commitment Percentage of such Existing Letter of
Credit. The Borrowers' reimbursement obligations in respect of each
Existing Letter of Credit, and each LOC Participant's obligations in
connection therewith, shall be governed by the terms of this Credit
Agreement.
(ii) Each LOC Participant, upon issuance of a Letter of
Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and
each LOC Document related thereto and the rights and obligations
arising thereunder and any collateral relating thereto, in each case
in an amount equal to its Revolving Loan Commitment Percentage of
the obligations under such Letter of Credit, and shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to the Issuing Lender therefor
and discharge when due, its Revolving Loan Commitment Percentage of
the obligations arising under such Letter of Credit. Without
limiting the scope and nature of each LOC Participant's
participation in any Letter of Credit, to the extent that the
Issuing Lender has not been reimbursed as required hereunder or
under any such Letter of Credit, each such LOC Participant shall pay
to the Issuing Lender its Revolving Loan Commitment Percentage of
such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing
pursuant to the provisions of subsection (d) or (e) hereof. The
obligation of each LOC Participant to so reimburse the Issuing
Lender shall be absolute and unconditional and shall not be affected
by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or
otherwise
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impair the obligation of the Borrowers or any other Credit Party to
reimburse the Issuing Lender under any Letter of Credit, together
with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the
Borrowers. Unless the Borrowers shall immediately notify the Issuing
Lender of its intent to otherwise reimburse the Issuing Lender, the
Borrowers shall be deemed to have requested a Swing Line Loan to the
extent a Swing Line Loan in such amount is available (including the
ability of the Borrowers to meet the conditions of Section 5.2) or
if a Swing Line Loan is not available then a Revolving Loan, in each
case at the Adjusted Base Rate in the amount of the drawing, in
either case, the proceeds of which will be used to satisfy the
reimbursement obligations. The Borrowers shall reimburse the Issuing
Lender on the day of drawing under any Letter of Credit either with
the proceeds of such Swing Line Loan or Revolving Loan obtained
hereunder or otherwise in same day funds as provided herein or in
the LOC Documents. If the Borrowers shall fail to reimburse the
Issuing Lender as provided hereinabove, the unreimbursed amount of
such drawing shall bear interest at a per annum rate equal to the
Base Rate plus the Applicable Percentage for the Base Rate Loans
that are Revolving Loans plus two percent (2%). The Borrowers'
reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of (but without
waiver of) any rights of set-off, counterclaim or defense to payment
the applicable account party or the Borrowers may claim or have
against an Issuing Lender, an Agent, the Lenders, the beneficiary of
the Letter of Credit drawn upon or any other Person, including
without limitation, any defense based on any failure of the
applicable account party, the Borrowers or any other Credit Party to
receive consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Issuing Lender will
promptly notify the LOC Participants of the amount of any
unreimbursed drawing and each LOC Participant shall promptly pay to
the Issuing Lender, in Dollars and in immediately available funds,
the amount of such LOC Participant's Revolving Loan Commitment
Percentage of such unreimbursed drawing. Such payment shall be made
on the day such notice is received by such Lender from the Issuing
Lender if such notice is received at or before 12:00 Noon, otherwise
such payment shall be made at or before 12:00 Noon on the Business
Day next succeeding the day such notice is received. If such LOC
Participant does not pay such amount to the Issuing Lender in full
upon such request, such LOC Participant shall, on demand, pay to the
Issuing Lender interest on the unpaid amount during the period from
the date the LOC Participant received the notice regarding the
unreimbursed drawing until such LOC Participant pays such amount to
the Issuing Lender in full at a rate per annum equal to, if paid
within two Business Days of the date of drawing, the Federal Funds
Rate and thereafter at a rate equal to the Base Rate. Each LOC
Participant's obligation to make such payment to the Issuing Lender,
and the right of the Issuing Lender to receive the same, shall be
absolute and unconditional, shall not be affected by any
circumstance whatsoever and without regard to the termination of
this Credit Agreement or the Commitments hereunder, the existence of
a Default or Event of Default or the acceleration of the obligations
hereunder and shall be made without any offset, abatement,
withholding or reduction whatsoever. Simultaneously with the making
of each
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such payment by a LOC Participant to the Issuing Lender, such LOC
Participant shall, automatically and without any further action on
the part of the Issuing Lender or such LOC Participant, acquire a
participation in an amount equal to such payment (excluding the
portion of such payment constituting interest owing to the Issuing
Lender) in the related unreimbursed drawing portion of the LOC
Obligation and in the interest thereon and in the related LOC
Documents, and shall have a claim against the Borrowers and the
other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the
Borrowers shall have requested, or been deemed to have requested, a
Revolving Loan borrowing to reimburse a drawing under a Letter of
Credit (as set forth in clause (d) above), the Administrative Agent
shall give notice to the applicable Lenders that a Revolving Loan
has been requested or deemed requested in connection with a drawing
under a Letter of Credit, in which case a Revolving Loan borrowing
comprised solely of Base Rate Loans (each such borrowing, a
"Mandatory Borrowing") shall be immediately made from all applicable
Lenders (without giving effect to any termination of the Commitments
pursuant to Section 9.2) pro rata based on each Lender's respective
Revolving Loan Commitment Percentage and the proceeds thereof shall
be paid directly to the Issuing Lender for application to the
respective LOC Obligations. Each such Lender hereby irrevocably
agrees to make such Revolving Loans immediately upon any such
request or deemed request on account of each such Mandatory
Borrowing in the amount and in the manner specified in the preceding
sentence and on the same such date notwithstanding (i) the amount of
Mandatory Borrowing may not comply with the minimum amount for
borrowings of Revolving Loans otherwise required hereunder, (ii)
whether any conditions specified in Section 5.2 are then satisfied,
(iii) whether a Default or Event of Default then exists, (iv)
failure of any such request or deemed request for Revolving Loans to
be made by the time otherwise required hereunder, (v) the date of
such Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount or any termination of the Commitments. 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 Borrowers or any other Credit Party), then each
such Lender hereby agrees that it shall forthwith fund (as of the
date the Mandatory Borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrowers on or after
such date and prior to such purchase) its Participation Interest in
the outstanding LOC Obligations; provided, further, that in the
event any Lender shall fail to fund its Participation Interest on
the day the Mandatory Borrowing would otherwise have occurred, then
the amount of such Lender's unfunded Participation Interest therein
shall bear interest payable to the Issuing Lender upon demand, at
the rate equal to, if paid within two Business Days of such date,
the Federal Funds Rate, and thereafter at a rate equal to the Base
Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions to any
Letter of Credit shall, for purposes hereof, be treated in all
respects the same as the issuance of a new Letter of Credit
hereunder.
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(g) Uniform Customs and Practices. The Issuing Lender may have
the Letters of Credit be subject to The Uniform Customs and Practice
for Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (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.
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the obligations of
the Issuing Lender hereunder to the LOC Participants are only those
expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set
forth in Section 5.2 have been satisfied unless it shall have
acquired actual knowledge that any such condition precedent has not
been satisfied; provided, however, that nothing set forth in this
Section 2.2 shall be deemed to prejudice the right of any LOC
Participant to recover from the Issuing Lender any amounts made
available by such LOC Participant to the Issuing Lender pursuant to
this Section 2.2 in the event that it is determined by a court of
competent jurisdiction that the payment with respect to a Letter of
Credit constituted gross negligence or willful misconduct on the
part of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document, this Credit
Agreement shall govern.
(j) Indemnification of Issuing Lender.
(i) In addition to its other obligations under this
Credit Agreement, the Borrowers hereby agree to protect,
indemnify, pay and save the Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of the
Issuing Lender to honor a drawing under a Letter of Credit as
a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto Governmental
Authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrowers and the Issuing Lender,
the Borrowers shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. The
Issuing Lender shall not be responsible for (except in the
case of (A), (B) and (C) below if the Issuing Lender has
actual knowledge to the contrary): (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) 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; (C) failure of the beneficiary of
a Letter of Credit to comply fully with conditions required in
order to draw upon a Letter of Credit; (D) errors,
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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; (E) errors in
interpretation of technical terms; (F) 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 (G) any consequences arising from causes
beyond the control of the Issuing Lender, including, without
limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of the Issuing Lender's
rights or powers hereunder.
(iii) In furtherance and extension and not in limitation
of the specific provisions hereinabove set forth, any action
taken or omitted by the Issuing Lender, under or in connection
with any Letter of Credit or the related certificates, if
taken or omitted in good faith, shall not put the Issuing
Lender under any resulting liability to the Borrowers or any
other Credit Party. It is the intention of the parties that
this Credit Agreement shall be construed and applied to
protect and indemnify the Issuing Lender against any and all
risks involved in the issuance of the Letters of Credit, all
of which risks are hereby assumed by the Borrowers, 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 Lender shall not, in any
way, be liable for any failure by the Issuing Lender or anyone
else to pay any drawing under any Letter of Credit as a result
of any Government Acts or any other cause beyond the control
of the Issuing Lender.
(iv) Nothing in this subsection (j) is intended to limit
the reimbursement obligation of the Borrowers contained in
this Section 2.2. The obligations of the Borrowers under this
subsection (j) shall survive the termination of this Credit
Agreement. No act or omission of any current or prior
beneficiary of a Letter of Credit shall in any way affect or
impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained
in this subsection (j), the Borrowers shall have no obligation
to indemnify the Issuing Lender in respect of any liability
incurred by the Issuing Lender arising solely out of the gross
negligence or willful misconduct of the Issuing Lender.
Nothing in this Agreement shall relieve the Issuing Lender of
any liability to the Borrowers in respect of any action taken
by the Issuing Lender which action constitutes gross
negligence or willful misconduct of the Issuing Lender or a
violation of the UCP or Uniform Commercial Code (as
applicable).
2.3 Swing Line Loans Subfacility.
(a) Swing Line Loans. NationsBank hereby agrees, on the terms and
subject to the conditions set forth herein and in the other Credit
Documents, to make loans to the Borrowers, in Dollars, at any time and
from time to time during the period from and including the Effective Date
to but not including the Maturity Date (each such loan, a "Swing Line
Loan" and collectively, the "Swing Line Loans"); provided that (i) the
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aggregate principal amount of the Swing Line Loans outstanding at any one
time shall not exceed the Swing Line Committed Amount and (ii) the
aggregate amount of Swing Line Loans outstanding plus the aggregate amount
of Revolving Loans outstanding plus the aggregate amount of LOC
Obligations outstanding shall not exceed the Revolving Committed Amount.
Prior to the Maturity Date, Swing Line Loans may be repaid and reborrowed
by the Borrowers in accordance with the provisions hereof.
(b) Method of Borrowing and Funding Swing Line Loans. By no later
than 1:00 p.m., on the date of the requested borrowing of Swing Line
Loans, the Borrowers shall provide telephonic notice to NationsBank,
followed promptly by a written Swing Line Loan Request in the form of
Exhibit 2.3(b) (which may be submitted via telecopy), each of such
telephonic notice and such written Swing Line Loan Request setting forth
(i) the amount of the requested Swing Line Loan and (ii) the date of the
requested Swing Line Loan and complying in all respects with Section 5.2.
NationsBank shall initiate the transfer of funds representing the Swing
Line Loan advance to the Borrowers by 3:00 p.m. on the Business Day of the
requested borrowing.
(c) Repayment and Participations of Swing Line Loans. The Borrowers
agree to repay all Swing Line Loans within one Business Day of demand
therefor by NationsBank. Each repayment of a Swing Line Loan may be
accomplished by requesting Revolving Loans which request is not subject to
the conditions set forth in Section 5.2. In the event that the Borrowers
shall fail to timely repay any Swing Line Loan, and in any event upon (i)
a request by NationsBank, (ii) the occurrence of an Event of Default
described in Section 9.1(f) or (iii) the acceleration of any Loan or
termination of any Commitment pursuant to Section 9.2, each other Lender
shall irrevocably and unconditionally purchase from NationsBank, without
recourse or warranty, an undivided interest and participation in such
Swing Line Loan in an amount equal to such other Lender's Revolving Loan
Commitment Percentage thereof, by directly purchasing a participation in
such Swing Line Loan in such amount (regardless of whether the conditions
precedent thereto set forth in Section 5.2 hereof are then satisfied,
whether or not the Borrowers have submitted a Notice of Borrowing and
whether or not the Commitments are then in effect, any Event of Default
exists or all the Loans have been accelerated) and paying the proceeds
thereof to NationsBank at the address provided on Schedule 11.1, or at
such other address as NationsBank may designate, in Dollars and in
immediately available funds. If such amount is not in fact made available
to NationsBank by any Lender, NationsBank shall be entitled to recover
such amount on demand from such Lender, together with accrued interest
thereon for each day from the date of demand thereof, at the Federal Funds
Rate. If such Lender does not pay such amount forthwith upon NationsBank's
demand therefor, and until such time as such Lender makes the required
payment, NationsBank shall be deemed to continue to have outstanding Swing
Line Loans in the amount of such unpaid participation obligation for all
purposes of the Credit Documents other than those provisions requiring the
other Lenders to purchase a participation therein. Further, such Lender
shall be deemed to have assigned any and all payments made of principal
and interest on its Loans, and any other amounts due to it hereunder to
NationsBank to fund Swing Line Loans in the amount of the participation in
Swing Line Loans that
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such Lender failed to purchase pursuant to this Section 2.3(c) until such
amount has been purchased (as a result of such assignment or otherwise).
2.4 Term Loans.
(a) Term Loan. Subject to the terms and conditions set forth herein,
each Lender severally agrees, on the Effective Date, to make a term loan
(collectively, the "Term Loans") to the Borrowers, in Dollars, in an
amount equal to such Lender's Term Loan Commitment Percentage of the Term
Loan Committed Amount; provided that the aggregate amount of such Term
Loans made on the Effective Date shall not exceed the Term Loan Committed
Amount. Once repaid, Term Loans cannot be reborrowed.
(b) Funding of Term Loans. On the Effective Date, each applicable
Lender will make its Term Loan Commitment Percentage of the Term Loan
Committed Amount available to the Administrative Agent by deposit, in
Dollars and in immediately available funds, at the offices of the
Administrative Agent at its principal office in Charlotte, North Carolina
or at such other address as the Administrative Agent may designate in
writing. The amount of the Term Loans will then be made available to the
Borrowers by the Administrative Agent by crediting the account of the
Borrowers on the books of such office of the Administrative Agent, to the
extent the amount of such Term Loans are made available to the
Administrative Agent. All Term Loans on the Effective Date shall be Base
Rate Loans. Thereafter, all or any portion of the Term Loans may be
converted into Eurodollar Loans in accordance with the terms of Section
2.5.
No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make a Term Loan hereunder; provided, however,
that the failure of any Lender to fulfill its obligations hereunder shall
not relieve any other Lender of its obligations hereunder. If the
Administrative Agent shall have received an executed signature page to
this Credit Agreement (whether an original or via telecopy) from a Lender,
the Administrative Agent may assume that such Lender has or will make the
amount of its Term Loans available to the Administrative Agent on the
Effective Date, and the Administrative Agent in reliance upon such
assumption, may (in its sole discretion but without any obligation to do
so) make available to the Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative
Agent, the Administrative Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent will promptly notify the Borrowers, and
the Borrowers shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to
recover from the Lender or the Borrowers, 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 Administrative Agent to the
Borrowers to the date such corresponding amount is recovered by the
Administrative Agent at a per annum rate equal to (i) from the Borrowers
at the applicable rate for such Term Loan and (ii) from a Lender at the
Federal Funds Rate.
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(c) Amortization. The principal amount of the Term Loans shall be
repaid in quarterly payments on the dates set forth below:
Principal Amortization Term Loan Principal
Payment Dates Amortization Payment
---------------------- --------------------
December 31, 1997 $1,500,000
March 31, 1998 $1,500,000
June 30, 1998 $1,500,000
September 30, 1998 $1,500,000
December 31, 1998 $2,000,000
March 31, 1999 $2,000,000
June 30, 1999 $2,000,000
September 30, 1999 $2,000,000
December 31, 1999 $2,125,000
March 31, 2000 $2,125,000
June 30, 2000 $2,125,000
September 30, 2000 $2,125,000
December 31, 2000 $2,125,000
March 31, 2001 $2,125,000
June 30, 2001 $2,125,000
September 30, 2001 $2,125,000
December 31,2001 $2,250,000
March 31, 2002 $2,250,000
June 30, 2002 $2,250,000
September 30, 2002 $2,250,000
Total $40,000,000
2.5 Continuations and Conversions.
The Borrowers shall have the option, on any Business Day, to continue
existing Eurodollar Loans for a subsequent Interest Period, to convert Base Rate
Loans (other than Swing Line Loans) into Eurodollar Loans or to convert
Eurodollar Loans into Base Rate Loans (other than Swing Line Loans); provided,
however, that (i) each such continuation or conversion must be requested by the
Borrowers pursuant to a written Notice of Continuation/Conversion, in the form
of Exhibit 2.5, in compliance with the terms set forth below, (ii) except as
provided in Section 3.11, Eurodollar Loans may only be continued or converted
into Base Rate Loans on the last day of the Interest Period applicable thereto,
(iii) Eurodollar Loans may not be continued nor may Base Rate Loans be converted
into Eurodollar Loans during the existence and continuation of a Default or an
Event of Default and (iv) any request to continue a Eurodollar Loan that fails
to comply with the terms hereof or any failure to request a continuation of a
Eurodollar Loan at the end of an Interest Period shall constitute a conversion
to a Base Rate Loan on the last day of the applicable Interest Period. Each
continuation or conversion must be requested by the Borrowers no later than
11:00 a.m. (A) on the date for a requested conversion of a Eurodollar Loan to a
Base Rate Loan or (B) three Business Days prior to the date for a requested
continuation of a Eurodollar Loan or conversion of a Base Rate Loan to a
Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Administrative Agent which shall set
forth (x) whether the Borrowers wish to continue or convert such Loans and (y)
if the request is to continue a Eurodollar Loan or convert a Base Rate Loan to a
Eurodollar Loan, the Interest Period applicable thereto.
2.6 Minimum Amounts.
Each request for a borrowing, conversion or continuation shall be subject
to the requirements that (a) each Eurodollar Loan for an Interest Period of one
month shall be in a minimum amount of $3,750,000 and in integral multiples of
$500,000 in excess thereof, (b) each
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Eurodollar Loan for an Interest Period of two, three or six months shall be in a
minimum amount of $3,000,000 and in integral multiples of $500,000 in excess
thereof, (c) each Base Rate Loan shall be in a minimum amount of the lesser of
$1,000,000 (and integral multiples of $100,000 in excess thereof) or the
remaining amount available under the Revolving Committed Amount, (d) each Swing
Line Loan shall be in a minimum amount of $100,000 and in integral multiples of
$50,000 in excess thereof or the remaining amount of the Swing Line Committed
Amount (provided that this limitation in clause (d) shall not apply for amounts
requested to repay a drawn Letter of Credit pursuant to Section 2.2(d)) and (e)
no more than eight Eurodollar Loans shall be outstanding hereunder at any one
time. For the purposes of this Section, all Eurodollar Loans with the same
Interest Periods that begin and end on the same date shall be considered as one
Eurodollar Loan, but Eurodollar Loans with different Interest Periods, even if
they begin on the same date, shall be considered as separate Eurodollar Loans.
2.7 Notes.
(a) Revolving Notes. The Revolving Loans made by each Lender shall
be evidenced by a duly executed promissory note of the Borrowers to each
applicable Lender in the face amount of its Revolving Loan Commitment
Percentage of the Revolving Committed Amount and in substantially the form
of Exhibit 2.7(a).
(b) Term Notes. The Term Loans made by each Lender shall be
evidenced by a duly executed promissory note of the Borrowers to each
applicable Lender in the face amount of its Term Loan Commitment
Percentage of the Term Loan Committed Amount and in substantially the form
of Exhibit 2.7(b).
(c) Swing Line Note. The Swing Line Loans made by NationsBank shall
be evidenced by a duly executed promissory note of the Borrowers to
NationsBank in the face amount of the Swing Line Committed Amount and in
substantially the form of Exhibit 2.7(c).
2.8 Joint and Several Liability of the Borrowers.
(a) Each of the Borrowers is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided
by the Lenders under this Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Borrowers and in consideration of
the undertakings of each of the Borrowers to accept joint and several
liability for the obligations of each of them.
(b) Each of the Borrowers jointly and severally hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrower with
respect to the payment and performance of all of the Credit Party
Obligations arising under this Credit Agreement and the other Credit
Documents, it being the intention of the parties hereto that all the
Credit Party Obligations shall be the joint and several obligations of
each of the Borrowers without preferences or distinction among them.
(c) If and to the extent that either of the Borrowers shall fail to
make any payment with respect to any of the obligations hereunder as and
when due or to perform any of such obligations in accordance with the
terms thereof, then in each such
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event, the other Borrower will make such payment with respect to, or
perform, such obligation.
(d) The obligations of each Borrower under the provisions of this
Section 2.8 constitute full recourse obligations of such Borrower,
enforceable against it to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of this Credit
Agreement or any other circumstances whatsoever. The joint and several
liability of the Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other
change whatsoever in the name, membership, constitution or place of
formation of either Borrower or any of the Lenders.
(e) The provisions of this Section 2.8 are made for the benefit of
the Lenders and their successors and assigns, and may be enforced by them
from time to time against either of the Borrowers as often as occasion
therefor may arise and without requirement on the part of the Lenders
first to xxxxxxxx any of its claims or to exercise any of its rights
against the other Borrower or to exhaust any remedies available to it
against the other Borrower or to resort to any other source or means of
obtaining payment of any of the Credit Party Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.8 shall remain in
effect until all the Credit Party Obligations hereunder shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or
any part thereof, made in respect of any of the Credit Party Obligations,
is rescinded or must otherwise be restored or returned by the Lenders upon
the insolvency, bankruptcy or reorganization of either of the Borrowers,
or otherwise, the provisions of this Section 2.8 will forthwith be
reinstated and in effect as though such payment had not been made.
(f) Notwithstanding any provision to the contrary contained herein
or in any of the other Credit Documents, to the extent the obligations of
any Borrower 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 such Borrower hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state
and including, without limitation, the Bankruptcy Code).
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 Interest.
(a) Interest Rate. All Base Rate Loans (including Swing Line Loans)
shall accrue interest at the Adjusted Base Rate and all Eurodollar Loans
shall accrue interest at the Adjusted Eurodollar Rate.
(b) Default Rate of Interest. Upon the occurrence, and during the
continuance, of an Event of Default, the principal of and, to the extent
permitted by law,
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interest on the Loans and any other amounts owing hereunder or under the
other Credit Documents (including without limitation fees and expenses)
shall bear interest, payable on demand, at a per annum rate equal to 2%
plus the rate which would otherwise be applicable (or if no rate is
applicable, then the rate for Revolving Loans that are Base Rate Loans
plus two percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due and payable in
arrears on each Interest Payment Date. 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.
3.2 Place and Manner of Payments.
All payments of principal, interest, fees, expenses and other amounts to
be made by a Credit Party under this Agreement shall be received not later than
2:00 p.m. on the date when due, in Dollars and in immediately available funds,
by the Administrative Agent at its offices in Charlotte, North Carolina.
Payments received after such time shall be deemed to have been received on the
next Business Day. A Borrower shall, at the time it makes any payment under this
Agreement, specify to the Administrative Agent, the Loans, Letters of Credit,
fees or other amounts payable by the Borrowers hereunder to which such payment
is to be applied (and in the event that it fails to specify, or if such
application would be inconsistent with the terms hereof, the Administrative
Agent shall, subject to Section 3.7, distribute such payment to the Lenders in
such manner as the Administrative Agent may deem appropriate). The
Administrative Agent will distribute such payments to the applicable Lenders on
the same Business Day if any such payment is received prior to 2:00 p.m.;
otherwise the Administrative Agent will distribute such payment to the
applicable Lenders on the next succeeding Business Day. 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.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrowers shall have the right to
prepay Loans in whole or in part from time to time without premium or
penalty; provided, however, that (i) Eurodollar Loans may only be prepaid
on three Business Days' prior written notice to the Administrative Agent
and any prepayment of Eurodollar Loans will be subject to Section 3.14,
(ii) each such partial prepayment of Loans shall be in the minimum
principal amount of (A) $1,000,000 and integral multiples of $100,000 in
excess thereof for Revolving Loans and Term Loans and (B) $100,000 and
integral multiples of $50,000 for Swing Line Loans and (iii) voluntary
prepayments with respect to the Term Loans shall be applied first to the
next four scheduled Principal Amortization Payments and then pro rata
among the remaining Principal Amortization Payments.
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(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time the sum of the
aggregate amount of Revolving Loans outstanding plus LOC Obligations
outstanding plus Swing Line Loans outstanding exceeds the lesser of
(A) the Revolving Committed Amount and (B) the Borrowing Base
Assets, the Borrowers shall immediately make a principal payment to
the Administrative Agent in the manner and in an amount such that
the sum of the aggregate amount of Revolving Loans outstanding plus
LOC Obligations outstanding plus Swing Line Loans outstanding is
less than or equal to (x) the Revolving Committed Amount and (y) the
Borrowing Base Assets.
(ii) Excess Cash Flow. Within 10 days after the date the
audited financial statements are required to be delivered pursuant
to Section 7.1(a) for each fiscal year, commencing with the fiscal
year ending December 31, 1998, the Borrowers shall, if there is any
principal amount outstanding with respect to the Term Loans, make a
prepayment of the Loans in an amount equal to 33% of the Excess Cash
Flow earned during the preceding fiscal year (to be applied as set
forth in Section 3.3(c) below).
(iii) Asset Sales. Immediately upon receipt by a Credit Party
or any of its Subsidiaries of proceeds from any Asset Disposition,
the Borrowers shall forward an amount equal to 100% of the Net Cash
Proceeds of such Asset Disposition to the Lenders as a prepayment of
the Loans (to be applied as set forth in Section 3.3(c) below).
(iv) Issuances of Equity. Immediately upon receipt by a Credit
Party or any of its Subsidiaries of proceeds from any Equity
Issuance (other than (A) an Equity Issuance consisting of the
issuance of shares of the Parent to employees of the Credit Parties
substantially contemporaneous with the repurchase of shares of the
Parent from other employees of the Parent and (B) Equity Issuances
consisting of the issuance of shares of the Parent to management of
the Credit Parties not to exceed a value of $25,000, in the
aggregate, during any calendar year), the Borrowers shall forward
100% of the Net Cash Proceeds of such Equity Issuance to the Lenders
as a prepayment of the Loans (to be applied as set forth in Section
3.3(c) below); provided that if the Net Cash Proceeds from an Equity
Issuance is at least $50 million, then the Borrowers may first use
such Net Cash Proceeds to prepay existing Preferred Stock plus
accrued dividends thereon, with any remaining Net Cash Proceeds to
be forwarded to the Lenders as a prepayment of the Loans.
(v) Issuance of Debt. Immediately upon receipt by a Credit
Party or any of its Subsidiaries of proceeds from any Debt Issuance,
the Borrowers shall forward 100% of the Net Cash Proceeds of such
Debt Issuance to the Lenders as a prepayment of the Loans (to be
applied as set forth in Section 3.3(c) below).
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(c) Application of Prepayments. All amounts required to be paid
pursuant to Section 3.3(b)(i) shall be applied first to Revolving Loans,
second to Swing Line Loans and third to a cash collateral account in
respect of LOC Obligations. All amounts required to be paid pursuant to
Section 3.3(b)(ii) above shall be applied to the outstanding Term Loans
(pro rata among the remaining Principal Amortization Payments) until the
Term Loans have been paid in full and once the Terms Loans are paid in
full any additional amounts returned to the Borrowers. All amounts
required to be paid pursuant to Section 3.3(b), (iii), (iv) and (v) above
shall be applied first to the outstanding Term Loans (pro rata among the
remaining Principal Amortization Payments) until the Term Loans have been
paid in full, second, to the Revolving Loans (with a corresponding
reduction in the Revolving Committed Amount), third to Swing Line Loans
and fourth, to a cash collateral account in respect of LOC Obligations.
Within the parameters of the applications set forth above, prepayments
shall be applied first to Base Rate Loans and then to Eurodollar Loans in
direct order of Interest Period maturities. All prepayments hereunder
shall be subject to Section 3.14.
(d) Escrow Account.
(i) If the Borrowers are required to make a mandatory
prepayment under Section 3.3(b) that would result in a payment by
the Borrowers under Section 3.14(c), the Borrowers may, at their
option, elect to place such mandatory prepayment in an escrow
account with the Administrative Agent, in the name of the
Administrative Agent (the "Escrow Account"). Either (A) at the
request of the Borrowers, (B) on the last day of an Interest Period,
(C) during the existence and continuation of an Event of Default or
(D) on the Maturity Date, the Administrative Agent shall apply all
amounts in the Escrow Account (including any income or gains earned
on amounts in the Escrow Account) to the Credit Party Obligations in
accordance with the terms of Section 3.3(c). The Borrowers may not
receive any amounts from the Escrow Account, but may only apply such
amounts to the Credit Party Obligations.
(ii) The Borrowers shall direct the investment of the amounts
in the Escrow Account; provided that the amounts in the Escrow
Account shall be invested only in cash and Cash Equivalents with a
remaining maturity that does not extend beyond the next Interest
Payment Date. All income and gains from such investments shall be
retained in the Escrow Account and the Borrowers shall treat all
income, gains and losses from investment of amounts in the Escrow
Account as their income or loss for federal income tax purposes.
3.4 Fees.
(a) Commitment Fees. In consideration of the Revolving Committed
Amount being made available by the Lenders hereunder, the Borrowers agree
to pay to the Administrative Agent, for the pro rata benefit of each
applicable Lender (based on each
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Lender's Revolving Loan Commitment Percentage of the Revolving Committed
Amount), a per annum fee equal to the Applicable Percentage for Commitment
Fees multiplied by the Unused Commitment (the "Commitment Fees"). The
Commitment Fees shall commence to accrue on the Effective Date and shall
be due and payable in arrears on the last day of each fiscal quarter of
the Parent (as well as on the Maturity Date and on any date that the
Revolving Committed Amount is reduced) for the immediately preceding
fiscal quarter (or portion thereof), beginning with the first of such
dates to occur after the Closing Date.
(b) Letter of Credit Fees.
(i) Standby Letter of Credit Fees. In consideration of the
issuance of Standby Letters of Credit hereunder, the Borrowers agree
to pay to the Issuing Lender for the pro rata benefit of the
applicable Lenders (based on each Lender's Revolving Loan Commitment
Percentage of the Revolving Committed Amount), a per annum fee (the
"Standby Letter of Credit Fees") equal to the Applicable Percentage
for the Standby Letter of Credit Fees 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. The Standby Letter
of Credit Fees will be payable in arrears on the last day of each
fiscal quarter of the Parent (as well as on the Maturity Date) for
the immediately preceding fiscal quarter (or portion thereof),
beginning with the first of such dates to occur after the Closing
Date.
(ii) Issuing Lender Fees. In addition to the Standby Letter of
Credit Fees payable pursuant to subsection (i) above, the Borrowers
shall pay to the Issuing Lender for its own account, without sharing
by the other Lenders, the customary charges from time to time to the
Issuing Lender for its services in connection with the issuance,
amendment, payment, transfer, administration, cancellation and
conversion of, and drawings under, Letters of Credit, including but
not limited to, the Issuing Lender's standard rates for operating,
amending, renewing and transferring any Documentary Letters of
Credit (collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrowers agree to pay to the
Administrative Agent, for its own account, an annual fee in accordance
with the terms of the Fee Letter.
3.5 Payment in full at Maturity.
On the Maturity Date, the entire outstanding principal balance of all
Loans and all LOC Obligations, together with accrued but unpaid interest and all
other sums owing with respect thereto, shall be due and payable in full, unless
accelerated sooner pursuant to Section 9.
3.6 Computations of Interest and Fees.
(a) Except for Base Rate Loans, in which case interest shall be
computed on the basis of a 365 or 366 day year as the case may be, all
computations of interest and fees hereunder shall be made on the basis of
the actual number of days elapsed over a
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year of 360 days. Interest shall accrue from and include the date of
borrowing (or continuation or conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit Parties to
conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between the Lenders and the
Borrowers are hereby limited by the provisions of this paragraph which
shall override and control all such agreements, whether now existing or
hereafter arising and whether written or oral. In no way, nor in any event
or contingency (including but not limited to prepayment or acceleration of
the maturity of any obligation), shall the interest taken, reserved,
contracted for, charged, or received under this Credit Agreement, under
the Notes or otherwise, exceed the maximum nonusurious amount permissible
under applicable law. If, from any possible construction of any of the
Credit Documents or any other document, interest would otherwise be
payable in excess of the maximum nonusurious amount, any such construction
shall be subject to the provisions of this paragraph and such documents
shall be automatically reduced to the maximum nonusurious amount permitted
under applicable law, without the necessity of execution of any amendment
or new document. If any Lender shall ever receive anything of value which
is characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum lawful
amount, an amount equal to the amount which would have been excessive
interest shall, without penalty, be applied to the reduction of the
principal amount owing on the Loans and not to the payment of interest, or
refunded to the Borrowers or the other payor thereof if and to the extent
such amount which would have been excessive exceeds such unpaid principal
amount of the Loans. The right to demand payment of the Loans or any other
indebtedness evidenced by any of the Credit Documents does not include the
right to accelerate the payment of any interest which has not otherwise
accrued on the date of such demand, and the Lenders do not intend to
charge or receive any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with respect to the
Loans shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term (including
any renewal or extension) of the Loans so that the amount of interest on
account of such indebtedness does not exceed the maximum nonusurious
amount permitted by applicable law.
3.7 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including, without
limitation, each Mandatory Borrowing), each payment or prepayment of
principal of any Loan, each payment of fees (other than the Issuing Lender
Fees retained by the Issuing Lender for its own account and the
Administrative Fees retained by the Administrative Agent for its own
account), each reduction of the Revolving Committed Amount, and each
conversion or continuation of any Loan, shall (except as otherwise
provided in Section 3.11) be allocated pro rata among the relevant Lenders
in accordance with the respective Revolving Loan Commitment Percentages or
Term Loan Commitment Percentages of such Lenders (or, if the Commitments
of such Lenders have expired or been terminated, in accordance with the
respective principal amounts of the outstanding Loans and
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Participation Interests of such Lenders); provided that, if any Lender
shall have failed to pay its applicable pro rata share of any Revolving
Loan, then any amount to which such Lender would otherwise be entitled
pursuant to this subsection (a) shall instead be payable to the
Administrative Agent until the share of such Loan not funded by such
Lender has been repaid; provided further, that in the event any amount
paid to any Lender pursuant to this subsection (a) is rescinded or must
otherwise be returned by the Administrative Agent, each Lender shall, upon
the request of the Administrative Agent, repay to the Administrative Agent
the amount so paid to such Lender, with interest for the period commencing
on the date such payment is returned by the Administrative Agent until the
date the Administrative Agent receives such repayment at a rate per annum
equal to, during the period to but excluding the date two Business Days
after such request, the Federal Funds Rate, and thereafter, the Base Rate
plus two percent (2%) per annum; and
(b) Letters of Credit. Each payment of unreimbursed drawings in
respect of LOC Obligations shall be allocated to each LOC Participant pro
rata in accordance with its Revolving Loan Commitment Percentage; provided
that, if any LOC Participant shall have failed to pay its applicable pro
rata share of any drawing under any Letter of Credit, then any amount to
which such LOC Participant would otherwise be entitled pursuant to this
subsection (b) shall instead be payable to the Issuing Lender until the
share of such unreimbursed drawing not funded by such Lender has been
repaid; provided further, that in the event any amount paid to any LOC
Participant pursuant to this subsection (b) is rescinded or must otherwise
be returned by the Issuing Lender, each LOC Participant shall, upon the
request of the Issuing Lender, repay to the Administrative Agent for the
account of the Issuing Lender the amount so paid to such LOC Participant,
with interest for the period commencing on the date such payment is
returned by the Issuing Lender until the date the Issuing Lender receives
such repayment at a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the Federal Funds
Rate, and thereafter, the Base Rate plus two percent (2%) per annum.
3.8 Sharing of Payments.
The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any Loan, unreimbursed drawing with respect to any LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of the Bankruptcy Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly pay in cash or purchase
from the other Lenders a participation in such 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 Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall
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have shared the benefit of such payment shall, by payment in cash or a
repurchase of a participation theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
The Borrowers agree that any Lender so purchasing such a participation may, to
the fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Loan, LOC Obligation or other
obligation in the amount of such participation. Except as otherwise expressly
provided in this Credit Agreement, if any Lender or an Agent shall fail to remit
to an Agent or any other Lender an amount payable by such Lender or such Agent
to such Agent or such other Lender 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 such Agent or such other Lender at a rate per annum equal to
the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section 3.8 applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders under this Section 3.8 to share in the benefits of any
recovery on such secured claim.
3.9 Capital Adequacy.
If, after the date hereof, any Lender has determined that the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any
applicable law, rule or regulation regarding capital adequacy, or compliance by
such Lender, or its parent corporation, 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 Lender's (or parent corporation's) capital or assets as a
consequence of its commitments or obligations hereunder to a level below that
which such Lender, or its parent corporation, could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration such
Lender's (or parent corporation's) policies with respect to capital adequacy),
then, upon notice from such Lender to the Borrowers, the Borrowers shall (only
to the extent that the amount of such reduction in the rate of return is not
reflected in the Base Rate) be obligated to pay to such Lender such additional
amount or amounts as will compensate such Lender on an after-tax basis (after
taking into account applicable deductions and credits in respect of the amount
indemnified) for such reduction. Each reasonable determination by any such
Lender of amounts owing under this Section shall, absent manifest error, be
conclusive and binding on the parties hereto; provided, however, that each
Lender agrees to allocate such cost increases among its customers in good faith
and on an equitable basis. This covenant shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.10 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the Administrative Agent
shall have determined in good faith (which determination shall be conclusive and
binding upon the Borrowers) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, the
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Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrowers and the Lenders as soon as practicable thereafter, and will also give
prompt written notice to the Borrowers when such conditions no longer exist. If
such notice is given (a) any Eurodollar Loans requested to be made on the first
day of such Interest Period shall be made as Base Rate Loans, (b) any Loans that
were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base Rate
Loans and (c) any outstanding Eurodollar Loans shall be converted, on the first
day of such Interest Period, to Base Rate Loans. Until the Administrative Agent
(after good faith efforts) is able to ascertain the Eurodollar Rate, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrowers
have the right to convert Base Rate Loans to Eurodollar Loans.
3.11 Illegality.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrowers
and the Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days or the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.14.
3.12 Requirements of Law.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance by
any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind whatsoever with
respect to any Letter of Credit, any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by Section 3.13 (including Non-Excluded Taxes imposed solely by
reason of any failure of such Lender to comply with its obligations under
Section 3.13(b)) and changes in taxes measured by or imposed upon the
overall net income, or franchise tax (imposed in lieu of such net income
tax), of such Lender or its applicable lending office, branch, or any
affiliate thereof);
(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other
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liabilities in or for the account of, advances, loans or other extensions
of credit by, or any other acquisition of funds by, any office of such
Lender which is not otherwise included in the determination of the
Eurodollar Rate hereunder; or
(c) shall impose on such Lender any other condition (excluding any
tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrowers from such Lender,
through the Administrative Agent, in accordance herewith, the Borrowers shall be
obligated to promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender on an after-tax basis (after taking into
account applicable deductions and credits in respect of the amount indemnified)
for such increased cost or reduced amount receivable, provided that, in any such
case, the Borrowers may elect to convert the Eurodollar Loans made by such
Lender hereunder to Base Rate Loans by giving the Administrative Agent at least
one Business Day's notice of such election, in which case the Borrowers shall
promptly pay to such Lender, upon demand, without duplication, such amounts, if
any, as may be required pursuant to Section 3.14. If any Lender becomes entitled
to claim any additional amounts pursuant to this Section 3.12, it shall provide
prompt notice thereof to the Borrowers, through the Administrative Agent,
certifying (x) that one of the events described in this Section 3.12 has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this Section 3.12 submitted by such Lender, through the
Administrative Agent, to the Borrowers shall be conclusive and binding on the
parties hereto in the absence of manifest error. This covenant shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder. Notwithstanding the foregoing, if a Lender can
reasonably avoid such increased cost by changing its lending office or taking
such other action and such change or other action does not cause a material risk
or cost to such Lender, it shall use best efforts to do so.
3.13 Taxes.
(a) Except as provided below in this Section 3.13, all payments made
by the Borrowers under this Credit Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes measured by
or imposed upon the net income of any Lender or its applicable lending
office, or any branch or affiliate thereof, and all franchise taxes,
branch taxes, taxes on doing business or taxes on the capital or net worth
of any Lender or its applicable lending office, or any branch or affiliate
thereof, in each case imposed in lieu of net income taxes: (i) by the
jurisdiction under the laws of which such Lender, applicable lending
office, branch or affiliate is organized or is located, or in which its
principal executive office is located, or
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any nation within which such jurisdiction is located or any political
subdivision thereof; or (ii) by reason of any connection between the
jurisdiction imposing such tax and such Lender, applicable lending office,
branch or affiliate other than a connection arising solely from such
Lender having executed, delivered or performed its obligations, or
received payment under or enforced, this Credit Agreement or any Notes. If
any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to an Agent or any Lender hereunder or
under any Notes, (A) the amounts so payable to an Agent or such Lender
shall be increased to the extent necessary to yield to an Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified
in this Credit Agreement and any Notes, provided, however, that the
Borrowers shall be entitled to deduct and withhold any Non-Excluded Taxes
and shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of
America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this Section 3.13 whenever any
Non-Excluded Taxes are payable by the Borrowers, and (B) as promptly as
possible after requested the Borrowers shall send to such Agent for its
own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the Borrowers
showing payment thereof. If the Borrowers fail to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to
the Administrative Agent the required receipts or other required
documentary evidence, the Borrowers shall indemnify the Agents and any
Lender for any incremental Non-Excluded Taxes, interest or penalties that
may become payable by an Agent or any Lender as a result of any such
failure. The Agent or any Lender (as the case may be) claiming any
additional amounts payable pursuant to this Section 3.13 shall use its
best efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its lending office if the
making of such a change would avoid the need for, or reduce the amount of,
any such additional amounts which may thereafter accrue and would not, in
the reasonable judgment of the Agent, or such Lender (as the case may be),
be otherwise disadvantageous to the Agent, or such Lender (as the case may
be). The agreements in this subsection shall survive the termination of
this Credit Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) (A) on or before the date of any payment by the
Borrowers under this Credit Agreement or Notes to such Lender,
deliver to the Borrowers and the Administrative Agent (x) two duly
completed copies of United States Internal Revenue Service Form 1001
or 4224, or successor applicable form, as the case may be,
certifying that it is entitled to receive payments under this Credit
Agreement and any Notes without deduction or withholding of any
United States federal income taxes and (y) an Internal Revenue
Service Form W-8 or W-9, or successor applicable form, as the case
may be, certifying that it is entitled to an exemption from United
States backup withholding tax;
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(B) deliver to the Borrowers and the Administrative
Agent two further copies of any such form or certification on or
before the date that any such form or certification expires or
becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Borrowers; and
(C) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be requested
by the Borrowers or the Administrative Agent; or
(ii) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (A) represent to the Borrowers (for the benefit of the
Borrowers and the Agents) that it is not a bank within the meaning
of Section 881(c)(3)(A) of the Internal Revenue Code, (B) agree to
furnish to the Borrowers, on or before the date of any payment by
the Borrowers, with a copy to the Administrative Agent, two accurate
and complete original signed copies of Internal Revenue Service Form
W-8, or successor applicable form certifying to such Lender's legal
entitlement at the date of such certificate to an exemption from
U.S. withholding tax under the provisions of Section 881(c) of the
Internal Revenue Code with respect to payments to be made under this
Credit Agreement and any Notes (and to deliver to the Borrowers and
the Administrative Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrowers or the Administrative Agent
for filing and completing such forms), and (C) agree, to the extent
legally entitled to do so, upon reasonable request by the Borrowers,
to provide to the Borrowers (for the benefit of the Borrowers and
the Agents) such other forms as may be reasonably required in order
to establish the legal entitlement of such Lender to an exemption
from withholding with respect to payments under this Credit
Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it and
such Lender so advises the Borrowers and the Administrative Agent, then
such Lender shall be exempt from such requirements. Each Person that shall
become a Lender or a participant of a Lender pursuant to Section 11.3
shall, upon the effectiveness of the related transfer, be required to
provide all of the forms, certifications and statements required pursuant
to this subsection (b); provided that in the case of a participant of a
Lender, the obligations of such participant of a Lender pursuant to this
subsection (b) shall be determined as if the participant of a Lender were
a Lender except that such participant of a Lender shall furnish all such
required forms, certifications and statements to the Lender from which the
related participation shall have been purchased.
3.14 Compensation.
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The Borrowers promise to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrowers in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrowers have given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrowers in making any prepayment of a Eurodollar Loan after
the Borrowers have given a notice thereof in accordance with the provisions of
this Credit Agreement and (c) the making of a prepayment of Eurodollar Loans on
a day which is not the last day of an Interest Period with respect thereto (as
long as such action does not result from the gross negligence or willful
misconduct of the Administrative Agent or a Lender). Such indemnification may
include an amount equal to (i) the amount of interest which would have accrued
on the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Loans provided for herein (excluding, however, the
Applicable Percentage included therein, if any) minus (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The agreements in
this Section shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
3.15 Substitution of Lender.
If (a) the obligation of any Lender to make Eurodollar Loans has been
suspended pursuant to Section 3.11 or (b) any Lender has demanded compensation
under Section 3.9, 3.11, 3.12, 3.13 or 3.14, the Borrowers shall have the right,
with the assistance of the Administrative Agent, to seek a mutually satisfactory
substitute lender or lenders. Any substitution under this Section 3.15 may be
accomplished, at the Borrowers' option, either (i) by the replaced Lender
assigning its rights and obligations hereunder to a replacement lender or
lenders pursuant to Section 11.3(b) at a mutually agreeable price or (ii) by the
Borrowers prepaying all outstanding Loans and LOC Obligations from the replaced
Lender and terminating such Lender's Commitment on a date specified in a notice
delivered to the Administrative Agent and the replaced Lender at least three
Business Days before the date so specified (and compensating such Lender for any
resulting funding losses as provided in Section 3.14 but otherwise without
premium or penalty) and concurrently a replacement Lender or Lenders assuming a
Commitment in an amount equal to the Commitment being terminated and making
Loans in the same aggregate amount and having the same maturity date or dates,
respectively, as the Loans being prepaid, all pursuant to documents reasonably
satisfactory to the Administrative Agent (and in the case of any document to be
signed by the replaced Lender, reasonably satisfactory to such Lender). No such
substitution shall relieve the Borrowers of their obligations to compensate
and/or indemnify the replaced Lender as required by Section 3.9, 3.11, 3.12,
3.13 or 3.14 with respect to the period before it is replaced and to pay all
accrued interest, accrued fees and other amounts owing to the replaced Lender
hereunder.
SECTION 4
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GUARANTY
4.1 Guaranty of Payment.
Subject to Section 4.7 below, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Lender, each Affiliate of Lender
that enters into a Hedging Agreement and the Agents the prompt payment of the
Credit Party Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise). This Guaranty is a guaranty
of payment and not of collection and is a continuing guaranty and shall apply to
all Credit Party Obligations whenever arising.
4.2 Obligations Unconditional.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, 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. Each Guarantor agrees that this Guaranty may be enforced by
the Lenders without the necessity at any time of resorting to or exhausting any
other security or collateral and without the necessity at any time of having
recourse to the Notes or any other of the Credit Documents or any collateral, if
any, hereafter securing the Credit Party Obligations or otherwise and each
Guarantor hereby waives the right to require the Lenders to proceed against the
Borrowers or any other Person (including a co-guarantor) or to require the
Lenders to pursue any other remedy or enforce any other right. Each Guarantor
further agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrowers or any other Guarantor of
the Credit Party Obligations for amounts paid under this Guaranty until such
time as the Lenders (and any Affiliates of Lenders entering into Hedging
Agreements) have been paid in full, all Commitments under the Credit Agreement
have been terminated and no Person or Governmental Authority shall have any
right to request any return or reimbursement of funds from the Lenders in
connection with monies received under the Credit Documents. Each Guarantor
further agrees that nothing contained herein shall prevent the Lenders from
suing on the Notes or any of the other Credit Documents or any of the Hedging
Agreements or foreclosing its security interest in or Lien on any collateral, if
any, securing the Credit Party Obligations or from exercising any other rights
available to it under this Credit Agreement, the Notes, any other of the Credit
Documents, or any other instrument of security, if any, and the exercise of any
of the aforesaid rights and the completion of any foreclosure proceedings shall
not constitute a discharge of any of any Guarantor's obligations hereunder; it
being the purpose and intent of each Guarantor that its obligations hereunder
shall be absolute, independent and unconditional under any and all
circumstances. Neither any Guarantor's obligations under this Guaranty nor any
remedy for the enforcement thereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of the Borrowers or by reason of the
bankruptcy or insolvency of the Borrowers. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Credit Party
Obligations and notice of or proof of reliance of by any Agent or any Lender
upon this Guarantee or acceptance of this Guarantee. The Credit Party
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee. All dealings between the Borrowers and any of the
Guarantors, on the one hand, and the Agents and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had
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or consummated in reliance upon this Guarantee. The Guarantors further agree to
all rights of set-off as set forth in Section 11.2.
4.3 Modifications.
Each Guarantor agrees that (a) all or any part of the Collateral now or
hereafter held for the Credit Party Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the Lenders shall not have any
obligation to protect, perfect, secure or insure any such security interests,
liens or encumbrances now or hereafter held, if any, for the Credit Party
Obligations or the properties subject thereto; (c) the time or place of payment
of the Credit Party Obligations may be changed or extended, in whole or in part,
to a time certain or otherwise, and may be renewed or accelerated, in whole or
in part; (d) the Borrowers and any other party liable for payment under the
Credit Documents may be granted indulgences generally; (e) any of the provisions
of the Notes or any of the other Credit Documents may be modified, amended or
waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Borrowers or any other party liable for the payment of the
Credit Party Obligations or liable upon any security therefor may be released,
in whole or in part, at, before or after the stated, extended or accelerated
maturity of the Credit Party Obligations, all without notice to or further
assent by such Guarantor, which shall remain bound thereon, notwithstanding any
such exchange, compromise, surrender, extension, renewal, acceleration,
modification, indulgence or release.
4.4 Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of
all extensions of credit to the Borrowers by the Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required in
the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Credit Party Obligations, or the
Lenders' subordinating, compromising, discharging or releasing such security
interests, liens or encumbrances, if any; and (e) all other notices to which
such Guarantor might otherwise be entitled.
4.5 Reinstatement.
The obligations of the Guarantors under this Section 4 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 Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agents and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by an Agent
or such Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
4.6 Remedies.
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The Guarantors agree that, as between the Guarantors, on the one hand, and
the Agents and the Lenders, on the other hand, the Credit Party Obligations may
be declared to be forthwith due and payable as provided in Section 9 (and shall
be deemed to have become automatically due and payable in the circumstances
provided in Section 9) notwithstanding any stay, injunction or other prohibition
preventing such declaration (or preventing such Credit Party Obligations from
becoming automatically due and payable) as against any other Person and that, in
the event of such declaration (or such Credit Party Obligations being deemed to
have become automatically due and payable), such Credit Party Obligations
(whether or not due and payable by any other Person) shall forthwith become due
and payable by the Guarantors. The Guarantors acknowledge and agree that their
obligations hereunder are secured in accordance with the terms of the Security
Agreements and the other Collateral Documents and that the Lenders may exercise
their remedies thereunder in accordance with the terms thereof.
4.7 Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein or in any
of the other Credit Documents, to the extent the obligations of any 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 such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
4.8 Rights of Contribution.
The Credit Parties agree among themselves that, in connection with
payments made hereunder, each Credit Party shall have contribution rights
against the other Credit Parties as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Credit Parties under the Credit Documents and no Credit Party
shall exercise such rights of contribution until all Credit Party Obligations
have been paid in full and the Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and make
the initial Extension of Credit is subject to satisfaction (or waiver) of the
following conditions:
(a) Executed Credit Documents. Receipt by the Administrative Agent
of duly executed copies of: (i) this Credit Agreement; (ii) the Notes;
(iii) the Collateral Documents; (iv) the Intercreditor Agreement; and (v)
all other Credit Documents, each in form and substance reasonably
acceptable to the Administrative Agent.
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(b) Corporate Documents. Receipt by the Administrative Agent of the
following:
(i) Charter Documents. Copies of the articles or certificates
of incorporation or other charter documents of each Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as
of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each Credit Party
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Effective Date.
(iii) Resolutions. Copies of resolutions of the Board of
Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by
a secretary or assistant secretary of such Credit Party to be true
and correct and in force and effect as of the Effective Date.
(iv) Good Standing. Copies of (A) certificates of good
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing would have a Material Adverse Effect on the business
or operations of a Credit Party in such jurisdiction and (B) to the
extent available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary to be true and
correct as of the Effective Date.
(c) Opinion of Counsel. Receipt by the Administrative Agent of an
opinion, or opinions (which shall cover, among other things, authority,
legality, validity, binding effect, enforceability and attachment and
perfection of liens), reasonably satisfactory to the Administrative Agent,
addressed to the Administrative Agent on behalf of the Lenders and dated
as of the Effective Date, from legal counsel to the Credit Parties.
(d) Financial Statements. Receipt by the Lenders of such financial
information regarding the Parent, the Borrowers and their Subsidiaries as
they may request, including, but not limited to, (i) the consolidated
financial statements of the Parent and the consolidated financial
statements of Auburn Hosiery Xxxxx, Inc. for the three most recent fiscal
years, including balance sheets, income statements and cash flow
statements audited by independent public accountants of recognized
national standing and prepared in accordance with GAAP, (ii) interim
unaudited quarterly financial statements for the Parent and its
Subsidiaries and for Auburn Hosiery Xxxxx, Inc. and
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its Subsidiaries, prepared in accordance with GAAP, (iii) monthly working
capital detail for the trailing twelve months and first projected year for
the Parent, the Borrowers and their Subsidiaries and (iv) a pro forma
balance sheet for the Parent, the Borrowers and their Subsidiaries giving
effect to the acquisition of Auburn Hosiery Xxxxx, Inc. and Sport Socks
Co. (Ireland) Limited by the Parent and reflecting estimated purchase
price accounting adjustments, prepared by the Credit Parties.
(e) Acquisition. Receipt by the Administrative Agent of evidence
that the Parent has acquired, on terms acceptable to the Administrative
Agent, all of the shares of Auburn Hosiery Xxxxx, Inc., and Sport Socks
Co. (Ireland) Limited for a cash price not to exceed $40 million plus an
assumption of debt not to exceed $7.5 million.
(f) Personal Property Collateral. The Collateral Agent shall have
received, in form and substance reasonably satisfactory to the Collateral
Agent:
(i) searches of Uniform Commercial Code ("UCC") filings in the
jurisdiction of the chief executive office of each Credit Party and
each jurisdiction where any Collateral is located or where a filing
would need to be made in order to perfect the Lenders' security
interest in the Collateral, copies of the financing statements on
file in such jurisdictions and evidence that no Liens exist other
than Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Collateral Agent's
sole discretion, to perfect the Lenders' security interest in the
Collateral;
(iii) searches of ownership of intellectual property in the
appropriate governmental offices as requested by the Collateral
Agent and such patent, trademark and copyright filings as requested
by the Collateral Agent;
(iv) except as set forth in Section 7.16, all stock
certificates evidencing the stock pledged to the Collateral Agent
pursuant to the Pledge Agreements, together with duly executed in
blank undated stock powers attached thereto;
(v) all instruments and chattel paper in the possession of a
Credit Party, as required by the Security Agreements, together with
allonges or assignments as may be necessary to perfect the Lenders'
security interest in such Collateral;
(vi) asset appraisal reports on the personal property of the
Parent, the Borrowers and their Subsidiaries, the terms of which are
reasonably acceptable to the Administrative Agent; and
(vii) certified copies of all Material License Agreements.
(g) Real Property Collateral. The Collateral Agent shall have
received, in form and substance reasonably satisfactory to the Collateral
Agent:
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(i) fully executed and notarized mortgages, deeds of trust or
deeds to secure debt (each a "Mortgage" and collectively the
"Mortgages") encumbering the fee interest of the Credit Parties in
each real property asset owned by a Credit Party set forth on
Schedule 5.1(g) (each a "Mortgaged Property" and collectively the
"Mortgaged Properties"), together with such UCC-1 financing
statements as are necessary with respect to each such Mortgaged
Property; and
(ii) an opinion of counsel in the state in which each
Mortgaged Property is located with respect to the enforceability of
the form of Mortgage, standard remedies with respect thereto and
sufficiency of the form of UCC-1 financing statements to be recorded
or filed in such state and such other matters as the Collateral
Agent may request, in form and substance reasonably satisfactory to
the Collateral Agent.
(iii) ALTA or other appropriate form mortgagee title insurance
policies (the "Mortgage Policies") issued by the Title Insurance
Company, in an amount reasonably satisfactory to the Collateral
Agent with respect to each Mortgaged Property, assuring the
Collateral Agent that the applicable Mortgages create valid and
enforceable mortgage liens on the respective Mortgaged Properties,
free and clear of all defects and encumbrances except Permitted
Liens which Mortgage Policies shall be in form and substance
reasonably satisfactory to the Collateral Agent and containing such
endorsements as shall be reasonably satisfactory to the Collateral
Agent and providing affirmative insurance and such reinsurance as
the Collateral Agent may request, all of the foregoing in form and
substance reasonably satisfactory to the Agents;
(iv) Surveys. Maps or plats of an as-built survey of the sites
of the Mortgaged Properties certified to the Collateral Agent and
the Title Insurance Company in a manner reasonably satisfactory to
them, dated a date satisfactory to the Collateral Agent and the
Title Insurance Company by an independent professional licensed land
surveyor reasonably satisfactory to the Collateral Agent and the
Title Insurance Company, which maps or plats and the surveys on
which they are based shall be sufficient to delete any standard
printed survey exception contained in the applicable title policy
and be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted
by the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality
of the foregoing, there shall be surveyed and shown on such maps,
plats or surveys the following: (A) the locations on such sites of
all the buildings, structures and other improvements and the
established building setback lines; (B) the lines of streets
abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites necessary to use the sites; (D)
all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the sites
or otherwise known to the surveyor; (E) any encroachments on any
adjoining property by the building structures and
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improvements on the sites; and (F) if the site is described as being
on a filed map, a legend relating the survey to said map;
(v) Flood Certificates. Certification from a registered
engineer or land surveyor or other evidence reasonably acceptable to
the Collateral Agent that none of the improvements on the Mortgaged
Properties are located within any area designated by the Director of
the Federal Emergency Management Agency as a "special flood hazard"
area or if any improvements on the Mortgaged Properties are located
within a "special flood hazard" area, evidence of a flood insurance
policy from a company and in an amount reasonably satisfactory to
the Collateral Agent for the applicable portion of the premises,
naming the Collateral Agent, for the benefit of the Lenders, as
mortgagee;
(vi) Environmental Reports. Environmental assessment reports
and related documents with respect to all Mortgaged Properties
reasonably acceptable to the Collateral Agent; and
(vii) Valuations. A real estate valuation for each of the
Mortgaged Properties reasonably acceptable to the Administrative
Agent.
(h) Evidence of Insurance. Receipt by the Collateral Agent of copies
of insurance policies or certificates of insurance of the Credit Parties
evidencing liability and casualty insurance meeting the requirements set
forth in the Credit Documents, including, but not limited to, naming the
Collateral Agent as additional insured or loss payee on behalf of the
Lenders.
(i) Examination. Receipt by the Administrative Agent of an
independent examination by the Lenders, in form and substance acceptable
to the Administrative Agent, of the accounts receivable, inventory,
payables, controls and systems of the Parent, the Borrowers and their
Subsidiaries.
(j) Consents. Receipt by the Administrative Agent of evidence that
all governmental, shareholder and third party consents and approvals
listed on Schedule 5.1(j) have been received and no condition or
Requirement of Law exists which could reasonably be likely to restrain,
prevent or impose any material adverse conditions on the acquisition or
ownership of Auburn Hosiery Xxxxx, Inc. or Sport Socks Co. (Ireland)
Limited by the Parent or the financings or other transactions contemplated
hereby.
(k) Litigation. There shall not exist any pending or, to the
Knowledge of any Credit Party, threatened action, suit, investigation or
proceeding against a Credit Party or any of their Subsidiaries that would
have or would reasonably be expected to have a Material Adverse Effect.
(l) Subordinated Debt. Receipt by the Administrative Agent of a
certified copy of the documentation evidencing the Subordinated Debt.
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(m) Officer's Certificates. The Administrative Agent shall have
received a certificate or certificates executed by the chief financial
officer of the Parent as of the Effective Date stating that (i) the Parent
and each of its Subsidiaries are in compliance with all existing material
financial obligations, (ii) no action, suit, investigation or proceeding
is pending or, to the Knowledge of any Credit Party, threatened in any
court or before any arbitrator or governmental instrumentality that
purports to effect the Parent, any of the its Subsidiaries or any
transaction contemplated by the Credit Documents, if such action, suit,
investigation or proceeding would have or might reasonably be expected to
have a Material Adverse Effect, (iii) the financial statements and
information delivered to the Administrative Agent on or before the
Effective Date were prepared in good faith and in accordance with GAAP and
(iv) immediately after giving effect to this Credit Agreement, the other
Credit Documents and all the transactions contemplated therein to occur on
such date, (A) the Parent and each of its Subsidiaries is Solvent, (B) no
Default or Event of Default exists, (C) all representations and warranties
contained herein and in the other Credit Documents are true and correct in
all material respects, and (D) the Credit Parties are in compliance with
each of the financial covenants set forth in Section 7.2.
(n) Prior Credit Agreement. Receipt by the Administrative Agent of
evidence that: (i) that certain Loan and Security Agreement, dated as of
January 22, 1996, among GCIH Merger Sub, Inc. as Borrower, GCIH, Inc., as
Corporate Guarantor and Xxxxxx Financial, Inc. as Agent and Lender (the
"Prior Credit Agreement") and all documents executed or delivered in
connection therewith has been terminated, (it being understood that this
does not include the Subordinated Debt) and (ii) all amounts owing in
connection with the Prior Credit Agreement are paid in full and all liens
granted in connection therewith have been or are agreed to be released.
(o) Management Contracts. Review and satisfaction by the
Administrative Agent of all management contracts for senior management of
the Parent and the Borrowers.
(p) Availability. Evidence satisfactory to the Lenders that the
committed financings of the Borrowers are sufficient to meet the ongoing
financial needs of the Borrowers and their Subsidiaries after giving
effect to the acquisition of Auburn Hosiery Xxxxx, Inc. by the Parent and
that there is at least $15 million of availability under the Revolving
Committed Amount after giving effect to such acquisition and the other
transactions contemplated hereunder.
(q) Fees and Expenses. Payment by the Credit Parties of (i) an
upfront fee to each Lender in the amount of .05% of each Lender's share of
the total Commitments and (ii) the fees and expenses owed by them to the
Administrative Agent, as set forth in the Fee Letter.
(r) Borrowing Base Report. A Borrowing Base Report, in the form of
Exhibit 7.1(c), as of October 25, 1997.
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(s) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably and timely requested
by any Lender, including, but not limited to, information regarding
litigation, tax, accounting, labor, insurance, pension liabilities (actual
or contingent), real estate leases, material contracts, debt agreements,
property ownership and contingent liabilities of the Parent and its
Subsidiaries.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall an Issuing Lender be
required to issue or extend a Letter of Credit unless:
(a) Notice. The Borrowers shall have delivered (i) in the case of
any new Revolving Loan, a Notice of Borrowing, duly executed and
completed, by the time specified in Section 2.1, (ii) in the case of any
Letter of Credit, the Issuing Lender shall have received an appropriate
request for issuance in accordance with the provisions of Section 2.2 and
(iii) in the case of a Swing Line Loan, a Swing Line Loan Request, duly
executed and completed, by the time specified in Section 2.3;
(b) Representations and Warranties. The representations and
warranties made by the Credit Parties in any Credit Document are true and
correct in all material respects at and as if made as of such date except
to the extent they expressly relate to an earlier date;
(c) No Default. No Default or Event of Default shall exist or be
continuing either prior to or after giving effect thereto; and
(d) Availability. Immediately after giving effect to the making of a
Loan (and the application of the proceeds thereof) or to the issuance of a
Letter of Credit, as the case may be, the sum of the Revolving Loans
outstanding plus LOC Obligations outstanding plus Swing Line Loans
outstanding shall not exceed the lesser of (i) the Revolving Commitment
Amount or (ii) Borrowing Base Assets.
The delivery of each Notice of Borrowing, each Swing Line Request and each
request for a Letter of Credit shall constitute a representation and warranty by
the Borrowers of the correctness of the matters specified in subsections (b),
(c), and (d) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Administrative Agent and each
Lender that:
6.1 Financial Condition.
(a) The financial statements delivered to the Lenders prior to the
Effective Date and pursuant to Section 7.1(a) and (b): (i) have been
prepared in accordance with GAAP and (ii) present fairly the consolidated
and consolidating (as applicable) financial
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condition, results of operations and cash flows of the Credit Parties and
their Subsidiaries as of such date and for such periods.
(b) Since December 31, 1996, there has been no sale, transfer or
other disposition by any Credit Party or any of their Subsidiaries of any
material part of the business or property of the Credit Parties, taken as
a whole, and no purchase or other acquisition by any of them of any
business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of the Credit
Parties, taken as a whole, in each case, which, is not (i) reflected in
the most recent financial statements delivered to the Lenders pursuant to
Section 7.1 or in the notes thereto or (ii) otherwise permitted by the
terms of this Credit Agreement and communicated to the Administrative
Agent.
6.2 No Material Change.
Since the Effective Date, there has been no development or event relating
to or affecting a Credit Party or any of their Subsidiaries which has had or
would be reasonably expected to have a Material Adverse Effect. To the Knowledge
of any Credit Party, since September 30, 1997, there has been no development or
event relating to or affecting a Credit Party or any of their Subsidiaries which
has had or would be reasonably expected to have a Material Adverse Effect.
6.3 Organization and Good Standing.
Each Credit Party (a) is a corporation duly incorporated, validly existing
and in good standing under the laws of the State (or other jurisdiction) of its
incorporation, (b) is duly qualified and in good standing as a foreign
corporation and authorized to do business in every jurisdiction unless the
failure to be so qualified, in good standing or authorized would have a Material
Adverse Effect and (c) 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.
6.4 Due Authorization.
Each Credit Party (a) 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 (b) is duly authorized to, and has been 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.
6.5 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 will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or 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 could
have or might be reasonably expected to have a Material Adverse Effect, or (d)
to
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the Knowledge of any Credit Party, result in or require the creation of any Lien
(other than those contemplated in or created in connection with the Credit
Documents) upon or with respect to its properties.
6.6 Consents.
Except for consents, approvals and authorizations which are listed on
Schedule 5.1(k), no consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Credit Agreement or any of the other
Credit Documents by such Credit Party.
6.7 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or moratorium laws or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
6.8 No Default.
No Credit Party, nor any of their Subsidiaries, is in default in any
respect under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which it is a party or by which
any of its properties is bound which default would have or would be reasonably
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred or exists except as previously disclosed in writing to the Lenders.
6.9 Ownership.
Each Credit Party, and each of its Subsidiaries, is the owner of, and has
good and marketable title to, or has a valid license to use all of its
respective assets and none of such assets is subject to any Lien other than
Permitted Liens.
6.10 Indebtedness.
The Credit Parties and their Subsidiaries have no Indebtedness except (a)
as disclosed in the financial statements referenced in Section 6.1, (b) as set
forth on Schedule 6.10 and (c) as otherwise permitted by this Credit Agreement.
There are no mandatory principal payments due with respect to the Subordinated
Debt prior to the Maturity Date.
6.11 Litigation.
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the Knowledge of any Credit Party,
threatened against, the Parent or any of its Subsidiaries which would have or
might be reasonably expected to have a Material Adverse Effect.
6.12 Taxes.
Each Credit Party, and each of its Subsidiaries, has filed, or caused to
be filed, all material tax returns (federal, state, local and foreign) required
to be filed and paid (a) all material amounts of taxes shown thereon to be due
and payable (including interest and penalties) and (b) all material other taxes,
fees, assessments and other governmental charges
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(including mortgage recording taxes, documentary stamp taxes and intangibles
taxes) that are due and payable, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. To the Knowledge of the Credit Parties, there are no
material amounts claimed to be due against any of them by any Governmental
Authority.
6.13 Compliance with Law.
Each Credit Party, and each of its Subsidiaries, is in compliance with all
Requirements of Law and all other laws, rules, regulations, orders and decrees
(including without limitation Environmental Laws) applicable to it, or to its
properties, unless such failure to comply would not have or would not be
reasonably expected to have a Material Adverse Effect.
6.14 ERISA.
Except as would not result or be reasonably expected to result in a
Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has
occurred, and, to the Knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination
Event could reasonably be expected to occur, with respect to any Plan;
(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not waived,
has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and in
material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor or the PBGC or
a Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" under
each Single Employer Plan (determined within the meaning of Section
401(a)(2) of the Code, utilizing the actuarial assumptions used to fund
such Plans), whether or not vested, did not, as of the last annual
valuation date prior to the date on which this representation is made or
deemed made, exceed the current value of the assets of such Plan allocable
to such accrued liabilities.
(c) Neither the Parent, nor any of its Subsidiaries nor any ERISA
Affiliate has incurred, or, to the Knowledge of the Credit Parties, are
reasonably expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Parent, any of
its Subsidiaries nor any ERISA Affiliate has received any notification
that any Multiemployer Plan is in reorganization (within the meaning of
Section 4241 of ERISA), is insolvent (within the meaning of Section 4245
of ERISA), or has been terminated (within the meaning of Title IV of
ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or
terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
has occurred with respect to a Plan which has subjected or is reasonably
likely to subject the Parent or any
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of its Subsidiaries or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under
any agreement or other instrument pursuant to which the Parent or any of
its Subsidiaries or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability.
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the benefits provided and
the employees participating) of the liability of the Parent and its
Subsidiaries and each ERISA Affiliate for post-retirement welfare benefits
to be provided to their current and former employees under Plans which are
welfare benefit plans (as defined in Section 3(1) of ERISA), net of all
assets under all such Plans allocable to such benefits, are reflected on
the Financial Statements in accordance with FASB 106.
(f) Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code
apply has been administered in material compliance with such sections.
6.15 Subsidiaries.
Set forth on Schedule 6.15 is a complete and accurate list of all
Subsidiaries of each Credit Party. Information on Schedule 6.15 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 all other similar rights with
respect thereto. The outstanding capital stock and other equity interests of all
such Subsidiaries is validly issued, fully paid and non-assessable and is owned
by each such Credit Party, directly or indirectly, free and clear of all Liens
(other than Permitted Liens). Other than as set forth in Schedule 6.15, neither
any Credit Party nor any Subsidiary thereof has outstanding any securities
convertible into or exchangeable for its capital stock nor does any such Person
have outstanding any rights to subscribe for or to purchase or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to
its capital stock. Schedule 6.15 may be updated from time to time by the
Borrowers by giving written notice thereof to the Administrative Agent.
6.16 Use of Proceeds; Margin Stock.
The proceeds of the Loans hereunder will be used solely for the purposes
specified in Section 7.11. None of the proceeds of the Loans will be used for
the purpose of purchasing or 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 any "margin security" or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulation
U, Regulation X, Regulation G or Regulation T. No proceeds of the Loans
hereunder have been or will be used to acquire, directly or indirectly, any
security in any transaction which is subject to Sections 13 or 14 of the
Securities Exchange Act of 1934, as amended, (including, without limitation,
Sections 13(d) and 14(d) thereof) or to refinance any Indebtedness used to
acquire any such securities.
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6.17 Government Regulation.
No Credit Party, nor any of its Subsidiaries, is 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, no Credit Party is an "investment company" registered or required
to be registered under the Investment Company Act of 1940, as amended, or
controlled by such a company, or 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. No director, executive officer or
principal shareholder of a Credit Party or any of its Subsidiaries is a
director, executive officer or principal shareholder of any Lender. For the
purposes hereof the terms "director", "executive officer" and "principal
shareholder" (when used with reference to any Lender) have the respective
meanings assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
6.18 Environmental Matters.
(a) Except as set forth on Schedule 6.18 or except as would not
cause or reasonably be expected to cause a Material Adverse Effect:
(i) Each of the Real Properties and all operations at the Real
Properties are in compliance with all applicable Environmental Laws,
and there is no violation of any Environmental Law with respect to
the Real Properties or the businesses operated by the Credit Parties
or any of their Subsidiaries (the "Businesses"), and there are no
conditions relating to the Businesses or Real Properties that would
reasonably be expected to give rise to liability under any
applicable Environmental Laws.
(ii) No Credit Party has received any written notice of any
violation, alleged violation, non-compliance, liability or potential
liability regarding Hazardous Materials or compliance with
Environmental Laws with regard to any of the Real Properties or the
Businesses, nor, to the Knowledge of a Credit Party or any of its
Subsidiaries, is any such notice being threatened.
(iii) Hazardous Materials have not been transported or
disposed of from the Real Properties, or generated, treated, stored
or disposed of at, on or under any of the Real Properties or any
other location, in each case by, or on behalf or with the permission
of, a Credit Party or any of its Subsidiaries in a manner that would
give rise to liability under any applicable Environmental Laws.
(iv) No judicial proceeding or governmental or administrative
action is pending or, to the Knowledge of a Credit Party or any of
its Subsidiaries, threatened, under any Environmental Law to which a
Credit Party or any of its Subsidiaries is or will be named as a
party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental
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Law with respect to a Credit Party or any of its Subsidiaries, the
Real Properties or the Businesses.
(v) There has been no release (including, without limitation,
disposal) or threat of release of Hazardous Materials at or from the
Real Properties, or arising from or related to the operations of a
Credit Party or any of its Subsidiaries in connection with the Real
Properties or otherwise in connection with the Businesses where such
release constituted a violation of, or would give rise to liability
under, any applicable Environmental Laws.
(vi) None of the Real Properties contains, or has previously
contained, any Hazardous Materials at, on or under the Real
Properties in amounts or concentrations that, if released,
constitute or constituted a violation of, or could give rise to
liability under, Environmental Laws.
(vii) No Credit Party, nor any of its Subsidiaries, has
assumed any liability of any Person (other than another Credit
Party, or one of its Subsidiaries) under any Environmental Law.
(b) The Credit Parties have adopted procedures that are designed to
(i) ensure that each Credit Party, any of its operations and each of the
properties owned or leased by each Credit Party complies with applicable
Environmental Laws and (ii) minimize any liabilities or potential
liabilities that each Credit Party, any of its operations and each of the
properties owned or leased by each Credit Party may have under applicable
Environmental Laws.
6.19 Intellectual Property.
Each Credit Party owns, or has the legal right to use, all patents,
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use would not have or be reasonably expected to have a Material Adverse
Effect. Set forth on Schedule 6.19 is a list of all patents, registered and
material unregistered trademarks, tradenames and registered copyrights owned by
each Credit Party or that any Credit Party has the right to use. Except as
provided on Schedule 6.19, no claim has been asserted against any Credit Party
or their Subsidiaries in writing and is pending by any Person challenging or
questioning the use of any Intellectual Property owned by a Credit Party or that
any Credit Party has a right to use or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party have Knowledge of any such
claim, and to the Credit Parties' Knowledge the use of any Intellectual Property
by the Credit Parties or any of their Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements that in the
aggregate, would not have or be reasonably expected to have a Material Adverse
Effect. Schedule 6.19 may be updated from time to time by the Borrowers by
giving written notice thereof to the Administrative Agent.
6.20 Solvency.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
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6.21 Investments.
All Investments of each Credit Party and its Subsidiaries are (a) as set
forth on Schedule 6.21 or (b) Permitted Investments.
6.22 Location of Collateral.
Set forth on Schedule 6.22(a) is a list of all Real Properties with street
address, county and state where located. Set forth on Schedule 6.22(b) is a list
of all locations where any personal property of a Credit Party is located,
including county and state where located; provided that in addition to those
locations set forth on Schedule 6.22(b), the Credit Parties may, at any one
time, have (i) work in process at subcontractor locations that does not exceed
$100,000 in value at any one subcontractor location or $2,500,000 in value, in
the aggregate, at such subcontractor locations and (ii) machinery and equipment
at subcontractor locations that does not exceed $10,000 in value at any one
subcontractor location or $250,000 in value, in the aggregate, at such
subcontractor locations. Set forth on Schedule 6.22(c) is the chief executive
office and principal place of business of each Credit Party. Schedule 6.22(a),
6.22(b) and 6.22(c) may be updated from time to time by the Borrowers by giving
written notice thereof to the Administrative Agent.
6.23 Disclosure.
Neither this Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Credit Party in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or herein, taken as a whole, not misleading.
6.24 Licenses, etc.
The Credit Parties have obtained and hold in full force and effect, all
franchises, licenses, permits, certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights, consents and
approvals which are necessary for the operation of their respective businesses
as presently conducted, except where the failure to obtain same would not have a
Material Adverse Effect. Set forth on Schedule 6.24 is a list of all Material
License Agreements to which a Credit Party is a party, as such schedule may be
updated from time to time by the Borrowers giving written notice thereof to the
Administrative Agent.
6.25 Collateral Documents.
The Collateral Documents create valid security interests in, and Liens on,
the Collateral purported to be covered thereby, which security interests and
Liens are currently perfected security interests and Liens, prior to all other
Liens other than Permitted Liens.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest and fees and other obligations then due and payable hereunder, have
been paid in full and the Commitments and Letters of Credit hereunder shall have
terminated:
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7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any
event within 105 days after the close of the fiscal year ending December
31, 1997 and 90 days after the close of each subsequent fiscal year of the
Parent, a consolidated and consolidating balance sheet and income
statement of the Parent and its Subsidiaries, as of the end of such fiscal
year, together with related consolidated and consolidating statements of
operations and consolidated statements of retained earnings and of cash
flows for such fiscal year, setting forth in comparative form consolidated
and consolidating figures for the preceding fiscal year, all such
consolidated financial information described above to be in reasonable
form and detail and audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Administrative
Agent and whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for changes
with which such accountants concur) and shall not be limited as to the
scope of the audit or qualified in any manner.
(b) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the close of each of the first three fiscal
quarters of the Parent, (i) a consolidated and consolidating balance sheet
and income statement of the Parent and its Subsidiaries, as of the end of
such fiscal quarter, together with related consolidated and consolidating
statements of operations and consolidated statements of retained earnings
and of cash flows for such fiscal quarter in each case setting forth in
comparative form consolidated and consolidating figures for (A) the
corresponding period of the preceding fiscal year and (B) management's
proposed budget for such period, all such financial information described
above to be in reasonable form and detail and reasonably acceptable to the
Administrative Agent, and accompanied by a certificate of the chief
financial officer of the Parent to the effect that such quarterly
financial statements fairly present in all material respects the financial
condition of the Parent and its Subsidiaries and have been prepared in
accordance with GAAP, subject to changes resulting from audit and normal
year-end audit adjustments and (ii) a management discussion and analysis
of operating results for such fiscal quarter.
(c) Borrowing Base Report. On or before the 30th day of each month,
a Borrowing Base Report, as of the end of the immediately preceding month,
in each case in substantially the form of Exhibit 7.1(c) and certified by
the chief financial officer of the Parent to be true and correct as of the
date thereof.
(d) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of the chief financial officer of the Parent substantially in the form of
Exhibit 7.1(d), (i) demonstrating compliance with the financial covenants
contained in Section 7.2 by calculation thereof as of the end of each such
fiscal period, (ii) demonstrating compliance with any other terms of this
Credit Agreement as requested by the Administrative Agent and (iii)
stating that no Default or Event of Default exists, or if any Default or
Event of Default does exist,
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specifying the nature and extent thereof and what action the Borrowers
propose to take with respect thereto. If necessary, the Parent shall
deliver financial statements prepared in accordance with GAAP as of the
Closing Date, to the extent GAAP has changed since the Closing Date, in
order to show compliance with the terms of this Credit Agreement,
including Section 7.2.
(e) Annual Business Plan and Budgets. Prior to the end of each
fiscal year of the Parent, an annual business plan and budget of the
Parent and its Subsidiaries on a consolidated basis containing, among
other things, pro forma financial projections for the next fiscal year.
(f) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have
reviewed this Credit Agreement and stating further whether, in the course
of their audit, they have become aware of any Default or Event of Default
and, if any such Default or Event of Default exists, specifying the nature
and extent thereof.
(g) Auditor's Reports. Promptly upon receipt thereof, a copy of any
"management letter" submitted by independent accountants to the Parent or
any of its Subsidiaries in connection with any annual, interim or special
audit of the books of the Parent or any of its Subsidiaries.
(h) Reports. Promptly upon transmission or receipt thereof, (a)
copies of any public filings and registrations with, and reports to or
from, the Securities and Exchange Commission, or any successor agency, and
copies of all financial statements, proxy statements, notices and reports
as the Parent or any of its Subsidiaries shall send to its shareholders
generally and (b) upon the reasonable written request of the
Administrative Agent, all material reports and written information to and
from the United States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety
matters.
(i) Notices. Upon an officer of a Credit Party obtaining Knowledge
thereof, the Borrowers will give written notice to the Administrative
Agent promptly (and in any event within five Business Days) of (a) 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
Borrowers propose to take with respect thereto, and (b) the occurrence of
any of the following with respect to the Parent or any of its Subsidiaries
(i) the pendency or commencement of any litigation, arbitral or
governmental proceeding against a Credit Party or any of its Subsidiaries
which if adversely determined would have or would be reasonably expected
to have a Material Adverse Effect, or (ii) the institution of any
proceedings against a Credit Party or any of its Subsidiaries with respect
to, or the receipt of written notice by such Person of potential liability
or responsibility for violation, or alleged violation of any federal,
state or local law, rule or regulation,
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(including but not limited to, Environmental Laws) the violation of which
would have or would be reasonably expected to have a Material Adverse
Effect.
(j) ERISA. Upon any of the Credit Parties obtaining Knowledge
thereof, the Borrowers will give written notice to the Administrative
Agent promptly (and in any event within five Business Days) of: (i) any
event or condition, including, but not limited to, any Reportable Event,
that constitutes, or might reasonably lead to, a Termination Event; (ii)
with respect to any Multiemployer Plan, the receipt of notice as
prescribed in ERISA or otherwise of any withdrawal liability assessed
against the Credit Parties or any of their ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the
failure to make full payment on or before the due date (including
extensions) thereof of all amounts which a Credit Party or any of its
Subsidiaries or ERISA Affiliates is required to contribute to each Plan
pursuant to its terms and as required to meet the minimum funding standard
set forth in ERISA and the Code with respect thereto; or (iv) any change
in the funding status of any Plan that could have a Material Adverse
Effect; together, with a description of any such event or condition or a
copy of any such notice and a statement by the principal financial officer
of the Borrowers briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or is being
taken or is proposed to be taken by the Credit Parties with respect
thereto. Promptly upon request, a Credit Party shall furnish the
Administrative Agent and each of the Lenders with such additional
information concerning any Plan as may be reasonably requested, including,
but not limited to, copies of each annual report/return (Form 5500
series), as well as all schedules and attachments thereto required to be
filed with the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan year" (within
the meaning of Section 3(39) of ERISA).
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(k) Environmental.
(i) Subsequent to a notice from any Governmental Authority
where the subject matter of such notice would reasonably be expected
to have a Material Adverse Effect, or during the existence of an
Event of Default, and upon the written request of Administrative
Agent, the Credit Parties will furnish or cause to be furnished to
the Administrative Agent, at the Credit Parties' expense, a report
of an environmental assessment of reasonable scope, form and depth,
including, where appropriate, invasive soil or groundwater sampling,
by a consultant reasonably acceptable to the Administrative Agent
addressing the subject of such notice or, if during the existence of
an Event of Default, regarding any release or threat of release of
Hazardous Materials on any property owned, leased or operated by a
Credit Party and the compliance by the Credit Parties with
Environmental Laws. If Credit Parties fail to deliver such an
environmental report within seventy-five (75) days after receipt of
such written request, then the Administrative Agent may arrange for
same, and the Credit Parties hereby grant to the Administrative
Agent and its representatives access to the Real Properties and a
license of a scope reasonably necessary to undertake such an
assessment (including, where appropriate, invasive soil or
groundwater sampling). The reasonable cost of any assessment
arranged for by the Administrative Agent pursuant to this provision
will be payable by the Credit Parties on demand and added to the
obligations secured by the Collateral Documents.
(ii) Each Credit Party will conduct and complete all
investigations, studies, sampling, and testing and all remedial,
removal, and other actions necessary to address all Hazardous
Materials on, from, or affecting any real property owned or leased
by a Credit Party to the extent necessary to be in compliance with
all Environmental Laws and all other applicable federal, state, and
local laws, regulations, rules and policies and with the orders and
directives of all Governmental Authorities exercising jurisdiction
over such real property to the extent any failure would have or be
reasonably expected to have a Material Adverse Effect.
(l) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of the Credit Parties and their Subsidiaries as the
Administrative Agent may reasonably request.
7.2 Financial Covenants.
(a) Leverage Ratio. The Leverage Ratio shall be less than or equal
to the ratios set forth below as of the last day of each fiscal quarter
within the period set forth below:
(i) From the Effective Date to December 30, 1998, 3.25 to
1.0;
(ii) From December 31, 1998 to December 30, 1999, 3.00 to
1.0;
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(iii) From December 31, 1999 to December 30, 2000, 2.75 to
1.0; and
(iv) From December 31, 2000 and thereafter, 2.50 to 1.0.
(b) Capitalization Ratio. The Capitalization Ratio shall be less
than or equal to the ratios set forth below as of the last day of each
fiscal quarter within the period set forth below:
(i) From the Effective Date to December 30, 1998, .85 to
1.0;
(ii) From December 31, 1998 to December 30, 1999, .75 to 1.0;
(iii) From December 31, 1999 to December 30, 2000, .65 to 1.0;
and
(iv) From December 1, 2000 thereafter, .60 to 1.0.
(c) Tangible Net Worth. As of the last day of each fiscal quarter of
the Parent, the Tangible Net Worth shall be greater than or equal to the
sum of (i) $5.5 million plus (ii) 50% of the cumulative Net Income
(without deduction for losses) earned for each completed fiscal quarter
from September 30, 1997 to the date of determination.
(d) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio,
for the twelve month period ending on the last day of each fiscal quarter
of the Parent, shall be greater than or equal to 1.20 to 1.0.
(e) Current Ratio. As of the last day of each fiscal quarter of the
Parent, the Current Ratio shall be greater than or equal to 2.0 to 1.0.
7.3 Preservation of Existence and Franchises.
Each of the Credit Parties will do all things necessary to preserve and
keep in full force and effect its existence, rights, franchises and authority
except as permitted by Section 8.4.
7.4 Books and Records.
Each of the Credit Parties will keep complete and accurate books and
records of its transactions in accordance with GAAP (including the establishment
and maintenance of appropriate reserves).
7.5 Compliance with Law.
Each of the Credit Parties will comply with all material laws, rules,
regulations and orders, and all applicable material restrictions imposed by all
Governmental Authorities, applicable to it and its property (including, without
limitation, Environmental Laws) if such noncompliance would have or be
reasonably expected to have a Material Adverse Effect.
7.6 Payment of Taxes and Other Indebtedness.
Each of the Credit Parties will pay, settle or discharge (a) all material
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, (b) all lawful claims (including claims for
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labor, materials and supplies) which, if unpaid, might give rise to a Lien upon
any of its properties, and (c) all of its other Indebtedness as it shall become
due, including, without limitation, the Subordinated Debt (to the extent such
repayment is not otherwise prohibited by this Agreement); provided, however,
that a Credit Party shall not be required to pay any such tax, assessment,
charge, levy, claim or Indebtedness which is being contested in good faith by
appropriate proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP, unless the failure to make any such payment
(i) would give rise to an immediate right to foreclose or collect on a Lien
securing such amounts or (ii) would have or reasonably be expected to have a
Material Adverse Effect.
7.7 Insurance.
Each of the Credit Parties will at all times maintain in full force and
effect 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 in accordance with normal industry practice.
All policies shall have the Collateral Agent, on behalf of the Lenders, as an
additional insured.
In the event there occurs any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Administrative Agent generally
describing the nature and extent of such damage or destruction. Subsequent to
any loss, damage to or destruction of the Collateral of any Credit Party or any
part thereof, such Credit Party, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for that
purpose, at such Credit Party's cost and expense, will promptly repair or
replace the Collateral of such Credit Party so lost, damaged or destroyed;
provided, however, that such Credit Party need not repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed to the extent the
failure to make such repair or replacement (a) is desirable to the proper
conduct of the business of such Credit Party in the ordinary course and
otherwise is in the best interest of such Credit Party and (b) would not
materially impair the rights and benefits of the Agents or the Lenders under
this Credit Agreement or any other Credit Document. In the event a Credit Party
shall receive any insurance proceeds, as a result of any loss, damage or
destruction of Collateral, in a net amount in excess of $1,000,000, such Credit
Party will immediately pay over such proceeds to the Administrative Agent as
cash collateral for the Credit Party Obligations. The Administrative Agent
agrees to release such insurance proceeds to such Credit Party for replacement
or restoration of the portion of the Collateral of such Credit Party lost,
damaged or destroyed if (A) within 30 days from the date the Administrative
Agent receives such insurance proceeds, the Administrative Agent has received
written application for such release from such Credit Party together with
evidence reasonably satisfactory to it that the Collateral lost, damaged or
destroyed has been or will be replaced or restored to its condition (or by
Collateral having a value at least equal to the condition of the asset subject
to the loss, damage or destruction) immediately prior to the loss, destruction
or other event giving rise to the payment of such insurance proceeds and (B) on
the date of such release no Default or Event of Default exists. If the
conditions in the preceding sentence are not met, the Administrative Agent may
or, upon the request of the Required Lenders, shall at any time after the first
Business Day subsequent to the date 30 days after it received such insurance
proceeds, apply such insurance proceeds as a mandatory prepayment of the Credit
Party Obligations for application in
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accordance with the terms of Section 3.3(b)(ii). All insurance proceeds shall be
subject to the security interest of the Lenders under the Collateral Documents.
The present insurance coverage of the Credit Parties and their Subsidiaries is
outlined as to carrier, policy number, expiration date, type and amount on
Schedule 7.7. Schedule 7.7 shall only be required to be amended by the Credit
Parties on an annual basis or upon the reasonable request of the Administrative
Agent.
7.8 Maintenance of Property.
Each of the Credit Parties will maintain and preserve its properties and
equipment 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.
7.9 Performance of Obligations.
Each of the Credit Parties will perform in all material respects all of
its obligations 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.
7.10 Collateral.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire any
real property, any patented, registered or applied for intellectual property or
any securities or (b) acquire any other personal property required to be
delivered to the Collateral Agent as Collateral hereunder or under any of the
Collateral Documents, or (c) enter into any Material License Agreement, the
Borrowers shall immediately notify the Collateral Agent of same. Each Credit
Party shall take such action (including, but not limited to, the actions set
forth in Sections 5.1(e) and (f)), as reasonably requested by the Collateral
Agent and at its own expense, to ensure that (i) the Lenders have a perfected
Lien in all owned real property and such personal property of the Credit Parties
as set forth in the Security Agreements (whether now owned or hereafter
acquired), subject only to Permitted Liens and (ii) the Lenders have an accurate
complete copy of all Material License Agreements. Each Credit Party shall adhere
to the covenants regarding the location of personal property as set forth in the
Security Agreements.
7.11 Use of Proceeds.
The Credit Parties will use the proceeds of the Loans solely (a) to
refinance or repay existing Indebtedness owing under the Prior Credit Agreement,
(b) to assist in repaying obligations incurred in the acquisition of Auburn
Hosiery Xxxxx, Inc. and Sport Socks Co. (Ireland) Limited by, directly or
indirectly, the Parent, (c) to pay related fees and expenses in connection with
the foregoing, (d) to make Permitted Acquisitions, (e) to provide working
capital and (f) for general corporate purposes. The Credit Parties will use the
Letters of Credit solely for the purposes set forth in Section 2.2(a).
7.12 Audits/Inspections.
Upon reasonable notice and during normal business hours, each Credit Party
will permit representatives appointed by Administrative Agent, including,
without limitation, independent accountants, agents, attorneys and appraisers to
visit and inspect such Credit Party's property,
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including its books and records, its accounts receivable and inventory, its
facilities and its other business assets, and to make photocopies or photographs
thereof and to write down and record any information such representative obtains
and shall permit the Administrative Agent or its representatives to investigate
and verify the accuracy of information provided to the Lenders, including,
without limitation, the performance of collateral valuation reviews from time to
time to assess the composition of the Borrowing Base Assets, and to discuss all
such matters with the officers, employees and representatives of the Credit
Parties; provided that, absent an Event of Default, the Administrative Agent and
its agents shall not contact any customers, account debtors or licensors of the
Credit Parties. The Credit Parties agree that the Collateral Agent may conduct
such collateral reviews, at the Credit Parties' expense, as it reasonably deems
appropriate; provided that, absent an Event of Default, such reviews shall not
occur more frequently than once a year.
7.13 Additional Credit Parties.
At the time any Person becomes a Subsidiary of a Credit Party, the
Borrowers shall so notify the Administrative Agent and promptly thereafter (but
in any event within 30 days after the date thereof) shall cause such Person to
(a) if it is a Domestic Subsidiary, execute a Joinder Agreement in substantially
the same form as Exhibit 7.13, (b) cause all of the capital stock of such Person
(if it is a Domestic Subsidiary) or 65% of the capital stock of such Person (if
it is a First Tier Foreign Subsidiary) to be delivered to the Collateral Agent
(together with undated stock powers signed in blank) and pledged to the
Collateral Agent pursuant to an appropriate pledge agreement in substantially
the form of the Pledge Agreement (or a joinder to the existing Pledge Agreement)
and otherwise in a form reasonably acceptable to the Collateral Agent, (c) if
such Person is a Domestic Subsidiary, pledge all of its assets to the Collateral
Agent pursuant to a security agreement in substantially the form of the Security
Agreement (or a joinder to the existing Security Agreement) and otherwise in a
form reasonably acceptable to the Collateral Agent, and (d) if such Person is a
Domestic Subsidiary and has any Subsidiaries, (A) deliver all of the capital
stock of such Domestic Subsidiaries owned by it and 65% of the stock of the
First Tier Foreign Subsidiaries owned by it (together with undated stock powers
signed in blank) to the Collateral Agent and (B) execute a pledge agreement in
substantially the form of the Pledge Agreement (or a joinder to the existing
Pledge Agreement) and otherwise in a form acceptable to the Collateral Agent,
(e) if such Person is a Domestic Subsidiary and owns or leases any real
property, execute any and all necessary mortgages, deeds of trust, deeds to
secure debt or other appropriate real estate collateral documentation in a form
acceptable to the Collateral Agent (or cause to be delivered in a commercially
reasonable manner a landlord waiver or estoppel letter with respect thereto in a
form acceptable to the Collateral Agent) and (f) deliver such other
documentation as the Collateral Agent may reasonably request in connection with
the foregoing, including, without limitation, appropriate UCC-1 financing
statements, real estate title insurance policies, environmental reports,
landlord's waivers, 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), all in form,
content and scope reasonably satisfactory to the Collateral Agent.
7.14 Material License Agreements.
The Credit Parties will (a) comply with the material terms of any Material
License Agreement, (b) keep each Material License Agreement in full force and
effect during the term
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of such Material License Agreement unless such Material License Agreement has
been replaced by a license agreement that the Borrower reasonably believes will
provide revenues and profitability to the Credit Parties at least equal to that
of the Material License Agreement to be terminated and (c) not make any
modification or amendment to any Material License Agreement that would
materially affect the rights of the Lenders under the Credit Documents.
7.15 Purchase Agreements.
The Credit Parties agree, upon the request of the Administrative Agent, to
promptly enforce their rights with respect to the indemnification provisions set
forth in the Purchase Agreements.
7.16 Foreign Shares.
Within 60 days after the Closing Date, the Credit Parties agree to provide
to the Collateral Agent (a) 65% of the stock of all First Tier Foreign
Subsidiaries and (b) an opinion, in a form and from legal counsel reasonably
acceptable to the Collateral Agent, which shall cover the enforceability, the
perfection and the priority of the Lenders' security interest in the shares of
First Tier Foreign Subsidiaries pledged pursuant to the Collateral Documents.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest, fees and other obligations then due and payable hereunder, have been
paid in full and the Commitments and Letters of Credit hereunder shall have
terminated:
8.1 Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries to,
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 existing as of the Closing Date as referenced in
Section 6.10 (and renewals, refinancings, replacements or extensions
thereof on terms and conditions no more favorable, in the aggregate, to
such Person than such existing Indebtedness and in a principal amount not
in excess of that outstanding as of the date of such renewal, refinancing,
replacement or extension);
(c) Indebtedness in respect of current accounts payable and accrued
expenses incurred in the ordinary course of business and to the extent not
current, accounts payable and accrued expenses that are subject to bona
fide dispute;
(d) Indebtedness owing by (i) a Credit Party to another Credit
Party, (ii) a Credit Party to a Foreign Subsidiary, (iii) a Foreign
Subsidiary to another Foreign
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Subsidiary or (iv) a Foreign Subsidiary to a Credit Party if it
constitutes a Permitted Investment.
(e) purchase money Indebtedness (including Capital Leases) to
finance the purchase of fixed assets (including equipment); provided that
(i) the total of all such Indebtedness for all such Persons taken together
shall not exceed an aggregate principal amount of $1,000,000 at any one
time outstanding (in addition to any such Indebtedness referred to in
subsection (b) above); (ii) such Indebtedness when incurred shall not
exceed the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of the
principal balance outstanding thereon at the time of such refinancing;
(f) Indebtedness of Foreign Subsidiaries up to $5,000,000, in the
aggregate, at any one time;
(g) Indebtedness arising from Hedging Agreements entered into in the
ordinary course and not for speculative purposes;
(h) Indebtedness arising from judgments that do not cause an Event
of Default;
(i) Indebtedness arising from indemnification obligations incurred
in connection with (i) the Stock Purchase Agreement for the purchase of
Auburn Hosiery Xxxxx, Inc., by and among the Parent and certain other
parties, dated as of the date hereof, (ii) the Stock Purchase Agreement
for the purchase of Sport Socks (Ireland) Limited by and between the
Parent and Xxxxxxx, dated as of the date hereof, (the Stock Purchase
Agreements referred to in clause (i) and (ii) of this Section 8.1(i)
collectively referred to as the "Purchase Agreements") and (iii) the Stock
Purchase Agreement by and between the Parent, Gerber Products Company and
others, dated as of January 22, 1996;
(j) the guaranty by the Parent of the obligations of Sport Socks Co.
(Ireland) Limited to the Industrial Development Agency of Ireland;
(k) other unsecured Indebtedness up to $500,000, in the aggregate,
at any one time outstanding; and
(l) other secured Indebtedness up to $100,000, in the aggregate, at
any one time outstanding.
8.2 Liens.
No Credit Party will, nor will it permit its Subsidiaries to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 Nature of Business.
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No Credit Party will, nor will it permit its Subsidiaries to, alter the
character of its business from that conducted as of the Effective Date or engage
in any business other than the business conducted as of the Effective Date and
activities which are substantially similar or related thereto or logical
extensions thereof or immaterial businesses which are acquired as part of a
Permitted Acquisition.
8.4 Consolidation and Merger.
No Credit Party will, nor will it permit any Subsidiary to, enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve itself;
provided that a Credit Party or a Subsidiary of a Credit Party may merge or
consolidate with or into another Person if the following conditions are
satisfied:
(a) the Administrative Agent is given prior written notice of such
action;
(b) if the merger or consolidation involves a Credit Party, the
Person formed by such consolidation or into which a Credit Party is merged
shall either (i) be such Credit Party or (ii) be a Domestic Subsidiary and
expressly assume in writing all of the obligations of such Credit Party
under the Credit Documents; provided that if the transaction is between
the Parent or a Borrower and another Person, the Parent or such Borrower
must be the surviving entity;
(c) if the merger or consolidation involves the merger of a First
Tier Foreign Subsidiary with any other Foreign Subsidiary, the Lenders
receive 65% of the Voting Stock of the surviving First Tier Foreign
Subsidiary, if any;
(d) the Credit Parties execute and deliver such documents,
instruments and certificates as the Administrative Agent may request
(including, if necessary, to maintain its perfection and priority in the
Collateral pledged pursuant to the Collateral Documents);
(e) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and
(f) the Borrowers deliver to the Administrative Agent an officer's
certificate demonstrating compliance with clause (b) or (c) above, as
applicable, and an opinion of counsel stating that such consolidation or
merger and any written agreement entered into in connection therewith,
comply with this Section 8.4.
8.5 Sale or Lease of Assets.
No Credit Party will, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise voluntarily dispose of, in one transaction or
a series of transactions, all or any part of its business or assets whether now
owned or hereafter acquired, including, without limitation, inventory,
receivables, equipment, real property interests (whether owned or leasehold),
and securities, other than (a) any inventory sold or otherwise disposed of in
the ordinary course of business; (b) the sale, lease, transfer or other disposal
by (i) a Credit Party (other than a Borrower) of any or all of its assets to a
Borrower or to another Credit Party or (ii) by a Borrower of any or all of its
assets to the other Borrower; (c) obsolete, slow-moving, idle or worn-out assets
no longer used or useful in its business or the trade in of equipment for
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equipment in better condition or of better quality; (d) the transfer of assets
which constitute a Permitted Investment; (e) the issuance of capital stock by
the Parent, subject to Section 3.3; (f) the lease of assets to contractors not
to exceed $425,000, in the aggregate, at any one time; (g) the lease or sublease
of real property interests in the ordinary course of business; (h) the license
of intellectual property in the ordinary course and (i) other sales of assets
not to exceed $500,000, in the aggregate, during the term of this Agreement.
Upon a sale of assets permitted by this Section 8.5, the Collateral Agent
shall promptly deliver to the Borrowers, upon the Borrowers' request and at the
Borrowers' expense, such documentation as is reasonably necessary to evidence
the release of the Lenders' security interest in such assets, including, without
limitation, amendments or terminations of UCC financing statements.
8.6 Sale Leasebacks.
No Credit Party will, nor will it permit its Subsidiaries to, directly or
indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party or its
Subsidiary has sold or transferred or is to sell or transfer to any other Person
other than a Credit Party or (b) which such Credit Party or its Subsidiary
intends to use for substantially the same purpose as any other property which
has been sold or is to be sold or transferred by such Credit Party to any Person
in connection with such lease.
8.7 Advances, Investments and Loans.
No Credit Party will, nor will it permit its Subsidiaries to, make any
Investments except for Permitted Investments.
8.8 Restricted Payments.
No Credit Party will, nor will it permit its Subsidiaries to, directly or
indirectly, (a) declare or pay any dividends or make any other distribution upon
any shares of its capital stock of any class or (b) purchase, redeem or
otherwise acquire or retire or make any provisions for redemption, acquisition
or retirement of any shares of its capital stock of any class or any warrants or
options to purchase any such shares; provided that (i) any Subsidiary of a
Borrower may pay dividends to its parent, (ii) a Borrower may pay dividends to
the Parent (A) to pay off debt incurred to purchase Auburn Hosiery Xxxxx, Inc.,
(B) for administrative expenses not to exceed $500,000 per fiscal year and (C)
to allow for the payment of taxes, (iii) the Parent may repurchase its stock to
the extent it constitutes a Permitted Investment and (iv) any Credit Party may,
and may permit its Subsidiaries to, pay a dividend solely in shares of the class
of stock on which such dividend is declared as long as no Change in Control
occurs.
8.9 Transactions with Affiliates.
Other than (a) transactions between Credit Parties, (b) non-material
transactions between Credit Parties and their Subsidiaries otherwise permitted
by 8.7 or (c) transactions with respect to agreements existing as of the date
hereof as set forth on Schedule 8.9, no Credit Party will, nor will it permit
its Subsidiaries to, enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer, director,
shareholder, Subsidiary or Affiliate other than (i) on terms and conditions
substantially as favorable as would be obtainable in a comparable arm's-length
transaction with a Person other than an officer,
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director, shareholder, Subsidiary or Affiliate or (i) as approved by a majority
disinterested directors of the applicable Credit Party.
8.10 Fiscal Year; Organizational Documents.
No Credit Party will, nor will it permit its Subsidiaries to, (a) change
its fiscal year or (b) in any manner that would reasonably be likely to
adversely affect the rights of the Lenders, change its articles or certificate
of incorporation or its bylaws.
8.11 Ownership of Borrowers.
The Parent will not sell, transfer or otherwise dispose of any shares of
capital stock of a Borrower. Furthermore, the Parent will not hold any assets
other than (a) the stock of the Borrowers, and (b) such amounts allowed to be
transferred to the Parent pursuant to Section 8.8. The Parent may not have any
liabilities other than the liabilities under the Credit Documents, tax
liabilities and other liabilities in the ordinary course of business (which
shall include liabilities under certain agreements with members of management
and indemnification obligations).
8.12 No Limitations.
No Credit Party will, nor will it permit its Subsidiaries to, directly or
indirectly, create or otherwise cause, incur, assume, suffer or permit to exist
or become effective any consensual encumbrance or restriction of any kind on the
ability of any such Person to (a) pay dividends or make any other distribution
on any of such Person's capital stock, (b) pay any Indebtedness owed to any
other Credit Party, (c) make loans or advances to any other Credit Party or (d)
transfer any of its property to any other Credit Party, except for encumbrances
or restrictions existing under or by reason of (i) customary non-assignment or
net worth provisions in any lease governing a leasehold interest, (ii) any
agreement or other instrument of a Person existing at the time it becomes a
Subsidiary of a Credit Party; provided that such encumbrance or restriction is
not applicable to any other Person, or any property of any other Person, other
than such Person becoming a Subsidiary of a Credit Party and was not entered
into in contemplation of such Person becoming a Subsidiary of a Credit Party,
and (iii) this Credit Agreement and the other Credit Documents.
8.13 No Other Negative Pledges.
No Credit Party will, nor will it permit its Subsidiaries to, enter into,
assume or become subject to any agreement prohibiting or otherwise restricting
the creation or assumption of any Lien upon its properties or assets, whether
now owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation except as set forth in
the Credit Documents or as set forth in the Senior Subordinated Credit Agreement
or the Junior Subordinated Note.
8.14 Limitation on Foreign Operations.
The Credit Parties will not, nor will they permit any of their
Subsidiaries to, allow the Foreign Subsidiaries to have assets which in the
aggregate constitute more than 15% of Total Assets at any time.
8.15 Subordinated Debt.
No Credit Party will, nor will it permit its Subsidiaries to, (a) make or
offer to make any voluntary or optional principal payments with respect to the
Subordinated Debt, (b) redeem or offer to redeem any of the Subordinated Debt,
or (c) deposit any funds intended to discharge
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or defease any or all of the Subordinated Debt except, with respect to (b) and
(c), as permitted in accordance with the terms and conditions of the Senior
Subordinated Credit Agreement and the Intercreditor Agreement; provided that,
notwithstanding the foregoing, the Parent may repay up to $1,500,000 of
principal owing under the Junior Subordinated Note in exchange for amounts owed
from Gerber Products Company to the Parent. Neither the Senior Subordinated
Credit Agreement nor the Junior Subordinated Note shall be amended or modified
in any manner without the prior written consent of the Required Lenders.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence, and during the
continuance, of any of the following specified events (each an "Event of
Default"):
(a) Payment. Any Credit Party shall default in the payment (i) when
due of any principal of any of the Loans or any reimbursement obligation
arising from drawings under Letters of Credit or (ii) within three
Business Days of when due of any interest on the Loans or any fees or
other amounts owing hereunder, under any of the other Credit Documents or
in connection herewith.
(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 made or deemed to have
been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.3, 7.5, 7.11,
7.12, or 8.1 through 8.15 inclusive;
(ii) default in the due performance or observance by it of any
term, covenant or agreement contained in Sections 7.1 (other than
Section 7.1(c)) and such default shall continue unremedied for a
period of five Business Days;
(iii) default in the due performance or observance by it of
any term, covenant or agreement contained in Section 7.1(c) and such
default shall continue unremedied for a period of two Business Days;
or
(iv) 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), (ii) or (iii) of this Section 9.1)
contained in this Credit Agreement and such default shall continue
unremedied for a period of at least 30 days after the
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earlier of an officer of a Credit Party becoming aware of such
default or notice thereof given by the Administrative Agent.
(d) Other Credit Documents. (i) Any Credit Party shall default in
the due performance or observance of any term, covenant or agreement in
any of the other Credit Documents and such default shall continue
unremedied for a period of at least 30 days after the earlier of an
officer of a Credit Party becoming aware of such default or notice thereof
given by the Administrative Agent, or (ii) any Credit Document shall fail
to be in full force and effect or any Credit Party shall so assert or any
Credit Document shall fail to give the Collateral Agent and/or the Lenders
the security interests, liens, rights, powers and privileges purported to
be created thereby.
(e) Guaranties. 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.
(f) Bankruptcy, etc. The occurrence of any of the following with
respect to the Parent or any of its Subsidiaries (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Parent or any of its
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Parent or any of its Subsidiaries or for any
substantial part of its property or ordering the winding up or liquidation
of its affairs; or (ii) an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect is
commenced against the Parent or any of its Subsidiaries and such petition
remains unstayed and in effect for a period of 60 consecutive days; or
(iii) the Parent or any of its Subsidiaries shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or any substantial part of
its property or make any general assignment for the benefit of creditors;
or (iv) the Parent or any of its Subsidiaries shall admit in writing its
inability to pay its debts generally as they become due or any action
shall be taken by such Person in furtherance of any of the aforesaid
purposes.
(g) Defaults under Other Agreements. With respect to any Funded Debt
in excess of $500,000 (other than Funded Debt outstanding under this
Credit Agreement) of the Parent or any of its Subsidiaries (i) such Person
shall (A) default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Funded Debt, or (B)
default (after giving effect to any applicable grace period) in the
observance or performance relating to such Funded Debt 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
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condition is to cause, or permit, the holder or holders of such Funded
Debt (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 Funded Debt to become due prior to its stated maturity; or (ii) any
such Funded Debt 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 (iii) any such Funded Debt shall mature
and remain unpaid.
(h) Judgments. One or more judgments, orders, or decrees shall be
entered against any one or more of the Credit Parties and its Subsidiaries
involving a liability of $1,000,000 or more, in the aggregate, (to the
extent not paid or covered by insurance provided by a carrier who has
acknowledged coverage) and such judgments, orders or decrees (i) are the
subject of any enforcement proceeding commenced by any creditor or (ii)
shall continue unsatisfied, undischarged and unstayed for a period ending
on the first to occur of (A) the last day on which such judgment, order or
decree becomes final and unappealable or (B) 60 days.
(i) ERISA. The occurrence of any of the following events or
conditions if such occurrence would have or be reasonably likely to have a
Material Adverse Effect: (A) any "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, shall exist with respect to any Plan, or any lien
shall arise on the assets of the Parent or any of its Subsidiaries or any
ERISA Affiliate in favor of the PBGC or a Plan; (B) a Termination Event
shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (C) a
Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the
Administrative Agent, likely to result in (i) the termination of such Plan
for purposes of Title IV of ERISA, or (ii) the Parent or any of its
Subsidiaries or any ERISA Affiliate incurring any liability in connection
with a withdrawal from, reorganization of (within the meaning of Section
4241 of ERISA), or insolvency (within the meaning of Section 4245 of
ERISA) of such Plan; or (D) any prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility shall occur which may subject the Parent or any
of its Subsidiaries or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under
any agreement or other instrument pursuant to which the Parent or any of
its Subsidiaries or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability.
(j) Ownership. There shall occur a Change of Control.
(k) Subordinated Debt. (i) Any Governmental Authority with
applicable jurisdiction determines that the Lenders are not holders of
Senior Indebtedness (as defined in the documentation evidencing the Junior
Subordinated Note) or Senior Debt (as defined in the documentation
evidencing the Senior Subordinated Credit Agreement) or (ii) the
subordination provisions in the Junior Subordinated Note or the
Intercreditor
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Agreement shall, in whole or in part, terminate, cease to be effective or
cease to be legally valid, binding and enforceable as to any holder of the
Subordinated Debt.
(l) Any breach of the Intercreditor Agreement by a Credit Party or
by the Subordinated Agent or a Subordinated Lender (as such terms are
defined in the Intercreditor Agreement).
9.2 Acceleration; Remedies.
Upon the occurrence, and during the continuance, of an Event of Default,
and at any time thereafter unless and until such Event of Default has been
waived in writing by the Required Lenders (or the Lenders as may be required
hereunder), the Administrative Agent shall, upon the request and direction of
the Required Lenders, by written notice to the Borrowers, take the following
actions without prejudice to the rights of the Agents or any Lender to enforce
its claims against the Credit Parties, except as otherwise specifically provided
for herein:
(a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
indebtedness or obligations of any and every kind owing by a Credit Party
to any of the Lenders 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 Credit Parties.
(c) Cash Collateral. Direct the Borrowers to pay (and the Borrowers
agree that upon receipt of such notice, or upon the occurrence of an Event
of Default under Section 9.1(f), they will immediately pay) to the
Administrative Agent additional cash, to be held by the Administrative
Agent, for the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of 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.
(d) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents, including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders hereunder shall immediately become due and
payable without the giving of any notice or other action by the Agents or the
Lenders, which notice or other action is expressly waived by the Credit Parties.
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Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.
9.3 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by an Agent or any Lender on account of amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agents or any of the Lenders in connection with enforcing the rights of
the Lenders under the Credit Documents and any protective advances made by
the Agents or any of the Lenders with respect to the Collateral under or
pursuant to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to an Agent, the Issuing Lender
or any Lender;
THIRD, to the payment of all accrued interest payable to the Lenders
hereunder and all other obligations which shall have become due and
payable under the Credit Documents and not repaid pursuant to clauses
"FIRST" and "SECOND" above;
FOURTH, to the payment of the outstanding principal amount of the
Loans and unreimbursed drawings under Letters of Credit, to the payment or
cash collateralization of the outstanding LOC Obligations, pro rata as set
forth below;
FIFTH, to any principal amounts outstanding under Hedging Agreements
between a Credit Party and a Lender, pro rata, as set forth below; and
SIXTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans, LOC
Obligations and obligations under Hedging Agreements held by such Lender bears
to the aggregate then outstanding Loans, LOC Obligations and obligations under
Hedging Agreements) of amounts available to be applied; and (c) to the extent
that any amounts available for distribution pursuant to clause "FOURTH" above
are attributable to the issued but undrawn amount of outstanding Letters of
Credit, such amounts shall be held by the Collateral Agent in a cash collateral
account and applied (x) first, to reimburse the Issuing Lender from time to time
for any drawings under such Letters of Credit and (y) then, following the
expiration of all Letters of Credit, to all other obligations of the types
described in clauses "FOURTH," and "FIFTH" above in the manner provided in this
Section 9.3.
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SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
Each Lender hereby designates and appoints NationsBank, N.A. as
Administrative Agent and Collateral Agent of such Lender to act as specified
herein and the other Credit Documents, and each such Lender hereby authorizes
the Agents, as the agents for such Lender, 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 Agents
shall not have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any of the other Credit
Documents, or shall otherwise exist against the Agents. The provisions of this
Section are solely for the benefit of the Agents and the Lenders 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, each Agent shall act solely as an
agent of the Lenders and does not assume and shall not be deemed to have assumed
any obligation or relationship of agency or trust with or for any Credit Party.
10.2 Delegation of Duties.
An 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. An Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions.
Neither the Agents nor any of their officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be 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 responsible in
any manner to any of the Lenders 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, document, financial
statement or other written or oral statement referred to or provided for in, or
received by an Agent under or in connection herewith or in connection with the
other Credit Documents, or enforceability or sufficiency therefor of any of the
other Credit Documents, or for any failure of the Borrowers to perform its
obligations hereunder or thereunder. The Agents shall not be responsible to any
Lender for the effectiveness, genuineness, validity, enforceability,
collectibility 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 a 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 an Agent to the Lenders or by or on behalf of the Credit
Parties to the Agents or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms,
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conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or the use of the Letters of Credit
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 (except the
Agents shall inspect the books and records of the Credit Parties upon the
request of the Required Lenders). The Agents are not trustees for the Lenders
and owe no fiduciary duty to the Lenders.
10.4 Reliance on Communications.
The Agents 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 reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any of the Credit Parties, independent
accountants and other experts selected by the Agents with reasonable care). The
Agents may deem and treat the Lenders 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 Administrative Agent in accordance with
Section 11.3(b). The Agents 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 Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agents 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 Lenders (or to the extent specifically provided in
Section 11.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including their
successors and assigns).
10.5 Notice of Default.
An Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless such Agent has received
notice from a Lender 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 Administrative Agent receives such a
notice, the Administrative Agent shall give prompt notice thereof to the
Lenders. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders and as is permitted by the Credit Documents.
10.6 Non-Reliance on Agents and Other Lenders.
Each Lender expressly acknowledges that neither the Agents, NMSI nor any
of their officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representations or warranties to it and that no act by the Agents
or any affiliate thereof hereinafter taken, including any review of the affairs
of any Credit Party, shall be deemed to constitute any representation or
warranty by the Agents to any Lender. Each Lender represents to the Agents and
NMSI that it has, independently and without reliance upon the Agents or NMSI or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property,
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financial and other conditions, prospects and creditworthiness of the Credit
Parties and made its own decision to make its Loans hereunder and enter into
this Credit Agreement. Each Lender also represents that it will, independently
and without reliance upon the Agents or NMSI or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this 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 Lenders by the Administrative Agent hereunder,
the Agents and NMSI shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
assets, property, financial or other conditions, prospects or creditworthiness
of the Credit Parties which may come into the possession of the Agents, NMSI or
any of their officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.7 Indemnification.
The Lenders agree to indemnify each Agent in its capacity as such (to the
extent not reimbursed by the Borrowers and without limiting the obligation of
the Borrowers to do so), ratably according to their respective Commitments (or
if the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interest of
the Lenders), 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 payment in full of the Credit Party Obligations) be imposed
on, incurred by or asserted against an 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 an Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of an Agent. If any indemnity furnished to an Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
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 Credit Party
Obligations and all other amounts payable hereunder and under the other Credit
Documents.
10.8 Agents in Their Individual Capacity.
Each Agent and its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with a Borrower or any other Credit
Party as though such Agent were not an Agent hereunder. With respect to the
Loans made and Letters of Credit issued and all obligations owing to it, an
Agent shall have the same rights and powers under this Credit Agreement as any
Lender and may exercise the same as though they were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
10.9 Successor Agent.
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Any Agent may, at any time, resign upon 20 days written notice to the
Lenders. Upon any such resignation, the Required Lenders shall, with the consent
of the Borrowers, such consent not to be unreasonably withheld or delayed, have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 60 days after the notice of resignation, then the retiring Agent shall
select a successor Agent, with the consent of the Borrowers, such consent not to
be unreasonably withheld or delayed, provided such successor is an Eligible
Assignee. Upon the acceptance of any appointment as an Agent hereunder by a
successor, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations as an
Agent, as appropriate, under this Credit Agreement and the other Credit
Documents and the provisions of this Section 10.9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was an Agent under
this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.
11.2 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
of an Event of Default and the commencement of remedies described in Section
9.2, each Lender 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 Lender (including, without limitation, branches, agencies or
Affiliates of such Lender wherever located) to or for the credit or the account
of any Credit Party against obligations and liabilities of such Credit Party to
the Lenders hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective of whether the Administrative Agent or the Lenders 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 Lender
subsequent thereto. The Credit Parties hereby agree that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to Section 11.3(c)
or 3.8 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Lender hereunder.
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11.3 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 none of the Credit Parties
may assign and transfer any of its interests (except as permitted by
Section 8.4 or 8.5) without the prior written consent of the Lenders; and
provided further that the rights of each Lender to transfer, assign or
grant participations in its rights and/or obligations hereunder shall be
limited as set forth below in subsections (b) and (c) of this Section
11.3. Notwithstanding the above (including anything set forth in
subsections (b) and (c) of this Section 11.3), nothing herein shall
restrict, prevent or prohibit any Lender from (A) pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank, or (B) granting assignments or
participations in such Lender's Loans and/or Commitments hereunder to its
parent company and/or to any Affiliate of such Lender or to any existing
Lender or Affiliate thereof.
(b) Assignments. Each Lender may, with the prior written consent of
the Borrowers and the Agents (provided that no consent of the Borrowers
shall be required during the existence and continuation of an Event of
Default), 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 Exhibit 11.3 to
one or more Eligible Assignees; provided that (i) any such assignment
shall be in a minimum aggregate amount of $10,000,000 of the Commitments
and in integral multiples of $1,000,000 above such amount (or the
remaining amount of Commitments held by such Lender), (ii) each such
assignment shall be of a constant, not varying, percentage of all of the
assigning Lender's rights and obligations under the Commitment being
assigned and (iii) no assignment may be made to a competitor of a
Borrower. Any assignment hereunder shall be effective upon satisfaction of
the conditions set forth above and delivery to the Administrative Agent of
a duly executed assignment agreement together with a transfer fee of
$3,500 payable to the Administrative Agent for its own account. Upon the
effectiveness of any such assignment, the assignee shall become a "Lender"
for all purposes of this Credit Agreement and the other Credit Documents
and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the Loans and
Commitment components being assigned. As a condition to any such
assignment, the assigning Lender shall surrender the appropriate Note or
Notes, and the Borrowers will promptly provide to the assigning Lender and
to the assignee separate promissory notes in the amount of their
respective interests substantially in the form of the original Note or
Notes (but with notation thereon that it is given in substitution for and
replacement of the original Note or Notes or any replacement notes
thereof).
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender 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 Lender 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 Lender makes no representation or warranty and assumes no
responsibility with respect to any
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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 Agents, such assigning
Lender or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Credit Agreement and
the other Credit Documents; (vi) such assignee appoints and authorizes the
Agents 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
Agents 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 Lender.
(c) Participations. Each Lender may sell, transfer, grant or assign
participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall remain
a "Lender" for all purposes under this Credit Agreement (such selling
Lender's obligations under the Credit Documents remaining unchanged) and
the participant shall not constitute a Lender 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 Loans in
which the participant is participating or increase any Commitments with
respect thereto, (B) postpone the date fixed for any payment of principal
(including the extension of the final maturity of any Loan 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 Loans or Commitments in which the participant is
participating, (iii) sub-participations by the participant (except to an
Affiliate, parent company or Affiliate of a parent company of the
participant) shall be prohibited and (iv) any such participations shall be
in a minimum aggregate amount of $10,000,000 of the Commitments and in
integral multiples of $1,000,000 in excess thereof. 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 Lender in respect of such participation to be those
set forth in the participation agreement with such Lender creating such
participation) and all amounts payable by the Borrowers hereunder shall
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be determined as if such Lender had not sold such participation; provided,
however, that such participant shall be entitled to receive additional
amounts under Sections 3.9, 3.12, 3.13 and 3.14 to the same extent that
the Lender from which such participant acquired its participation would be
entitled to the benefit of such cost protection provisions.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of an Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Borrowers or any Credit Party and the Agents or
any Lender 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 Agents or any Lender would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Agents or the Lenders to any other or further action in any
circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs
and expenses of (i) the Administrative Agent and NMSI in connection with (A) the
negotiation, preparation, execution and delivery and administration 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 Administrative
Agent) subject to the limitations set forth in the letter agreement among Gerber
Childrenswear, Inc., NationsBank, N.A. and NMSI dated as of September 22, 1997,
and (B) 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 Credit Parties under this Credit Agreement and (ii) the
Agents and the Lenders in connection with (A) 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 Agents and each of the Lenders, and (B) any
bankruptcy or insolvency proceeding of a Credit Party of any of its Subsidiaries
and (b) indemnify each Agent, NMSI and each Lender, 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, any investigation, litigation or other proceeding (whether or not any
Agent, NMSI or Lender is a party thereto) related to (i) the entering into
and/or performance of any Credit Document or the use of proceeds of any Loans
(including other extensions 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, (ii) any
Environmental Claim, (iii) any claims for Non-Excluded Taxes (but excluding in
the case of (i), (ii) and (iii) 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) and (iv) any
claims
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for amounts incurred by the Administrative Agent pursuant to that certain letter
agreement among NationsBank of Tennessee, N.A., Auburn Hosiery Xxxxx, Inc. and
the Administrative Agent dated as of the Closing Date.
11.6 Amendments, Waivers and Consents.
Subject to Section 11.18(b), 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 and signed by the Required Lenders and
the then Credit Parties; provided that no such amendment, change, waiver,
discharge or termination shall without the consent of each Lender affected
thereby:
(a) extend the Maturity Date or postpone or extend the time for any
Principal Amortization Payment;
(b) reduce the rate or extend 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;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend the Commitment of a Lender or the total
Commitments over the amount thereof in effect (it being understood and
agreed that a waiver of any Default or Event of Default or a waiver of any
mandatory reduction in the Commitments shall not constitute a change in
the terms of any Commitment of any Lender);
(e) release any material portion of the Collateral securing the
Credit Party Obligations hereunder (provided that the Collateral Agent
may, without consent from any other Lender, release any Collateral that is
sold or transferred by a Credit Party in conformance with Section 8.5);
(f) release a Borrower or the Parent from its obligations or release
all or substantially all of the other Credit Parties from their respective
obligations under the Credit Documents;
(g) amend, modify or waive any provision of this Section or Section
3.4(a), 3.4(b)(i), 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 9.1(a),
11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise modify, the
definition of Required Lenders; or
(i) consent to the assignment or transfer by a Borrower or the
Parent of any of its rights and obligations under (or in respect of) the
Credit Documents.
Notwithstanding the above, no provisions of Section 10 may be amended or
modified without the consent of the Agents.
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Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans or the
Letters of Credit, and each Lender acknowledges that the provisions of Section
1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set
forth herein and (y) the Required Lenders may consent to allow a Credit Party to
use cash collateral in the context of a bankruptcy or insolvency proceeding.
11.7 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. Delivery of executed counterparts
by telecopy shall be as effective as an original and shall constitute a
representation that an original will be delivered.
11.8 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.
11.9 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 11.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.
11.10 Survival of Indemnification and Representations and Warranties.
All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, the issuance of the Letters of Credit and the repayment
of the Loans, LOC Obligations and other obligations and the termination of the
Commitments hereunder.
11.11 Governing Law; Jurisdiction.
(a) THIS 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
NORTH CAROLINA (other than the Mortgage Documents which shall be governed
by the laws of the state where the real property is located that is
covered by such Mortgage Document). Any legal action or proceeding with
respect to this Agreement or any other Credit Document may be brought in
the courts of the State of North Carolina or of the United States for the
Western District of North Carolina, and, by execution and delivery of this
Credit Agreement, each Credit Party hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the
jurisdiction of such courts. Each Credit 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 by
registered or certified mail, postage prepaid, to it at the address for
notices pursuant
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to Section 11.1, such service to become effective 10 days after such
mailing. Nothing herein shall affect the right of a Lender to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against a Credit Party in any other
jurisdiction. Each Credit Party agrees that a final judgment in any action
or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law; provided that nothing in this Section 11.11(a) is intended to impair
a Credit Party's right under applicable law to appeal or seek a stay of
any judgment.
(b) Each Credit 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
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.
11.12 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT 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.
11.13 Time.
All references to time herein shall be references to Eastern Standard Time
or Eastern Daylight time, as the case may be, unless specified otherwise.
11.14 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.
11.15 Further Assurances.
The Credit Parties agree, upon the request of the Administrative Agent, to
promptly take such actions, as reasonably requested, as is necessary to carry
out the intent of this Credit Agreement and the other Credit Documents,
including, but not limited to, such actions as are necessary to ensure that the
Lenders have a perfected security interest in the Collateral subject to no Liens
other than Permitted Liens.
11.16 Confidentiality.
Each Lender agrees that it will use its reasonable best efforts to keep
confidential and to cause any representative designated under Section 7.12 to
keep confidential any non-public information from time to time supplied to it
under any Credit Document; provided, however, that nothing herein shall prevent
the disclosure of any such information to (a) the extent a Lender in good faith
believes such disclosure is required by Requirement of Law, (b) counsel
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for a Lender or to its accountants, (c) bank examiners or auditors or comparable
Persons, (d) any affiliate of a Lender, (e) any other Lender, or any assignee,
transferee or participant, or any potential assignee, transferee or participant,
of all or any portion of any Lender's rights under this Agreement who is
notified of the confidential nature of the information or (f) any other Person
in connection with any litigation to which any one or more of the Lenders is a
party; and provided further that no Lender shall have any obligation under this
Section 11.16 to the extent any such information becomes available on a
non-confidential basis from a source other than a Credit Party or that any
information becomes publicly available other than by a breach of this Section
11.16 by any Lender or representative thereof.
11.17 Entirety.
This Credit Agreement together with the other Credit Documents and the Fee
Letter 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.
11.18 Binding Effect; Continuing Agreement.
(a) This Credit Agreement shall become effective at such time when all of
the conditions set forth in Section 5.1 have been satisfied or waived by the
Lenders and it shall have been executed by the Borrowers, the Guarantors and the
Agents, and the Agents shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each Lender, and
thereafter this Credit Agreement shall be binding upon and inure to the benefit
of the Borrowers, the Guarantors, the Agents and each Lender and their
respective successors and assigns.
(b) This Credit Agreement shall be a continuing agreement and shall remain
in full force and effect until all Loans, LOC Obligations, interest, fees and
other Credit Party Obligations have been paid in full and all Commitments and
Letters of Credit have been terminated. Upon termination, the Credit Parties
shall have no further obligations (other than the indemnification provisions
that survive) under the Credit Documents and the Collateral Agent shall, at the
request and expense of the Borrowers, deliver all Collateral in its possession
to the Borrowers and release all Liens on Collateral; provided that should any
payment, in whole or in part, of the Credit Party Obligations be rescinded or
otherwise required to be restored or returned by an Agent or any Lender, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise,
then the Credit Documents shall automatically be reinstated and all Liens of the
Lenders shall reattach to the Collateral and all amounts required to be restored
or returned and all costs and expenses incurred by an Agent or Lender in
connection therewith shall be deemed included as part of the Credit Party
Obligations.
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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.
BORROWERS:
GERBER CHILDRENSWEAR, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Solar
-----------------------------------
Name: Xxxxxxx Solar
Title: Senior Vice President
AUBURN HOSIERY XXXXX, INC.,
a Kentucky corporation
By: /s/ Xxxxxxx Solar
-----------------------------------
Name: Xxxxxxx Solar
Title: Senior Vice President
101
GUARANTORS:
GCIH, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Solar
-----------------------------------
Name: Xxxxxxx Solar
Title: Senior Vice President
COSTURA DOMINICANA, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Solar
-----------------------------------
Name: Xxxxxxx Solar
Title: Senior Vice President
AUBURN HOLDINGS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Solar
-----------------------------------
Name: Xxxxxxx Solar
Title: Senior Vice President
GCI IP SUB, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Solar
-----------------------------------
Name: Xxxxxxx Solar
Title: Senior Vice President
AUBURN MERGER CO,
a Delaware corporation
By: /s/ Xxxxxxx Solar
-----------------------------------
Name: Xxxxxxx Solar
Title: Senior Vice President
102
LENDERS:
NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Administrative
Agent and Collateral Agent
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: XXXXX X. XXXXXXX
Title: Vice President
NATIONSBANK OF TENNESSEE, N.A.,
solely in its capacity as an Issuing Lender in
connection with certain Existing Letters of
Credit
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: XXXXX X. XXXXXXX
Title: Vice President
000
XXXX XX XXXXXXX, FSB
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: XXXXXX X. XXXXXX
Title: Vice President
000
XXX XXXXX XXXXXXXXX BANK
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: XXXXXXX XXXXXX
Title: Vice President
105
FLEET BANK, N.A.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: XXXXXX X. XXXXXXX
Title: Senior Vice President
000
XXXXXXXX XXXX, XXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: XXXXXXX X. XXXXXXX
Title: Banking Officer
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: XXXXXXX X. XXXX
Title: Vice President
107
WACHOVIA BANK, N.A.
By: /s/ Xxxxxxx X.X. Xxxxx
----------------------------------------
Name: XXXXXXX X.X. XXXXX
Title: Assistant Vice President
000
XXXX XXXXXX, X.X.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: XXXXXXX X. XXXXXXXX
Title: Vice President
