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EXHIBIT 10.33
CREDIT AGREEMENT
Bearing Formal Date of March 31, 1999
between
GILDAN ACTIVEWEAR INC.
(as Borrower)
and
THE LENDERS NAMED HEREIN AS LENDERS
(as Lenders)
and
NATIONAL BANK OF CANADA
(as Agent)
CDN $90,000,000
(LOGO)
XXXXXXXXXX XXXXXXXX XXXXX XXXXXX
(general partnership)
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TABLE OF CONTENTS
Page
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1. INTERPRETATION 1
1.1 Definitions 1
1.2 Accounting Terms and Practices 1
1.3 Headings 1
1.4 Governing Laws 2
1.5 Formal Notice 2
1.6 Schedules 2
1.7 References to this Agreement 2
2. REVOLVING CREDIT FACILITY 2
2.1 Maximum Amount Available 2
2.2 Margined Limit of the Revolving Credit Facility 2
2.3 Revolving Nature of the Revolving Credit Facility 3
2.4 Voluntary Reduction of the Revolving Credit Facility 3
2.5 Use of Proceeds from Advances 4
2.6 Availability Under the Revolving Credit Facility 4
3. DRAW DOWNS AND OPERATION OF ACCOUNTS 4
3.1 Draw Downs Under the Revolving Credit Facility 4
3.2 Disbursement OF Funds 5
3.3 Maintenance of Accounts 5
3.4 Authority to Debit and Credit 5
4. CONDITIONS PRECEDENT 6
4.1 Conditions Precedent to Advances 6
5. INTEREST ON PRIME RATE BASIS 9
5.1 Cdn Prime Rate 9
5.2 U.S. Prime Rate 9
5.3 Interest on Revolving Loans Generally 9
6. INTEREST ON LIBOR BASIS 10
6.1 Interest on Libor Basis 10
6.2 Determination of Libor Rate 10
6.3 Establishment of Libor Rate as at 11:00 A.M., London time 10
6.4 Limits on Libor Advances 10
6.5 Availability 10
7. COMPUTATION AND PAYMENT OF INTEREST 11
7.1 Computation of Interest 11
7.2 Annual Equivalent of Libor and Federal Funds Effective Rate 11
7.3 Payment of Interest 11
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8. BANKER'S ACCEPTANCES 12
8.1 Request for Banker's Acceptances 12
8.2 Requirements for Banker's Acceptances 12
8.3 Stamping Fee 12
8.4 The Agent to Advise Lenders 12
8.5 Maturity Date of Banker's Acceptances 12
8.6 Deemed Conversion on Maturity Date 13
8.7 Power of Attorney 13
8.8 Waiver 13
8.9 Obligations Absolute 13
9. LETTERS OF GUARANTEE 13
9.1 Request for Letters of Guarantee 14
9.2 Issuance of Letters of Guarantee 14
9.3 Limits of Letters of Guarantee 14
9.4 LG Fee 14
9.5 Distribution of LG Fee 14
9.6 Advances on Payment of Letters of Guarantee 15
9.7 Obligations Absolute 15
10. STAND-BY AND AGENCY FEE 15
10.1 Stand-by Fee 15
10.2 Payment of Stand-By Fee 15
10.3 Agency Fee 15
10.4 Structuring and Underwriting Fee 16
11. CONVERSIONS AND CONTINUATIONS 16
11.1 Conversions and Continuations 16
11.2 No Revocation or Withdrawal of Notices 16
11.3 Limits on Conversions 16
11.4 Determinations of Equivalent of Canadian Dollars and of U.S. Xxxxxxx 00
00. PAYMENTS AND REPAYMENTS 16
12.1 Repayment of Revolving Loans 16
12.2 Compulsory Repayment of Part of Revolving Loans 17
12.3 Currency of Payments 17
12.4 Overadvances - Exchange Rate Fluctuations 17
12.5 Manner of Payments 17
12.6 Payments at Branch of Account Only 18
12.7 Payment on Business Day and by 1:00 P.M., Montreal Time 18
13. SECURITY 18
13.1 Deed of Hypothec 18
13.2 Security Agreement 18
13.3 Bank Act Documents 18
13.4 Pledge of Shares 19
13.5 Endorsements of Insurance Policies 19
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13.6 Corporate Guarantees 19
14. REPRESENTATIONS AND WARRANTIES 19
14.1 Organization 19
14.2 Authorization of Documents by the Borrower 19
14.3 Authorization of Documents by Unrestricted Subsidiaries 20
14.4 No Conflict 20
14.5 Governmental Regulation 20
14.6 Compliance with Law 20
14.7 Litigation 20
14.8 Taxes 21
14.9 Financial Statements of the Borrower 21
14.10 No Adverse Change 21
14.11 Material Agreements and Restrictions 21
14.12 Approvals 21
14.13 Environment 21
14.14 No Subsidiary 22
14.15 Head Office - Places of Business 22
14.16 Title of Ownership 22
14.17 Erisa 22
14.18 Labour Disputes 22
14.19 Intangible Assets 23
14.20 Ownership of Accounts Reveivable and Inventory 23
14.21 Accuracy and Completeness of Information 23
14.22 Survival of Representations and Xxxxxxxxxx 00
00. GENERAL COVENANTS 23
15.1 Preservation of Existence, etc. 24
15.2 Preservation of Authorizations 24
15.3 Business, Compliance with Applicable Law 24
15.4 Insurance 24
15.5 Payment of Taxes and Claims 24
15.6 Visits and Inspections 24
15.7 Maintenance of Ratios 24
15.8 Payment of Legal and Other Fees and Disbursements 25
15.9 Renewal of Registration 25
15.10 Transactions with Affiliates of the Borrower 25
15.11 Lock Box Agreement 26
15.12 Financial Information 26
15.13 Notice of Litigation and Other Matters 27
15.14 Disclosure of Environmental Matters 27
15.15 Year 2000 Compliance 27
16. NEGATIVE COVENANTS 28
16.1 Consolidation, Amalgamation, Merger, Etc. 28
16.2 Change of Control 28
16.3 Indebtedness 28
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16.4 Sale of Assets 29
16.5 Advances, Revolving Loans and Investments 29
16.6 Loans and Guarantees 29
16.7 Liens 29
16.8 Change in Business 29
16.9 Dividends 30
16.10 Capital Expenditures 30
16.11 Subordination of Debt 30
16.12 Consulting Fees to Affiliates 30
16.13 Change of Year End 30
16.14 Creation of Subsidiaries 30
16.15 Derivative Instruments 30
16.16 Reorganization 30
17. EVENTS OF DEFAULT AND REALIZATION 31
17.1 Events of Default 31
17.2 Remedies 34
17.3 Proceeds of Realization 34
17.4 Compensation and Set-Off 34
17.5 Dealing with the Borrower 34
18. INCREASED COSTS AND INDEMNITY 35
18.1 Indemnification 35
18.2 Reimbursement of Losses 35
19. ENVIRONMENTAL INDEMNITY 36
19.1 Indemnity 36
19.2 Rights of the Lenders to Act 36
19.3 Acknowledgement from the Borrower 37
20. MISCELLANEOUS 37
20.1 Notices 37
20.2 Amendments and Waivers 37
20.3 Calculations 37
20.4 Assignments by the Borrower 39
20.5 Assignments by the Lenders 39
20.6 Judgment Currency 39
20.7 Counterparts 40
20.8 Severability 40
20.9 Replacement of Commitment Letter 40
20.10 Inconsistency with Security Documents 40
20.11 Obligation to Pay Absolute 40
20.12 Formal Date 40
20.13 English Language 41
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SCHEDULES
Schedule "A" The Commitments
Schedule 1.1 Definitions
Schedule 2.2.4 Prior Claims
Schedule 3.1.2 Draw Down Notice
Schedule 4.1.1 Closing Agenda
Schedule 10.1 Relevant Margin and Stand-by-Fee
Schedule 11.1 Conversion Notice
Schedule 14.8 Tax Matters
Schedule 14.11 Material Contracts
Schedule 14.13 Environmental Matters
Schedule 14.14 Subsidiaries
Schedule 14.15 Places of Business
Schedule 15.12.1 Quarterly Certificate
Schedule 15.12.2 Monthly Certificate
Schedule 15.12.3 Annual Certificate
Schedule 16.6 Existing Loans and Advances
Schedule 16.7 Existing Liens
Schedule 16.16 Reorganization
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CREDIT AGREEMENT entered into at Montreal, Province of Quebec, on March 30,
1999.
BETWEEN: GILDAN ACTIVEWEAR INC., a corporation incorporated under the
CANADA BUSINESS CORPORATIONS ACT, as borrower
AND: THE LENDERS SET FORTH IN SCHEDULE "A", as Lenders
AND: NATIONAL BANK OF CANADA, as Agent
WHEREAS the Borrower has requested that a credit facility be made available
to it for an aggregate amount of Cdn $90,000,000 by way of a revolving operating
credit facility (the "REVOLVING CREDIT FACILITY");
WHEREAS the Lenders have agreed to provide the requested Revolving Credit
Facility to the Borrower, subject to the terms and conditions set forth
hereunder.
NOW THE PARTIES HAVE AGREED AS FOLLOWS:
1. INTERPRETATION
1.1 DEFINITIONS
Unless there be something in the subject or the context inconsistent
therewith, the capitalized words and expressions used in this Agreement, in its
schedules or in any deed or agreement supplemental or ancillary hereto shall
have the meaning ascribed to them in Schedule 1.1.
1.2 ACCOUNTING TERMS AND PRACTICES
Unless otherwise defined herein, each accounting term used in this
Agreement has the meaning ascribed to it under generally accepted accounting
principles in Canada as established, specified and up-dated, INTER ALIA, in the
Canadian Institute of Chartered Accountants Handbook. The financial
calculations, audits, audit reports and financial statements (and their
different items) referred to herein or pertaining to the Borrower's business
shall be made or prepared in accordance with such accounting principles applied
on a consistent basis and in accordance with the normal practice in the
Borrower's industry.
1.3 HEADINGS
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The division of this Agreement into Articles, Sections, subsections,
paragraphs and subparagraphs and the insertion of titles are for convenience of
reference only and do not affect the meaning or the interpretation of the
present Agreement.
1.4 GOVERNING LAWS
This Agreement and the interpretation and enforcement thereof shall be
governed by and construed in accordance with the laws applicable in the Province
of Quebec.
1.5 FORMAL NOTICE
The Borrower shall be deemed to have received formal notice to fulfil its
obligations by the mere lapse of the time provided for their execution or by the
end or forfeiture of the term, or by any other cause provided by the law.
1.6 SCHEDULES
The schedules annexed hereto shall form an integral part of this Agreement.
1.7 REFERENCES TO THIS AGREEMENT
The expressions "hereto" or "hereunder" or "hereof" or "herein" or "this
Agreement" refer to this Agreement together with any future amendment, updating
or restatement.
2. REVOLVING CREDIT FACILITY
2.1 MAXIMUM AMOUNT AVAILABLE
The Lenders, severally but not solidarily, make the following Revolving
Credit Facility available to the Borrower, up to a maximum amount which shall
not exceed the lower of:
2.1.1 the amount resulting from the calculation referred to in Section
2.2; and
2.1.2 an amount equal to the difference between (i) Cdn $90,000,000 and
(ii) the total outstanding amount discounted by SODEX pursuant to
a Master Agreement entered into (or to be entered into) with the
Borrower (as same may be amended, supplemented or restated from
time to time) in connection with the sale by the Borrower or
Gildan Activewear SRL, at a discount, of accounts receivable to
SODEX (the "SODEX Amount"); for the purpose set forth herein the
Borrower undertakes to instruct SODEX to deliver, to the Agent, as
often as necessary, the SODEX Amount as of such day in order to
allow the Agent and the Borrower to evaluate the maximum amount
available under the Revolving Credit Facility;
None of the Lenders is bound, in connection with the Revolving Credit
Facility, to make an advance or to contract an obligation over and above its
Commitment.
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2.2 MARGINED LIMIT OF THE REVOLVING CREDIT FACILITY
The aggregate principal amount outstanding under the Revolving Credit
Facility, expressed in the Equivalent of Canadian Dollars if any portion thereof
is outstanding in U.S. Dollars, shall not exceed the aggregate of:
2.2.1 an amount equal to the sum of (i) an amount equal to 80% of the
aggregate book value of all the Insured Eligible Accounts
Receivable with respect to which the insurance coverage (i.e. the
insured percentage) is at least equal to 85% of the book value of
said insured accounts receivable and (ii) an amount equal to the
aggregate of the Insured Amounts of all of the Insured Eligible
Accounts Receivable with respect to which the insurance coverage
(i.e. the insured percentage) is less than 85% of the book value
of said insured accounts receivable; for the purpose set forth
herein "Insured Amount" means that portion of the insured account
receivable which is covered by the receivable insurance and is
obtained by multiplying the book value of the account receivable
by the applicable insured percentage;
2.2.2 an amount equal to 75% of the amount resulting from the difference
between (i) the book value of the Uninsured Eligible Accounts
Receivable and (ii) an amount equal to Cdn $1,000,000 (or such
other greater amount equal to the aggregate Uninsured Eligible
Accounts Receivable which are owed by Disqualified Account
Debtor); and
2.2.3 an amount equal to the lesser of (i) Cdn$45,000,000 and (ii) an
amount equal to 60% of the book value of the Eligible Inventory;
less
2.2.4 the aggregate amount of liabilities owing by the Borrower or an
Unrestricted Subsidiary, the non-payment of which shall or may
result in the creation of a Lien or other claim ranking in
priority to any of the Liens of the Lenders under the Security
Documents including, without limitation, the claims listed in
Schedule 2.2.4 hereto;
less
2.2.5 until such time as the Borrower shall have delivered to the Agent
satisfactory evidence that GE Capital Quebec Equipment Financing
Inc. and GE Capital Canada Equipment Financing Inc. have granted a
release and discharge of all the Liens created in their favour on
the Borrower's assets subject to the Liens created by the Security
Documents, an amount equal to Cdn$2,000,000;
For the purposes of determining the Margined Limit of the Revolving Credit
Facility, all amounts should be calculated on a consolidated basis with the
Unrestricted Subsidiaries.
2.3 REVOLVING NATURE OF THE REVOLVING CREDIT FACILITY
Subject to the relevant terms and conditions of this Agreement, the amount
of any repayment of the whole or any part of the principal amount outstanding
under the Revolving Credit Facility may be
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reborrowed by the Borrower at any time.
2.4 VOLUNTARY REDUCTION OF THE REVOLVING CREDIT FACILITY
At any time on any Business Day during the Revolving Period, upon giving
the Agent three (3) Business Days prior written notice, the Borrower may
voluntarily either terminate or reduce the Revolving Credit Facility in whole
multiples of Cdn $1,000,000. Concurrently with any such termination or
reduction, the Borrower shall pay to the Agent, the amount, if any, by which the
Revolving Loans exceeds the amount of the Commitments so reduced. Where the
aggregate principal amounts outstanding under the Revolving Loans by way of
Prime Rate Advances are less than the required repayment, the Borrower shall,
subject to the provisions of Section 18.2, be required to repay, prior to their
stated date of maturity a sufficient amount outstanding by way of Bankers'
Acceptances or Libor Advances.
2.5 USE OF PROCEEDS FROM ADVANCES
The proceeds of all advances by the Lenders under the Revolving Credit
Facility shall be used by the Borrower exclusively for general corporate
purposes including investments in Unrestricted Subsidiaries.
2.6 AVAILABILITY UNDER THE REVOLVING CREDIT FACILITY
Subject to the restrictions set forth hereunder, the Borrower may request
that the whole or any portion of the Revolving Credit Facility be advanced by
the Lenders, either in Canadian Dollars or U.S. Dollars, by way of:
2.6.1 direct advance by way of overdraft where interest thereon is to be
calculated on a Prime Rate Basis;
2.6.2 direct advances where interest thereon is to be calculated on a
Prime Rate Basis in whole multiples of Cdn$50,000 or U.S.$50,000;
2.6.3 the issuance of Letters of Guarantee;
2.6.4 the issuance of Banker's Acceptances; and
2.6.5 direct advances where interest thereon is to be calculated on a
Libor Basis.
Notwithstanding the provisions of Section 5.2 and subject to further review
by the Agent and the Borrower, the amounts available to the Borrower under the
Revolving Credit Facility shall be reduced by the amounts outstanding under the
credit facility made available to the Borrower or its subsidiaries by SODEX.
3. DRAW DOWNS AND OPERATION OF ACCOUNTS
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3.1 DRAW DOWNS UNDER THE REVOLVING CREDIT FACILITY
All advances under the Revolving Credit Facility shall be requested by the
Borrower:
3.1.1 subject to a maximum amount not to exceed Cdn $5,000,000 or its
Equivalent in U.S. Dollars, by incurring overdrafts (by drawing
cheques or being deemed to have drawn cheques) against the
Borrower's Account; where an overdraft exists against the
Borrower's Account as contemplated in this subsection, the amount
of such overdraft shall be deemed to constitute an advance under
the Revolving Credit Facility with respect to which the Borrower
shall be deemed to have requested that interest thereon be
calculated on a Prime Rate Basis; and
3.1.2 by delivering to the Agent a draw down notice substantially in the
form attached hereto as Schedule 3.1.2 before 10:30 a.m. at least
two (2) Business Days prior to any advance, where the Borrower has
requested that interest thereon be calculated on a Prime Rate
Basis, two (2) Business Days prior to any advance where the
Borrower wishes to request that the whole or any part thereof be
outstanding by way of Banker's Acceptances or Letters of Guarantee
or three (3) Banking Days prior to any advance where the Borrower
has requested that interest on the whole or any portion thereof be
calculated on a Libor Basis; any such notice, once delivered to
the Agent, may not subsequently be revoked or withdrawn by the
Borrower.
3.2 DISBURSEMENT OF FUNDS
3.2.1 Whenever the overdraft in the Borrower's Account (expressed in its
Equivalent in Canadian Dollars if any portion thereof is
outstanding in U.S. Dollars) reaches or exceeds Cdn $5,000,000,
the Agent shall deposit into such account, an amount, rounded up
to the nearest Cdn $10,000 or U.S. $10,000, as the case may be,
sufficient to ensure that said overdraft is eliminated and a
positive balance is established in each of the Canadian Dollar
Account and the U.S. Dollar Account.
3.2.2 Where the proposed advance is requested by the Borrower through a
draw down notice, the said advance shall be made as follows:
3.2.2.1 where the whole or any portion of any such advance is requested to
be made by way of direct advance with interest thereon calculated
on a Prime Rate Basis or the Libor Basis, the Lenders shall
disburse such portion of such advance by depositing their
respective Pro Rata Share of said amount into the Borrower's
Canadian Dollar Account or U.S. Dollar Account, as the case may
be;
3.2.2.2 where the whole or any portion of any such advance is requested to
be made by way of the issuance of one or more Letters of
Guarantee, the Agent shall disburse such portion of such advance
by delivering the Letter or Letters of Guarantee to the Borrower;
3.2.2.3 where the whole or any portion of any such advance is requested to
be made by way of the issuance of one or more Banker's
Acceptances, the Lenders shall disburse such portion of such
advance by delivering such Banker's Acceptances to or to the order
of the Borrower.
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3.3 MAINTENANCE OF ACCOUNTS
The Agent will open and maintain on its books at the Branch of Account, for
the purpose of this Agreement, bank accounts for deposits in Canadian Dollars
and for deposits in U.S. Dollars, as well as a loan account or ledger for the
Borrower evidencing the aggregate Indebtedness of the Borrower to the Lenders
hereunder and each constituent part of the Revolving Loans. Such loan ledger
shall constitute, in the absence of manifest error, conclusive evidence of the
whole and each constituent part of the Revolving Loans, the date any advance is
made to the Borrower and the aggregate amounts from time to time paid by the
Borrower on account of such Revolving Loans in principal, interest, fees and
other amounts due hereunder.
3.4 AUTHORITY TO DEBIT AND CREDIT
Subject to the provisions of this Agreement, the Borrower does hereby
expressly and irrevocably authorize the Agent to effect all the necessary
debits, deposits and credits in the Borrower's accounts in order to accommodate
the Lenders in making advances and in order to accommodate the Borrower in
making payments to the Lenders, the whole under and subject to the terms of this
Agreement.
4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO ADVANCES
The obligations of the Lenders to make advances to the Borrower under the
Revolving Credit Facility as provided hereunder are conditional upon each of the
following conditions precedent having been met to the satisfaction of the Agent
and its legal counsel:
4.1.1 the Borrower shall have:
4.1.1.1 executed and delivered the Security Documents referred to under
the closing agenda annexed hereto under Schedule 4.1.1;
4.1.1.2 attended to the due publication of such forms and the due
registration or filing of any financing statement registrations
required under all applicable Laws with respect to the Security
Documents delivered pursuant to paragraph 4.1.1.1;
4.1.1.3 attended to the due registration of the notice of intention
forming part of the Bank Act Documents at the agency of the Bank
of Canada situated in Montreal, Province of Quebec;
4.1.2 an executed counterpart of this Agreement, the Interlender
Agreement, the Guarantee and Subordination Agreement and the
Intercreditor Agreements will have been executed and/or remitted
to the Agent;
4.1.3 the Borrower shall have delivered to the Agent and its legal
counsel, in form and substance satisfactory to them;
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4.1.3.1 a certified copy of the Borrower's constating documents and
by-laws;
4.1.3.2 a certified copy of the constating documents and by-laws of each
Unrestricted Subsidiary and Guarantor Subsidiary;
4.1.3.3 a Certificate of incumbency in respect of the directors and
officers of the Borrower and each of the Unrestricted Subsidiaries
and Guarantor Subsidiary;
4.1.3.4 a certified copy of a resolution of the board of directors of the
Borrower authorizing inter alia the transactions contemplated in
this Agreement;
4.1.3.5 a certified copy of a resolution of the board of directors of each
Unrestricted Subsidiary and Guarantor Subsidiary authorizing INTER
ALIA the Corporate Guarantee and the Security Documents to which
it is a party;
4.1.3.6 the opinion (in form and substance satisfactory to the Agent and
Xxxx, Saint-Pierre) of Xxxx, Saint-Pierre, addressed to the
Lenders, the Agent and Xxxxxxxxxx Xxxxxxxx Xxxxx Xxxxxx, dated the
date of the draw down notice relating to the initial advance under
the Revolving Credit Facility covering INTER ALIA (i) the
corporate status of the Borrower; (ii) the authorization and
capacity for the Borrower to execute this Agreement and to perform
each of the obligations contained herein or incidental thereto;
and (iii) the legal, valid, and binding nature of the obligations
of the Borrower under this Agreement; such opinion shall include a
report on searches made in the province of Quebec on Liens
existing on the movable assets of the Borrower subject to such
qualifications and reservations as may be agreed to between the
Agent and Xxxx, Saint-Pierre;
4.1.3.7 the opinion (in form and substance satisfactory to the Agent) of
the Borrower's U.S. legal counsel, addressed to the Lenders, the
Agent and Xxxxxxxxxx Xxxxxxxx Xxxxx Xxxxxx, dated the date of the
draw down notice relating to the initial advance under the
Revolving Credit Facility covering INTER ALIA (i) the corporate
status of the U.S. Unrestricted Subsidiaries; (ii) the ability for
the U.S. Unrestricted Subsidiaries to guarantee the obligations of
the Borrower under this Agreement pursuant to the terms and
conditions of the Security Documents to which they are a party and
to perform each of the obligations contained therein or incidental
thereto; and (iii) the legal, valid, and binding nature of the
obligations of the U.S. Unrestricted Subsidiaries under the
Security Documents to which they are party to;
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4.1.3.8 the opinion (in form and substance satisfactory to the Agent) of
the Borrower's Barbados legal counsels, addressed to the Lenders,
the Agent, the Lenders' Barbados legal counsel and Xxxxxxxxxx
Xxxxxxxx Xxxxx Xxxxxx, dated the date of the draw down notice
relating to the initial advance under the Revolving Credit
Facility covering INTER ALIA (i) the corporate status of the
Barbados Unrestricted Subsidiaries; (ii) the ability for the
Barbados Unrestricted Subsidiaries to guarantee the obligations of
the Borrower under this Agreement pursuant to the terms and
conditions of the Security Documents to which the Barbados
Unrestricted Subsidiaries are party and to perform each of the
obligations contained therein or incidental thereto; and (iii) the
legal, valid, and binding nature of the obligations of the
Barbados Unrestricted Subsidiaries under the Security Documents to
which they are party to;
4.1.3.9 the opinion (in form and substance satisfactory to the Agent) of
the Borrower's British Virgin Islands' legal counsels, addressed
to the Lenders, the Agent, the Lenders' British Virgin Islands'
legal counsel and Xxxxxxxxxx Xxxxxxxx Xxxxx Xxxxxx, dated the date
of the draw down notice relating to the initial advance under the
Revolving Credit Facility covering INTER ALIA (i) the corporate
status of B.V.I.; (ii) the ability for B.V.I. to guarantee the
obligations of the Borrower under this Agreement pursuant to the
terms and conditions of the Security Documents to which B.V.I. is
a party to and to perform each of the obligations contained
therein or incidental thereto;
4.1.4 the Agent shall have received the opinion of Xxxxxxxxxx Xxxxxxxx
Xxxxx Xxxxxx addressed to the Lenders and the Agent and dated the
date of the drawdown notice related to the initial advance under
the Revolving Credit Facility, covering such matters incident to
the transactions contemplated hereby as the Lenders may reasonably
request;
4.1.5 the opinion of the Agent's U.S. legal counsel addressed to the
Lenders and the agent and dated the date of the drawdown notice
related to the initial advance under the Revolving Credit
Facility, covering such matters incident to the transactions
contemplated hereby as the Lenders may reasonably request;
4.1.6 the Agent shall have received, for the year ended October 4, 1998:
(i) the audited consolidated financial statements of the Borrower
and its Subsidiaries, (ii) the audited unconsolidated financial
statements of the Borrower and (iii) unaudited unconsolidated
financial statements of each other Subsidiary;
4.1.7 The Agent shall have received the latest quarterly unaudited
consolidated and unconsolidated financial statements of the
Borrower and the Unrestricted Subsidiairies and the unaudited
internal balance sheet and income statement of Gildan Activewear
SRL dated March 7, 1999;
4.1.8 the Agent shall have received the financial projections of the
Borrower, on a consolidated basis, for the next three fiscal years
comprised of a balance sheet, income statement, cash flow,
Borrowing Base, capital expenditures and financial ratios
(including without limitation, the assumptions upon which such
budget is based);
4.1.9 the Agent shall have received evidence that since the financial
statements referred to under subsection 4.1.6, no event has
occurred or failed to occur which may have a material adverse
effect on the business, assets, liabilities, financial position,
results of operations or business prospects of the Borrower (on a
consolidated basis) or on the ability of the Borrower or any
Unrestricted Subsidiary to perform its obligations under the
Credit Agreement or any of the Security Documents;
4.1.10 the Agent shall have received evidence that the Borrower complies
with all other financial undertakings presently outstanding
towards any other person;
4.1.11 the Agent shall be satisfied with the results of the due diligence
conducted by it with respect to environmental matters as well as
with respect to the internal reports prepared by or on behalf of
the Borrower of the manufacturing facilities of the Borrower;
4.1.12 the Agent shall have received evidence that all the assets to be
charged under the terms of the Security
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Documents are free and clear from all encumbrances, save and
except for Permitted Encumbrances;
4.1.14 the Agent shall be satisfied with the results of the due diligence
conducted by the Agent's field auditors with regards to accounts
receivable and inventory which due diligence shall be at the
Borrower's expense and which shall include a visit of the
Borrower's premises located in Canada and the United States of
America;
4.1.15 the Agent shall have received evidence of the adequacy of the
insurance coverage of the Borrower and of the Unrestricted
Subsidiaries;
4.1.16 the Agent shall have received certified copies (by the Borrower)
of all deeds, contracts and agreements pursuant to which any
secured indebtedness of the Borrower and the Unrestricted
Subsidiaries was created and any individual unsecured indebtedness
in excess of Cdn $1,000,000; and
4.1.17 the Agent shall have received search reports in respect of all the
charges or encumbrances of the whole or any part of the assets
owned respectively by the Borrower and the Unrestricted
Subsidiaries for each jurisdiction where the Borrower or/and
Unrestricted Subsidiary has a place of business or in which
inventory is located. The searches should be performed under the
name of the Borrower and under the names of each of the
Unrestricted Subsidiary and all of the respective predecessors.
For the purposes hereof, an encumbrance includes any conditional
sale, sale with a balance of price, sale with a resulatory clause
as well as any leasing contract;
4.1.18 the Agent shall have received satisfactory evidence that the
Borrower has entirely repaid all of its Indebtedness under the B
of A Credit Agreement, provided that any portion of such repayment
may be made with the proceeds of the first advance under the
Revolving Credit Facility, in which case, this condition precedent
shall be deemed to have been met where the Borrower provides the
Agent with such satisfactory evidence concurrently with such first
advance;
4.1.19 the Agent shall have received from Bank of America (Canada) a
general release and discharge with respect to all Liens created in
their favor in connection with the B of A Credit Agreement. Such
general release and discharge shall also contain the unconditional
and irrevocable undertaking to execute all such documents and do
all such things as may be required in order to grant and register
such release and discharge of the aforesaid Liens;
4.1.20 the Agent shall have received on behalf of the Lenders, the entire
amount of that portion of the structuring and underwriting fee
which is payable concurrently with the execution of this
Agreement.
5. INTEREST ON PRIME RATE BASIS
5.1 CDN PRIME RATE
The principal amounts denominated in Canadian Dollars and outstanding under
the Revolving Credit Facility with respect to which the Borrower has elected or
pursuant to the provisions of this
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Agreement is required to pay interest on a Prime Rate Basis shall bear interest,
computed daily, on the respective daily balances outstanding from the date of
their respective first advance up to and including the day preceding the day of
their respective repayment in full, at an annual rate applicable for each such
day equal to the Cdn Prime Rate in effect on such day plus the Relevant Margin.
5.2 U.S. PRIME RATE
The principal amounts denominated in U.S. Dollars and outstanding under the
Revolving Credit Facility with respect to which the Borrower has elected or
pursuant to the provisions of this Agreement is required to pay interest on a
Prime Rate Basis shall bear interest, computed daily, on the respective daily
balances outstanding from the date of their respective first advance up to and
including the day preceding the day of their respective repayment in full, at an
annual rate applicable for each such day equal to the U.S. Prime Rate in effect
on such day plus the Relevant Margin.
5.3 INTEREST ON REVOLVING LOANS GENERALLY
Where no specific provision for interest on any amount outstanding and
payable by the Borrower is made in this Agreement, interest thereon shall be
computed and be payable on a Prime Rate Basis relating to the Revolving Credit
Facility.
6. INTEREST ON LIBOR BASIS
6.1 INTEREST ON LIBOR BASIS
The principal amounts of the Libor Advances shall bear interest, computed
daily, on the respective daily balances outstanding from each relevant Rollover
Date at an annual rate applicable for each such day equal to the Libor Rate
applicable to such Selected Amount plus the Relevant Margin and shall be in
effect from and including such Rollover Date up to and including the day
preceding their respective maturity date.
6.2 DETERMINATION OF LIBOR RATE
Where, under the provisions of this Agreement, the Borrower has requested
that the interest on any principal amount outstanding under the Revolving
Credit Facility be calculated on a Libor Basis, the Libor Rate shall be
determined by the Agent two Banking Days prior to a Rollover Date.
6.3 ESTABLISHMENT OF LIBOR RATE AS AT 11:00 A.M., LONDON TIME
The Libor Rate shall be established as at 11:00 a.m., London time, two
Banking Days prior to the relevant Rollover Date. Before the end of business,
two (2) Banking Days prior to the said Rollover Date, the Agent shall notify the
Borrower of the Libor Rate applicable to each Selected Amount for each
applicable Selected Maturity.
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6.4 LIMITS ON LIBOR ADVANCES
In connection with any Libor Advances, the Borrower shall not be entitled:
6.4.1 to elect a Selected Amount for any Selected Maturity which is less
than U.S. $500,000 and a whole multiple of U.S. $100,000 per
Lender;
6.4.2 to elect a Selected Maturity for any Selected Amount other than
one, two, three or six months; and
6.4.3 to elect a Selected Maturity which has a maturity date that is
beyond the last day of the Revolving Period.
6.5 AVAILABILITY
If, on the date referred to in Section 6.3, a Lender determines in good
faith that because of conditions affecting the interbank market, for a Selected
Maturity,
6.5.1 adequate and fair means do not exist to ascertain the Libor Rate;
or
6.5.2 it is unfeasible to make or continue a Libor Advance; or
6.5.3 the Libor Rate is less than the actual cost to make and maintain a
Libor Advance; or
6.5.4 a sufficient quantity of U.S. Dollars deposits is not available to
such Lender;
the Agent shall give notice of this situation to the Borrower as soon as
possible (the "Initial Notice").
Once the Initial Notice has been given, the concerned Lender shall be under
no obligation to make new Libor Advances to renew outstanding Libor Advances
until the Agent gives notice to the contrary to the Borrower. During a period of
thirty (30) days following the date of the Initial Notice, the concerned Lender
shall consult the Borrower with a view to concluding in good faith and
implementing an agreement as to an alternative basis of borrowing.
The terms and conditions of this alternative basis of borrowing take effect
upon the conclusion of such agreement relating to an alternative basis of
borrowing, and the provisions hereof pertaining to this Libor Advance shall be
automatically amended to reflect the terms and conditions of the alternative
basis.
7. COMPUTATION AND PAYMENT OF INTEREST
7.1 COMPUTATION OF INTEREST
Under the terms of this Agreement:
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7.1.1 interest at Cdn Prime Rate shall be calculated on the basis of a
365-day year for the actual days elapsed;
7.1.2 interest at U.S. Prime Rate shall be calculated on the basis of
(i) a 365-day year for the actual days elapsed during such period
if the U.S. Prime Rate is calculated using the National Bank of
Canada's U.S. Prime Rate and (ii) a 360-day year for the actual
days elapsed during such period if the U.S. Prime Rate is
calculated using the Federal Funds Effective Rate; and
7.1.3 interest at Libor Rate shall be calculated on the basis of a
360-day year for the actual days elapsed.
7.2 ANNUAL EQUIVALENT OF LIBOR AND FEDERAL FUNDS EFFECTIVE RATE
For the purposes of the INTEREST ACT (Canada), the annual rates of
interest to which the rates determined in accordance with the provisions
respectively of subsection 7.1.3 and of clause (ii) of subsection 7.1.2 are
equivalent, are the specified rates multiplied by the actual number of days in
the year divided by 360.
Furthermore, for the purposes of the same Act, in the case of a leap year,
the yearly rate of interest to which the rate of interest calculated on a
365-day basis is equivalent, is such rate multiplied by 366 and divided by 365.
7.3 PAYMENT OF INTEREST
The interest payable in accordance with the foregoing provisions and
computed as aforesaid on the amount outstanding from time to time shall be
payable, in arrears, on the 26th day of each month or, with respect to Libor
Advances, on the appropriate Libor Interest Payment Date, with interest on all
overdue interest at the rate applicable to the principal during the period in
which it remains unpaid, computed daily and payable upon the demand of the
Agent.
8. BANKER'S ACCEPTANCES
8.1 REQUEST FOR BANKER'S ACCEPTANCES
Provided that no Default or Event of Default exists at that time, the
Borrower may request that any part of the Revolving Credit Facility be advanced
or that any amount outstanding thereunder be converted into or continued
respectively as Banker's Acceptances. Such request may be made by delivering to
the Agent a draw down notice or conversion notice to that effect pursuant to
the provisions of this Agreement.
8.2 REQUIREMENTS FOR BANKER'S ACCEPTANCES
Each advance requested by way of a Banker's Acceptance pursuant to this
Agreement:
8.2.1 shall have a Selected Amount which must be in a minimum amount of
Cdn $500,000 and a whole multiple of Cdn $100,000 per Lender;
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8.2.2 shall have a Selected Maturity of one, two, three or six months,
excluding days of grace as that term is defined in the BILLS OF
EXCHANGE ACT (Canada); and
8.2.3 shall not have a Selected Maturity which has a maturity date that
is beyond the last day of the Revolving Period.
8.3 STAMPING FEE
The Borrower shall pay to the Agent on behalf of the Lenders, forthwith
upon the issue of each Banker's Acceptance, a stamping fee on the face amount of
each Banker's Acceptance equal to the product resulting from multiplying the
said face amount by a fraction, the numerator of which shall consist of the
product resulting from multiplying the Relevant Margin by the number of days in
the Selected Maturity selected by the Borrower for such Banker's Acceptance and
the denominator of which shall consist of 365.
8.4 THE AGENT TO ADVISE LENDERS
The Agent, following receipt of a draw down notice or a conversion notice
requesting Banker's Acceptances, shall advise each Lender of the applicable
Selected Maturity for, and the nominal amount of, each of the Banker's
Acceptances to be accepted by it. The aggregate nominal amount of Banker's
Acceptances to be accepted by a Lender shall be equal to the Pro Rata Share of
such Lender of the aggregate nominal amount of Banker's Acceptances requested by
the Borrower, except that, if the nominal amount of a Banker's Acceptance would
not be a whole multiple of Cdn $100,000, such nominal amount shall be increased
or reduced by the Agent in its sole discretion to the nearest whole multiple of
Cdn $100,000.
8.5 MATURITY DATE OF BANKER'S ACCEPTANCES
Within the time period stipulated in the relevant provisions hereof, prior
to or on the maturity date of each Banker's Acceptance, the Borrower shall
either issue a conversion notice as contemplated in Section 11.1 or by no later
than 11:00 a.m., Montreal time, on the maturity date of the Banker's Acceptances
then outstanding and about to mature, deposit into the Canadian Dollar Account
an amount equal to the nominal amount of such Banker's Acceptances.
8.6 DEEMED CONVERSION ON MATURITY DATE
In the event the Borrower does not deliver to the Agent any conversion
notice or make a deposit as contemplated in Section 8.5, or, in the event the
Borrower does deliver any such notice, but at any relevant Conversion Date,
there exists a Default or an Event of Default, then the Borrower shall be deemed
to have issued a conversion notice requesting that the face value of the
Banker's Acceptances about to mature be converted into an advance under the
Revolving Credit Facility with respect to which interest is to be calculated on
a Prime Rate Basis.
8.7 POWER OF ATTORNEY
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Each of the Lenders is hereby appointed the irrevocable agent of the
Borrower with the power and authority to execute the Banker's Acceptances to be
issued and accepted by it. Furthermore, the Agent is hereby appointed the
irrevocable agent of the Borrower with power and authority to make the necessary
arrangements for the negotiation, sale and delivery on the money market, in
accordance with normal market practice, of Banker's Acceptances accepted by the
Lenders.
8.8 WAIVER
The Borrower shall not claim from the Lenders any days of grace for the
payment at maturity of any Banker's Acceptance presented to and accepted
pursuant to this Agreement. Furthermore, the Borrower hereby waives any defense
to payment which might otherwise exist if for any reason a Banker's Acceptance
shall be held by a Lender in its own right at the maturity thereof.
8.9 OBLIGATIONS ABSOLUTE
The obligations of the Borrower with respect to Banker's Acceptances under
this Article shall be unconditional and irrevocable, and shall be paid strictly
in accordance with the terms of this Agreement under all circumstances,
including, without limitation, the following circumstances:
8.9.1 any lack of validity or enforceability of any draft issued by the
Borrower and accepted by a Lender as a Banker's Acceptance; or
8.9.2 the existence of any defense, right of action, right of
compensation or set-off or claim of any nature whatsoever which
the Borrower may at any time have or have had against the holder
of a Banker's Acceptance, the Lenders or any other Person, whether
in connection with this Agreement or otherwise.
9. LETTERS OF GUARANTEE
9.1 REQUEST FOR LETTERS OF GUARANTEE
Provided that no Default or Event of Default exists at that time, the
Borrower may request that any part of the Revolving Credit Facility be advanced,
converted into or continued as a Letter of Guarantee to be denominated in
Canadian Dollars or U.S. Dollars. Such request may be made by delivering to the
Agent a draw down notice or conversion notice to that effect pursuant to the
provisions of this Agreement.
9.2 ISSUANCE OF LETTERS OF GUARANTEE
By no later than 10:30 a.m., Montreal time, on the date requested, the
Agent shall deliver to the Borrower the requested Letter of Guarantee duly
executed by it. The parties hereto do hereby expressly acknowledge and agree
that the Borrower shall only have the right to request that the issuance of any
such Letter of Guarantee be made only by the Lender which is also the Agent,
provided, however, that any such advance by way of the issuance of any such
Letter of Guarantee shall be allocated among the Lenders on the basis of their
respective Pro Rata Share of such advance.
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9.3 LIMITS OF LETTERS OF GUARANTEE
Nothing in this Agreement contained shall be construed or interpreted so as
to entitle the Borrower:
9.3.1 to request or have outstanding any Letter of Guarantee expiring
more than 364 days from the date of its issuance or renewal;
9.3.2 to request or have outstanding any Letter of Guarantee which
constitutes a documentary letter of credit which is not payable at
sight;
9.3.3 to request or have outstanding any Letter of Guarantee the term of
which goes beyond the last day of the Revolving Period; or
9.3.4 to request or have outstanding any Letter of Guarantee in any
currency other than in Canadian Dollars or U.S. Dollars.
9.4 LG FEE
The Borrower shall pay to the Agent, as issuer, forthwith upon the issue,
renewal or amendment of each Letter of Guarantee:
9.4.1 which is not a documentary letter of credit, subject to a minimum
of Cdn $150 per such Letter of Guarantee, a fee, calculated on an
amount equal to the maximum liability of the Agent under such
Letter of Guarantee equal to the product resulting from
multiplying the said amount by a fraction, the numerator of which
shall consist of the product resulting from multiplying the
Relevant Margin by the number of days in the Selected Maturity
selected by the Borrower for such Letter of Guarantee (subject,
for the sole purpose of this subsection to a minimum of 30 days)
and the denominator of which shall consist of 365; and
9.4.2 which is a documentary letter of credit, a fee in accordance with
the fee schedule of the Agent in force from time to time with
respect to the issuance, renewal or amendment of such documentary
letters of credit.
9.5 DISTRIBUTION OF LG FEE
Upon receipt of any fee pursuant to the provisions of Section 9.4, same
shall forthwith be distributed among the Lenders as follows:
9.5.1 the Agent, as issuer, shall keep for its own account and exclusive
benefit that portion of any such fee corresponding to the product
resulting from multiplying the amount corresponding to the maximum
liability under the relevant Letter of Guarantee by a fraction,
the numerator of which shall consist of the product resulting from
multiplying 10% by the number of days in the Selected Maturity
selected by the Borrower for such Letter of Guarantee and the
denominator of which shall consist of 365; and
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9.5.2 the balance of such fee shall be paid over by the Agent to the
Lenders on a Pro Rata Basis.
9.6 ADVANCES ON PAYMENT OF LETTERS OF GUARANTEE
The aggregate principal amount or amounts of monies paid by the Agent at
any time under any of the Letters of Guarantee, shall constitute an advance
under the Revolving Credit Facility with respect to which interest is to be
calculated on a Prime Rate Basis.
9.7 OBLIGATIONS ABSOLUTE
The obligations of the Borrower with respect to Letters of Guarantee under
this Article shall be unconditional and irrevocable, and shall be paid strictly
in accordance with the terms of this Agreement under all circumstances,
including, without limitation, the following circumstances:
9.7.1 any lack of validity or enforceability of any draft or other
document presented in connection with any payment requested under
any Letter of Guarantee; or
9.7.2 the existence of any defense, right of action, right of
compensation or set-off or claim of any nature whatsoever which
the Borrower may at any time have or have had against the
beneficiary of a Letter of Guarantee, the Lenders or any other
Person, whether in connection with this Agreement or otherwise.
10. STAND-BY AND AGENCY FEE
10.1 STAND-BY FEE
As of the date of execution of this Agreement and until the termination of
the Revolving Credit Facility, the Borrower hereby covenants and agrees to pay
to the Lenders, a stand-by fee equal to the percentage per annum set out in
Schedule 10.1 hereof, computed daily on the undisbursed portion of the Revolving
Credit Facility.
10.2 PAYMENT OF STAND-BY FEE
The stand-by fee shall be calculated on the basis of a 365-day year for the
actual days elapsed and shall be payable quarterly in arrears. Any arrears on
the payment of the stand-by fee shall bear interest, computed daily, on the
daily balance thereof on a Prime Rate Basis applicable to the Revolving Credit
Facility from the date it becomes due up to and including the day preceding the
day of the payment in full thereof.
10.3 AGENCY FEE
The Borrower shall pay to the Agent, for its account exclusively, an annual
agency fee (to be determined by separate agreement between the Agent and the
Borrower) payable on the date contemplated by such separate agreement and
thereafter, on each renewal date of the Revolving Credit
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Facility until the date which the Revolving Credit Facility is terminated and
the Revolving Loans are repaid in full. No portion of the agency fee paid
pursuant to the provisions of this Agreement and such separate agreement shall,
under any circumstances, be refundable.
10.4 STRUCTURING AND UNDERWRITING FEE
The Borrower shall pay to the Agent, for the account of the Lenders, a
structuring and underwriting fee (to be determined by separate agreement between
the Borrower and the Lenders) payable on the date contemplated by such separate
agreement. No portion of the structuring and underwriting fee paid pursuant to
the provisions of this Agreement and such separate agreement shall, under any
circumstances, be refundable.
11. CONVERSIONS AND CONTINUATIONS
11.1 CONVERSIONS AND CONTINUATIONS
The Borrower may choose to convert the currency of any principal amount
outstanding under the Revolving Credit Facility or change the basis on which all
or a part of such amounts bear interest or are outstanding as provided
hereunder. Such election shall be expressed by delivering to the Agent a written
notice substantially in the form attached hereto as Schedule 11.1 by no later
than 10:30 a.m., Montreal time, at least three (3) Business Days prior to its
effective date (or at least three (3) Banking Days prior to its effective date
whenever the Borrower elects to have interest thereon calculated on a Libor
Basis).
11.2 NO REVOCATION OR WITHDRAWAL OF NOTICES
Any notice under this Article, once delivered to the Agent, may not
subsequently be revoked or withdrawn by the Borrower.
11.3 LIMITS ON CONVERSIONS
No conversion may be made in respect of outstanding Letters of Guarantee
until the expiry thereof, nor with respect to outstanding Banker's Acceptances
or outstanding amounts with interest thereon calculated on a Libor Basis until
the maturity thereof.
11.4 DETERMINATIONS OF EQUIVALENT OF CANADIAN DOLLARS AND OF U.S. DOLLARS
Where, under any provision of this Agreement, the Agent has the right or is
required to determine the Equivalent in Canadian Dollars of any values or sums
denominated or expressed in U.S. Dollars, or the Equivalent in U.S. Dollars of
any values or sums denominated or expressed in Canadian Dollars, the rate of
exchange applied shall be that quoted by the Bank of Canada as the noon
mid-market spot rate for conversion of U.S. Dollars into Canadian Dollars or of
Canadian Dollars into U.S. Dollars on the day preceding the Business Day on
which such determination is made.
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12. PAYMENTS AND REPAYMENTS
12.1 REPAYMENT OF REVOLVING LOANS
The Borrower shall repay to the Agent on behalf of the Lenders on the
last day of the Revolving Period the entire amount of the Revolving Loans
outstanding at such date, plus any interest, fees and related expenses thereto.
During the Revolving Period, the Borrower may, at any time with a 30-day
notice, without penalty or premium, voluntarily repay the Revolving Loan in
whole or in part provided that where such part of such loans is outstanding by
way of Banker's Acceptances or by way of Libor Advances, no such repayment may
be made on any day other than the date of maturity thereof unless Borrower pays
the reasonable breakage costs referred to under Section 18.2 in respect thereof.
The amount of each such repayment shall be an integral multiple of Cdn $50,000
or U.S. $50,000.
12.2 COMPULSORY REPAYMENT OF PART OF REVOLVING LOANS
Where at any time the Agent determines that the Revolving Loans at such
time exceed the limits set forth under Section 2.1, the Borrower shall forthwith
repay such excess amount to the Agent on behalf of the Lenders.
Where the aggregate principal amounts outstanding by way of advances with
interest thereon calculated on a Prime Rate Basis are less than the required
repayment, the Borrower shall, subject to the provisions of Section 18.2, be
required to repay, prior to their stated date of maturity a sufficient amount
outstanding by way of Banker's Acceptances or Libor Advances.
12.3 CURRENCY OF PAYMENTS
All payments and repayments:
12.3.1 of principal or of interest under the Revolving Credit Facility
shall be made in the same currency in which such principal
amounts are outstanding or to which it relates;
12.3.2 of the stamping fee, the stand-by fee, the structuring and
underwriting fee and the agency fee, shall be made in Canadian
Dollars only;
12.3.3 of the fee relating to Letters of Guarantee shall be made in the
same currency as that in which the Letter of Guarantee to which
it relates is outstanding; and
12.3.4 of amounts referred to in Section 18.2 with respect to losses
shall be made in the same currency as the losses incurred by the
Lenders.
12.4 OVERADVANCES - EXCHANGE RATE FLUCTUATIONS
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On the First Business Day of each month and each time particular
circumstances justify it, the Agent shall establish the Equivalent in Canadian
Dollars of any principal amounts outstanding in U.S. Dollars. If, at any such
time, the aggregate amount of the utilizations made under the Revolving Credit
Facility exceeds the limits set forth under Section 2.1, the Borrower shall,
fortwith following a demand to this effect by the Agent, pay the amount in
excess to the Agent on behalf of the Lenders.
12.5 MANNER OF PAYMENTS
In order to effect all payments of interest on the Revolving Loans, and
of fees and other amounts due and to become due hereunder by the Borrower, the
Borrower shall be deemed to have issued under the provisions of subsection
3.1.1, as of the date any such payment is due hereunder, a draw down cheque, in
Canadian Dollars or U.S. Dollars, as the case may be, in an amount equal to the
aggregate amount of all said payments due to the Lenders on such date.
12.6 PAYMENTS AT BRANCH OF ACCOUNT ONLY
All payments or repayments of principal, interest, fees and other amounts
due and to become due hereunder by the Borrower, if not effected or which cannot
be effected in the manner set forth in Section 12.5, must be effected by direct
payments to the Agent on behalf of the Lenders at the Branch of Account only.
12.7 PAYMENT ON BUSINESS DAY AND BY 1:00 P.M., MONTREAL TIME
Whenever any payment or repayment falls due on a day which is not a
Business Day, such payment or repayment shall be made on the next following
Business Day. Furthermore, any amounts received after 1:00 p.m., Montreal time,
on any Business Day shall be applied to the appropriate payment or repayment
which was required to be made on such Business Day, on the next following
Business Day. Until so applied, interest shall continue to accrue as provided in
this Agreement on the amount of such payment or repayment.
13. SECURITY
As a general and continuing collateral security for the performance by
the Borrower of all its obligations, present and future, direct and indirect,
absolute and contingent, presently owing and due and hereafter to become owing
and due to the Agent on behalf of the Lenders by the Borrower under the terms
and conditions of this Agreement (including, without limitation, the obligation
of the Borrower to repay the Revolving Loans), the Security Documents, and any
Derivative Instruments concluded from time to time by the Borrower and any of
the Lenders (collectively the "Obligations"), the Borrower shall, in form and
substance satisfactory to the Agent and subject only to Permitted Encumbrances:
13.1 DEED OF HYPOTHEC
execute and deliver to the Agent, as collateral agent for the Lenders (or
to any Person designated by
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the Lenders), a movable hypothec and security interest on the universality of
the Borrower's present and future accounts receivable and claims (including
insurance and assignment of Lockbox), inventory, securities (such as shares that
the Borrower holds in all Unrestricted Subsidiaries) and intangible assets (such
as patents, trademarks and material agreements), to be governed by the laws of
the Province of Quebec, for an amount of $200,000,000, the whole bearing
interest at the rate of 25% per annum;
13.2 SECURITY AGREEMENT
execute and deliver to the Agent, as collateral agent for the Lenders (or
to any Person designated by the Lenders), a security agreement to be governed by
the laws of the state of New York under the terms of which there shall be
created in favour of the Lenders a Lien upon and a continuing security interest
in all the Borrower's inventory situated in the United States of America;
13.3 BANK ACT DOCUMENTS
execute and deliver to any Lender that is a bank under the BANK ACT
(Canada) documents, pursuant to the terms of which the Borrower shall assign its
inventory in favour of such Lender, free from any Liens, subject only to
Permitted Encumbrances, the whole pursuant to the provisions of Xxxxxxx 000 xx
xxx XXXX XXX (Xxxxxx);
13.4 PLEDGE OF SHARES
execute and deliver to the Agent, as collateral agent for the Lenders (or
to any Person designated by the Lenders), a first ranking pledge with delivery
on the shares that the Borrower holds in all Unrestricted Subsidiaries to be
governed by the laws of a jurisdiction to be mutually agreed upon by the Agent
and the Borrower;
13.5 ENDORSEMENTS OF INSURANCE POLICIES
execute and deliver to the Agent endorsements under all insurance
policies of the Borrower designating the Lenders and the Agent as loss payee
under such insurance policies as their interests may appear. Furthermore, such
endorsements shall include industry standard mortgagee clauses under terms and
conditions acceptable to the Agent; and
13.6 CORPORATE GUARANTEES
deliver to the Agent, as collateral agent for the Lenders (or to any
Person designated by the Lenders), a Corporate Guarantee from each Unrestricted
Subsidiary and Guarantor Subsidiary supported by a first ranking hypothec and
security interest, subject only to Permitted Encumbrances, on the accounts
receivable and claims, inventory, securities (such as shares that such
Unrestricted Subsidiary holds in another Unrestricted Subsidiary or in a
Guarantor Subsidiary) and intangible assets of each Unrestricted Subsidiary
(such as patents, trademarks and material agreements), for an amount sufficient
to cover their respective obligations under the Corporate Guarantee and under
all other Security Documents to which they are respectively a party, plus an
additional amount of 25%, the whole bearing interest at the rate of
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25% per annum; these Security documents shall comply with the laws of each
jurisdiction in which the charged property is located and shall be perfected in
accordance with the requirements of the laws applicable to each of such
jurisdictions;
14. REPRESENTATIONS AND WARRANTIES
The Borrower does hereby represent and warrant that:
14.1 ORGANIZATION
Each of the Borrower and the Unrestricted Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the Laws of its
jurisdiction of incorporation and of all jurisdictions in which it carries on
business, and is in compliance with all provisions of its constating documents
and by-laws. Each of the Borrower and the Unrestricted Subsidiaries has all
requisite power and authority, corporate or otherwise, to own its property and,
subject to Section 14.13, to carry on its business as now being and hereafter
proposed to be conducted.
14.2 AUTHORIZATION OF DOCUMENTS BY THE BORROWER
The Borrower has the corporate power, and has taken all necessary action,
to authorize it to borrow under the terms hereof and has the corporate power and
has taken all necessary action to authorize it to execute, deliver and perform
this Agreement, the Interlender Agreement, the Intercreditor Agreements and each
of the Security Documents to which it is a party in accordance with the terms
thereof and to consummate the transactions contemplated hereby and thereby. This
Agreement, the Interlender Agreement, the Intercreditor Agreements and the
Security Documents have been duly executed and delivered by the duly authorized
officers of the Borrower and constitute legal, valid and binding obligations of
the Borrower enforceable in accordance with their terms, except as enforcement
may be limited by bankruptcy, insolvency and other laws affecting the
enforcement of rights of creditors generally and except that equitable remedies
may be granted in the discretion of a court of competent jurisdiction.
14.3 AUTHORIZATION OF DOCUMENTS BY UNRESTRICTED SUBSIDIARIES
Each of the Unrestricted Subsidiaries has the corporate power, and has
taken all necessary action, to authorize it to execute, deliver and perform the
Guarantee and Subordination Agreement and each of the Security Documents to
which it is a party in accordance with the terms thereof and to consumate the
transactions contemplated therein. The Guarantee and Subordination Agreement and
the Security Documents to which each Unrestricted Subsidiary is a party have
been duly executed and delivered by the duly authorized officers of each of the
Unrestricted Subsidiaries and constitute legal, valid and binding obligations of
the Unrestricted Subsidiaries enforceable in accordance with their terms, except
as enforcement may be limited by bankruptcy, insolvency and other laws affecting
the enforcement of rights of creditors generally and except that equitable
remedies may be granted in the discretion of a court of competent jurisdiction.
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14.4 NO CONFLICT
The execution, delivery and performance by the Borrower or by any
Unrestricted Subsidiary of this Agreement, the Interlender Agreement, the
Intercreditor Agreements and the Security Documents to which it is a party in
accordance with their respective terms and the consummation of the transactions
contemplated hereby and thereby do not violate any Law, conflict with, result in
a breach of or constitute a default under the constating documents or by-laws of
the Borrower or of any Unrestricted Subsidiary or under any agreement or
instrument to which it is a party or by which it or any of the Charged Property
may be bound.
14.5 GOVERNMENTAL REGULATION
Neither the Borrower nor any of the Unrestricted Subsidiaries is required
to obtain any consent, Approval, authorization, permit or license from, or
effect any filing or registration with, any federal, provincial, state or local
regulatory authority in connection with the execution, delivery and performance,
in accordance with their respective terms, of this Agreement, the Interlender
Agreement, the Intercreditor Agreements or any Security Documents, except the
registrations and filings contemplated in subsection 4.1.1.
14.6 COMPLIANCE WITH LAW
Each of the Borrower and the Unrestricted Subsidiaries is in compliance
with all Laws, the non-compliance with which could, singly or in the aggregate,
have a Material Adverse Effect.
14.7 LITIGATION
There is no notice of infraction, action, suit or proceeding pending
against (nor, to the knowledge of the Borrower, threatened against or in any
other manner relating adversely to) the Borrower or the Unrestricted
Subsidiaries or any of their respective properties in any court or before any
arbitrator of any kind or before or by any governmental body except those
described in Sections 14.8 and 14.13.
14.8 TAXES
Save and except as described in Schedule 14.8, all federal, provincial
and other tax returns of the Borrower and the Unrestricted Subsidiaries,
required by Law to be filed have been duly filed, and all federal, provincial
and other taxes, assessments and other governmental charges or levies upon the
Borrower and the Unrestricted Subsidiaries, and any of their properties, income,
profits and assets, which are due and payable, have been paid. The charges,
accruals and reserves on the books of the Borrower and the Unrestricted
Subsidiaries in respect of taxes are adequate, in the judgment of the Borrower.
14.9 FINANCIAL STATEMENTS OF THE BORROWER
The audited consolidated financial statements of the Borrower for the
fiscal year ended October 5, 1998 and the latest quarterly audited and unaudited
consolidated financial statements of the
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Borrower, copies of which have been provided to the Lenders, present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Borrower as at such date.
14.10 NO ADVERSE CHANGE
Since October 5, 1998, no Material Adverse Effect has occurred and is
continuing.
14.11 MATERIAL AGREEMENTS AND RESTRICTIONS
Neither the Borrower nor any Unrestricted Subsidiary is a party to any
deed, indenture, loan or credit agreement, or any lease or other agreement or
instrument, or subject to any governmental or other restriction, or any
judgment, decree or order of any court or governmental body which has or will
have a Material Adverse Effect except those described in Schedule 14.11.
14.12 APPROVALS
Save and except as described in Section 14.13, all approvals, certificates
of approval, authorizations, consents, permits, licenses, orders, registrations,
declarations, filings, notices and other actions to be taken in respect of any
federal, provincial or local governmental body (the "Approvals"), which are
necessary for the ownership and operation by the Borrower or any of the
Unrestricted Subsidiaries of their respective business and all the properties
related thereto, have been duly obtained, made or taken and are in full force
and effect, are not subject to further Approval or appeal, or any pending or
threatened legal or administrative proceedings, and the Borrower has no
knowledge of any fact which, as a matter of Law, is sufficient to justify the
commencement by any governmental or regulatory body of any proceeding for
termination or revocation of such Approvals.
14.13 ENVIRONMENT
Save and except as described in Schedule 14.13, neither the Borrower nor
any Unrestricted Subsidiary is in contravention of and neither of the Borrower
nor any Unrestricted Subsidiary has been notified by any government agency or
regulatory body or by any other interested person that it has contravened or
that its predecessor in title has contravened or is in contravention of
Environmental Laws or the requirements of any Environmental Permit, in any way
whatsoever, except where such contravention would not have, individually or in
the aggregate, a Material Adverse Effect. The exercise of their respective
activities was and is in compliance with Environmental Laws, at all times, and
the performance of their respective obligations under this Agreement and the
Security Documents shall not entail any contraventions and shall not conflict
with any Environmental Laws, except where such non-compliance, contravention or
conflict would not have, individually or in the aggregate, a Material Adverse
Effect.
14.14 NO SUBSIDIARY
On the date of execution of this Agreement there are no corporations or
limited partnerships which would constitute a Subsidiary of the Borrower except
those specifically listed in Schedule 14.14. The
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organizational chart set forth in Schedule 14.14 illustrates the corporate
structure of the Borrower and its Unrestricted Subsidiaries.
14.15 HEAD OFFICE - PLACES OF BUSINESS
The addresses of the head office, executive office and of all places of
business of each of the Borrower and the Unrestricted Subsidiaries, are listed
in Schedule 14.15.
14.16 TITLE OF OWNERSHIP
Each of the Borrower and the Unrestricted Subsidiaries is the sole title
and beneficial owner of all assets, rights, title and interest forming part of
the Charged Property, free and clear of all Liens whatsoever, except Permitted
Encumbrances, if any.
14.17 ERISA
During the five-year period ending on the date hereof (or, with respect to
(vi) or (viii) below, as of the date such representation is made or deemed
made), except as set forth under Schedule 14.17 or as reflected in the financial
statements referred to in Section 14.9 none of the following events or
conditions has occurred which, either individually or in the aggregate, has
resulted or could reasonably be expected to result in a liability to the
Borrower or any of the Unrestricted Subsidiaries which could have a Material
Adverse Effect: (i) a Reportable Event; (ii) an "accumulated funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of ERISA); (iii)
any material noncompliance with the applicable provisions of ERISA or the Code;
(iv) a termination of a Single Employer Plan (other than a standard termination
pursuant to Sections 4041(b) of ERISA); (v) a Lien in favour of the PBGC or a
Plan; (vi) Underfunding with respect to any Single Employer Plan; (vii) a
complete or partial withdrawal from any Multiemployer Plan by the Borrower, any
of the Unrestricted Subsidiaries or any Commonly Controlled Entity; (viii) any
liability of the Borrower or any Commonly Controlled Entity under ERISA if the
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the annual valuation date most closely preceding
the date on which this representation is made or deemed made; (ix) the
Reorganization or insolvency (within the meaning of Section 4245 of ERISA) of
any Multiemployer Plan; (x) the excess of the present value (determined using
actuarial and other assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the aggregate liability of the
Borrower or any Commonly Controlled Entity for post-retirement 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) over the assets under all
such Plans; and (xi) an event or condition with respect to which the Borrower or
any Commonly Controlled Entity could incur any liability in respect of a Former
Plan.
14.18 LABOUR DISPUTES
As of the date hereof (i) there is no pending or threatened strike, work
stoppage, material unfair labour practice claim or charge, arbitration or other
material labour dispute against or affecting the
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Borrower, the Unrestricted Subsidiaries or any of their employees, and (ii)
there are no actions, suits, charges, demands, claims, counterclaims or
proceedings pending or, to the knowledge of the Borrower or the Unrestricted
Subsidiaries, threatened against any of them, by or on behalf of, or with, their
employees, other than employee grievances arising in the ordinary course of
business which singly or in the aggregate would not have a Material Adverse
Effect.
14.19 INTANGIBLE ASSETS
Each of the Borrower and the Unrestricted Subsidiaries possess all
necessary patents, know-how, trademarks, service marks, trade names, and
copyrights, and rights with respect to each of the foregoing, necessary to carry
on their business as currently conducted and the possession and use thereof in
their business does not conflict with the patents, know-how, trademarks, service
marks, trade names, and copyrights, and rights with respect to the foregoing, of
any other Person, except where such conflict or failure to hold or possess would
not have a Material Adverse Effect.
14.20 OWNERSHIP OF ACCOUNTS REVEIVABLE AND INVENTORY
As of the date of execution of this Agreement and until the effective date
of the Reorganization, none of the Borrower's Insured Eligible Accounts
Receivable, Uninsured Eligible Accounts Receivable and Eligible Inventory are
owned by any Subsidiary of the Borrower.
14.21 ACCURACY AND COMPLETENESS OF INFORMATION
All information, reports and other papers and data furnished to the Lenders
by or on behalf of the Borrower and the Unrestricted Subsidiaries were, at the
time the same were so furnished, complete and correct in all material respects
to the extent necessary to give the Lenders a true and accurate knowledge of the
subject matter. No undisclosed fact is currently known to the Borrower and the
Unrestricted Subsidiaries, which has or may have a Material Adverse Effect which
has not been set forth or referred to herein or in such information, reports and
other papers and data or otherwise specifically disclosed to the Lenders.
14.22 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made under this Agreement shall be
deemed to be made and shall be true and correct in all material respects, at and
as of the date of execution of this Agreement and at and as of the date of any
advance, conversion or continuation hereunder. All representations and
warranties made under this Agreement shall survive until the full repayment of
the Revolving Loans and the termination of the Revolving Credit Facility, and
not be waived, by the execution and delivery of this Agreement, any
investigation by or on behalf of the Lenders or the making of any advance,
conversion or continuation under this Agreement.
15. GENERAL COVENANTS
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So long as the Revolving Loans or any other amount payable hereunder are
outstanding and unpaid or the Borrower shall have the right to borrow hereunder
(whether or not the conditions to borrowing have been or can be fulfilled), and
unless the Agent, acting in accordance with the instructions of the Majority
Lenders, shall otherwise consent in writing, the Borrower covenants and agrees
that it will and cause each of the Unrestricted Subsidiaries, as the case may
be, to:
15.1 PRESERVATION OF EXISTENCE, ETC.
Preserve and maintain its existence and all material rights, franchises,
licenses and privileges necessary or desirable in the normal conduct of its
business and remain qualified and authorized to do business in each jurisdiction
which the nature of each of the Borrower's and the Unrestricted Subsidiaries
business requires such qualification or authorization.
15.2 PRESERVATION OF AUTHORIZATIONS
Maintain, and take all actions necessary to maintain, in full force and
effect the action taken by it to authorize the borrowings hereunder and the
execution, delivery and performance in accordance with their respective terms of
this Agreement, the Interlender Agreement, the Intercreditor Agreements, the
Security Documents and any other documents required or contemplated hereunder.
15.3 BUSINESS, COMPLIANCE WITH APPLICABLE LAW
Conduct its business in a proper and efficient manner, keep or cause to
be kept, proper and lawful records and books of account and make or cause to be
made therein, true and faithful entries of all dealings and transactions in
relation to its business, all in accordance with generally accepted accounting
principles applied on a consistent basis and comply with all requirements of
Law.
15.4 INSURANCE
Maintain insurance from responsible companies in such amounts and against
such risks as is contemplated in the Security Documents.
15.5 PAYMENT OF TAXES AND CLAIMS
Pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or upon any properties
belonging to it and forming part of the Charged Property prior to the date on
which penalties attach thereto unless such charges or levies are being contested
in good faith, and all lawful claims for rents, labour, materials and supplies
which, if unpaid, might become a Lien or charge upon the Charged Property other
than a Permitted Encumbrance.
15.6 VISITS AND INSPECTIONS
Upon reasonable notice, permit representatives of the Lenders and the
Agent and their advisors to visit and inspect the properties of the Borrower and
the Unrestricted Subsidiaries during normal business
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hours, inspect and make extracts from and copies of its books and records
pertaining to the Borrower's or any of the Unrestricted Subsidiaries' business
and discuss with its principal officers the business, assets, liabilities,
financial position, results of operations and business prospects of the
Borrower.
15.7 MAINTENANCE OF RATIOS
With respect to the Borrower, maintain at all times, on a consolidated
basis:
15.7.1 a Senior Debt to EBITDA Ratio of no more than 3.75 : 1.00 up to
and including September 29, 1999 and of 3.25 : 1.00 thereafter;
15.7.2 a Fixed Charge Coverage Ratio of at least 2.00 : 1.00;
15.7.3 a ratio of Senior Debt to Total Capitalization of no more than
0.65 : 1.00 up to and including September 29, 1999 and of no
more than 0.60 : 1.00 thereafter.
15.8 PAYMENT OF LEGAL AND OTHER FEES AND DISBURSEMENTS
Pay upon demand all reasonable legal, notarial and professional fees and
disbursements or any out of pocket costs and expenses incurred from time to time
by the Agent on behalf of the Lenders in connection with the:
15.8.1 the negotiation, preparation and delivery of the Commitment
Letter, this Agreement, the Interlender Agreement, the
Intercreditor Agreements, the Security Documents and all other
documents accessory thereto or in implementation thereof as well
as any amendment to be made from time to time to any of the
foregoing;
15.8.2 the registration, filing and renewal of the Security Documents;
15.8.3 advice sought by the Agent in connection with the
interpretation of this Agreement, the Interlender Agreement, the
Intercreditor Agreements or the Security Documents or in
connection with the exercise of any or all of their rights and
remedies;
15.8.4 the visits and inspections pursuant to Section 15.6;
15.8.5 publicity relating to the Revolving Commitment made available
to the Borrower by the Lenders pursuant to the terms and
conditions of the Commitment Letter and the Credit Agreement,
including, without limitation, the insertion of standard
advertisements ("TOMBSTONES") in various financial publications
and any other form of advertising;
15.8.6 the conduct in Montreal (Qc) by the Agent's examiners of the
pre-closing audit referred to in Section 4.1.13 and the
semi-annual field audits for evaluating the Borrower's inventory
and accounts receivable;
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15.8.7 the permitted assignments pursuant to Section 20.5; and
15.8.8 the collection of any moneys due hereunder or under the
Interlender Agreement, the Intercreditor Agreements or any of
the Security Documents.
the whole whether or not any advances are made under the terms
hereof.
15.9 RENEWAL OF REGISTRATION
Renew and keep renewing the registration and filing of financing
statements registered or filed with respect to the Security Documents, no later
than 180 days before the expiry date stipulated for the preservation of the Lien
created under the terms of such documents and the perfection of the security
interest created thereby and execute and deliver all other documents and do all
other things which the Agent may require with respect to the Security Documents
in order to maintain in full force and effect the validity and perfection of the
security created thereunder.
15.10 TRANSACTIONS WITH AFFILIATES OF THE BORROWER
Negotiate and conclude agreements or transactions to be entered into from
time to time, as between the Borrower and any one or more of its Affiliates
(other than an Unrestricted Subsidiary) on no less favourable terms than
prevailing commercially reasonable market terms as between parties acting at
arm's length with respect to similar agreements or transactions negotiated and
concluded in similar circumstances and, as between the Borrower and any one or
more Unrestricted Subsidiary in accordance with such terms may be prescribed
from time to time by the Canadian taxation authorities for the purposes of their
international transfer pricing policies.
15.11 LOCK BOX AGREEMENT
Obtain an undertaking from Gildan Activewear SRL to maintain a Lockbox
with the Agent at the Agent's branch situated in Chicago or any other branch
which may be determined by the Agent from time to time, where all payments under
all U.S. accounts receivable will be deposited and whereby standing irrevocable
instructions will be given to wire the funds so deposited, daily to the
Borrower's account in Montreal (Quebec).
15.12 FINANCIAL INFORMATION
Deliver to the Agent:
15.12.1 within 60 days after the last day of each quarter, the
consolidated quarterly financial statements of the Borrower and
the unconsolidated quarterly financial statements of the
Borrower and of each Unrestricted Subsidiary and Guarantor
Subsidiary and the certificate of the Vice-President Finance of
the Borrower in form and substance substantially as set out in
Schedule 15.12.1 setting forth all such amounts and values
accompanied by all such information and calculations required to
establish that the Borrower is in compliance with the financial
ratios described and referred to under Section 15.7;
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15.12.2 within 25 days after the last day of each calendar month, a
detailed list of the Borrower's inventory and aged accounts
receivable accompanied by a certificate of the Vice-President
Finance of the Borrower in form and substance substantially as
set out in Schedule 15.12.2 showing the required calculations
for the Borrowing Base and confirming compliance with the Credit
Agreement;
15.12.3 within 120 days after the end of each fiscal year of the
Borrower: (i) the audited consolidated financial statements of
the Borrower, (ii) the audited unconsolidated financial
statements of the Borrower and Gildan Activewear SRL and (iii)
the unaudited unconsolidated financial statements of all other
Subsidiaries and related companies (if any), as at the end of
such fiscal year, accompanied by a compliance certificate of the
Vice-President Finance of the Borrower in form and substance
substantially as set out in Schedule 15.12.3 confirming the
absence of any default;
15.12.4 on a semi-annual basis, access to its facilities in order to
allow the Agent and its representatives to conduct audits on
accounts receivable and inventory;
15.12.5 within 120 days after the end of each fiscal year of the
Borrower, the updated financial information referred to under
subsection 4.1.7;
15.12.6 within 120 days after the end of each fiscal year of the
Borrower, an environmental report prepared by in-house engineers
confirming the environmental status of all production facilities
of the Borrower or of the Unrestricted Subsidiaries, accompanied
by a certificate signed by the Vice-President Manufacturing, the
whole to the satisfaction of the Agent;
15.12.7 promptly upon each request, such other data, certificates,
reports, statements, documents or further information regarding
the business, assets, liabilities, financial position, results
of operations or business prospects of the Borrower and of the
Unrestricted Subsidiaries as the Agent may reasonably request.
15.13 NOTICE OF LITIGATION AND OTHER MATTERS
Furnish or cause to be furnished to the Agent, prompt notice of the
following events after the Borrower has become aware thereof:
15.13.1 the commencement of all proceedings (including any notices of
infraction) and investigations by or before any governmental
body and all actions and proceedings in any court or before any
arbitrator against, or (to the extent known to the Borrower) in
any other way relating adversely to the Borrower or to any
Unrestricted Subsidiary or any of their properties, assets or
businesses which, if adversely determined, could singly or when
aggregated with all other such proceedings, investigations and
actions have a Material Adverse Effect;
15.13.2 the occurrence or the failure to occur of any event which would
result in the occurrence of a Material Adverse Effect;
15.13.3 the occurrence of any Default or Event of Default.
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15.14 DISCLOSURE OF ENVIRONMENTAL MATTERS
Without limiting the generality of the covenant set forth under Section
15.13:
15.14.1 the Borrower shall immediately notify the Agent of any Release
of a Contaminant or of the discovery of the presence of a
Contaminant at, upon, under, over, within, with respect to or
emanating from its property or from the property of any
Unrestricted Subsidiary;
15.14.2 the Borrower shall immediately forward to the Agent, copies of
all orders, notices or permits from environmental authorities
and copies of all technical reports prepared by or on behalf of
the Borrower (or of an Unrestricted Subsidiary) in connection
with the environmental status of its (their) property and of its
(their) activities or operations.
15.14.3 promptly upon the written request of the Agent, acting in
accordance with the instructions of the Majority Lenders, the
Borrower shall provide the Agent, at the Borrower's expense,
with an environmental site assessment or environmental audit
report prepared by an environmental consultant approved by the
Agent, to assess with a reasonable degree of certainty the
Release of any Contaminant and the potential costs in connection
with abatement, clean-up or removal of such Contaminant on,
under, upon, over, at, within, or with respect to its property
or the property of any Unrestricted Subsidiary and/or the
material conformity with Environmental Laws of the activities or
operations of the Borrower or of Unrestricted Subsidiaries.
15.15 YEAR 2000 COMPLIANCE
Take appropriate and reasonable steps to ensure that its computer
software, hardware and other products incorporating embedded software or
microcode, used in carrying on business are (i) designed to be used for the year
2000 without error relating to date, data and shall operate transparently to the
user and (ii) capable of recognizing and accurately treating and handling dates
subsequent to December 31, 1999 as well as all data associated to such dates.
On June 30, 1999 deliver to the Agent a progress report stating the
progress made by the Borrower in its effort to comply with the foregoing problem
and, by October 29, 1999, a progress report confirming that as at October 3,
1999 all essential systems are Y2K compliant.
On January 31, deliver to the Agent a report stating any incident or
unresolved problem associated to the recognition and the treatment and handling
of dates subsequent to December 31, 1999 by any computer software, hardware and
other products incorporating embedded software or micro code used in carrying on
business.
16. NEGATIVE COVENANTS
So long as the Revolving Loans or any other amount payable hereunder is
outstanding and unpaid or the Borrower shall have the right to borrow hereunder
(whether or not the conditions to borrowing have
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been or can be fulfilled), and without the prior written consent of the Agent,
which consent shall not be unreasonably withheld, acting in accordance with the
instructions of the Majority Lenders, the Borrower covenants and agrees that it
will not do any of the following:
16.1 CONSOLIDATION, AMALGAMATION, MERGER, ETC.
Consolidate, amalgamate or merge with or wind-up into any other
corporation. The Lenders are aware that the Borrower will submit a request for
consent in connection with the proposed merger between Harco Holdings Ltd. and
the Borrower. Upon reception of particulars, the Lenders shall consider such
proposal.
16.2 CHANGE OF CONTROL
Effect, agree to or permit any change to its controlling ownership as it
exists on the date hereof without giving a prior notice of such change to the
Agent it being understood that a change to its controlling ownership means that
the combined aggregate shares held directly or indirectly by Xxxx Xxxxxxxx and
Xxxxx Xxxxxxxx would not be sufficient to maintain the controlling ownership of
the Borrower.
16.3 INDEBTEDNESS
Incur, create, assume or suffer to exist, on a consolidated basis, any
Indebtedness other than (i) Indebtedness incurred in the ordinary course of
business and for the purpose of carrying on same, representing the deferred
purchase price of property or services; (ii) Indebtedness of the Borrower under
derivative instruments contracted with a Lender and entered into in the ordinary
course of business to hedge or mitigate risks to which the Borrower or any
Unrestricted Subsidiary is exposed to in the conduct of its business or the
management of its liabilities and not for speculative purposes;
(iii) Indebtedness under the Revolving Credit Facility; (iv) Purchase Money
Obligations and other forms of debt for borrowed money incurred to finance
permitted capital expenditures; (v) operating leases; vi) corporate guarantees
by the Borrower or an Unrestricted Subsidiary in support of permitted
indebtedness of an Unrestricted Subsidiary or the Borrower; (vii) Sale and
Leaseback Transaction or (viii) Subordinated Debt.
16.4 SALE OF ASSETS
On a consolidated basis, sell, alienate, lease or otherwise dispose of
the whole or any part of its assets or properties other than (i) inventory and
obsolete equipment in the ordinary course of its business and for the purpose of
carrying on the same, (ii) annually, such assets or properties, the net book
value of which does not exceed an amount equal to 10% of the aggregate
consolidated net book value of the total fixed assets of the Borrower and
(iii) accounts receivable for a discounted amount not to exceed an amount equal
to US$20,000,000.
16.5 ADVANCES, REVOLVING LOANS AND INVESTMENTS
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Except as permitted under Section 16.6, directly or indirectly (including
through any one or more subsidiaries) but except in favour of an Unrestricted
Subsidiary or subject to an aggregate maximum amount equal to 10% of the
aggregate consolidated net book value of the total assets of the Borrower, in
favor of a Guarantor Subsidiary, on a consolidated basis: (i) make any loan,
advance, extension of credit (excluding terms of credit granted to third parties
in the normal course of business) or advances to third parties in an aggregate
amount not to exceed Cdn $2,000,000 in the form of down payments under services
contracts reasonably acceptable to Agent; (ii) make any capital contribution or
investment to or in any person; or (iii) except in connection with the proposed
acquisition of all the issued and outstanding shares in the capital stock of
Sula Textiles S.A. de C.V. and Winners Manufacturing, S.A. for an aggregate
purchase price of approximately Cdn $4,000,000, purchase or otherwise acquire
for a consideration any evidence of indebtedness, capital stock, partnership
units or other securities of any person (except short-term certificates of
deposit of financial institutions and readily marketable money market
securities) in excess of Cdn 5,000,000 per fiscal year, subject to an aggregate
limit of Cdn $10,000,000;
16.6 LOANS AND GUARANTEES
Make any loans to or give guarantees with respect to the obligations of
any Subsidiary or Affiliate or any one of its or their respective officers or
directors in excess of an aggregate amount of Cdn $3,000,000 annually, except
for those set forth in Schedule 16.6;
16.7 LIENS
Save only for Permitted Encumbrances, create, incur, assume or suffer to
exist any Lien or other charge or encumbrance upon or in respect of any of its
present or future assets or properties, other than (i) Liens created under the
Security Documents, (ii) Liens securing Purchase Money Obligations within the
limits set forth under Section 16.3 (iii) the Liens existing as of the date of
execution of this Agreement and listed in Schedule 16.7, (iv) and the Liens
specifically authorized by the Agent and the Lenders.
16.8 CHANGE IN BUSINESS
Effect any material change in the nature of its business or reevaluation
of assets for accounting purposes.
16.9 DIVIDENDS
Declare or pay dividends, redeem shares or return capital to its
shareholders in cash or by delivery of other property (a "DISTRIBUTION") if at
the time of such Distribution a Default or Event of Default exists or results as
a consequence thereof.
16.10 CAPITAL EXPENDITURES
For the fiscal year ending in October 1999, undertake or incur, on a
consolidated basis, capital expenditures in excess of an aggregate amount of
Cdn $25,600,000. For any fiscal year thereafter,
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undertake or incur capital expenditures in excess of the amounts forecasted in
the Borrower's budget which shall be revised and approved by the Lenders on an
annual basis.
16.11 SUBORDINATION OF DEBT
Save as otherwise specifically permitted by the Lenders under the terms
of an agreement entered into between the Lenders, the Agent, the Borrower and
the subordinated creditor, pay or repay any portion of any Subordinated Debt
(on account of principal, interest, fees or costs) or set aside any funds or
property for any of the foregoing purposes.
16.12 CONSULTING FEES TO AFFILIATES
Pay or undertake to pay any management or consulting fees to any
Affiliate (other than an Unrestricted Subsidiary) of the Borrower.
16.13 CHANGE OF YEAR END
Change its fiscal year-end or the fiscal year-end of any Unrestricted
Subsidiary.
16.14 CREATION OF SUBSIDIARIES
Create or incorporate any corporation or limited partnership which would
constitute a Subsidiary of the Borrower or acquire the shares or other ownership
units of any corporation or limited partnership which would, following such
acquisition, become a Subsidiary of the Borrower.
16.15 DERIVATIVE INSTRUMENTS
Enter into any Derivative Instrument for purposes other than for hedging
and risk management.
16.16 REORGANIZATION
Proceed with the proposed Reorganization unless each of the following
conditions precedent are met to the satisfaction of the Agent and its legal
counsel:
16.16.1 the Borrower shall have given to the Agent not less than
10 Business Days' prior written notice of its intention to
proceed with the Reorganization;
16.16.2 each of Gildan Activewear SRL, Gildan Activewear Barbados Inc.
and Gildan Activewear (BVI) Inc. shall have executed and
delivered all of the Security Documents referred to under
Section 13.6 which were not delivered pursuant to subsection
4.1.1;
16.16.3 the Borrower shall have attended to the due publication of such
forms and the due registration or filing of any financing
statement registrations required under all applicable Laws with
respect to the Security Documents referred to under subsection
16.16.2;
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16.16.4 the Borrower shall have delivered to the Agent and its legal
counsel, in form and substance satisfactory to them, a copy of
the closing agenda relating to the Reorganization and of all
documents and contracts pertaining to the Reorganization and
each transaction contemplated in the structure of transactions
set forth under Schedule 16.16.4 including all disclosures,
schedules and exhibits thereto (the "REORGANIZATION DOCUMENTS");
16.16.5 the Borrower shall have delivered to the Agent and its legal
counsel, in form and substance satisfactory to them, the
opinions of Xxxx, Saint-Pierre and each of the Borrower's U.S.
and Barbados counsel addressed to the Lenders, the Agent and
Xxxxxxxxxx Xxxxxxxx Xxxxx Xxxxxx, dated the effective date of
the Reorganization covering such matters incident to the
Reorganization as the Lenders may reasonably request;
16.16.6 the Agent shall have received a copy of all material contracts
to which the Borrower or any of the Unrestricted Subsidiaries is
a party including, without limitation any agreement which will
permit the Agent and the Lenders to keep track of the
circulation of goods and the flow funds;
16.16.7 the Agent shall have received a certified copy of the Lock Box
Agreement;
16.16.8 with respect to the Unrestricted Subsidiaries that are
delivering the Security Documents referred to under subsection
16.16.2, the Borrower shall have delivered to the Agent the
documents and opinions referred to under subsections 4.1.3.7,
4.1.3.8, 4.1.3.9 and 4.1.18;
16.16.9 the Borrower shall have delivered to the Agent a certificate
from an Officer of the Borrower to the effect that no Material
Adverse Effect has occurred or is likely to occur as determined
on the date of such certificate;
16.16.10 the Agent shall have confirmed in writing that it is satisfied
that all of the conditions precedent set forth under this
section have been complied with.
17. EVENTS OF DEFAULT AND REALIZATION
17.1 EVENTS OF DEFAULT
The occurrence of any of the following events during the term of this
Agreement shall constitute an event of default (herein referred to as an "Event
of Default"):
17.1.1 should the Borrower fail to make, as and when same are due, any
payment of principal, or any payment of interest, fees or
related costs with respect to the Revolving Loans; or
17.1.2 should the Borrower or any Unrestricted Subsidiary, as the case
may be, default in the performance or fulfillment of any of its
obligations under Article 16 or under Section 15.7; or
17.1.3 should the Borrower or any Unrestricted Subsidiary default in
the performance or fulfillment of any other
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obligation or covenant hereunder, or any other obligation or
covenant under any one of the Interlender Agreement, the
Intercreditor Agreements or the Security Documents, under any
Derivative Instruments or under any other covenant assumed by
the Borrower or any Unrestricted Subsidiary in relation to the
Revolving Loans or the Revolving Credit Facility and such
default is not remedied within 10 days following the issuance by
the Lenders of a notice thereof, (provided however that if the
Borrower shall have diligently taken steps to correct such
default within the said 10 days following such notice, the same
shall not constitute an Event of Default for so long as the
Borrower or any Unrestricted Subsidiary is continuing to take
such steps to correct such default and provided however that
such default is fully cured within 20 days following the
issuance by the Lenders of said notice); or
17.1.5 should any Guarantor default under any of its obligations under
the Guarantee and Subordination Agreement or should the
guarantee provided for thereunder cease to be applicable or
valid with respect to any portion of the Guaranteed Obligations
(within the meaning set forth under the Guarantee and
Subordination Agreement) or with respect to any future advances
under the Commitment;
17.1.6 should the Borrower use the proceeds of any advances for
purposes not permitted hereunder;
17.1.7 should the Borrower or any Unrestricted Subsidiary make an
assignment for the benefit of creditors, or file or consent to
the filing of a petition in bankruptcy, a proposal or a notice
of intention under the Bankruptcy and Insolvency Act (Canada) or
any other equivalent Law of any jurisdiction, or be adjudicated
insolvent or bankrupt, or petition or apply to any tribunal for
any receiver, trustee, coordinator, liquidator or sequestrator
of, or for any substantial part of its property (collectively
the "Proceedings") or the Borrower or any Unrestricted
Subsidiary commences any such Proceedings; or should there be
commenced against the Borrower or any Unrestricted Subsidiary
any such Proceedings relating to it or its property or any
substantial portion thereof under any reorganization,
arrangement or readjustment, composition or liquidation Law of
any jurisdiction which Proceeding remains undismissed for a
period of 30 days; or should any receiver, trustee, coordinator,
liquidator or sequestrator of, or for the Borrower, any
Unrestricted Subsidiary or any substantial portion of their
property be appointed or should the Borrower or any Unrestricted
Subsidiary consent to or approve or accept any Proceeding or the
appointment of any receiver, trustee, coordinator, liquidator or
sequestrator of, or for the Borrower, any Unrestricted
Subsidiary or any substantial portion of their Property; or
17.1.8 should any statement, certificate, representation or warranty
which has been made by or on behalf of the Borrower or any of
the Unrestricted Subsidiaries to the Lenders in or pursuant to
this Agreement or any of the Security Documents prove at any
time to be either incorrect or substantially inaccurate with
respect to a material aspect; or
17.1.9 should any interest of the Borrower or of any Unrestricted
Subsidiary in any of their assets or property be sold or
foreclosed by any creditor or encumbrancer or any Person acting
under legal process, or should any Person take possession, or
assume control through distress or legal process, of the
property and assets of the Borrower or of any Unrestricted
Subsidiary or any part thereof and which would, singly or in the
aggregate, have a Material Adverse Effect; or
17.1.10 should the Borrower or any of the Unrestricted Subsidiaries, as
the case may be, default with respect to any of its Indebtedness
(other than the Indebtedness of the Borrower hereunder), the
amount of which exceeds, singly or in the aggregate,
Cdn $1,000,000; or
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42
17.1.11 should there occur a change of control of the Borrower as
described in Section 16.2 or should any Unrestricted Subsidiary
or Guarantor Subsidiary ceases to be a, direct or indirect,
wholly-owned Subsidiary of the Borrower without the prior
written consent of the Agent (acting upon the instructions of
the Majority Lenders), which consent shall not be unreasonably
withheld or delayed; or
17.1.12 should the Borrower or an Unrestricted Subsidiary have received
any notice of infraction or should there be any action, suit or
proceeding pending or threatened against the Borrower or any
Unrestricted Subsidiary or their properties in any court or
before any arbitrator of any kind or before or by any
governmental body, which, if adversely determined, would, singly
or in the aggregate, have a Material Adverse Effect; or
17.1.13 should there be any material adverse change in the business,
assets, liabilities, financial position, results of operations
or business prospects of the Borrower on a consolidated basis,
or should any event occur or fail to occur which would, singly
or in the aggregate, have a Material Adverse Effect;
17.1.14 should a Derivative Instrument entered into between the Borrower
and any financial or brokerage institution be terminated prior
to its scheduled maturity as the result of the Borrower's
inability to meet its obligations in respect thereof;
17.1.15 should (i) any Person engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived, exist with respect to any Plan or any
Lien in favour of the PBGC or a Plan arise on the assets of the
Borrower or of any of the Guarantors or any Commonly Controlled
Entity, (iii) a Reportable Event occur with respect to, or
proceedings commence to have a trustee appointed, or a trustee
be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is reasonably likely to result in the
termination of such Plan for purposes of Title IV of ERISA
(other than a standard termination pursuant to Section 4041(b)
of ERISA), (iv) any Single Employer Plan terminate for purposes
of Title IV of ERISA, (v) the Borrower or any of the
Unrestricted Subsidiaries or any Commonly Controlled Entity, or
is reasonably likely to, incur any liability in connection with
a withdrawal from, or the insolvency (within the meaning of
Section 4245 of ERISA) or Reorganization of, a Multiemployer
Plan, (vi) the occurrence or expected occurrence of any event or
condition which results or is reasonably likely to result in
such Obligor's or any Commonly Controlled Entity's becoming
responsible for any liability in respect of a Former Plan, or
(vii) any other event or condition occur or exist with respect
to a Plan; and in each case in clauses (i) through (vii) above,
such event or condition, together with all other such event or
condition, if any, could result in liability which could
reasonably be expected to have a Material Adverse Effect;
17.1.16 should the Borrower fail to complete the Reorganization by
June 1, 1999.
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43
17.2 REMEDIES
17.2.1 Upon the occurrence of an Event of Default:
17.2.1.1 the Agent, acting in accordance with the instructions of the
Majority Lenders, may terminate the Revolving Period and demand
the immediate payment of all or part of the amounts owing to the
Lenders hereunder, in principal, interest, fees and related
costs as well as the immediate payment of the face amount of all
outstanding Banker's Acceptances and Letters of Guarantee;
17.2.1.2 the Lenders and/or the Agent, acting in accordance with the
instructions of the Majority Lenders, may exercise any and all
of the Lenders rights and recourses under this Agreement and the
Security Documents;
17.2.2 Notwithstanding the provisions set forth above in subsection
17.2.1, upon the occurrence of an Event of Default specified in
subsection 17.1.6, the Revolving Period shall forthwith
terminate and all amounts specified in subsection 17.2.1.1 shall
thereupon and concurrently therewith become due and payable, all
without any action by the Agent or the Lenders and without
presentment, demand, protest, or other notice of any kind, all
of which are expressly waived, anything in this Agreement or the
Security Documents to the contrary notwithstanding.
17.3 PROCEEDS OF REALIZATION
The proceeds of realization under any of the Security Documents or any
credit or compensating balances of the Borrower held by any Lender shall be
applied as set forth under the Interlender Agreement.
17.4 COMPENSATION AND SET-OFF
In addition to any right now or hereafter granted under Law and not by way
of limitation of any such right, upon the occurrence of a Default or an Event of
Default, the Lenders are hereby authorized by the Borrower, at any time, without
notice to the Borrower or to any other Person other than as is required by Law,
any such notice being hereby expressly waived, to effect compensation, to
set-off and to appropriate and to apply any and all deposits, whether matured or
unmatured, and any other indebtedness at any time held or owing by the Lenders
to or for the credit or the account of the Borrower against and on account of
the obligations and liabilities of the Borrower to the Lenders under this
Agreement. Such compensation and set-off may be effected irrespective of whether
or not the Agent or the Lenders shall have made any demand hereunder or shall
have declared the amounts of the Revolving Loans to be due and payable as
permitted hereunder and although any of the said obligations and liabilities
shall be contingent or unmatured.
17.5 DEALING WITH THE BORROWER
The Agent may grant extensions of time and other indulgences, take or
abstain from taking or give up securities, accept compositions, grant releases
and discharges and otherwise deal with the Borrower as
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it may see fit, without prejudice to the liability of the Borrower or to the
rights of the Lenders hereunder.
18. INCREASED COSTS AND INDEMNITY
18.1 INDEMNIFICATION
If a law, regulation, directive or policy generally applicable to
financial institutions, emanating from an administrative authority or other
institution, or to which a Lender is held to have subscribed voluntarily or the
creation of a tax other than on such Lender's income or a decision of
a competent court has the effect (i) of increasing for such Lender the cost
of Letters of Guarantee, Libor Advances, Banker's Acceptances or Derivative
Instruments or of making any advance or maintaining any amounts outstanding
under the Revolving Credit Facility or (ii) of reducing the revenue or return
accruing to it from such advances, letters, acceptances or instruments, or
(iii) of increasing the cost incurred by it for the unused portion of the
Revolving Credit Facility or (iv) of imposing the payment or collection of a tax
in connection with the Revolving Credit Facility or Derivative Instruments, the
Agent may send to the Borrower a notice, indicating the amount of such
additional cost or of such reduction of revenue or return, as well as the cause
thereof; such notice is prima facie evidence of the amount of such additional
cost or of such reduction of revenue or return and the Borrower shall, within
two (2) Business Days following receipt of such notice, pay such amount to such
Lender as will, on an after-tax basis, compensate such Lender for such
additional cost or such reduction of revenue or return.
Furthermore, the Borrower shall at all times protect, indemnify and hold
harmless the Lenders, the Agent and each of their respective affiliates,
directors, officers, agents and employees (collectively, the "INDEMNIFIED
PARTIES") from and against any losses, claims, damages, liabilities or other
expenses which arise out of or in connection with the Revolving Credit Facility,
the Commitment Letter or the credit documentation, including those which may
arise from or in connection with any action, suit or proceeding (whether or not
any Indemnified Parties is a party or is subject thereto).
18.2 REIMBURSEMENT OF LOSSES
Whenever any Lender shall sustain or incur any losses in connection with:
18.2.1 the failure of the Borrower to borrow pursuant to a draw down
notice (whether by reason of the Borrower's determination not to
proceed, the non-fulfillment of any of the conditions set forth
in this Agreement or for any other reason attributable to the
Borrower); or
18.2.2 the declaration by the Agent or the Lenders following the
occurrence of an Event of Default, that the Revolving Loans are
immediately due and payable;
18.2.3 the conversion or repayment of the whole or a part of any Libor
Advances or of any amount outstanding by way of Banker's
Acceptances on any day other than their stated date of maturity
for any reason whatsoever including a change in circumstances
specified in Section 6.5;
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18.2.4 the failure to pay principal, interest, fees or any other amount
under this Agreement when due (whether at maturity, by reason of
acceleration or otherwise); or
18.2.5 the failure to follow through with a conversion notice duly
delivered to the Agent due to the existence of a Default or
Event of Default on the relevant Conversion Date;
The Borrower agrees to pay the Lenders, upon demand, an amount certified
by the Lenders to be sufficient to compensate them for all such losses. The
obligations of the Borrower with respect to this Section shall survive the
repayment of the Revolving Loans. Furthermore, the Borrower shall at all times
indemnify and hold harmless the Lenders and the Agent against and from any and
all claims, suits, actions, debts, damages, costs, losses, obligations,
judgments, charges and expenses, of any nature whatsoever suffered or incurred
by them or any one thereof, in connection with any of the events described above
in subsections 18.2.1 through 18.2.5.
19. ENVIRONMENTAL INDEMNITY
19.1 INDEMNITY
The Borrower shall at all times protect, indemnify and hold harmless the
Lenders, the Agent and their directors, officers, employees and agents (for the
purpose of this Article, the "Lenders-Indemnified Parties") against and from
(and pay the full amount of) any and all liabilities, claims, suits, actions,
debts, damages, costs, losses, obligations, judgments, charges, and expenses, of
any nature whatsoever (for the purposes of this Article, collectively the
"Losses") suffered or incurred by the Lenders-Indemnified Parties, whether as
secured party under any of the Security Documents, as hypothecary creditor or
mortgagee in possession, or as successor-in-interest to the Borrower by
foreclosure deed, deed of taking of possession or deed in lieu of foreclosure or
taking of possession, or by any other means relating to the Borrower, under or
on account of the Environmental Laws, including the assertion of any Lien
thereunder other than a Permitted Encumbrance, with respect to:
19.1.1 the Release of any Contaminant on, from or upon any property of
the Borrower or any Unrestricted Subsidiary or any part thereof
or the presence of any Contaminant affecting the property of the
Borrower or of any Unrestricted Subsidiary or any part thereof;
19.1.2 any costs of removal or remedial action incurred by any federal,
provincial, state, municipal, local or other government or any
costs incurred by any other Person or damages from injury to,
destruction of, or loss of natural resources, including
reasonable costs of assessing such injury, destruction or loss
incurred in relation with the property of the Borrower or any
Unrestricted Subsidiary or any part thereof or the operations
and activities of the Borrower or any Unrestricted Subsidiary
pertaining to its business; and/or
19.1.3 liability for personal injury or property damage arising under
any statutory or civil law, private nuisance or for the carrying
on of an Environmental Activity at, near, or with respect to the
property of the Borrower or of any Unrestricted Subsidiary;
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the Borrower's obligations under this Section shall arise upon the
Release of a Contaminant or the discovery of the presence of any Contaminant,
whether or not any federal agency or any provincial, state, municipal or local
environmental agency has taken or threatened any action in connection with the
Release or presence of any Contaminant on, from or upon the property of the
Borrower or of any Unrestricted Subsidiary or any part thereof.
19.2 RIGHTS OF THE LENDERS TO ACT
Following the Release of a Contaminant, or in the event of the presence
of any Contaminant affecting or relating to any part of the property of the
Borrower or of any Unrestricted Subsidiary which would have a Material Adverse
Effect, and/or the failure to comply with any of the requirements of any
applicable Environmental Law in respect to the activities of the Borrower or the
Unrestricted Subsidiaries, the non-compliance with which would have a Material
Adverse Effect, should the Borrower or any Unrestricted Subsidiary fail to abide
and comply with any final and binding order, judgment or instruction issued or
given by any court and/or competent environmental authority pursuant to any
applicable Environmental Law and fail to diligently and in good faith contest
such order, judgment or instruction within the time period prescribed in any
applicable Environmental Law, the Agent, acting in accordance with the
instructions of the Majority Lenders, may give written instructions to the
Borrower or any Unrestricted Subsidiary to cause the work required by such
order, judgment or instruction to be performed at the property of the Borrower
and/or take any and all other actions as the Agent shall deem necessary or
advisable in order to cure the Borrower's or any Unrestricted Subsidiary's
non-compliance. Should the Borrower or any Unrestricted Subsidiary fail to
diligently commence the implementation of the Agent's instructions within ten
(10) Business Days following the receipt by the Borrower or any Unrestricted
Subsidiary of said written instructions, the Agent, acting in accordance with
the instructions of the Majority Lenders, may, at their election, but without
the obligation to do so, cause to be performed or perform such work and/or
actions itself. Any amounts expended by the Agent in any of the foregoing
activities, shall be repayable by the Borrower or the Unrestricted Subsidiaries
upon the demand of the Agent and shall bear interest on a Prime Rate Basis
applicable to the Revolving Credit Facility and shall form part of the
Obligations.
19.3 ACKNOWLEDGEMENT FROM THE BORROWER
The Borrower acknowledges that the Lenders have agreed to enter into this
Agreement in reliance upon the Borrower's representations, warranties, and
covenants. For this reason, it is the intention of the Borrower and the Lenders
that the Borrower shall be personally liable for any liability or Indebtedness
arising under this Article. All covenants and indemnities under this Article
shall survive the repayment of the Revolving Loans indefinitely and shall
survive the transfer of any or all right, title and interest in and to any part
of the Charged Property by the Borrower to any party, whether or not affiliated
with the Borrower.
20. MISCELLANEOUS
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20.1 NOTICES
Except as otherwise specified herein, all notices requests, demands or
other communications to or upon the respective parties hereto shall be deemed to
have been duly given or made to the party to which such notice, request, demand
or other communication is required or permitted to be given or made under this
Agreement, when delivered to such party (by certified mail, postage prepaid, or
by telegraph, telex, telecopier or hand delivery) at its address and attention
set forth with its signature below, or at such other address as any of the
parties hereto may hereafter notify the others in writing. No other method of
giving notice is hereby precluded.
20.2 AMENDMENTS AND WAIVERS
The rights and remedies of the Lenders under this Agreement and the
Security Documents shall be cumulative and not exclusive of any rights or
remedies which it would otherwise have and no failure or delay by the Agent or
the Lenders in exercising any right shall operate as a waiver thereof, nor shall
any single or partial exercise of any power or right preclude its other or
further exercise or the exercise of any other power or right. Subject to the
provisions set forth below with respect to amendments only, any term, covenant,
agreement or condition contained in this Agreement or the Security Documents may
be amended with the consent of the Agent, acting in accordance with the
instructions of the Majority Lenders, and the Borrower and such amendment shall
be binding upon all of the parties hereto and thereto, or compliance therewith
may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the Agent, acting in accordance with the
instructions of the Majority Lenders, and such waiver shall be binding upon all
of the Lenders. Without the prior unanimous written consent of the Lenders, no
amendment shall:
20.2.1 affect the maximum amount of the Revolving Credit Facility set
forth under Section 2.1 or of the Commitment of any Lender, save
and except with respect to any modification to the Commitment of
any Lender resulting from the operation of the provisions of
Section 20.5, in which case, only the consent of the parties
involved in such operation shall be required to effect such
modification;
20.2.2 alter the agreed time for the payment of the principal of or
interest on the Revolving Loans or the amount of principal
thereof or reduce the rate of interest thereon;
20.2.3 permit any subordination of the principal of or interest of any
Revolving Loans;
20.2.4 reduce the amount of any fees to be paid to any Lender;
20.2.5 be made to the definition of the expression "Majority Lenders"
in Schedule 1.1;
20.2.6 be made to the provisions of any of the Security Documents;
20.2.7 release or permit the release of the whole or any part of the
Liens created under the Security Documents provided however that
where the Borrower makes a sale, alienation, assignment, lease
or other disposition of any asset affected by a Lien, to the
extent permitted under the Security Documents, and requests the
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Agent to release the Liens created under the Security Documents
on the property so disposed of, the Agent shall be permitted to
grant such release without the prior written consent of the
Lenders or the Majority Lenders, or where, for the purposes of
accelerating the process of realization on the assets of the
Borrower subject to the Liens created under the Security
Documents, the Agent, acting in accordance with the instructions
of the Majority Lenders, determines that it is necessary or
useful to grant a release with respect to such Liens affecting
the assets which are subject to such process of realization, the
Agent shall be authorized to grant such release with the consent
only of the Majority Lenders;
20.2.9 be made to the definition of the expression "Revolving Period"
in Schedule 1.1; and
20.2.10 be made to the provisions of this Section 20.2;
Nothing contained in this Agreement, the Interlender Agreement, or the
Security Documents including, without limitation, the specific reference to
Lenders in certain provisions and to Majority Lenders in other provisions,
should be construed or interpreted as in any way limiting or restricting the
generality of the provisions of this Section. The parties hereto acknowledge and
agree that any waiver referred to in this Section, once issued by the Agent to
the Borrower in writing, for and on behalf of the Majority Lenders (or, in
connection with the elements described in subsections 20.2.1 to 20.2.9, for and
on behalf of all the Lenders), shall be binding upon all the parties hereto.
20.3 CALCULATIONS
In the absence of manifest error, any calculation or determination to be
made by the Agent or the Lenders under this Agreement or any of the Security
Documents, when made, shall be conclusive and shall constitute prima facie
evidence for all of the parties hereto.
20.4 ASSIGNMENTS BY THE BORROWER
The rights of the Borrower hereunder are declared to be purely personal
and may therefore not be assigned or transferred, nor can the Borrower assign or
transfer any of its obligations, any such assignment being null and void insofar
as the Lenders are concerned and rendering any balance then outstanding of the
Revolving Loans immediately due and payable at the option of the Lenders, and
relieving the Lenders from the obligation of making any or any further advances
hereunder.
20.5 ASSIGNMENTS BY THE LENDERS
Each of the Lenders may grant participations in, and sell, assign,
transfer or otherwise dispose of, all or any portion of the Revolving Loans and
the equivalent portion of its Commitment under the Revolving Credit Facility and
other obligations of such Lender under this Agreement to any financial
institution approved by the Borrower (which approval shall not be unreasonably
withheld or required where a Default or an Event of Default has occurred and is
continuing at the time of such assignment, transfer or disposal) which is not a
non-resident of Canada, within the meaning of the INCOME TAX ACT (Canada). Each
such disposition shall be effective upon the execution of an instrument, in form
and substance satisfactory to the Agent, by the transferee, the transferor, the
Borrower and the Agent and the
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49
delivery of such instrument to the Borrower and the Agent in such capacity. The
Borrower hereby covenants and agrees not to unreasonably withhold its execution
of the aforesaid instrument.
Upon such execution and delivery, the Lender shall be released from its
Commitments and other obligations hereunder to the extent of such disposition
and such transferee shall for all purposes be a Lender party to this Agreement
and shall have all the rights and obligations of a Lender under this Agreement,
the Interlender Agreement, the Intercreditor Agreements and the Security
Documents and shall be entitled to the benefit of the provisions hereof and
thereof, to the same extent, as if it were an original party hereto and thereto,
and no further consent or action by the Borrower or the Lender shall be
required.
Without in any way limiting the generality of any of the foregoing, the
Borrower shall, at the request of the Agent execute and deliver to the Agent or
to the party or parties as the Agent may designate any and all further
instruments, use its best efforts to obtain any and all further authorizations
or approvals, and make any and all further registrations, filings or
notifications, as may be necessary or desirable to give full force and effect to
such disposition.
The Borrower does hereby authorize the assigning Lender to provide any
serious prospective assignees, on a confidential basis, with all financial
information and documents made available to such Lender by the Borrower, from
time to time.
20.6 JUDGMENT CURRENCY
If for the purpose of obtaining or enforcing judgment, it is necessary to
convert an amount due hereunder into Canadian Dollars, the rate of exchange
applied shall be that quoted by the Bank of Canada as the noon mid-market spot
rate for conversion of the original currency into Canadian Dollars on the
Business Day on which judgment is given.
If a fluctuation occurs in the exchange rate between the Business Day
prior to the date of judgment and the date of payment, the Borrower shall pay on
demand or, as the case may be, shall deduct from payment, the sum, if any,
necessary so that the sum paid in Canadian Dollars shall be equal to the sum due
in the other currency, after conversion at the spot rate quoted by the Bank of
Canada at noon at the time of payment. Any obligation of the Borrower under this
Section shall constitute a distinct debt and an obligation which is added to
those resulting from the judgment which may have been rendered.
20.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument.
20.8 SEVERABILITY
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without
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invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.
20.9 REPLACEMENT OF COMMITMENT LETTER
The present Agreement replaces and supersedes the Commitment Letter and
all other verbal or oral agreements, understandings and undertakings between the
Lenders or any one thereof, and the Borrower relating to the Revolving Credit
Facility.
20.10 INCONSISTENCY WITH SECURITY DOCUMENTS
Unless otherwise herein provided, to the extent that any provision of
this Agreement is inconsistent with the provisions of the Interlender Agreement
or of any of the Security Documents, the provisions of this Agreement shall
prevail.
20.11 OBLIGATION TO PAY ABSOLUTE
The obligations of the Borrower to make payments on the Revolving Loans
as and when provided in this Agreement shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances without any right of compensation or set-off and
notwithstanding any defense, right of action or claim of any nature whatsoever
which the Borrower may at any time have or have had against the Lender, whether
in connection with this Agreement or otherwise.
20.12 FORMAL DATE
For the purpose of convenience, this Agreement may be referred to as
bearing formal date of March 31, 1999 irrespective of the actual date of its
execution.
20.13 ENGLISH LANGUAGE
The parties hereto have expressly required that this Agreement and all
deeds, documents and notices relating thereto be drafted in the English
language. Les parties aux presentes ont expressement exige que la presente
convention et tous les autres contrats, documents ou avis qui y sont afferents
soient rediges en langue anglaise.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the date and in the place first
hereinabove mentioned.
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51
GILDAN ACTIVEWEAR INC.
per:
per:
Address: 725 Xxxxxx xx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
To the attention of the: President
Telecopier: (000) 000-0000
NATIONAL BANK OF CANADA,
in its capacity as Lender
per:
per:
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52
Address: Corporate Banking
0000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
To the attention of the: Manager
Telecopier: (000) 000-0000
LAURENTIAN BANK OF CANADA, in its capacity
as Lender
per:
per:
Address: 1981 XxXxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
To the attention of the: Principal Manager
Telecopier: (000) 000-0000
BANCA COMMERCIALE ITALIANA OF CANADA, in
its capacity as Lender
per:
per:
Address: 000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
To the attention of the: Vice-President
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53
Telecopier: (000) 000-0000
CAISSE CENTRALE XXXXXXXXXX DU QUEBEC,
in its capacity as Lender
per:
per:
Address: 1 Complexe Xxxxxxxxxx
Tour Sud, Suite 2822
Xxxxxxxx, Xxxxxx
X0X 0X0
To the attention of the: Manager
Telecopier: (000) 000-0000
- 00 -
00
XXXXXXXX XXXX XX XXXXXX, in its capacity as Agent
per:
per:
Address: Syndication Department
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
To the attention of the: Manager
Telecopier: (000) 000-0000
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55
SCHEDULE "A"
THE COMMITMENTS
---------------
LENDER COMMITMENT
NATIONAL BANK OF CANADA Cdn $50,000,000
LAURENTIAN BANK OF CANADA Cdn $20,000,000
BANCA COMMERCIALE ITALIANA OF CANADA Cdn $10,000,000
CAISSE CENTRALE XXXXXXXXXX DU QUEBEC Cdn $10,000,000
TOTAL Cdn $90,000,000
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56
SCHEDULE 1.1
DEFINITIONS
"AFFILIATE" means a body corporate which is an affiliate within the meaning
given to such term as of the date hereof in the CANADA BUSINESS CORPORATIONS ACT
as well as a partnership or limited partnership that would be deemed, because of
the way the shares of its capital stock are held, to be an affiliate within the
meaning of said act if it were a corporation governed by said act ;
"AGENT" means National Bank of Canada, in its capacity as Agent for the
Lenders for the purposes of this Agreement, the Interlender Agreement, the
Security documents and the Intercreditor Agreements and includes any successor
to National Bank of Canada in such capacity;
"APPROVALS" shall have the meaning ascribed to it in Section 14.12;
"XX XXXX RATE" means, for any day, the average rate for banker's
acceptances denominated in Canadian Dollars having a maturity of 1 month which
appears on the Reuters Screen CDOR page as of 10:00 a.m., Montreal time, on such
day, or if such day is not a Business Day, then on the immediately preceding
Business Day. If for any such Business Day such rate does not appear on such
CDOR page, "XX XXXX Rate" shall mean, for such Business Day, the discount rate
(expressed as an annual percentage, rounded to the nearest fifth decimal point)
charged by money market jobbers for non-interest bearing bills of exchange
accepted by National Bank of Canada, having a maturity of 30 days and for a
nominal amount approximately equal to the aggregate principal amount outstanding
under the Revolving Credit Facility, in Canadian Dollars and in respect to which
interest is calculated on a Prime Rate Basis;
"BANK ACT DOCUMENTS" is the collective reference to the documents referred
to in Section 13.3, as same may be amended, supplemented or restated from time
to time;
"BANKER'S ACCEPTANCE" means (i) the standard form of term xxxx of exchange
used by each of the Lenders on which the Borrower has drawn and which is
accepted by such Lender; (ii) Discount Note, in all cases denominated in
Canadian Dollars or (iii) a depositary xxxx pursuant to the DEPOSITARY BILLS
AND NOTES ACT;
"BANKING DAY" means any Business Day which is also a day that is not a
legal holiday or a day on which banking institutions are authorized by Law or by
local proclamation to close in London, England;
"BARBADOS UNRESTRICTED SUBSIDIARIES" means Gildan Activewear (Barbados)
Inc. and Gildan Activewear SRL;
"B OF A CREDIT AGREEMENT" refers to that certain Amended and Restated Loan
Agreement, dated as of August 6, 1997, between Gildan Activewear Inc./Les
V#tements de Sports Gildan Inc., as borrower, and Bank of America, as lender as
same was amended, supplemented or restated from time to time;
"BORROWER" means Gildan Activewear Inc., a legal person incorporated under
the CANADA BUSINESS CORPORATIONS ACT, and includes any successor thereto;
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57
"BORROWER'S ACCOUNT" means either one of the Canadian Dollar account or
U.S. Dollar account established on behalf of the Borrower by the Agent at the
Branch of Account pursuant to Section 3.3;
"BORROWING BASE" means, as at any time, as determined by the Agent, the
amount resulting from the calculation referred to in Section 2.2 hereof;
"BRANCH OF ACCOUNT" means the branch of the Agent located at 000 xx Xx
Xxxxxxxxxxx Xxxxxx Xxxx, Xxxxxxxx, Province xx Xxxxxx, X0X 0X0, or such other
office or branch of the Agent as the Agent may specify from time to time;
"BUSINESS DAY" means any day excluding Saturday, Sunday and any other day
which in Montreal, Xxxxxx, Xxxxxxx, Xxxxxx or New York (United States of
America) is a legal holiday or a day on which the Lenders are authorized by Law
or by local proclamation to close;
"CANADIAN DOLLAR ACCOUNT" means the Canadian Dollar account established on
behalf of the Borrower by the Agent at the Branch of Account pursuant to Section
3.3;
"CANADIAN DOLLARS" and "CDN $" mean the lawful currency of Canada;
"CDN PRIME RATE" means, for any day, a rate per annum equal to the greater
of (i) the National Bank of Canada's Prime Rate in effect on such day and (ii)
the XX XXXX Rate in effect on such day plus 1% per annum;
"CHARGED PROPERTY" refers collectively to all of the property and assets of
the Borrower (on a consolidated basis) which are subject to the Liens created by
the Security Documents;
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time;
"COMMITMENT" means the obligation of a Lender, with respect to the
Revolving Credit Facility, to make such Revolving Credit Facility (up to the
amount referred to in Schedule "A") available to the Borrower;
"COMMITMENT LETTER" means that certain term sheet issued by National Bank
of Canada, dated February 16, 1999;
"COMMONLY CONTROLLED ENTITY" means an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414(b) or 414(c) of the Code;
provided that for purposes of Section 4.19 (and, insofar as they apply to said
Section, for purposes of the definitions of the terms used therein) the term
"Commonly Controlled Entity" shall include any entity, whether or not
incorporated, which, at any relevant time as to which the representations
contained therein are made, was under common control with any Subsidiary of the
Borrower within the meaning of Section 4001 of ERISA or was part of a group
which included any Subsidiary of the Borrower and which was at the time treated
as a single employer under Section 414(b)
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58
or 414 (c) of the Code;
"CONTAMINANT" means, any pollutants, dangerous substances, liquid waste,
industrial waste, hauled liquid waste, toxic substances, hazardous wastes,
hazardous materials, hazardous substances or contaminants as defined in any
Environmental Law;
"CONTROL" means control within the meaning given to such term as of the
date hereof in the CANADA BUSINESS CORPORATIONS ACT;
"CONVERSION DATE" means, as the case may be, the date as of which a
currency conversion occurs or the date as of which any basis of calculating
interest on the whole or any part of the Revolving Loans is converted into
another or is continued on the same basis or the date as of which any part of
the Revolving Loans is converted into or continued as a Banker's Acceptance or
a Letter of Guarantee;
"CORPORATE GUARANTEE" refers to the corporate guarantee executed and
delivered by each of the Unrestricted Subsidiaries and Guarantor Subsidiaries
pursuant to Article 13 hereof under the terms of which each of the Unrestricted
Subsidiary and Guarantor Subsidiary solidarity and irrevocably guarantees the
payment of the Obligations and "CORPORATE GUARANTEES" is the collective
reference to such corporate guarantees;
"DEFAULT" means any of the events specified in Section 17.1, the occurrence
or failure to occur of which constitutes, or with the passage of time or the
giving of notice or both, would constitute an Event of Default;
"DERIVATIVE INSTRUMENTS" means documents executed with respect to a rate
swap transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions and
any combination of these transactions);
"DISCOUNT" means if it is
(i) a term xxxx of exchange or a depositary xxxx accepted by a bank:
the difference between the face amount of such Banker's
Acceptance and the price at which such Banker's Acceptance could
be sold on the money market at the time of its issue, calculated
on the basis of the formula referred to in Schedule 10.1; and
(ii) a Discount Note: the average (rounded upwards, if necessary, to
the nearest one hundredth) of the discounts applicable to the
Banker's Acceptances accepted by each of the Lenders which is a
bank and issued on the same day as such Discount Note;
"DISCOUNT NOTE" means a note issued by the Borrower to a Lender which is
not a bank, having a rate of return equivalent to the Discount;
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59
"DISQUALIFIED ACCOUNT DEBTOR" means any account debtor of the Borrower or
of an Unrestricted Subsidiary with respect to which more than 50% of the total
amount of accounts receivable (other than Insured Eligible Accounts Receivable)
is owed to the Borrower or to an Unrestricted Subsidiary and remains outstanding
and unpaid for more than 90 days;
"EBITDA" means, for any given period, the net earnings before interest,
income tax expense, depreciation and amortization, excluding therefrom any
non-cash expense (including in the form of unrealized foreign exchange gains
and losses);
"ELIGIBLE INVENTORY" means all of the inventory of the Borrower (on a
consolidated basis) located in Canada, the United States of America and
Barbados, (valued at the lower of cost, determined using the first-in-first-out
method, replacement cost and net realizable value, but in no event valued at
greater than fair market value), which consists of raw materials (which shall
include all yarn, greige goods and dyed fabrics), and finished goods inventory
(but in no event work in process including piece-cut goods), which are subject
to the Liens created by the Security Documents, excluding therefrom (i) any
supplies, spare parts, goods returned or rejected by customers and are not
saleable, (ii) goods to be returned to suppliers, (iii) goods in transit except
those delivered free on board (FOB) once they have cleared customs and are
either in Canada or in the United States of America, and (iv) goods held under
consignment or subject to title retention agreements pending complete payment
or subject to any other special arrangement affecting the title of the Borrower
thereto;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
from time to time thereunder;
"ENVIRONMENTAL ACTIVITY" means any activity, event or circumstance in
respect of a Contaminant, including, without limitation, its storage, use,
holding, collection, purchase, accumulation, assessment, generation,
manufacture, construction, processing, treatment, stabilization, disposition,
handling or transportation, or its Release, escape, leaching, dispersal or
migration into the natural environment, including the movement through or in
the air, soil (land surface or subsurface strata), surface water or
groundwater;
"ENVIRONMENTAL LAW" means any and all Laws relating to pollution or the
environment or any Environmental Activity;
"ENVIRONMENTAL PERMITS" means, collectively, all permits, licenses,
certificates, remediation orders and authorizations of and registrations with,
any of the environmental authorities pursuant to any of the Environmental Laws;
"EQUIVALENT" means the equivalent in any one currency of any value or sum
denominated or expressed in any other currency using the rate of exchange
referred to in Section 11.4, the whole as calculated by the Agent as at the
date that any such calculation is so required to be made;
"EVENT OF DEFAULT" shall have the meaning ascribed to it in Section 17.1;
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60
"FEDERAL FUNDS EFFECTIVE RATE" means, on any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published the following
Business Day by the Federal Reserve Bank of New York or, if such rate is not
published for any day which is a Business Day, the average quotations for the
day for such transactions received by National Bank of Canada from three (3)
federal funds brokers of recognized standing selected by National Bank of
Canada;
"FIXED CHARGE COVERAGE RATIO" means, for any given period, the ratio of:
(i) EBITDA less capital expenditures funded from cash flow during such period;
over (ii) the sum of interest payments and principal repayments on Senior Debt
(excluding therefrom any such repayments made from proceeds derived from a
public issue of shares in the capital stock of the Borrower) made during such
period. This ratio shall be determined by using the aggregate financial results
of four consecutive quarters, namely the quarter ending on the date on which
this ratio is calculated and the three preceding quarters;
"FORMER PLAN" means any employee benefit plan in respect of which the
Borrower or a Commonly Controlled Entity could incur liability because of
Section 4069 or Section 4212(c) of ERISA;
"GUARANTEE AND SUBORDINATION AGREEMENT" refers to the guarantee and
subordination agreement to be entered into concurrently with the execution of
this Agreement among the Unrestricted Subsidiaries, the Guarantor Subsidiaries,
the Lenders, the Agent and the Borrower, as same may be amended, supplemented or
restated from time to time;
"GUARANTORS" refers collectively to the Unrestricted Subsidiaries and the
Guarantor Subsidiaries;
"GUARANTOR SUBSIDIARY" refers to either of Los Ang de San Xxx#, S.A.
(currently in the process of changing its name to Gildan Activewear San Xxx#,
S.A.), Xxxxxx Progreso, S.A. (currently in the process of changing its name to
Gildan Activewear El Progreso, S.A.) or Sula Textiles S.A. de C.V. and Winners
Manufacturing, S.A. (following the execution of the present Agreement, these two
companies will be merged to form a company which will be named Gildan Activewear
San Xxxxxx, S.A.) and any other wholly-owned Subsidiary of the Borrower that
delivers a Corporate Guarantee by becoming a party to the Guarantee and
Subordination Agreement;
"INDEBTEDNESS" includes, for any Person:
(i) obligations for borrowed money;
(ii) obligations under letters of credit or letters of guarantee or
obligations to financial institutions who issued such letters of
credit or letters of guarantee for the account of such Person;
(iii) obligations under banker's acceptances;
(iv) obligations representing the deferred purchase price of property
or services;
(v) obligations, whether or not assumed, secured by Liens on, or
payable out of the proceeds
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61
or production from, property owned by such Person;
(vi) lease obligations which would be shown as a liability on a
balance sheet of such Person;
(vii) obligations under Derivative Instruments;
(viii) any other obligations which in accordance with generally accepted
accounting principles would constitute a liability on the balance
sheet of such Person;
(ix) obligations of another Person of the type set forth in paragraphs
(i) to (vii) above which such Person has guaranteed (except by
reason of endorsement for collection in the ordinary course of
business) or in respect of which such Person is liable,
contingently or otherwise, including, without limitation, liable
by way of agreement to purchase property or services, to provide
funds for payment, to supply funds to or otherwise invest in such
other Person, or otherwise to assure a creditor of such other
Person against loss;
"INSURED ELIGIBLE ACCOUNTS RECEIVABLE" means on a consolidated basis, all
of the Borrower's claims, book debts and accounts receivable which are subject
to the Liens created by the Security Documents for which the account debtor is
located in Canada, in the United States of America, in the United Kingdom or in
any other jurisdiction to be agreed upon by the Agent, acting upon instructions
from the Lenders, and whose payment is insured by an adequate receivable
insurance provider acceptable to the Agent, provided that the benefits of any
such insurance are specifically charged to and in favour of the Lenders, free
from any other lien and any such charge is duly accepted and acknowledged by
such insurance provider; provided, however, that the book value of the claims,
book debts and accounts receivable which shall be taken into consideration for
the purposes of this definition shall not in any event exceed in the aggregate
the maximum liability under such applicable receivable insurance agreement in
respect thereof and only for up to the principal amount of the insurance
coverage thereof;
"INTERCREDITOR AGREEMENTS" refers collectively to the subordination
agreements to be entered into concurrently with the execution of this Agreement
among the Lenders, the Agent, the Borrower and each of the Subordinated
Creditors, as same may be amended, supplemented or restated from time to time;
"INTERLENDER AGREEMENT" refers to the interlender agreement to be entered
into concurrently with the execution of this Agreement among the Lenders, the
Agent and the Borrower, as same may be amended, supplemented or restated from
time to time;
"LAW" means all applicable provisions of statutes, ordinances, decrees,
orders in council, rules, regulations and orders of governmental bodies and all
applicable orders and decrees of courts and arbitrators;
"LENDER" refers individually to any Person whose name is set forth in
Schedule "A" hereof as a Lender hereunder and shall include any successor or
assign of any such Person and "Lenders" is the collective reference to all such
Persons;
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62
"LETTERS OF GUARANTEE" is the collective reference to any outstanding
letter of guarantee or any documentary, stand-by or other letter of credit, and
all renewals and substitutions therefor, denominated in Canadian Dollars or U.S.
Dollars, issued from time to time by the Lender that is also the Agent, for the
account of the Borrower under the Revolving Credit Facility in accordance with
the provisions hereof, and "Letter of Guarantee" means any one of the Letters of
Guarantee;
"LIBOR ADVANCE" means such portion of the principal amounts denominated in
U.S. Dollars and outstanding under the Revolving Credit Facility with respect to
which the Borrower has elected to pay interest on a Libor Basis;
"LIBOR BASIS" means the calculation of interest on the outstanding amount
of monies advanced in U.S. Dollars under the Revolving Credit Facility or any
portion thereof as provided under Section 6.1;
"LIBOR INTEREST PAYMENT DATE" means the last day of a Libor Interest Period
and, if such Libor Interest Period is longer than 90 days, the last day of every
period of 90 days after the beginning of such Libor Interest Period;
"LIBOR INTEREST PERIOD" means a period of at least 1 month and of no more
than 6 months, as selected by the Borrower, commencing the day on which a Libor
Advance is made or renewed and ending the last day of such period;
"LIBOR RATE" with respect to a Selected Amount, means the rate of interest,
rounded upwards, if necessary, to the nearest whole multiple of 1/16%, at which
National Bank of Canada, in accordance with its normal practice, would be
prepared to offer to leading banks in the London Interbank Market, for delivery
on each of the relevant Rollover Dates for a period equal to the relevant
Selected Maturity based on the number of days comprised therein, deposits in
U.S. Dollars of comparable amounts to such Selected Amount, to be outstanding
during such selected maturity, at or about 11:00 a.m., London time, two (2)
Banking Days prior to a drawdown date for an advance in U.S. Dollars;
"LIEN" means any interest in property or the income or profits therefrom
securing an obligation owed to, or a claim by, a Person other than the owner of
such property, whether such interest is based on common law, civil law, statute
or contract, and including, but not limited to, any security interest, hypothec,
mortgage, pledge, lien, claim, charge, cession, transfer, assignment,
encumbrance, title retention agreement, lessor's interest under a lease which
would be capitalized on a balance sheet of the owner of such property or
analogous instrument in, of, or on any property or the income or profits
therefrom of a Person, other than Liens incurred in the ordinary course of
business and for the purpose of carrying on same not in connection with the
borrowing of money or the obtaining of credit and which do not in the aggregate
materially impair the use, the income or profits therefrom, of the property
covered thereby in the operation of such Person's business;
"LOCK BOX AGREEMENT" means that certain Lock Box Agreement to be entered
into concurrently with the execution of this Agreement among the Agent and
Gildan Activewear SRL pursuant to which Gildan Activewear SRL will maintain a
Lock Box with the Agent, at the Agent's branch situated in
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63
Chicago or any other branch which may be determined by the Agent from time to
time, where all payments under all U.S. accounts receivable will be deposited
and whereby standing irrevocable instructions will be given to wire the funds so
deposited, daily, to the Borrower's account in Montreal (Quebec);
"MAJORITY LENDERS" means, as at any time, Lenders to which no less than
66 2/3% of the Revolving Loans are owing or, if no Revolving Loans are then
outstanding, Lenders having no less than 66 2/3% of the Commitments, provided
however that for as long as there are less than three Lenders, "Majority
Lenders" means all Lenders;
"MATERIAL ADVERSE EFFECT" means the occurrence or the failure to occur of
any event or series of events which either singly or in the aggregate would have
a material adverse effect upon the business, assets, liabilities, financial
position or results of operations of the Borrower on a consolidated basis or of
any Unrestricted Subsidiary or on the ability of the Borrower or of any
Unrestricted Subsidiary to perform its obligations under this Agreement, or
under any of the Security Documents;
"MULTIEMPLOYEE PLAN" means a Plan which is s multiemployee plan as defined
in Section 4001(a)(3) of ERISA;
"NATIONAL BANK OF CANADA'S PRIME RATE" means, for any day, the rate of
interest, expressed as an annual rate, quoted or announced on such day by
National Bank of Canada in the City of Montreal as being its reference rate of
interest then in effect for determining interest rates on its commercial loans
made in Canada in Cdn $ by National Bank of Canada;
"NATIONAL BANK OF CANADA'S U.S. PRIME RATE" means, for any day, the rate of
interest, expressed as an annual rate, quoted or announced on such day by
National Bank of Canada in the City of Montreal as being its reference rate of
interest then in effect for determining interest rates on its commercial loans
made in Canada in U.S. $ by National Bank of Canada;
"OBLIGATIONS" shall have the meaning ascribed to it in Article 13 hereof;
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA and any successor thereto;
"PERMITTED ENCUMBRANCES" means the following Liens and other encumbrances,
excluding the security granted by the Borrower or an Unrestricted Subsidiary to
the Lenders pursuant to Article 13 hereof:
(i) created by workers compensation, unemployment insurance and other
social security legislation for liabilities not yet overdue;
(ii) for taxes or assessments not yet due or for which payment is not
yet delinquent;
(iii) for taxes or assessments, due or past due and payable, the
validity of which is being contested in
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good faith by the Borrower by appropriate proceedings timely
instituted; provided, however, that where taxes must be paid or
deposited in whole or in part subject to resolution of such
contest in order to stay enforcement of such lien, such taxes or
required part thereof shall have been so paid or deposited; and
(iv) for services performed for or materials delivered to the Borrower
for which payment is not yet delinquent, and attachments,
judgments and other similar liens arising in connection with
services performed or materials delivered; provided, however,
that the execution or other enforcement of such liens is
effectively stayed and the claims secured thereby are being
contested in good faith by appropriate proceedings and for which
the Borrower or any of its Subsidiaries has deposited with the
Agent a letter of credit or a suretyship satisfactory to the
Agent in an amount sufficient to pay in principal, interest and
costs whatever may be owing should such contestation be
unsuccessful;
(v) the Liens permitted under Section 16.7;
"PERSON" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, government or any department,
agency or instrumentality of any government;
"PLAN" means any employee benefit plan which is covered by ERISA and in
respect of which the Borrower or a Commonly Controlled Entity is an "employer"
as defined in Section 3(5) of ERISA;
"PRIME RATE BASIS" with respect to any principal amount denominated in
Canadian Dollars, means the calculation of interest as provided under Section
5.1 and, with respect to any principal amount denominated in U.S. Dollars, means
the calculation of interest as provided under Section 5.2;
"PRIOR CLAIM" means any claim which, by the effect of law, entitles its
beneficiary to be paid in priority to the obligations secured by the Security
Documents, whether resulting from conventional security or from a prior claim,
legal hypothec, trust or presumed trust or any other mechanism or right
benefiting the holder of such claim (a non-exhaustive list is annexed hereto as
Schedule 2.2.4);
"PRO RATA SHARE" with respect to any Lender, means the ratio of the
Commitment of such Lender to the Commitments;
"PURCHASE MONEY OBLIGATION" means all obligations of any Person (i)
consisting of the deferred purchase price of any property, conditional sale
obligation, obligations under any kind of title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business) and
other purchase money obligation, in each case where the maturity of such
obligations does not exceed the anticipated useful life of the property being
acquired or financed and (ii) incurred to finance the acquisition or
construction of such property, including additions and improvements thereto; and
(iii) lease and leasing agreements that are capitalized in the balance sheet of
the lessee of the leased property; provided however that any Lien arising in
connection with any Purchase Money Obligations shall be
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65
limited to the specified asset being leased, financed or acquired, including
additions and improvements thereto;
"RELEASE" means discharge, spray, inject, inoculate, abandon, deposit,
spill, leak, seep, pour, emit, empty, throw, dump, place and exhaust, and when
used as a noun has a similar meaning;
"RELEVANT MARGIN" has the meaning ascribed to it in Schedule 10.1;
"REORGANIZATION" means the Reorganization of the Borrower whereby future
sales to customers situated outside of Canada will be made by Gildan Activewear
SRL in virtue of the personnel and resources put together by Gildan Activewear
SRL in Barbados; an up-to-date description of the Reorganization is set forth in
the March 30, 1999 internal memorandum enclosed herewith under Schedule 16.16;
"REORGANIZATION DOCUMENTS" refers to the documents outlined in subsection
16.16.4;
"REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty-day notice period is
waived under Sections .13, .14, .16,.18, 19 or .20 of PBGC Reg. Section 4043 or
any successor regulation thereto;
"REVOLVING CREDIT FACILITY" means the credit facility referred to in
Section 2.1;
"REVOLVING LOANS" is the collective reference to the aggregate of the
outstanding amount advanced to the Borrower by the Lenders under the Revolving
Credit Facility (including by way of the overdraft referred to under subsection
3.1.1) and includes such portion outstanding by way of Banker's Acceptances and
Letters of Guarantee;
"REVOLVING PERIOD" means the period commencing on the date of execution of
this Agreement and terminating at the earlier of:
(1) 3:00 P.M., Montreal time, on the third anniversary of such date. By
written notice to the Agent, the Borrower may request that the
Lenders extend the Revolving Period a first time to the date of
the fourth anniversary of the Credit agreement, and thereafter
for additional individual 12-month periods, each such period to
commence on the day following the last day of the Revolving
Period then in effect, each such period to commence on the day
following the last day of the Revolving Period then in effect.
Any such extension request must be received by the Agent no later
than 120 days before the last day of the effective Revolving
Period accompanied by the latest financial statements and related
information stipulated in Section 16.12, except to the extent
that same were already delivered to the Agent. The decision as to
whether to extend the Revolving Period shall be subject to the
unanimous affirmative decision of the Lenders, failing which,
such decision shall be deemed to be to the effect of not
extending such period. The Agent shall then notify the Borrower
of the Lenders decision no later than 90 days before the last day
of the effective Revolving Period. In the event that the Borrower
fails to deliver either the aforementioned extension request or
the financial information or both within the delays stipulated
above, it shall thereupon lose any right to request an extension
of the Revolving Period for the balance of
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66
such period and the Revolving Period, subject to subparagraph 2
below shall terminate at the close of business in Montreal of the
last day of the Revolving Period then in effect. The failure by
the Agent to notify the Borrower in writing, of the decision of
the Lenders ought not, under any circumstances, to be construed
or interpreted as a consent by the Lenders to such an extension;
(2) the date that the Revolving Credit Facility is fully terminated
and cancelled as provided under the provisions of Sections 2.4 or
17.2;
"RISK VALUE OF DERIVATIVE INSTRUMENTS" means costs incurred by a Lender
further to the breaking or assignment of a Derivative Instrument to which the
Borrower is a party, as established from time to time in good faith by such
Lender based on the market value, but in case of Default, on the basis of the
formula proposed by the "ISDA Master Agreement" (1992 Version or any other
subsequent version) of the International Swaps and Derivatives Association, Inc.
under Section 6(e) "Payments on Early Termination" in the case of currency or
interest exchange agreements or other agreements governed by such agreement;
"ROLLOVER DATE" means with respect to Banker's Acceptance, Libor Advance or
Letter of Guarantee, the Conversion Date or the date of any advance where the
Borrower has elected that such advance be made by way of Banker's Acceptances or
Letters of Guarantee, or that interest thereon be calculated on a Libor Basis,
as the case may be;
"SALE AND LEASEBACK TRANSACTION", with respect to any Person, means any
transaction or series of transactions whereby such Person sells, transfers or
otherwise disposes of any of its properties and assets to another Person and
within one (1) year of such sale, transfer or other disposition such Person
leases or rents as lessee, the same property;
"SECURITY DOCUMENTS" is the collective reference to the documents
contemplated in Article 13, as same may be amended, supplemented or restated
from time to time;
"SELECTED AMOUNT" means, with respect to:
(1) Banker's Acceptances, the whole or any portion of any advance in
Canadian Dollars under the Revolving Credit Facility or any
portion of the Revolving Loans outstanding in Canadian Dollars,
which the Borrower has requested to be or become outstanding by
way of Banker's Acceptances;
(2) Libor Advances, the whole or any portion of any advance in U.S.
Dollars under the Revolving Credit Facility or any portion of the
Revolving Loans outstanding in U.S. Dollars, which the Borrower
has requested that interest payable thereon be calculated on a
Libor Basis;
(3) Letters of Guarantee, the whole or any portion of any advance in
Canadian Dollars or U.S. Dollars under the Revolving Credit
Facility or any portion of the Revolving Loans outstanding in
Canadian Dollars or U.S. Dollars, which the Borrower has
requested to be or become outstanding by way of Letters of
Guarantee;
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67
"SELECTED MATURITY" means, with respect to any Banker's Acceptance, Libor
Advance or Letter of Guarantee, the maturities (number of days) elected by the
Borrower under the provisions of Sections 6.4, 8.2 and 9.3, as the case may be;
"SENIOR DEBT" means, with respect to the Borrower, on a consolidated
basis, the sum of all Indebtedness for borrowed money (including corporate
guarantees for borrowed money with the exception however of corporate
guarantees by the Borrower or any Unrestricted Subsidiary in support of
Indebtedness for borrowed money by the Borrower or an Unrestricted Subsidiary)
but excluding Subordinated Debt. For the purposes set forth herein,
Indebtedness for borrowed money shall include, without limitation:
(i) obligations for borrowed money; (ii) obligations under letters of credit or
letters of guarantee or obligations to financial institutions who issued such
letters of credit or letters of guarantee for the account of such Person;
(iii) obligations under banker's acceptances, depository bills or depository
notes (as these latter two expressions are defined in the DEPOSITORY BILLS AND
NOTES ACT (Canada); (iv) Purchase Money Obligations; (v) obligations evidenced
by bonds, debentures or promissory notes; (vi) redeemable shares of its capital
stock which are either redeemable at the option of the holder thereof, are
redeemable at a fixed date or are redeemable during fixed intervals (the amount
of Indebtedness for borrowed money of any such capital stock shall be the
maximum fixed redemption or repurchase price therefor); and (vii) the lesser of
the fair market value of the property subject to a Sale and Leaseback
Transaction and the total net amount of rent required to be paid under such
sale and leaseback transaction;
"SENIOR DEBT TO EBITDA RATIO" means, for any given period, the ratio of
Senior Debt over EBITDA. This ratio shall be determined by using the aggregate
financial results of four consecutive quarters, namely the quarter ending on
the date on which this ratio is calculated and the three preceding quarters;
"SHAREHOLDERS' EQUITY" means the sum of all issued and fully paid capital
stock of the Borrower at stated value, paid-in capital surplus, contributed
capital and retained earnings, but excluding any deferred taxes and intangibles
(an asset having no physical substance such as goodwill, patents, copyrights,
trademarks, franchises, etc.);
"SINGLE EMPLOYER PLAN" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan;
"SODEX" means NBC Export Development Corporation Inc.;
"SUBORDINATED CREDITORS" means Fonds de solidarite des travailleurs du
Quebec (F.T.Q.) and Capital d'Amerique CDPQ Inc.;
"SUBORDINATED DEBT" means any indebtedness of the Borrower to any person,
in principal, interest and fees, which is expressly postponed and made
subordinate and junior in right of payment to the Revolving Loans under the
terms and conditions satisfactory to the Agent and the Lenders, including the
indebtedness of the Borrower to Fonds de solidarite des travailleurs du Quebec
(F.T.Q.) and to Capital d'Amerique CDPQ Inc.;
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68
"SUBSIDIARY" means a subsidiary within the meaning given to such term as of
the date hereof in the CANADA BUSINESS CORPORATIONS ACT as well as a partnership
or limited partnership that would be deemed, because of the way the partnership
units are held, to be a subsidiary within the meaning of said act if it were a
corporation governed by said act;
"TOTAL CAPITALIZATION" means the sum of Senior Debt, Shareholders' Equity
and Subordinated Debt;
"U.S. DOLLAR ACCOUNT" means the U.S. Dollar Account established on behalf
of the Borrower by the Agent at the Branch of Account pursuant to Section 3.3;
"U.S. DOLLARS" and "U.S. $" means the lawful currency of the United States
of America in same day immediately available funds or if such funds are not
available, the form of money of the United States of America that is customarily
used in the settlement of international banking transactions on the day any
payment is due to be made hereunder;
"U.S. PRIME RATE" means, for any day, a rate per annum equal to the greater
of (i) the National Bank of Canada's U.S. Prime Rate in effect on such day and
(ii) the Federal Funds Effective Rate on such day plus 1% per annum;
"U.S. UNRESTRICTED SUBSIDIARIES" means Gildan Activewear Miami, Inc. and
Gildan Activewear Xxxxxx, Inc.;
"UNDERFUNDING" means an excess of the present value of all accumulated
benefits under a Plan (based on those assumptions used to fund such Plan), over
the aggregate market value of the assets of such plan allocable to such
accumulated benefits, determined in each case as of the most recent annual
valuation date:
"UNINSURED ELIGIBLE ACCOUNTS RECEIVABLE" means on a consolidated basis, all
of the Borrower's claims, book debts and accounts receivable which are subject
to the Liens created by the Security Documents, for which the account debtor is
not an affiliate of the Borrower and is located in Canada or in the United
States of America or, if located in another jurisdiction, for which the
applicable claim, book debt or account receivable is supported by a letter of
credit acceptable to the Agent that has been assigned or charged to the Agent or
the Lenders and which are outstanding for less than 90 days, other than such
claims, book debts and accounts receivable which are being disputed by the
account debtors or are considered to constitute bad debts under generally
accepted accounting principles;
"UNRESTRICTED SUBSIDIARY" refers to either Gildan Activewear Properties
(BVI) Inc.), Gildan Activewear Miami, Inc., Gildan Activewear Barbados Inc.,
Gildan Activewear SRL, Gildan Activewear Xxxxxx, Inc. and any other direct or
indirect wholly-owned Subsidiaries of the Borrower acceptable to the Agent
(acting upon the instructions of the Majority Lenders) that have provided their
corporate guarantee and supporting security as required in Article 13.
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69
SCHEDULE 2.2.4
PRIOR CLAIMS
NON LIMITATIVE LIST
Claims which are due and payable and which are not contested in good faith
and by appropriate measures before a court or GOVERNMENTAL AUTHORITY:
(i) for deductions at source pursuant to the INCOME TAX ACT (R.S.C.
(1985), 5th supp., ch. 1 as amended);
(ii) for deductions at source, employer contributions, interest,
penalties or other sums pursuant to Part III of the EMPLOYMENT
INSURANCE ACT (S.C. 1996, ch. 23);
(iii) for deductions at source, employer contributions, interests,
penalties or other sums payable pursuant to the CANADA PENSION
PLAN ACT (R.S.C. (1985), ch. C-8);
(iv) pursuant to a fiscal act within the meaning of Section 1 of AN
ACT RESPECTING THE MINISTERE DU REVENU (R.S.Q., ch. M-31);
(v) for assessments pursuant to AN ACT RESPECTING THE QUEBEC PENSION
PLAN (R.S.Q., ch. R-9, Sections 50, 59 and 63);
(vi) for assessments pursuant to AN ACT RESPECTING INDUSTRIAL
ACCIDENTS AND OCCUPATIONAL DISEASES (R.S.Q., ch. A-3.001,
Section 324); and
(vii) for taxes, income taxes or duties owed to a municipality or other
body corporate of public law.
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70
SCHEDULE 3.1.2
DRAW DOWN NOTICE
(Letterhead)
(Date)
NATIONAL BANK OF CANADA, as Agent
Syndication Department
0000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Gentlemen:
We refer you to that certain Cdn $90,000,000 credit agreement entered into
among ourselves, as Borrower, National Bank of Canada and the lenders named
therein, as Lenders, and National Bank of Canada, as Agent, bearing formal date
of March 31, 1999, as same may be amended, supplemented or restated at any time
and from time to time (the "Credit Agreement").
Unless there be something in the subject or the context inconsistent
therewith, all capitalized terms and expressions used herein shall have the same
meaning as that ascribed to them in the Credit Agreement.
1. In connection with the Revolving Credit Facility and pursuant to
subsection 3.1.2 of the Credit Agreement, we hereby request that as
of , a draw down be made as follows:
(a) Prime Rate Advance
Amount: Cdn $
Amount: U.S. $
(b) Banker's Acceptance
Face Amount: Cdn $
________________________
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71
Period: ___________________________ days
(c) Libor Advance
Amount: U.S. $__________________________
Period: ___________________________ days
(d) Letter of Guarantee
Face Amount: $ ______________________________
U.S. $__________________________
Period: ___________________________ days
Yours very truly,
GILDAN ACTIVEWEAR INC.
per:
per:
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72
SCHEDULE 4.1.1
CLOSING AGENDA
(SEE DOCUMENT ANNEXED HERETO)
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73
SCHEDULE 10.1
RELEVANT MARGIN AND STAND-BY FEE
1. The "RELEVANT MARGIN" shall fluctuate with the results of the Senior Debt
to EBITDA Ratio as follows:
Level Senior Debt to Agent's Prime Rate Agent's Agent's Libor LG Fees to
EBITDA Ratio Advances Discount Rate Rate Advance (90%
(R) (Cdn, U.S.) B.A. Stamping $ distributed to
Fees Lenders)
I R < 2.00 +0.50% 1.50% +1.50% 1.50%
II 2.00 < R < 3.00 +0.875% 1.875% +1.875% 1.875%
III 3.00 < R +1.25% 2.25% +2.25% 2.25%
[FN]
(1) other than documentary letters of credit
The interest rates and stamping fees mentioned hereinabove shall be reduced
by 0.25 % at every level, if the Senior Debt to Total Capitalization Ratio
is maintained below 0.50 : 1.00 for four consecutive quarters.
2. "DISCOUNT" means:
F(1) - F
___
F + ( Rate(2) x n(3)/365)
3. The "STAND-BY FEE" shall fluctuate as follows:
(a) 0.25 % if the Revolving Credit Facility is utilized in excess
of 66%;
(b) 0.35 % if the Revolving Credit Facility is utilized between 33% and
66%;
________________________
[FN]
1 Face amount of the Banker's Acceptance.
2 Discount rate offered to the acceptor {average, rounded-off upwards
to the nearest one hundredth, of discount rates offered to National
Bank of Canada) by the money market at the time of issue for a
banker's acceptance for the selected period.
3 Number of days until maturity of the Banker's Acceptance.
- 73 -
74
(c) 0.45 % if the Revolving Credit Facility is utilized below 33%.
(d) *****
(e) Any variation of the Relevant Margins resulting from the above
variations in the Senior Debt to EBITDA Ratio shall become effective
on the day of the receipt by the Agent of the quarterly consolidated
financial statements of the Borrower and certificate of the Vice
President Finance mentioned in 15.12.1 of this Agreement, but at the
latest on the 60th day following the end of such quarter. Such
variation shall apply to the Prime Rate Advances and Libor Advances
outstanding at the time of the variations, but only to the BA's to
be issued after the variation in the Relevant Margin has occurred
and to the fees on Letters of Guarantee payable after such date.
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75
SCHEDULE 11.1
CONVERSION NOTICE
(letterhead of the Borrower)
Date:
NATIONAL BANK OF CANADA, as Agent
Syndication Department
0000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Gentlemen:
We refer to that certain Cdn $90,000,000 credit agreement entered into
among ourselves, as Borrower, National Bank of Canada and the lenders named
therein, as Lenders, and National Bank of Canada, as Agent, bearing formal date
of March 31, 1999, as same may be amended, supplemented or restated at any time
and from time to time (the "Credit Agreement").
Unless there be something in the subject or the context inconsistent
therewith, all capitalized terms and expressions used herein shall have the same
meaning as that ascribed to them in the Credit Agreement.
Pursuant to Section 11.1 of the Credit Agreement, we hereby request the
following:
1. In connection with the Revolving Credit Facility, we hereby request
that as of , a sufficient amount outstanding by way of [Prime
Rate Advance, Banker's Acceptance or Libor Advance] be converted or
continued into:
(a) Prime Rate Advance
Amount U.S.$_______________
$_______________
(b) Banker's Acceptance
Face Amount $_______________
Period ______________ days
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76
(c) Libor Advance
Amount U.S.$_______________
Period ______________ days
(d) Letter of Guarantee
Face Amount U.S.$_______________
$_______________
Period ______________ days
Yours truly,
GILDAN ACTIVEWEAR INC.
per:
per:
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77
SCHEDULE 14.8
TAX MATTERS
- NIL -
- 77 -
78
SCHEDULE 14.11
MATERIAL CONTRACTS
[TO BE COMPLETED]
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79
SCHEDULE 14.13
ENVIRONMENTAL MATTERS
[TO BE COMPLETED]
- 79 -
80
SCHEDULE 14.14
SUBSIDIARIES
[TO BE COMPLETED]
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81
SCHEDULE 14.15
PLACES OF BUSINESS
[TO BE COMPLETED]
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82
SCHEDULE 15.12.1
QUARTERLY CERTIFICATE
(Letterhead of Gildan Activewear Inc.)
TO: NATIONAL BANK OF CANADA, as Agent
FROM: GILDAN ACTIVEWEAR INC.
For the quarter ending:
This certificate is delivered to you pursuant to the provisions of
subsection 15.12.1 of the credit agreement bearing formal date of March 31, 1999
(the "Credit Agreement") among the Borrower, the Lenders and National Bank of
Canada, as Agent, as same may be amended, supplemented or restated at any time
and from time to time.
All capitalized terms and expressions used in this certificate have the
meanings ascribed to them in the Credit Agreement.
As of the Borrower, I hereby confirm that as of :
(i) SENIOR DEBT TO EBITDA RATIO (<3.75: 1.00 up to
including September 29, 1999 and <3.25: 1.00
thereafter)
The Borrower's Senior Debt to EBITDA Ratio was , calculated as
follows:
(a) obligations for borrowed money $_______________(A)
(b) obligations under letters of $_______________(B)
credit or letters of guarantee or
obligations to financial
institutions who issued such
letters of credit or letters of
guarantee for the account of such
Person
(c) obligations under banker's $_______________(C)
acceptances, depository bills or
depository note
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83
(d) Purchase Money Obligations $_______________(D)
(e) obligations evidenced by bonds, $_______________(E)
debentures or promissory notes
(f) redeemable shares of its capital $_______________(F)
stock which are either redeemable
at the option of the holder
thereof, are redeemable at a
fixed date or are redeemable
during fixed intervals
(g) the lesser of the faire market $_______________(G)
value of the property subject to
a sale and leaseback transaction
and the total net amount of rent
required to be paid under such
sale and leaseback transaction
(h) (A) + (B) + (C) + (D) +(E) + (F) + (G) $_______________(H)
(i) Net earnings before interest $_______________(I)
(j) Income tax expenses $_______________(J)
(k) Depreciation and amortization $_______________(K)
expenses (excluding any non-cash
expense)
(l) EBITDA [(I) + (J) + (K)] $_______________(L)
(m) (H) divided by (L) _______________
(ii) Fixed Charge Coverage Ratio
(>2.00: 1.00)
The Borrower's Fixed Charge Coverage Ratio was _______________,
calculated as follows:
(a) EBITDA $_______________(A)
(b) Capital expenditures (funded from $_______________(B)
cash flows during such period)
(c) (A) - (B) $_______________(C)
(d) Interest payments on Senior Debt $_______________(D)
made during said period by the
Borrower
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84
(e) The principal repayments of Senior $_______________(E)
Debt made during said period by the
Borrower and not made from proceeds
derived from a public issue of shares
in the capital stock of the Borrower
(f) (D) + (E) $_______________(F)
(g) (C) divided by (F) $_______________(G)
(iii) Senior Debt to Total Capitalization Ratio
(0.65 : 1.00 up to and including
September 29, 1999 and 0.6: 1.00 thereafter)
The Borrower's Senior Debt to Total
Capitalization Ratio was_______________,
calculated as follows:
(a) Senior Debt $_______________(A)
(b) Shareholders' Equity $_______________(B)
(c) Subordinated Debt $_______________(C)
(d) (A) divided by [(A) + (B) + (C)] _______________
Dated:
By:
Title:
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85
SCHEDULE 15.12.2
MONTHLY CERTIFICATE
(Letterhead of Gildan Activewear Inc.)
TO: NATIONAL BANK OF CANADA, as Agent
FROM: GILDAN ACTIVEWEAR INC.
For the month of:
This certificate is delivered to you pursuant to the provisions of
subsection 15.12.2 of the credit agreement bearing formal date of March 31, 1999
(the "Credit Agreement") among the Borrower, the Lenders and National Bank of
Canada, as Agent, as same may be amended, supplemented or restated at any time
and from time to time.
All capitalized terms and expressions used in this certificate have the
meanings ascribed to them in the Credit Agreement.
1. As of the Borrower, I hereby confirm that as of , the maximum
amount available under the Revolving Credit Facility is $ ,
calculated, as provided by section 2.2 of the Credit Agreement, as follows:
Authorized amount Cdn $90,000,000 (A)
the aggregate net book value of the Borrower's Insured
Eligible Accounts Receivable (see appendix 1); _______________ (B)
the net book value of the Borrower's Uninsured
Eligible Accounts Receivable (see appendix 2); _______________ (C)
The aggregate of all Uninsured Eligible Accounts
Receivable that are owed by Disqualified Debtor
(see appendix 3) _______________ (D)
the lesser of Cdn $1,000,000 and (D) _______________ (E)
an amount equal to 60 % of the net book value of the
Borrower's Eligible Inventory (see appendix 4); _______________ (F)
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86
the lesser of Cdn $45,000,000 and (F) _______(G)
the aggregate amount of liabilities owing by the Borrower or _______(H)
an Unrestricted Subsidiary, the non-payment of which shall
or may result in the creation of a Lien or other claim ranking
in priority to any Liens of the Lenders under Security
Documents including, without limitation, Prior Claims
(see appendix 5);
80% of (B) + 75% [(C) - (E)] + (G) - (H) _______(I)
Amount available: the lesser of (A) and (J) __________
Dated:
By:
Title:
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87
APPENDIX 1 TO THE MONTHLY CERTIFICATE
INSURED ELIGIBLE ACCOUNTS RECEIVABLE
------------------------------------
[TO BE COMPLETED WITH RESPECT TO THE BORROWER AND EACH UNRESTRICTED SUBSIDIARY]
AMOUT DUE INSURANCE AGING (BY MULTIPLES
NAME OF CLIENT COUNTRY OF ORIGIN (EXPRESSED IN CDN $) PROVIDER INSURANCE COVERAGE OF 30 DAYS)
(%) AMOUNT
TOTAL CDN $
- 87 -
88
APPENDIX 2 TO THE MONTHLY CERTIFICATE
UNINSURED ELIGIBLE ACCOUNTS RECEIVABLE
[TO BE COMPLETED WITH RESPECT TO THE BORROWER AND EACH UNRESTRICTED SUBSIDIARY]
AGSD (NUMBER OF DAYS)
AMOUNT
(EXPRESSED MORE THAN
NAME OF CLIENT COUNTRY OF ORIGIN IN CDN $ 30 60 90 90
- 88 -
89
APPENDIX 3 TO THE MONTHLY CERTIFICATE
UNINSURED ELIGIBLE ACCOUNTS RECEIVABLE
OWED BY DISQUALIFIED DEBTOR
[TO BE COMPLETED WITH RESPECT TO THE BORROWER AND EACH UNRESTRICTED SUBSIDIARY]
AMOUNT DUE
(EXPRESSED AR AGED LESS THAN AR AGED MORE THAN
NAME OF CLIENT COUNTRY OF ORIGIN IN CDN $) 90 DAYS 90 DAYS
- 89 -
90
APPENDIX 4 TO THE MONTHLY CERTIFICATE
ELIGIBLE INVENTORY
[TO BE COMPLETED WITH RESPECT TO THE BORROWER AND EACH UNRESTRICTED
SUBSIDIARY 1]
BOOK VALUE
DESCRIPTION OF INVENTORY (EXPRESSED IN CDN $) LOCATION
- 90 -
91
APPENDIX 5 TO THE MONTHLY CERTIFICATE
PRIOR CLAIMS
[TO BE COMPLETED WITH RESPECT TO THE BORROWER AND EACH UNRESTRICTED
SUBSIDIARIES]
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92
SCHEDULE 15.12.3
ANNUAL CERTIFICATE
(YEAR ENDED ( DATE ))
TO: NATIONAL BANK OF CANADA
FROM: GILDAN ACTIVEWEAR INC. (the "Borrower")
This certificate of the Vice-President Finance is delivered to you under
subsection 15.12.3 of the credit agreement bearing formal date of March 31, 1999
(the "Credit Agreement") among the Borrower, National Bank of Canada and the
Lenders named therein, as Lenders, and National Bank of Canada, as Agent, as
same may be amended, supplemented or restated at any time and from time to time.
All capitalized terms and expressions used in this Certificate have the
meanings ascribed to them in the Credit Agreement.
We are respectively the [and] of the Borrower and we, in such capacity,
hereby certify to you, as follows:
(i) that we have taken cognizance of all the terms of the Credit
Agreement, the Security Documents and of the contracts, agreements
and deeds ancillary thereto and of all deeds and agreements
governing the borrowings of the Borrower; and
(ii) that we have taken cognizance and reviewed the transactions,
operations and status of business of the Borrower, since the last
certificate given to you or, as the case may be, since the
execution of the Credit Agreement] and that all conditions and
requirements of the Credit Agreement, the Security Documents and of
the contracts, agreements and deeds ancillary thereto and of all
other deeds or agreements governing the borrowings of the Borrower,
have been accomplished and satisfied and that [we do not know of the
existence, as of the date of this certificate, of a condition or of
any fact whatsoever, constituting or having constituted a default or
an event of default under the terms of the aforementioned agreements
or deeds or which would, after notices or by the simple laps of
time, constitute an event of default] or [IF SUCH CONDITION EXISTS
OR HAS EXISTED DURING THE PERIOD COVERED BY THIS CERTIFICATE, THEN
SPECIFYING ITS NATURE AND DURATION AND DESCRIBING THE MEASURES TAKEN
OR INTENDED TO BE TAKEN TO REMEDY THE DEFAULT, EVENT OF DEFAULT OR
ANTICIPATED EVENT OF DEFAULT].
Dated this [day of], 1999.
- 92 -
93
Name:
Office:
Name:
Office:
- 93 -
94
SCHEDULE 16.6
EXISTING LOANS AND ADVANCES
(see annexed document)
- 94 -
95
SCHEDULE 16.7
EXISTING LIENS
(see annexed document)
- 95 -
96
SCHEDULE 16.16
REORGANIZATION
(see annexed document)
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