UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 5, 1997
------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-8016
------
TULTEX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-0367896
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
101 Commonwealth Boulevard, P. O. Box 5191, Martinsville, Virginia 24115
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 540-632-2961
------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
29,885,688 shares of Common Stock, $1 par value, as of August 9, 1997
- ---------- -- --------------
PART I. FINANCIAL INFORMATION
Item 1.
Tultex Corporation
Consolidated Statement of Operations (Unaudited -
$000's omitted except in shares and per share data)
July 5, 1997 (and June 29, 1996)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ---------------------------
July 5, 1997 June 29, 1996 July 5, 1997 June 29,1996
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net Sales and Other Income $ 148,117 $ 138,198 $ 247,747 $ 233,501
------------ ------------- ------------ ------------
Costs and Expenses:
Cost of Products Sold 115,171 105,445 189,052 175,464
Depreciation 5,092 5,639 10,184 11,375
Selling, General and 19,562 20,980 41,718 44,575
Administrative
Interest 6,889 5,014 12,342 9,868
------------ ------------- ------------ ------------
Total Costs and Expenses 146,714 137,078 253,296 241,282
------------ -------------- ------------ ------------
Income (Loss) Before Income 1,403 1,120 (5,549) (7,781)
Taxes
Benefit (Provision) for (553) (431) 2,164 2,950
Income Taxes (Note 3) ------------ ------------- ------------ -------------
Net Income (Loss) 850 689 (3,385) (4,831)
Preferred Dividend (237) (284) (521) (567)
Requirement (Note 4) ------------ ------------- ------------ -------------
Balance Applicable to Common
Stock $ 613 $ 405 $ (3,906) $ (5,398)
============ ============= ============ =============
Weighted Average Number of 29,978,823 29,735,522 29,679,919 29,779,891
Common Shares Outstanding ============ ============= ============ =============
Net Income (Loss) Per Common
Share $ .02 $ .01 $ (.13) $ (.18)
============ ============= ============ =============
Dividends Per Common Share
(Note 4) $ .00 $ .00 $ .00 $ .00
============ ============= ============ =============
</TABLE>
Tultex Corporation
Consolidated Balance Sheet (Unaudited - $000's
omitted)
July 5, 1997 (and December 28, 1996)
Assets July 5, 1997 December 28, 1996
- ------ ------------ -----------------
Current Assets:
Cash $ 3,431 $ 1,654
Accounts Receivable - Net of
Allowances for Doubtful
Accounts $5,324 (1997) and
$3,762 (1996) 132,333 160,107
Inventories (Note 2) 258,032 162,283
Prepaid Expenses 10,022 7,877
------------ -----------------
Total Current Assets 403,818 331,921
Fixed Assets - Net 145,893 136,426
Intangible Assets (Note 6) 44,880 24,333
Other Assets 10,032 8,100
------------ -----------------
Total Assets $ 604,623 $ 500,780
============ =================
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities:
Notes Payable to Banks $ 5,118 $ 5,628
Current Maturities of Long-Term
Debt 19 424
Accounts Payable 40,674 33,981
Federal and State Income Taxes (2,980) 1,684
Payable (Note 3)
Accrued Expenses 15,476 14,713
------------ -----------------
Total Current Liabilities 58,307 56,430
Long-Term Debt, Less Current
Maturities 332,962 223,616
Other Liabilities 16,947 17,806
Stockholders' Equity:
Five Percent Cumulative Preferred 198 198
Stock (Note 4)
Series B, Cumulative Convertible 7,500 15,000
Preferred Stock (Note 4)
Common Stock (Note 4) 30,015 29,334
Capital in Excess of Par Value 7,574 3,416
Retained Earnings 151,501 155,663
------------ -----------------
196,788 203,611
Less Notes Receivable - Stockholders 381 683
------------ -----------------
Total Stockholders' Equity 196,407 202,928
------------ -----------------
Total Liabilities and
Stockholders' Equity $ 604,623 $ 500,780
============ =================
Tultex Corporation
Consolidated Statement of Cash Flows (Unaudited -
$000's omitted) Six Months Ended July 5, 1997 (and June 29, 1996)
Six Months Ended
----------------------------
July 5, 1997 June 29, 1996
------------ -------------
Operations:
Net Income (Loss) $ (3,385) $ (4,831)
Items not Requiring (Providing) Cash:
Depreciation 10,184 11,375
Amortization of Intangible Assets 608 608
Deferred Income Taxes - -
Other Deferrals (859) (1,583)
Changes in Assets and Liabilities:
Accounts Receivable 42,789 21,913
Inventories (58,521) (49,582)
Prepaid Expenses (2,035) 2,524
Accounts Payable and Accrued Expenses (8,557) 11,220
Income Taxes Payable (4,714) (4,831)
------------ -------------
Cash Provided (Used) by Operations (24,490) (13,187)
------------ -------------
Investing Activities:
Additions to Property, Plant and (18,692) (8,596)
Equipment
Business Acquisitions (Note 6) (57,694) -
Additions to Other Assets (1,687) (3,755)
------------ -------------
Cash Provided (Used) by Investing (78,073) (12,351)
Activities ------------ -------------
Financing Activities:
Issuance (Payment) of Short-Term
Borrowings (628) 5,000
Issuance of Long-Term Debt 89,405 -
Issuance (Payment) of Revolving 19,200 26,500
Credit Facility Borrowings
Payments on Long-Term Debt (500) (108)
Cash Dividends (Note 4) (521) (567)
Proceeds From Stock Plans 1,964 222
Purchase of Preferred Stock (7,688) -
Issuance of Common Stock 4,225 -
Purchase of Common Stock (1,117) (779)
------------ --------------
Cash Provided (Used) by Financing 104,340 30,268
Activities ------------ --------------
Net Increase (Decrease) in Cash 1,777 4,730
Cash at End of Prior Year 1,654 1,981
------------ --------------
Cash at End of Period $ 3,431 $ 6,711
============ ==============
TULTEX CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
July 5, 1997
NOTE 1 - The accompanying consolidated financial statements furnished in this
quarterly 10-Q Report reflect all adjustments, consisting only of normal
recurring adjustments, which are, in the opinion of management, necessary for
a fair statement of the results of the interim periods. This balance sheet,
statement of income and statement of cash flows have been prepared from the
company's records and are subject to audit and year-end adjustments.
NOTE 2 - A summary of inventories by component
follows.
(In thousands of dollars)
July 5, 1997 December 28, 1996
------------ -----------------
Raw Materials $ 31,768 31,253
Supplies 10,701 6,297
Goods-in-Process 27,785 21,464
Finished Goods 187,778 103,269
------------ -----------------
Total Inventory $ 258,032 $ 162,283
============ =================
NOTE 3 - Income taxes are provided based upon income reported for financial
reporting purposes. Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of the
company's assets and liabilities.
NOTE 4 - Five percent cumulative preferred stock is $100 par value, 22,000
shares authorized, shares issued and outstanding 1,975 shares (1997and 1996).
The stated quarterly dividend was declared on April 29, 1997, and paid on
July 1, 1997.
Series B preferred stock is cumulative, convertible preferred stock, $7.50
Series B, $100 stated value, 150,000 shares authorized. The entire 150,000
shares were issued and outstanding during 1996. On May 30, 1997 the company
redeemed 75,000 of the 150,000 shares at a redemption price (including accrued
but unpaid dividends) of $103.75 per share. The stated quarterly dividend on
the remaining 75,000 shares was declared on April 29, 1997, and paid on
July 1, 1997.
Common stock, $1 par value, 60,000,000 shares authorized, shares issued and
outstanding were 30,014,788 at July 5, 1997, and 29,333,571 at December 28,
1996. There were no dividends declared on the company's common stock for the
three month period ended July 5, 1997.
NOTE 5 - Income (loss) per common share is computed using the weighted average
number of common shares outstanding in the first six months of 1997 and 1996
of 29,679,919 and 29,779,891, respectively.
NOTE 6 - On April 16, 1997, the company acquired California Shirt Sales, Inc.,
("CSS") an apparel distributor in 11 western states and Hawaii. The company
purchased substantially all assets and assumed certain liabilities totaling
$58.8 million. The acquisition was recorded using the purchase method of
accounting. Acquisition consideration was comprised of 554,098 shares of the
company's common stock valued at $4.2 million based on a price of $7.625 per
share, cash payment of $7.0 million, subordinated indebtedness issued for $14.4
million, and the assumption of liabilities totaling $33.2 million. The purchase
price has been allocated to the acquired assets and liabilities based on their
fair values resulting in goodwill of $12.1 million to be amortized over 25
years. The historical recorded values of CSS assets and liabilities were not
materially different from their fair values. The operating results of CSS have
been included in the consolidated statements of income from the date of
acquisition. The following pro forma unaudited consolidated operating results
of the company and CSS have been prepared as if the acquisition had been made
at the beginning of the periods presented and include pro forma adjustments to
reflect intercompany transactions, amortization of goodwill and transaction
financing, as well as the income tax effect of these items.
(In thousands, except per share data)
Three Months Ended(Unaudited) Six Months Ended(Unaudited)
----------------------------- ----------------------------
July 5, 1997 June 29, 1996 July 5, 1997 June 29, 1996
----------- ------------- ------------ -------------
Net Sales $ 149,552 158,659 269,267 273,895
Net Income $ 829 528 (3,695) (5,914)
Net Income
per Share $ .02 .01 (.14) (.21)
The pro forma results are not necessarily indicative of the results of
operations of the combined companies that would have occurred had the
acquisition occurred at the beginning of the periods presented, nor are they
necessarily indicative of future operating results.
On May 6, 1997, the company acquired T-Shirt City, Inc., ("TSC") an apparel
distributor in the Midwestern United States. The company purchased
substantially all assets and assumed liabilities totaling $16.6 million, and
the transaction was recorded using the purchase method. Acquisition
consideration included a cash payment of $1.8 million and the assumption of
liabilities totaling $14.8 million. The purchase price has been allocated to
the acquired assets and liabilities based on their fair values resulting in
goodwill of $9.1 million to be amortized over 25 years. The historical recorded
values of TSC assets and liabilities were not materially different from their
fair values. The pro forma effect of this acquisition has not been presented
because amounts would not differ materially from actual results.
Tultex Corporation
Management's Discussion and Analysis of Financial Condition and Results
of Operations
July 5, 1997
Results of Operations
- ---------------------
This Quarterly Report on Form 10-Q may contain certain forward-looking
statements reflecting the company's expectations. Although the company believes
that the expectations reflected in any such forward-looking statements are
reasonable, it can give no assurances that such expectations would prove to
have been correct. Important factors that could cause actual results to differ
materially from the company's expectations include the financial strength of
the retail industry, the level of consumer spending on apparel, the competitive
pricing environment within the apparel industry, the company's substantial
leverage and the restrictive covenants in its borrowing documents, fluctations
in the price of cotton and polyester used by the company in the manufacture of
its products, and the seasonality and cyclicality of the fleecewear and
licensed apparel industries. Such statements are provided in accordance with
the safe harbor provisions of the Private Litigation Reform Act of 1995.
Investors should consider other risks and uncertainties discussed in other
documents filed by the company with the Securities and Exchange Commission.
The following table presents the company's consolidated statement of operations
items as a percentage of net sales.
Three Months Ended Six Months Ended
------------------- -------------------
07/05/97 06/29/96 07/05/97 06/29/96
-------- -------- -------- --------
Net Sales and Other Income 100.0% 100.0% 100.0% 100.0%
Cost of Products Sold 77.8 76.3 76.3 75.1
Depreciation 3.4 4.1 4.1 4.9
Selling, General and 13.2 15.2 16.8 19.1
Administrative
Interest 4.7 3.6 5.0 4.2
-------- -------- -------- --------
Total Costs and Expenses 99.1 99.2 102.2 103.3
-------- -------- -------- --------
Income (Loss) Before Income
Taxes 0.9 0.8 (2.2) (3.3)
Benefit (Provision) for
Income Taxes (0.3) (0.3) .8 1.2
-------- -------- -------- --------
Net Income (Loss) 0.6% 0.5% (1.4)% (2.1)%
======== ======== ======== ========
Note: Certain items have been rounded to cause the columns to add to 100%.
Net sales and other income for the three months ended July 5, 1997 increased
$9.9 million, or 7.2%, from the second quarter of 1996. Activewear sales of
$113.1 million represent an increase of $16.2 million, or 16.7%, as compared
to the second quarter of 1996. The activewear increase was due to the inclusion
of sales for California Shirt Sales and T-Shirt City which were acquired during
the second quarter of 1997. Licensed apparel sales of $35.0 million in the
second quarter of 1997 represent a decrease of $6.3 million, or 15.2%, as
compared to the same period of the prior year. The licensed apparel sales
decrease resulted from Olympic sales during the second quarter of 1996 and
some softness in sales of Major League Baseball and National Basketball
Association products during 1997.
For the six months to date, net sales and other income increased $14.2 million,
or 6.1%, due to a 12.6% increase in activewear sales, partially offset by a 6.0%
decrease in licensed apparel sales. The activewear sales increase was primarily
due to the acquisitions of CSS and TSC.
Cost of products sold as a percentage of sales increased to 77.8% for the
second quarter of 1997 compared to 76.3% for the comparable second quarter of
last year. For the comparative six-month periods, cost as a percentage of
sales increased from 75.1% to 76.3% in 1997. The decrease in margin as a
percentage of sales reflects lower licensed apparel sales as a percentage of
consolidated sales. Licensed apparel sales typically carry a higher gross
margin than the company's activewear products. In addition, the company's
distributor acquisitions, which sell primarily jersey products, also generate
lower margins than the company's other businesses.
Depreciation expense decreased $547,000, or 9.7%, during the second quarter of
1997, and for the six months depreciation decreased $1.2 million, or 10.5%. This
decrease was the result of certain assets becoming fully depreciated during
1996. The company invested $18.7 million in fixed assets during the first six
months of 1997.
Selling, general and administrative expenses ("S,G&A") decreased $1.4 million
for the second quarter of 1997 compared to the same period of 1996. As a
percentage of sales, S,G&A expenses were 13.2% compared to 15.2% for the second
quarter of 1996. The decrease as a percentage of sales was due to cost reduction
initiatives, lower advertising expenses and the distributor acquisitions which
typically have lower S, G&A expenses than the company's other businesses. During
the six month period ended July 5, 1997, S, G&A expenses were $41.7 million, or
16.8% of sales, compared to $44.6 million, or 19.1% of sales, for the comparable
period of the prior year. The primary reason for this decrease was a $1.8
million reduction in advertising expenses for the first six months of 1997
compared to the same period of 1996. The company's cost reduction initiatives
and lower licensed apparel royalty expenses also contributed to the decrease.
Interest expense as a percentage of sales increased from 3.6%, or $5.0 million,
for the second quarter of 1996 to 4.7%, or $6.9 million, for the comparable
period of 1997. The 1997 increase is due to higher average borrowings and
higher average borrowing rates. The nature of the company's business requires
extensive seasonal borrowings to support its working capital needs. For the
first six months of 1997, working capital borrowings averaged $113.6 million at
an average rate of 7.3% compared to $118.0 million and 6.9%, respectively, for
the comparable period of the prior year.
Benefit (Provision) for income taxes reflects an effective rate for combined
federal and state income taxes of 39% for the first six months of 1997 and 38%
for the comparable period of 1996.
On April 16, 1997, the company acquired California Shirt Sales, Inc., an
apparel distributor in 11 western states and Hawaii. Acquisition consideration
comprised a combination of the company's common stock and subordinated
indebtedness, and assumption of bank indebtedness. On May 6, 1997, the company
acquired T-Shirt City, Inc., an apparel distributor in the Midwestern United
States. These acquisitions complement the company's strategy of becoming more
marketing and distribution oriented and take advantage of distribution
efficiencies.
On May 28, 1997, the company announced that Discus Athletic(Registered
trademark) and LogoAthletic(Registered trademark) will be the official
outfitters at Disney's Wide World of Sports complex in Florida. Participation
by these brands will include event sponsorships as well as media exposure,
on-site presence and promotions.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
Net working capital at July 5, 1997 increased $70.0 million from year-end 1996
due primarily to higher inventories partially offset by lower accounts
receivable. Net accounts receivable decreased $27.8 million from December 28,
1996 to July 5, 1997 due to the seasonality of the company's products.
Receivables normally peak in September and October and begin to decline in
December as shipment volume decreases and cash is collected.
Inventories traditionally increase during the first half of the year to support
second-half shipments. Compared to December 28, 1996, inventories increased
$95.7 million, or 59.0%. The distributor acquisitions accounted for $43.8
million, or 17.0% of this increase.
The current ratio at July 5, 1997 was 6.9 compared to 5.9 at December 28, 1996.
The increase in the ratio from the beginning of the year was mainly due to
higher inventories partially offset by lower accounts receivable.
On April 15, 1997, the company sold $75 million of 9 5/8% Senior Notes due 2007.
Proceeds from the sale of the Senior Notes were used to repay existing
indebtedness and redeem $7,500,000 of the Series B, $7.50 cumulative convertible
preferred stock. On May 15, 1997, the company entered into a three-year $187
million revolving credit facility which replaced its existing three year
facility due to expire in 1998. The terms of the new facility are substantially
equivalent to those of the former revolving credit facility, except that the
maximum borrowing amount under the new facility is $187 million, compared with
$225 million under the old facility. Reduction of the borrowing limit reflects
the sale of $75 million Senior Notes.
Total long-term debt at July 5, 1997 included the senior notes totaling $185
million and $132.8 million outstanding under the revolving credit facility. At
the end of the second quarter of 1997, the company was in compliance with all
debt covenants.
On May 30, 1997, the company redeemed 75,000 shares of the 150,000 outstanding
shares of its $7.50 Series B, $100 stated value Preferred Stock at a redemption
price (including accrued but unpaid dividends) of $103.75 per share.
On June 29, 1997 the company's Board of Directors authorized the purchase of
an additional 1 million shares increasing the total authorized shares for the
program dated Masrch 20, 1996 to 2 million shares. As of July 5, 1997, a total
of 668,100 shares had been purchased and retired. Stockholders' equity
decreased $6.5 million during the first six months of 1997 as a result of the
preferred stock redemption of $7.7 million, the net loss for the period of
$3.4 million, preferred dividends of $521,000 and stock repurchases of $1.1
million partially offset by common shares issued of $4.2 million and proceeds
from stock plans of $2.0 million. Debt as a percentage of total capitalization
was 63.3% compared to 58.6% at June 29, 1996.
For the first six months of 1997, net cash used by operations was $24.5 million
versus $13.2 million for the same period last year. Cash used for capital asset
additions increased $10.1 million in 1997 compared to the first six months of
1996. Cash provided by financing activities increased $74.1 million from the
first six months of 1997 primarily as a result of higher seasonal borrowing
requirements and the distributor acquisitions. The company expects that annual
cash flows from income and non-cash items, supplemented by the revolving credit
facility, will be adequate to support requirements for the remainder of 1997.
New Accounting Standards
- ------------------------
In February 1997, the Financial Accounting Standards Board (the "Board") issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("FAS 128"), which replaces the presentation of primary and fully diluted
earnings per share ("EPS") with basic and diluted EPS, respectively. FAS 128
simplifies the standards for computing earnings per share and makes them
comparable to international EPS standards. It also requires dual presentation
of basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and denominator
of the diluted EPS computation.
The company must adopt this Statement in the fourth quarter of 1997. Pro forma
basic and diluted EPS were both $.02 for the quarter ended July 5, 1997 and $.01
for the quarter ended June 29, 1996. Pro forma basic and diluted EPS were both
$(.13) for the six months ended July 5, 1997and $(.18) for the six months ended
June 29, 1996.
In June 1997, the Board issued FAS 130, "Reporting Comprehensive Income". This
Statement requires that changes in the amounts of comprehensive income items,
which are currently reported as separate components of equity, be shown in a
financial statement, displayed as prominently as other financial statements.
The common components of other comprehensive income would include foreign
currency translation adjustments, minimum pension liability adjustments and/or
unrealized gains or losses on available-for-sale securities. The Statement does
not require a specific format for the financial statement in which comprehensive
income is reported, but does require that an amount representing total
comprehensive income be reported in that statement.
This Statement is effective for the company in fiscal 1998; however, management
has not yet completed its assessment of the manner in which comprehensive
income might be displayed.
In June 1997, the Board issued FAS 131, "Disclosures about Segments of an
Enterprise and Related Information". This Statement will change the way the
company reports information about segments of their business in their annual
financial statements and require the company to report selected segment
information in their quarterly reports issued to shareholders. It also requires
entity-wide disclosures about the products and services an entity provides, the
material countries in which it holds assets and reports revenues, and its major
customers. The Statement requires the company disclose segment data based on
how management makes decisions about allocating resources to segments and
measuring their performance.
This Statement is effective for the company in fiscal 1998; however, management
has not yet completed its assessment of how this statement impacts existing
segment disclosure.
TULTEX CORPORATION
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.8 Credit Agreement for $187 million credit facility, dated
May 18, 1997.
(b) Reports on Form 8-K
None
Items 1, 2, 3, 4 and 5 are inapplicable and are omitted.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TULTEX CORPORATION
------------------
(Registrant)
Date August 19, 1997 /s/ C. W. Davies, Jr.
---------------------
C. W. Davies, Jr., President and Chief
Executive Officer
Date August 19, 1997 /s/ S. H. Wood
--------------
Suzanne H. Wood,
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JUL-05-1997
<CASH> 3,431
<SECURITIES> 0
<RECEIVABLES> 137,657
<ALLOWANCES> 5,324
<INVENTORY> 258,032
<CURRENT-ASSETS> 403,818
<PP&E> 344,927
<DEPRECIATION> 199,034
<TOTAL-ASSETS> 604,623
<CURRENT-LIABILITIES> 58,307
<BONDS> 0
<COMMON> 30,015
0
7,698
<OTHER-SE> 159,456
<TOTAL-LIABILITY-AND-EQUITY> 604,623
<SALES> 247,747
<TOTAL-REVENUES> 247,747
<CGS> 189,052
<TOTAL-COSTS> 199,236
<OTHER-EXPENSES> 36,394
<LOSS-PROVISION> 5,324
<INTEREST-EXPENSE> 12,342
<INCOME-PRETAX> (5,549)
<INCOME-TAX> 2,164
<INCOME-CONTINUING> (3,385)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,385)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
CREDIT AGREEMENT
Dated as of May 15, 1997
among
TULTEX CORPORATION,
as Borrower,
AND
CERTAIN SUBSIDIARIES AND RELATED PARTIES,
as Guarantors and Credit Parties,
THE BANKS IDENTIFIED HEREIN,
CORESTATES BANK, N.A.,
AND
FIRST UNION NATIONAL BANK OF VIRGINIA,
as Co-Agents,
AND
NATIONSBANK, N.A.,
as Administrative Agent
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS 1
1.01 Definitions. 1
1.02 Computation of Time Periods. 21
1.03 Accounting Terms. 21
SECTION 2 CREDIT FACILITIES 21
2.01 Revolving Loan Commitment. 21
2.02 Committed Revolving Loan Advances. 22
2.03 Conversion. 24
2.04 Repayment of the Committed Revolving Loans. 24
2.05 Interest on Committed Revolving Loans. 24
2.06 Committed Revolving Notes. 25
2.07 Letter of Credit Subfacility. 25
2.08 Swingline Loan Subfacility. 30
2.09 Conditions of Lending. 33
2.10 Termination of Commitments. 34
2.11 Fees. 34
2.12 Prepayments. 35
2.13 Increased Costs, Illegality, etc. 36
2.14 Capital Adequacy. 37
2.15 Compensation. 38
2.16 Net Payments. 38
2.17 Indemnification; Nature of Issuing Bank's Duties. 39
2.18 Change of Lending Office. 40
2.19 Payments and Computations. 41
2.20 Pro Rata Treatment. 42
2.21 Set-Off; Sharing of Payments. 42
2.22 Determination as a Highly Leveraged Transaction. 43
SECTION 3 GUARANTEE 44
3.01 The Guarantee. 44
3.02 Obligations Unconditional. 44
3.03 Reinstatement. 45
3.04 Certain Additional Waivers. 46
3.05 Remedies. 46
3.06 Continuing Guarantee. 46
3.07 Limitation of Guarantee. 46
SECTION 4 CONDITIONS PRECEDENT TO LOANS AND LETTERS OF
CREDIT 47
4.01 Conditions to Closing. 47
4.02 Conditions to Initial Extensions of Credit. 47
SECTION 5 REPRESENTATIONS AND WARRANTIES 48
5.01 Organization and Good Standing. 48
5.02 Due Authorization. 49
5.03 No Conflicts. 49
5.04 Consents. 49
5.05 Enforceable Obligations. 49
5.06 Financial Condition. 49
5.07 No Default. 50
5.08 Liens. 50
5.09 Indebtedness. 50
5.10 Litigation. 50
5.11 Material Agreements. 50
5.12 Taxes. 51
5.13 Compliance with Law. 51
5.14 ERISA. 51
5.15 Subsidiaries. 51
5.16 Use of Proceeds; Margin Stock. 51
5.17 Government Regulation. 52
5.18 Hazardous Substances. 52
5.19 Patents, Franchises, etc. 52
5.20 Solvency. 53
5.21 Investments. 53
SECTION 6 AFFIRMATIVE COVENANTS 53
6.01 Information Covenants. 53
6.02 Preservation of Existence and Franchises. 55
6.03 Books, Records and Inspections. 56
6.04 Compliance with Law. 56
6.05 Payment of Taxes and Other Indebtedness. 56
6.06 Insurance. 56
6.07 Maintenance of Property. 57
6.08 Performance of Obligations. 57
6.09 ERISA. 57
6.10 Use of Proceeds. 57
6.11 Financial Covenants. 58
6.12 Additional Subsidiaries. 58
SECTION 7 NEGATIVE COVENANTS 59
7.01 Indebtedness. 59
7.02 Liens. 60
7.03 Guaranty Obligations. 60
7.04 Nature of Business. 60
7.05 Consolidation, Merger, Sale or Purchase of Assets,
etc. 60
7.06 Advances, Investments and Loans. 61
7.07 Prepayments of Indebtedness, etc. 61
7.08 Transactions with Affiliates. 62
7.09 Ownership of Subsidiaries. 63
7.10 Fiscal Year. 63
SECTION 8 EVENTS OF DEFAULT 63
8.01 Events of Default. 63
8.02 Acceleration; Remedies. 65
SECTION 9 AGENCY PROVISIONS 66
9.01 Appointment. 66
9.02 Delegation of Duties. 67
9.03 Exculpatory Provisions. 67
9.04 Reliance on Communications. 68
9.05 Notice of Default. 68
9.06 Non-Reliance on Agents and Other Banks. 68
9.07 Indemnification. 69
9.08 Agents in their Individual Capacity. 69
9.09 Successor Agent. 70
SECTION 10 MISCELLANEOUS 70
10.01 Notices. 70
10.02 Right of Set-Off. 71
10.03 Benefit of Agreement. 72
10.04 No Waiver; Remedies Cumulative. 73
10.05 Payment of Expenses, etc. 73
10.06 Amendments, Waivers and Consents. 74
10.07 Counterparts. 74
10.08 Headings. 75
10.09 Survival of Indemnification. 75
10.10 Governing Law; Submission to Jurisdiction; Venue. 75
10.11 Severability. 76
10.12 Entirety. 76
10.13 Survival of Representations and Warranties. 76
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of May 15, 1997 (the "Credit
Agreement"), is by and among TULTEX CORPORATION, a Virginia
corporation (the "Borrower"), each of the corporations identified
as a "Guarantor" on the signature pages hereto (hereinafter
sometimes referred to individually as a "Guarantor" and
collectively as the "Guarantors"), the various banks and lending
institutions identified on the signature pages hereto (each a
"Bank" and collectively, the "Banks"), CORESTATES BANK, N.A. and
FIRST UNION NATIONAL BANK OF VIRGINIA, as co-agents (in such
capacity, the "Co-Agents") and NATIONSBANK, N.A., as
administrative agent for the Banks (in such capacity, the
"Administrative Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Banks provide a
$187,000,000 credit facility for the purposes hereinafter set
forth;
WHEREAS, the Banks have agreed to make the requested credit
facility available to the Borrower, and the Agents have accepted
their duties hereunder, all on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.01 Definitions.
As used herein, the following terms shall have the meanings
herein specified unless the context otherwise requires. Defined
terms herein shall include in the singular number the plural and
in the plural the singular:
"Additional Credit Party" means each Person that
becomes a direct or indirect Material Subsidiary of the
Borrower after the Closing Date.
"Adjusted CD Loan" means a Loan which bears interest
based on the Adjusted CD Rate.
"Adjusted CD Rate" means for the Interest Period for
each Adjusted CD Loan comprising part of the same borrowing
(including conversions, extensions and renewals), a per
annum interest rate equal to the sum of:
(a) the rate obtained by dividing (i)
the rate of interest determined by the
Administrative Agent to be the average (rounded
upward to the nearest whole multiple of 1/100 of
1% per annum, if such average is not such a
multiple) of the consensus bid rate determined by
the Administrative Agent for the bid rates per
annum, at 10:00 A.M. (Charlotte, North Carolina
time) (or as soon thereafter as is practicable) on
the first day of such Interest Period, of
certificate of deposit dealers of recognized
standing selected by the Administrative Agent for
the purchase at face value of certificates of
deposit in an amount substantially equal to the
Adjusted CD Loan comprising part of such borrowing
(including extensions and renewals) and with a
maturity equal to such Interest Period, by (ii) a
percentage equal to 100% minus the Adjusted CD
Rate Reserve Percentage (as defined below) for
such Interest Period, plus
(b) the Assessment Rate (as defined
below) for such Interest Period.
As used herein, "Adjusted CD Rate Reserve Percentage" for
the Interest Period for each Adjusted CD Loan comprising
part of the same borrowing (including conversions,
extensions and renewals) means the reserve percentage
applicable on the first day of such Interest Period under
regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with deposits
exceeding one billion dollars with respect to liabilities
consisting of or including (among other liabilities) U.S.
dollar nonpersonal time deposits in the United States with a
maturity equal to such Interest Period. The "Assessment
Rate" for the Interest Period for each Adjusted CD Loan
comprising part of the same borrowing (including
conversions, extensions and renewals) means the annual
assessment rate estimated by the Administrative Agent on the
first day of such Interest Period for determining the then
current annual assessment payable by the Administrative
Agent to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. dollar deposits of the
Administrative Agent in the United States.
"Adjusted Eurodollar Rate" means for the Interest
Period for each Eurodollar Loan comprising part of the same
borrowing (including conversions, extensions and renewals),
a per annum interest rate equal to the rate obtained by
dividing (a) the rate of interest determined by the
Administrative Agent to be the average (rounded upward to
the nearest whole multiple of 1/16 of 1% per annum, if such
average is not such a multiple) of the per annum rates at
which deposits in U.S. dollars are offered to the
Administrative Agent in the interbank eurodollar market at
11:00 A.M. (Charlotte, North Carolina time) (or as soon
thereafter as is practicable), in each case two Business
Days before the first day of such Interest Period, in an
amount substantially equal to such Eurodollar Loan
comprising part of such borrowing (including conversions,
extensions and renewals) and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the
Adjusted Eurodollar Rate Reserve Percentage for such
Interest Period. As used herein, "Adjusted Eurodollar Rate
Reserve Percentage" for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing
(including conversions, extensions and renewals), means the
percentage applicable two Business Days before the first day
of such Interest Period under regulations issued from time
to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System
in New York City with respect to liabilities or assets
consisting of or including eurocurrency liabilities, as such
term is defined in Regulation D (or with respect to any
other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Loans is
determined) having a term equal to the Interest Period for
which such Adjusted Eurodollar Reserve Percentage is
determined.
"Adjusted Federal Funds Rate" means, for any day, a per
annum rate equal to the rate at which Federal funds are
offered to NationsBank on an overnight basis.
"Adjusted Net Worth" means, with respect to any
Guarantor as of any date of determination thereof, the
excess of (i) the amount of the "present fair saleable
value" of the assets of such Guarantor as of such date of
determination, over (ii) the amount of all "liabilities,
contingent or otherwise", of such Guarantor as of such date
of determination, as such quoted terms are determined in
accordance with applicable Federal and state laws governing
determinations of the insolvency of debtors. In determining
the Adjusted Net Worth of any Guarantor for purposes of
calculating the Maximum Guaranteed Amount for such Guarantor
in respect of any Extension of Credit, the liabilities of
such Guarantor to be used in such determination pursuant to
clause (ii) of the preceding sentence shall in any event
include the liabilities of such Guarantor hereunder in
respect of all Extensions of Credit other than the Extension
of Credit in respect of which such calculation is being
made.
"Administrative Agent" means the administrative agent
for the Banks under this Credit Agreement as identified in
the recital of parties hereinabove, and any successors and
assigns in such capacity.
"Administrative Agent's Fee Letter" means the letter
agreement dated as of May 14, 1997 between the
Administrative Agent and the Borrower, as amended, modified,
supplemented or replaced from time to time.
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling (including
but not limited to all directors and officers of such
Person), controlled by or under direct or indirect common
control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or
indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause
direction of the management and policies of such
corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" means the Administrative Agent and the Co-
Agents, individually or collectively, as appropriate.
"Applicable Percentage" means, initially until receipt
by the Administrative Agent of the financial statements for
the first quarter of 1997 (the "Initial Interest Rate
Period"), 1.25% in the case of Committed Revolving Loans
which are Eurodollar Loans, 1.375% in the case of Committed
Revolving Loans which are Adjusted CD Loans, 1.25% in the
case of Swingline Loans which are Fed Funds Swingline Loans
and 1.375% in the case of the Standby Letter of Credit Fee,
and on Interest Determination Dates occurring after the
Initial Interest Rate Period:
Applicable
Percentage
Eurodollar
Ratio of Consolidated Loans Standby
Debt and Letter
to Fed Funds Adjusted CD of
Consolidated Tangible Swingline Loans Credit
Capitalization Loans
Fee
< 40% .75% .875% .875%
> 40% to < 50% 1.00% 1.125% 1.125%
> 50% to < 60% 1.25% 1.375% 1.375%
$ 60% 1.50% 1.625% 1.625%
The appropriate Applicable Percentage shall be determined
and adjusted annually on the date 5 days after the date by
which the Borrower shall have provided annual financial
information to the Administrative Agent in accordance with
the provisions of Section 6.01(a) (an "Interest
Determination Date"), such Applicable Percentage to be
effective from such Interest Determination Date until the
next such Interest Determination Date.
"Bankruptcy Code" means the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded
or replaced from time to time.
"Base Rate" means, for any day, a rate per annum
(rounded upwards, if necessary, to the nearest whole
multiple of 1/16 of 1%) equal to the greater of (a) the
Federal Funds Effective Rate in effect on such day plus 2 of
1% or (b) the Prime Rate in effect on such day. If for any
reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of
the Administrative Agent to obtain sufficient quotations in
accordance with the terms hereof, the Base Rate shall be
determined without regard to clause (a) of the first
sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the
Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective on the effective
date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Base Rate Loan" means a Loan which bears interest
based on the Base Rate.
"Borrower" means Tultex Corporation, a Virginia
corporation, and its successors and permitted assigns.
"Business Day" means any day other than a Saturday, a
Sunday, a legal holiday or a day on which banking
institutions are authorized by law or other governmental
action to close in Charlotte, North Carolina or
Philadelphia, Pennsylvania; except that in the case of
Eurodollar Loans, such day is also a day on which dealings
between banks are carried on in U.S. dollar deposits in the
interbank Eurodollar market.
"Cal-Shirt Acquisition" means the acquisition of
California Shirt Sales, Inc. for an acquisition price of
$38.4 million (including assumed debt and seller financing)
and the issuance of up to 554,000 shares of common stock of
the Borrower in connection therewith.
"Capital Expenditures" means all expenditures which in
accordance with generally accepted accounting principles
would be classified as capital expenditures, including
without limitation Capitalized Leases.
"Capitalized Lease" means any lease the obligation for
Rentals with respect to which is required to be capitalized
on a consolidated balance sheet of the lessee and its
subsidiaries in accordance with generally accepted
accounting principles.
"Capitalized Rentals" means, with regard to any Person,
as of the date of any determination thereof, the amount at
which the aggregate Rentals due and to become due under all
Capitalized Leases under which such Person is a lessee would
be reflected as a liability on a consolidated balance sheet
of such Person.
"Cash Equivalents" means (i) securities issued or
directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United
States of America is pledged in support thereof) having
maturities of not more than twelve months from the date of
acquisition, (ii) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of
deposit, Eurodollar time deposits and Eurodollar
certificates of deposit of (x) Piedmont Trust Bank, (y) any
domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000 or (z) any
bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at
least P-1 or the equivalent thereof (any such bank being an
"Approved Bank"), in each case with maturities of not more
than 270 days from the date of acquisition, (iii) commercial
paper and variable or fixed rate notes issued by any
Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by any domestic
corporation rated A-2 (or the equivalent thereof) or better
by S&P or P-2 (or the equivalent thereof) or better by
Moody's and maturing within six months of the date of
acquisition and (iv) repurchase agreements with a bank or
trust company (including the Bank) or recognized securities
dealer having capital and surplus in excess of $500,000,000
for direct obligations issued by or fully guaranteed by the
United States of America in which the Borrower shall have a
perfected first priority security interest (subject to no
other liens or encumbrances) and having, on the date of
purchase thereof, a fair market value of at least 100% of
the amount of the repurchase obligations.
"Change of Control" means (i) any Person or two or more
Persons acting in concert shall have acquired beneficial
ownership, directly or indirectly, of Voting Stock of the
Borrower (or other securities convertible into such Voting
Stock) representing 35% or more of the combined voting power
of all Voting Stock of the Borrower, (ii) during any period
of up to 24 consecutive months, commencing after the Closing
Date, individuals who at the beginning of such 24 month
period were directors of the Borrower cease to constitute a
majority of the board of directors of the Borrower and such
event is a result (directly or indirectly) of the
acquisition of 5% or more of the combined voting power of
the Voting Stock by a Person or Persons who did not own at
least 5% or more of the combined voting power of the Voting
Stock as of the Closing Date, or (iii) any Person or two or
more Persons acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation, will result in its
or their acquisition of, control over Voting Stock of the
Borrower (or other securities convertible into such
securities) representing 35% or more of the combined voting
power of all Voting Stock of the Borrower. As used herein,
"beneficial ownership" shall have the meaning provided in
Rule 13d-3 of the Securities and Exchange Commission under
the Securities and Exchange Act of 1934.
"Closing Date" means the date on which the conditions
set forth in Section 4 to the making of the initial Loans
and the issuance of the initial Letters of Credit hereunder
shall have been fulfilled (or waived) and on which the
initial Loans shall have been made or the initial Letters of
Credit shall have been issued.
"Co-Agent" means the co-agents for the Banks under this
Credit Agreement as identified and defined in the recital of
the parties hereinabove, and any successors and assigns in
such capacity.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" means the commitments of the Banks to make
Committed Revolving Loans and to purchase participation
interests in the Letters of Credit hereunder, and of the
Issuing Bank to issue Letters of Credit.
"Commitment Fee" means such term as defined in Section
2.11(b).
"Committed Revolving Loan" means a contractual
revolving credit loan made by the Banks pursuant to the
provisions of Section 2.01.
"Committed Revolving Note" means the promissory notes
of the Borrower in favor of each of the Banks evidencing the
Committed Revolving Loans as provided pursuant to Section
2.06, individually or collectively, as appropriate, as such
promissory notes may be amended, modified, supplemented,
extended, renewed or replaced from time to time.
"Consistent Basis" or "consistent basis" means, with
regard to the application of accounting principles,
accounting principles consistent in all material respects
with the accounting principles used and applied in
preparation of the financial statements previously delivered
to the Banks and referred to in Section 5.06.
"Consolidated Borrower Group" means the Borrower and
its Restricted Subsidiaries.
"Consolidated Current Assets" means current assets of
the Borrower and its Subsidiaries on a consolidated basis as
determined in accordance with generally accepted accounting
principles applied on a consistent basis.
"Consolidated Current Liabilities" means current
liabilities of the Borrower and its Subsidiaries on a
consolidated basis determined in accordance with generally
accepted accounting principles applied on a consistent
basis.
"Consolidated Debt" means all Indebtedness of the
Borrower and its Restricted Subsidiaries on a consolidated
basis determined in accordance with generally accepted
accounting principles.
"Consolidated Funded Debt" means all Funded Debt of the
Borrower and its Restricted Subsidiaries on a consolidated
basis determined in accordance with generally accepted
accounting principles.
"Consolidated Net Income" means for any period the
gross revenues of the Borrower and its Restricted
Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a
consolidated basis in accordance with generally accepted
accounting principles after eliminating earnings or losses
attributable to outstanding Minority Interests, but
excluding in any event:
(a) any extraordinary gains or losses
on the sale or other disposition of assets, and
any taxes on such excluded gains and any tax
deductions or credits on account of any such
excluded losses;
(b) the proceeds of any life insurance
policy;
(c) net earnings of any business entity
(other than a Restricted Subsidiary) in which the
Borrower or any Restricted Subsidiary has an
ownership interest unless such net earnings shall
have actually been received by the Borrower or
such Restricted Subsidiary in the form of cash
distributions; and
(d) any portion of the net earnings of
any Restricted Subsidiary which for any reason is
unavailable for payment of dividends to the
Borrower or any other Restricted Subsidiary.
"Consolidated Tangible Net Worth" means as of any
Determination Date Tangible Assets less all obligations of
the Borrower and its Restricted Subsidiaries which in
accordance with generally accepted accounting principles
shall be classified upon a consolidated balance sheet of the
Borrower as liabilities. For purposes of calculating
Consolidated Tangible Net Worth, treasury stock shall be
excluded.
"Consolidated Tangible Capitalization" means as of any
date the sum of (i) Consolidated Funded Debt plus (ii)
Consolidated Tangible Net Worth.
"Controlled Group" means (i) the controlled group of
corporations as defined in Section 414(b) of the Code and
the applicable regulations thereunder, or (ii) the group of
trades or businesses under common control as defined in
Section 414(c) of the Code and the applicable regulations
thereunder, of which the Borrower is a part or may become a
part.
"Credit Documents" means this Credit Agreement, the
Notes, the LOC Documents, any Joinder Agreement and all
other related agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto.
"Credit Party" means any of the Borrower and the
Guarantors.
"Credit Party Obligations" means, without duplication,
all of the obligations of the Borrower or other Credit Party
to the Banks, the Administrative Agent and the Issuing Banks
(including the obligations to pay principal of and interest
on the Loans, to pay LOC Obligations, to pay all Fees, to
provide cash collateral in respect of Letters of Credit, to
pay certain expenses and the obligations arising in
connection with various indemnities) whenever arising, under
this Credit Agreement, the Notes or any of the other Credit
Documents to which the Borrower or other Credit Party is a
party.
"Current Ratio" means, as of the last day of each
fiscal quarter, the ratio of Consolidated Current Assets to
Consolidated Current Liabilities.
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event
of Default.
"Determination Date" means the last day of each
quarterly fiscal period of the Borrower and each other date
upon which the Borrower or a Restricted Subsidiary shall
incur or otherwise become liable for Consolidated Funded
Debt.
"Eligible Assignee" means any Bank or Affiliate or
subsidiary of a Bank, and any other commercial bank,
financial institution or "accredited investor" (as defined
in Regulation D of the Securities and Exchange Commission)
reasonably acceptable to the Administrative Agent and, so
long as no Event of Default then exists, the Borrower.
"Equity Transaction" means (i) the issuance by the
Borrower or any of its Restricted Subsidiaries of new shares
of its capital stock, unless such new shares are being
issued in exchange for an ownership interest in another
Person or in exchange for substantially all of the assets of
another Person in connection with an acquisition permitted
by Section 7.05, (ii) an issuance by the Borrower or any of
its Restricted Subsidiaries of any shares of its capital
stock pursuant to the exercise of options or warrants and
(iii) an issuance by the Borrower or any of its Restricted
Subsidiaries of any shares of its capital stock pursuant to
the conversion of any debt securities (including without
limitation any Subordinated Debt) to equity.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated and the rulings issued thereunder.
"ERISA Affiliate" means each person (as defined in
Section 3(9) of ERISA) which together with the Borrower, any
Subsidiary of the Borrower or member of the Consolidated
Borrower Group would be deemed to be a member of the same
"controlled group" within the meaning of Section 414(b),
(c), (m) and (o) of the Code.
"Eurodollar Loan" means a Loan which bears interest
based on the Adjusted Eurodollar Rate.
"Event of Default" has the meaning specified in Section
8.
"Existing Letters of Credit" means those Letters of
Credit issued by CoreStates Bank, N.A., as Issuing Bank for
Trade Letters of Credit, and by NationsBank, N.A., as
Issuing Bank for Standby Letters of Credit, for the account
of the Borrower or other Credit Party outstanding on the
Closing Date and being more particularly identified on
Schedule 2.07(c) hereof as such Letters of Credit may be
amended, modified, extended, renewed or replaced from time
to time.
"Extension of Credit" means any Loan advance or the
issuance or extension of any Letters of Credit and the
obligations to make advances thereunder.
"Federal Funds Effective Rate" means, for any day, the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve Bank of New
York, or, if such rate is not so released for any day which
is a Business Day, the arithmetic average (rounded upwards
to the next 1/100th of 1%), as determined by the
Administrative Agent, of the quotations for the day of such
transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fed Funds Swingline Loan" means a Swingline Loan which
bears interest based on the Adjusted Federal Funds Rate.
"Fees" means all fees payable pursuant to Section 2.11.
"Fixed Charges" means, on a consolidated basis for any
period, the sum of (i) all Rentals (other than Rentals on
Capitalized Leases) payable during such period by the
Borrower and its Restricted Subsidiaries, (ii) all Interest
Charges on all Indebtedness (including the interest
component on Rentals on Capitalized Leases) of the Borrower
and its Restricted Subsidiaries, (iii) all dividends paid in
cash or property and redemptions made of capital stock by
the Borrower and its Restricted Subsidiaries (other than
dividends paid to, or redemptions of capital stock owned by,
the Borrower or a wholly-owned Restricted Subsidiary) during
such period, (iv) the cash payment portion of current
maturities of that Funded Debt having a final maturity of
one or more years from the date of origin thereof (or which
is renewable or extendible at the option of the obligor for
a period or periods more than one year from the date of
origin) and current maturities of Capitalized Leases and (v)
the amount of voluntary or optional prepayments on, or
redemptions or acquisition for value (including by way of
defeasance) of, the Senior Notes (or any Indebtedness
incurred in a refinancing of the Senior Notes permitted
hereunder), for the Borrower and its Restricted Subsidiaries
during such period.
"Funded Debt" means, for any Person, (i) all
Indebtedness of such Person for borrowed money (including
without limitation, indebtedness evidenced by promissory
notes, bonds, debentures and similar instruments and further
any portion of the purchase price for assets or acquisitions
permitted hereunder which may be financed by the seller),
(ii) all Capitalized Rentals for such Person, and (iii) all
Guaranty Obligations by such Person of Funded Debt of
others. Funded Debt shall include payments in respect of
Funded Debt which constitute current liabilities of the
obligor under generally accepted accounting principles.
"Generally Accepted Accounting Principles" or
"generally accepted accounting principles" means generally
accepted accounting principles at the time in the United
States.
"Governmental Authority" means any Federal, state,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Government Acts" has the meaning specified in Section
2.17.
"Guarantor" means those corporations identified as a
"Guarantor" on the signature pages hereto, being Dominion
Stores, Inc., a Virginia corporation; LogoAthletic, Inc., a
Virginia corporation; LogoAthletic Headwear, Inc., a
Massachusetts corporation; California Shirt Sales, Inc., a
Virginia corporation and each Additional Credit Party which
has executed a Joinder Agreement.
"Guaranty Obligations" means any obligations (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness,
leases, dividends or other obligations of any other Person
in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not
contingent, (i) to purchase any such Indebtedness or other
obligation or any property constituting security therefor,
(ii) to advance or provide funds or other support for the
payment or purchase of such indebtedness or obligation or to
maintain working capital, solvency or other balance sheet
condition of such other Person (including without limitation
keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements), (iii) to
lease or purchase property, securities or services primarily
for the purpose of assuring the owner of such Indebtedness
or obligation, or (iv) to otherwise assure or hold harmless
the owner of such Indebtedness or obligation against loss in
respect thereof. The amount of Guaranty Obligations
hereunder shall be deemed to be an amount equal to the
stated or determinable amount of the Indebtedness or
obligation in respect of which such Guaranty Obligation is
made or, if not stated or determinable, the maximum
reasonably anticipated amount in respect thereof (assuming
such other Person is required to perform thereunder) as
determined in good faith.
"Indebtedness" means without duplication, (i) all
indebtedness for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with
generally accepted accounting principles would be shown to
be a liability (or on the liability side of a balance
sheet), (iii) all Guaranty Obligations, (iv) the maximum
amount of all letters of credit issued or acceptance
facilities established for the account of such Person and,
without duplication, all drafts drawn thereunder (other than
letters of credit (x) supporting other Indebtedness of the
Borrower or a Subsidiary or (y) offset by a like amount of
cash or government securities held in escrow to secure such
letter of credit and draws thereunder), (v) all Capitalized
Lease obligations, (vi) all Indebtedness of another Person
secured by any Lien on any property of the Borrower or a
Restricted Subsidiary, whether or not such indebtedness has
been assumed, (vii) all obligations under take-or-pay or
similar arrangements or under interest rate, currency, or
commodities agreements, (viii) indebtedness created or
arising under any conditional sale or title retention
agreement, and (ix) withdrawal liability or insufficiency
under ERISA or under any qualified plan or related trust;
but specifically excluding from the foregoing trade payables
and accrued expenses arising or incurred in the ordinary
course of business.
"Interest Charges" means, for any period, all interest
and amortization of debt discount and expense on any
particular Indebtedness (including specifically without
limitation Capitalized Rentals) for which such calculations
are being made.
"Interest Payment Date" means (i) as to Loans which are
Committed Revolving Loans and Swingline Loans, the last day
of each month and on the Termination Date and (ii) as to
Eurodollar Loans and Adjusted CD Loans, on the last day of
each Interest Period for such Loan and on the Termination
Date, and in addition where the applicable Interest Period
is more than 3 months, in the case of Eurodollar Loans, or
more than 90 days, in the case of Adjusted CD Loans, then
also on the date 3 months or 90 days, respectively, from the
beginning of the Interest Period, and each 3 months or 90
days, respectively, thereafter. If an Interest Payment Date
falls on a date which is not a Business Day, such Interest
Payment Date shall be deemed to be the next succeeding
Business Day, except that in the case of Eurodollar Loans
where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding day.
"Interest Period" means (i) as to Adjusted CD Loans, a
period of 30, 60, 90 or 180 days' duration, as the Borrower
may elect, and (ii) as to Eurodollar Loans, a period of one,
two, three or six month's duration, as the Borrower may
elect, commencing in each case, on the date of the borrowing
(including conversions, extensions and renewals); provided,
however, (A) if any Interest Period would end on a day which
is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that in
the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month,
then on the next preceding Business Day), (B) no Interest
Period shall extend beyond the Termination Date (or if more
than one Termination Date exists with respect to the
Commitments on account of a failure of one or more Banks to
extend the Termination Date as provided in Section 2.01,
then no Interest Period shall extend beyond any Termination
Date, unless either the portion of Committed Revolving Loans
comprised of Base Rate Loans together with the amount of any
unused availability is at least equal to the amount of such
Commitments terminating on such date, or the Interest
Periods for Committed Revolving Loans which, when taken
together with Base Rate Loans then outstanding and any
unused availability, are at least equal to the amount of
such Commitments terminating on such date) and (C) in the
case of Eurodollar Loans, where an Interest Period begins on
a day for which there is no numerically corresponding day in
the calendar month in which the Interest Period is to end,
such Interest Period shall end on the last day of such
calendar month.
"Investment Grade Rating" means a rating for the
Borrower's senior unsecured long-term debt (which is not
supported through defeasance, guarantees, letters of credit
or other forms of credit enhancement) of "BBB-" or better by
S&P or "Baa3" or better by Moody's.
"Issuing Bank" means, in the case of Trade Letters of
Credit, CoreStates Bank, N.A., or, in the case of Standby
Letters of Credit, NationsBank, or in each case, such other
Bank as to which the Borrower may request. There shall be
no more than one Issuing Bank for Trade Letters of Credit or
for Standby Letters of Credit at any time although the
Issuing Bank for Trade Letters of Credit and for Standby
Letters of Credit need not be the same, and provided that
should there be a change in the Issuing Bank any Letters of
Credit then issued and outstanding need not be replaced, but
may remain outstanding.
"Issuing Bank Fees" means such term as defined in
Section 2.11(c).
"Joinder Agreement" means a Joinder Agreement
substantially in the form of Schedule 6.12 hereto executed
and delivered by an Additional Credit Party in accordance
with the provisions of Section 6.12.
"Letter of Credit" means a Standby Letter of Credit, a
Trade Letter of Credit or both, as appropriate.
"Letter of Credit Fees" means the Standby Letter of
Credit Fee and the Trade Letter of Credit Fee.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest,
encumbrance, lien (statutory or otherwise), preference,
priority or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar
statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or
other similar recording or notice statute, and any lease in
the nature thereof).
"Loan" means a Committed Revolving Loan, a Swingline
Loan or both, as appropriate.
"LOC Documents" means, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or
other documents (whether general in application or
applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties
concerned or at risk or (ii) any collateral security for
such obligations, and including specifically without
limitation the Master Trade LOC Agreement.
"LOC Obligations" means, at any time, the sum of
Standby LOC Obligations plus Trade LOC Obligations.
"Mandatory Borrowing" means such term as defined in
Sections 2.07(e) and 2.08(b).
"Master Trade LOC Agreement" means those Master Letter
of Credit Agreements dated as of February 10, 1992 between
CoreStates Bank, N.A., as Issuing Bank for Trade Letters of
Credit hereunder, and each of the Credit Parties
substantially in the form of Schedule 4.01(a) attached,
together with any other such agreements entered into
subsequent thereto with another Credit Party, and any
amendments or modifications thereto or extensions or
replacements thereof, individually or collectively, as
appropriate.
"Material Adverse Effect" means a material adverse
effect on (i) the operations or financial condition of the
Borrower and its Restricted Subsidiaries, or of the Borrower
and its Subsidiaries, in each case taken as a whole, (ii)
the ability of the Borrower or Guarantors to perform their
respective obligations under this Credit Agreement, or (iii)
the validity or enforceability of this Credit Agreement, any
of the other Credit Documents, or the rights and remedies of
the Banks hereunder or thereunder.
"Material Subsidiary" means any Subsidiary of the
Borrower which would constitute a "significant subsidiary"
of the Borrower as defined in Rule 1-02 of Regulation S-X
promulgated by the Commission except that for purposes of
this definition all references therein to ten (10) percent
shall be deemed to be references to five (5) percent.
"Maximum Guaranteed Amount" means, for any Guarantor as
of the date of determination thereof, the sum of (i) with
respect to each Extension of Credit (or portion thereof) the
proceeds of which are used to make a Valuable Transfer to
such Guarantor, the amount of such Extension of Credit (or
such portion thereof) plus (ii) with respect to each
Extension of Credit (or portion thereof) the proceeds of
which are not used to make a Valuable Transfer to such
Guarantor, the lesser of (a) the outstanding amount of such
Extension of Credit (or such portion thereof) as of such
date or (b) the greater of (1) ninety-five percent (95%) of
the Adjusted Net Worth of such Guarantor at the time of such
Extension of Credit or (2) ninety-five percent (95%) of the
Adjusted Net Worth of such Guarantor at the earliest of (A)
such date, (B) the date of commencement of a case under the
Bankruptcy Code in which such Guarantor is a debtor or (C)
the date enforcement of such Guarantor's obligations under
Section 3 is sought.
"Minority Interests" means any shares of stock of any
class of a Restricted Subsidiary (other than directors'
qualifying shares as required by law) that are not owned by
the Borrower and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing
Minority Interests constituting preferred stock at the
voluntary or involuntary liquidating value of such preferred
stock, whichever is greater, and by valuing Minority
Interests constituting common stock at the book value of
capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of
valuing Minority Interests in preferred stock.
"Moody's" means Moody's Investors Service, Inc., and
any successor thereof.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section
4001(a)(3) of ERISA to which any member of the Controlled
Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years
made contributions, including for these purposes any Person
which ceased to be a member of the Controlled Group during
such five year period.
"NationsBank" means NationsBank, N.A. or its successor.
"Net Income Available for Fixed Charges" means, for any
period, the sum of Consolidated Net Income during such
period
plus (to the extent deducted in determining
Consolidated Net Income) (i) depreciation, amortization and
other non-cash charges, (ii) all provisions for any Federal,
state or other income taxes made by the Borrower or its
Restricted Subsidiaries during such period, (iii) Fixed
Charges of the Borrower and its Restricted Subsidiaries
during such period, and (iv) amortization of the acquisition
cost of license agreements and goodwill of the Borrower and
its Restricted Subsidiaries (including any such charges
deducted in determining the net income of Logo 7, Inc.
during the applicable period)
minus Capital Expenditures made or incurred by the
Borrower and its Restricted Subsidiaries during such period.
"1995 Senior Notes" means those 10-5/8% Senior Notes of
the Borrower due June 1, 1999, as amended and modified.
"1997 Senior Notes" means those 9-5/8% Senior Notes of
the Borrower due April 15, 2007, as amended and modified.
"Note" or "Notes" means the Committed Revolving Notes,
the Swingline Note, or both, as appropriate.
"Notice of Borrowing" shall have such meaning as
provided in Section 2.02(a).
"Notice of Conversion" shall have such meaning as
provided in Section 2.03.
"Obligations" means, collectively, Loans and LOC
Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, and any successor thereto.
"Participation Interest" means the extension of credit
by a Bank by way of purchase of a participation hereunder in
Letters of Credit or LOC Obligations as provided in Section
2.07, in the Swingline Loans as provided in Section 2.08 or
in Committed Revolving Loans as provided in Section 2.21.
"Permitted Investments" means (i) cash and Cash
Equivalents, (ii) receivables owing to the Borrower or its
Restricted Subsidiaries or any of its receivables and
advances to suppliers, in each case if created, acquired or
made in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms,
(iii) subject to the limitations set out in Section 7.05(b),
investments by the Borrower and its Restricted Subsidiaries
in and to a Credit Party, including any investment in a
corporation which, after giving effect to such investment,
will become an Additional Credit Party (provided such
Additional Credit Party shall execute a Joinder Agreement),
(iv) loans and advances in the usual and ordinary course of
business to officers, directors and employees for expenses
(including moving expenses related to a transfer) incidental
to carrying on the business of the Borrower or any
Restricted Subsidiary in an aggregate amount not to exceed
$5,000,000 at any time outstanding, (v) investments
(including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and
in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the
ordinary course of business, and (vi) additional loan
advances and/or investments of a nature not contemplated by
the foregoing clauses hereof, provided that such loans,
advances and/or investments made pursuant to this clause
(vi) shall not exceed in aggregate amount at any time
outstanding an amount equal to the sum of $5,000,000 plus 1%
of Consolidated Tangible Net Worth. As used herein,
"investment" means all investments, in cash or by delivery
of property made, directly or indirectly in any Person,
whether by acquisition of shares of capital stock,
indebtedness or other obligations or securities or by loan
advance, capital contribution or otherwise.
"Permitted Liens" means (i) Liens created by, under or
in connection with this Credit Agreement or the other Credit
Documents in favor of the Banks; (ii) Liens described on
Schedule 7.02 attached hereto; (iii) Liens for taxes not yet
delinquent or Liens for taxes being contested in good faith
by appropriate proceedings for which adequate reserves
determined in accordance with generally accepted accounting
principles have been established (and as to which the
property subject to such lien is not yet subject to
foreclosure, sale or loss on account thereof); (iv) Liens in
respect of property imposed by law arising in the ordinary
course of business such as materialmen's, mechanics',
warehousemen's and other like Liens provided that such Liens
secure only amounts not yet due and payable; (v) pledges or
deposits made to secure payment of worker's compensation
insurance, unemployment insurance, pensions or social
security programs; (vi) Liens arising from good faith
deposits in connection with or to secure performance of
tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-
of-money bonds and other similar obligations incurred in the
ordinary course of business (other than obligations in
respect of the payment of borrowed money); (vii) easements,
rights-of-way, restrictions (including zoning restrictions),
minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect,
impairing the use of such property for its intended purposes
or interfering with the ordinary conduct of business of the
Borrower and its Subsidiaries; (viii) Liens arising from UCC
financing statements regarding leases permitted by this
Credit Agreement; (ix) leases or subleases granted to others
in the ordinary course of business not interfering in any
material respect with the business or operations of the
Borrower or its Subsidiaries; and (x) purchase money Liens
securing purchase money indebtedness to the extent permitted
under Section 7.01.
"Person" means any individual, partnership, joint
venture, firm, corporation, association, trust or other
enterprise (whether or not incorporated), or any government
or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means any multiemployer or single-employer plan
as defined in Section 4001 of ERISA, which is maintained, or
at any time during the five calendar years preceding the
date of this Credit Agreement was maintained, for employees
of the Borrower, any Subsidiary or an ERISA Affiliate.
"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by NationsBank as its
prime rate in effect at its principal office in Charlotte,
North Carolina; each change in the Prime Rate shall be
effective on the date such change is publicly announced as
effective.
"Pro Forma Basis" means, with respect to any optional
payment on or redemption or repurchase of the Senior Notes
pursuant to the provisions of Section 7.07, such transaction
shall be deemed to have occurred as of the first day of the
four fiscal quarter period ending as of the end of the most
recent fiscal quarter preceding the date of such transaction
with respect to which the Administrative Agent shall have
received financial information pursuant to the provisions of
Sections 6.01(a) or (b).
"Reclassification Fee" means such term as defined in
Section 2.22.
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System as from time to time
in effect and any successor to all or a portion thereof
establishing reserve requirements.
"Regulation G" means Regulation G of the Board of
Governors of the Federal Reserve System as from time to time
in effect and any successor to all or a portion thereof
establishing margin requirements.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System as from time to time
in effect and any successor to all or a portion thereof
establishing margin requirements.
"Regulation X" means Regulation X of the Board of
Governors of the Federal Reserve System as from time to time
in effect and any successor to all or a portion thereof
establishing margin requirements.
"Rentals" means, as of the date of determination
thereof, all fixed payments (including as such all payments
which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property)
payable by the Borrower or a Restricted Subsidiary, as
lessee or sublessee under a lease of real or personal
property, but shall be exclusive of any amounts required to
be paid by the Borrower or a Restricted Subsidiary (whether
designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges.
Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any,
required to be paid by the lessee regardless of sales volume
or gross revenues.
"Required Banks" means Banks which are then in
compliance in all material respects with their obligations
hereunder (as shall be reasonably determined by the
Administrative Agent) holding in the aggregate at least 51%
of the Commitments (other than with respect to Swingline
Loans) or, if the aggregate Commitments have been
terminated, Banks which are then in compliance in all
material respects with their obligations hereunder (as shall
be reasonably determined by the Administrative Agent) in the
aggregate holding at least 51% of the principal amount of
the Obligations then outstanding (provided that in the case
of Letters of Credit or Swingline Loans, where a Mandatory
Borrowing cannot be made and the Banks shall have purchased
a participation interest in unreimbursed drawings under
Letters of Credit or in Swingline Loans in accordance with
the provisions of Section 2.07(e) or Section 2.08(b)(iii),
respectively, for purposes of determining the aggregate
amount of Obligations owing to each Bank hereunder, such
Bank's funded participation interest such unreimbursed
drawings under Letters of Credit and in Swingline Loans
shall be considered as if it were a direct loan and not a
participation interest, and the aggregate amount of LOC
Obligations owing to the Issuing Banks and the aggregate
amount of Swingline Loans owing to the Swingline Lender
shall be reduced by the amount of such funded participation
interests).
"Restricted Subsidiary" means any Guarantor and also
any Subsidiary (i) which is organized under the laws of the
United States or any other State thereof; (ii) which
conducts substantially all of its business and has
substantially all of its assets within the United States;
and (iii) of which more than 50% (by number of votes) of the
Voting Stock is beneficially owned, directly or indirectly,
by the Borrower. In addition, notwithstanding the
provisions of clauses (i) and (ii) of the immediately
preceding sentence, AKOM, Ltd., a corporation organized
under the laws of the Cayman Islands, and Tultex Canada,
Inc., a corporation organized under the laws of Canada, and
any other corporation which fails to qualify under clauses
(i) and (ii) of the immediately preceding sentence shall be
Restricted Subsidiaries so long as the portion of
Consolidated Net Income attributable to the net income of
such companies (taken in the aggregate) shall be less than
5% of Consolidated Net Income for the immediately preceding
fiscal year and so long as the assets of such companies
(taken in the aggregate) shall be less than 5% of the
consolidated assets of the Company and its Restricted
Subsidiaries.
"Revolving Committed Amount" means collectively the
aggregate amount of all of the Banks commitments, and
individually the amount of each such Bank's commitment to
make Committed Revolving Loans specified in Schedule
2.01(a).
"S&P" means Standard & Poor's Rating Group, a division
of McGraw Hill, Inc., and any successor thereof.
"Senior Notes" means those publicly issued notes of the
Borrower which are guaranteed by the Subsidiaries of the
Borrower issued prior to or contemporaneous with the initial
Extensions of Credit hereunder, consisting of the 1995
Senior Notes and the 1997 Senior Notes.
"Standby Letter of Credit" means any standby letter of
credit issued for the account of a Credit Party by an
Issuing Bank pursuant to the letter of credit subfacility
provided in Section 2.07, as such letter of credit may be
amended, modified, extended, renewed or replaced from time
to time.
"Standby Letter of Credit Fees" means such term as
defined in Section 2.11(c).
"Standby LOC Committed Amount" means such term as
defined in Section 2.07(a).
"Standby LOC Obligations" means, at any time, the sum
of (i) the maximum amount which is, or at any time
thereafter may become, available to be drawn under Standby
Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Standby
Letters of Credit plus (ii) the aggregate amount of all
drawings under Standby Letters of Credit honored by the
Issuing Bank but not theretofore reimbursed.
"Subordinated Debt" means such term as defined in
Section 7.07.
"Subsidiary" means, as to any Person, (i) any
corporation more than 50% of whose stock of any class or
classes having by the terms thereof ordinary voting power to
elect a majority of the directors of such corporation
(irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through
Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such person directly or
indirectly through Subsidiaries has more than 50% equity
interest at any time. Except as otherwise expressly
provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Swingline Committed Amount" means the amount of the
Swingline Lender's commitment to make Swingline Loans as
specified in Section 2.08(a).
"Swingline Lender" means NationsBank, or such other
Bank as the Borrower has requested and as to which such
requested successor Swingline Lender and the Required Banks
may agree, and their respective successors and assigns.
There shall be no more than one Swingline Lender at any
time.
"Swingline Loan" means a swingline revolving credit
loan made by the Swingline Lender pursuant to the provisions
of Section 2.08.
"Swingline Note" means the promissory note of the
Borrower in favor of the Swingline Lender evidencing the
Swingline Loans as provided pursuant to Section 2.08(d), as
such promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time.
"T-Shirt City Acquisition" means the acquisition of T-
Shirt City, Inc. for a cash acquisition price of $1.8
million and adjustment of certain trade accounts.
"Tangible Assets" means as the date of any
determination thereof the total amount of all assets of the
Borrower and its Restricted Subsidiaries (less depreciation,
depletion and other properly deductible valuation reserves)
after deducting good will, patents, trade names, trade
marks, copyrights, franchises, experimental expense,
organizational expense, unamortized debt discount and
expense, deferred assets other than prepaid insurance and
prepaid taxes, the excess of cost of shares acquired over
book value of related assets and such other assets as are
properly classified as "intangible assets" in accordance
with generally accepted accounting principles.
"Taxes" shall have such meaning as provided in Section
2.16.
"Termination Date" means such term as defined in
Section 2.01, being initially April 30, 2000.
"Trade Letter of Credit" means any trade, documentary
or merchandise letter of credit issued for the account of a
Credit Party by an Issuing Bank pursuant to the committed
letter of credit subfacility provided in Section 2.07, as
such letter of credit may be amended, modified, extended,
renewed or replaced from time to time.
"Trade Letter of Credit Fees" means such term as
defined in Section 2.11(c).
"Trade LOC Committed Amount" means such term as defined
in Section 2.07(a).
"Trade LOC Obligations" means, at any time, the sum of
(i) the maximum amount which is, or at any time thereafter
may become, available to be drawn under Trade Letters of
Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Trade Letters
of Credit plus (ii) the aggregate amount of all drawings
under Trade Letters of Credit honored by the Issuing Bank
but not theretofore reimbursed. For purposes of clause (i)
hereof, each Trade Letter of Credit shall be deemed to be
outstanding from the date of issuance thereof until and
including the earlier of (A) the date which is thirty (30)
days after the stated expiration date of such Trade Letter
of Credit or (B) the date on which such Trade Letter of
Credit is fully drawn.
"Unrestricted Subsidiary" means any Subsidiary which is
not a Restricted Subsidiary.
"Upfront Fee" means such term as defined in Section
2.11(a).
"Valuable Transfer" means, in respect of any Guarantor,
(i) all loans, advances or capital contributions made to or
for the benefit of such Guarantor with proceeds of
Extensions of Credit, (ii) all debt securities or other
obligations of such Guarantor acquired from such Guarantor
or retired by such Guarantor with proceeds of Extensions of
Credit, (iii) the fair market value of all property acquired
with proceeds of Extensions of Credit and transferred,
absolutely and not as collateral, to such Guarantor and (iv)
all equity securities of such Guarantor acquired from such
Guarantor with proceeds from Extensions of Credit.
"Voting Stock" means the voting stock or other
securities of any class or classes, the holders of which are
ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons
performing similar functions).
1.02 Computation of Time Periods.
For purposes of computation of periods of time hereunder,
the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding."
1.03 Accounting Terms.
Accounting terms used but not otherwise defined herein
shall have the meanings provided by, and be construed in
accordance with, generally accepted accounting principles.
References herein to "consolidating" financial statements shall
mean and include financial statements for each business segment
of the subject Person.
SECTION 2
CREDIT FACILITIES
2.01 Revolving Loan Commitment.
Subject to and upon the terms and conditions and relying
upon the representations and warranties herein set forth, each
Bank severally agrees, from time to time from the Closing Date
until April 30, 2000 (such date, as extended, if extended in the
sole discretion of the Banks as hereinafter provided, is
hereinafter referred to as the "Termination Date") to make
revolving credit loans (each a "Committed Revolving Loan" and,
collectively, the "Committed Revolving Loans") to the Borrower
for the purposes hereinafter set forth; provided, however, that
(i) with regard to the Banks collectively, the amount of
Committed Revolving Loans outstanding shall not at any time
exceed ONE HUNDRED EIGHTY-SEVEN MILLION DOLLARS ($187,000,000) in
the aggregate (as such aggregate maximum amount may be reduced
from time to time as hereinafter provided, the "Revolving
Committed Amount"), and (ii) with regard to each Bank
individually, each such Bank's pro rata share of outstanding
Committed Revolving Loans plus Swingline Loans plus LOC
Obligations shall not at any time exceed such Bank's Revolving
Committed Amount; and provided, further, that notwithstanding
anything herein to the contrary, (A) the sum of Committed
Revolving Loans plus Swingline Loans plus LOC Obligations shall
not at any time exceed (B) the aggregate Revolving Committed
Amount. Committed Revolving Loans hereunder may consist of Base
Rate Loans, Eurodollar Loans or Adjusted CD Loans (or a
combination thereof) as the Borrower may request, and may be
repaid and reborrowed in accordance with the provisions hereof.
No more than 10 Interest Periods may be outstanding at any time.
The Borrower may, within 90 days prior to April 30, 1998 and
within 90 days prior to each anniversary date thereafter (April
30, 1998 and each anniversary date thereof being referred to as
an "Anniversary Date"), by notice to the Administrative Agent,
make written request of the Banks to extend the Termination Date
for an additional period of one year. The Administrative Agent
will give prompt notice to each of the Banks of its receipt of
any such request for extension of the Termination Date. Each
Bank shall make a determination not later than 30 days prior to
the then applicable Anniversary Date as to whether or not it will
agree to extend the Termination Date as requested; provided,
however, that failure by any Bank to make a timely response to
the Borrower's request for extension of the Termination Date
shall be deemed to constitute a refusal by the Bank to extend the
Termination Date. If, in response to a request for an extension
of the Termination Date, one or more Banks shall fail to agree to
the requested extension (the "Disapproving Banks"), then provided
that the requested extension is approved by Banks holding at
least 75% of the Commitments hereunder (the "Approving Banks"),
the credit facility may be extended and continued at the option
of the Borrower at a lower aggregate amount equal to the
Commitments held by the Approving Banks. In any such case, (i)
the Termination Date relating to the Commitments held by the
Disapproving Banks shall remain as then in effect with repayment
of Obligations held by such Disapproving Banks being due on such
date and termination of their respective Commitments on such
date, (ii) the Termination Date relating to the Commitments held
by the Approving Banks shall be extended by an additional one
year period, and (iii) the Borrower may, at its own expense with
the assistance of the Administrative Agent, make arrangements for
another bank or financial institution reasonably acceptable to
the Administrative Agent to acquire, in whole or in part, the
Obligations and Commitments of the Disapproving Banks. Where any
such arrangements are made for another bank or financial
institution to acquire the Obligations and Commitments of a
Disapproving Bank, or any portion thereof, then upon payment of
the Obligations and termination of the Commitments relating
thereto, such Disapproving Bank shall promptly transfer and
assign, in whole or in part, as requested, without recourse (in
accordance with and subject to the provisions of Section 10.03),
all or part of its interests, rights and obligations under this
Credit Agreement to such bank or financial institution which
shall assume such assigned obligations (which assignee may be
another Bank, if a Bank accepts such assignment); provided, that
such assignment shall not conflict with any law, rule or
regulation or order of any court or other Governmental Authority.
2.02 Committed Revolving Loan Advances.
(a) Notices. Whenever the Borrower desires a
Committed Revolving Loan advance hereunder, it shall
give written notice (or telephone notice promptly
confirmed in writing) to the Administrative Agent (a
"Notice of Borrowing") not later than 10:00 A.M.
(Charlotte, North Carolina time) on the Business Day of
the requested advance in the case of Base Rate Loans,
on the second Business Day prior to the requested
advance in the case of Adjusted CD Loans and on the
third Business Day prior to the requested advance in
the case of Eurodollar Loans. Each such notice shall
be irrevocable and shall specify (i) that a Committed
Revolving Loan is requested, (ii) the date of the
requested advance (which shall be a Business Day),
(iii) the aggregate principal amount of Committed
Revolving Loans requested, and (iv) whether the Loan
requested shall consist of Base Rate Loans, Eurodollar
Loans, Adjusted CD Loans or a combination thereof, and
if Eurodollar Loans and/or Adjusted CD Loans are
requested, the Interest Periods with respect thereto.
If the Borrower shall fail to specify in any Notice of
Borrowing (A) an applicable Interest Period in the case
of a Eurodollar Loan or an Adjusted CD Loan, then such
notice shall be deemed to be a request for an Interest
Period of one month or 30 days, respectively, or (B)
the type of Committed Revolving Loan requested, then
such notice shall be deemed to be a request for a Base
Rate Loan hereunder. The Administrative Agent shall as
promptly as practicable give each Bank notice of each
requested Committed Revolving Loan advance, of such
Bank's pro rata share thereof and of the other matters
covered in the Notice of Borrowing.
(b) Minimum Amounts. Committed Revolving Loan
advances shall be in a minimum aggregate amount of
$5,000,000 and integral multiples of $1,000,000 in
excess thereof.
(c) Advances. Each Bank will make its pro rata
share of each Committed Revolving Loan advance
available to the Administrative Agent by 2:00 P.M.
(Charlotte, North Carolina time) on the date specified
in the Notice of Borrowing by deposit in U.S. dollars
of immediately available funds at the offices of the
Administrative Agent in Charlotte, North Carolina, or
at such other address in the United States as the
Administrative Agent may designate in writing. All
Committed Revolving Loan advances shall be made by the
Banks pro rata on the basis of each Bank's share of the
Revolving Committed Amount. No Bank shall be
responsible for the failure or delay by any other Bank
in its obligation to make Committed Revolving Loan
advances hereunder; provided, however, that the failure
of any Bank to fulfill its commitments hereunder shall
not relieve any other Bank of its commitments
hereunder. Unless the Administrative Agent shall have
been notified by any Bank prior to the time of any such
Committed Revolving Loan advance that such Bank does
not intend to make available to the Administrative
Agent its portion of the Committed Revolving Loan
advance to be made on such date, the Administrative
Agent may assume that such Bank has made such amount
available to the Administrative Agent on the date of
such Committed Revolving Loan advance, and the
Administrative Agent, in reliance upon such assumption,
may (in its sole discretion without any obligation to
do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact
made available to the Administrative Agent by a Bank,
the Administrative Agent shall be entitled to recover
such corresponding amount from such Bank. If such Bank
does not pay such corresponding amount forthwith upon
the Administrative Agent's demand therefor, the
Administrative Agent will promptly notify the Borrower
and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover
from such Bank or the Borrower, as the case may be,
interest on such corresponding amount in respect of
each day from the date such corresponding amount was
made available by the Administrative Agent to the
Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a per annum
rate equal to (i) if paid by such Bank, within two (2)
Business Days of making such corresponding amount
available to the Borrower, the overnight Federal Funds
Effective Rate, and thereafter the Base Rate, and (ii)
if paid by the Borrower, the then applicable rate
calculated in accordance with Section 2.05.
2.03 Conversion.
The Borrower shall have the option, on any Business Day, to
extend existing Loans into a subsequent Interest Period or to
convert Loans into Loans of another type; provided, however, that
(i) except as provided in Section 2.13(iii), Eurodollar Loans and
Adjusted CD Loans may be converted into Loans of another type
only on the last day of an Interest Period applicable thereto,
(ii) Eurodollar Loans and Adjusted CD Loans may be extended, and
Loans may be converted into Eurodollar Loans or Adjusted CD
Loans, only if no Default or Event of Default is in existence on
the date of extension or conversion, (iii) Loans extended as, or
converted into, Eurodollar Loans or Adjusted CD Loans shall be in
such minimum amounts as provided in Section 2.02(b), and (iv) any
request for extension or conversion of a Eurodollar Loan or
Adjusted CD Loan which shall fail to specify an Interest Period
shall be deemed to be a request for an Interest Period of one
month or 30 days, respectively. Each such extension or
conversion shall be effected by the Borrower by giving written
notice (or telephone notice promptly confirmed in writing) to the
Administrative Agent (including requests for extensions and
renewals, a "Notice of Conversion") prior to 10:00 A.M.
(Charlotte, North Carolina time) on the Business Day of, in the
case of Base Rate Loans, on the second Business Day prior to, in
the case of Adjusted CD Loans, and on the third Business Day
prior to, in the case of Eurodollar Loans, the date of the
proposed extension or conversion, specifying the date of the
proposed extension or conversion, the Loans to be so extended or
converted, the types of Loans into which such Loans are to be
converted and, if appropriate, the applicable Interest Periods
with respect thereto. Each request for extension or conversion
shall be deemed to be a reaffirmation by the Borrower that no
Default or Event of Default then exists and is continuing and
that the representations and warranties set forth in Section 4
are true and correct in all material respects (except to the
extent they relate to an earlier period). In the event the
Borrower fails to request extension or conversion of any
Eurodollar Loan or Adjusted CD Loan in accordance with this
Section, or any such conversion or extension is not permitted by
this Section, then such Loans shall be automatically converted
into Base Rate Loans at the end of their Interest Period. The
Administrative Agent shall give each Bank notice as promptly as
practicable of any such proposed conversion affecting any Loans.
2.04 Repayment of the Committed Revolving Loans.
The Committed Revolving Loans shall be due and payable in
full on the Termination Date.
2.05 Interest on Committed Revolving Loans.
The Committed Revolving Loans shall bear interest at a per
annum rate equal to:
(a) Base Rate Loans. During such periods as
Committed Revolving Loans shall consist of Base Rate
Loans, the Base Rate;
(b) Eurodollar Loans. During such periods as
Committed Revolving Loans shall consist of Eurodollar
Loans, the sum of the Adjusted Eurodollar Rate plus the
Applicable Percentage;
(c) Adjusted CD Loans. During such periods as
Committed Revolving Loans shall consist of Adjusted CD
Loans, the sum of the Adjusted CD Rate plus the
Applicable Percentage;
provided, however, that from and after any failure to make any
payment of principal or interest in respect of the Obligations
hereunder when due, whether at scheduled or accelerated maturity
or on account of any mandatory prepayment (including any
reimbursement obligations in respect of Letters of Credit and
requirement for cash collateral hereunder), the principal of and,
to the extent permitted by law, interest on, the Committed
Revolving Loans shall bear interest, payable on demand, at a per
annum rate two percent (2%) in excess of the rate otherwise
applicable hereunder. Interest on Committed Revolving Loans
shall be payable in arrears on each Interest Payment Date.
2.06 Committed Revolving Notes.
Committed Revolving Loans by each Bank shall be evidenced by
a duly executed promissory note of the Borrower to each such Bank
dated as of the Closing Date in an original principal amount
equal to such Bank's Revolving Committed Amount and substantially
in the form of Schedule 2.06 (such promissory note, as amended,
modified, extended, renewed or replaced from time to time is
hereinafter referred to individually as a "Committed Revolving
Note" and collectively as the "Committed Revolving Notes").
2.07 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and
conditions hereof and of the LOC Documents, if any, and
any other terms and conditions which the Issuing Bank
may reasonably require, the Banks will participate in
the Existing Letters of Credit and in the issuance by
the Issuing Banks from time to time of such Letters of
Credit from the Closing Date until the Termination Date
as the Borrower or any other Credit Party may request
in a form acceptable to the Issuing Bank; provided,
however, that (i) the aggregate amount of Trade LOC
Obligations shall not at any time exceed $70,000,000
(the "Trade LOC Committed Amount"), (ii) the aggregate
amount of Standby LOC Obligations shall not at any time
exceed $10,000,000 (the "Standby LOC Committed
Amount"), (iii) the sum of Committed Revolving Loans
plus Swingline Loans plus LOC Obligations shall not at
any time exceed the aggregate Revolving Committed
Amount and (iv) Standby Letters of Credit shall be
issued solely for the purpose of supporting workers'
compensation and other insurance programs. Except as
otherwise expressly agreed upon by all the Banks, no
Standby Letter of Credit shall have an original expiry
date more than one year from the date of issuance and
no Trade Letter of Credit shall have an original expiry
date more than 210 days following the date of issuance
thereof; provided, however, so long as no Default or
Event of Default has occurred and is continuing and
subject to the other terms and conditions to the
issuance of Standby Letters of Credit hereunder, the
expiry dates of Standby Letters of Credit will be
extended annually on each anniversary date of their
date of issuance for an additional period not to exceed
one year; provided, further, that no Letter of Credit,
whether Standby or Trade, as originally issued or as
extended, shall have an expiry date extending beyond
the Termination Date except that prior to the
Termination Date a Letter of Credit may be issued or
extended with an expiry date extending beyond the
Termination Date if, and to the extent that, the
responsible Credit Party shall provide cash collateral
to the Issuing Bank on the date of issuance or
extension in an amount equal to the maximum amount
available to be drawn under such Letter of Credit.
Each Letter of Credit shall comply with the related LOC
Documents. The issuance and expiry date of each Letter
of Credit shall be a Business Day.
(b) Notice and Reports. The request for the
issuance of a Letter of Credit shall be submitted to
the Issuing Bank at least three (3) Business Days in
the case of Standby Letters of Credit and one (1)
Business Day in the case of Trade Letters of Credit,
prior to the requested date of issuance. The Issuing
Banks will, at least quarterly and more frequently upon
request, provide to the Administrative Agent for
dissemination to the Banks a detailed report specifying
the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which
may have occurred since the date of the prior report,
and including therein, among other things, the account
party, the beneficiary, the face amount, expiry date as
well as any payment or expirations which may have
occurred. The Issuing Banks will further provide to
the Administrative Agent promptly upon request copies
of the Letters of Credit. Each Issuing Bank, by
acceptance of its position as such, acknowledges that
the nature of the credit provided pursuant to this
Credit Agreement necessitates that the Administrative
Agent be kept informed as to the nature and extent of
credit extended hereunder, including particularly LOC
Obligations. To that end each Issuing Bank agrees to
provide to the Administrative Agent at least weekly,
and more frequently upon request, a summary report of
the nature and extent of LOC Obligations then
outstanding.
(c) Participations. Each Bank, with respect to
the Existing Letter of Credit, hereby purchases a
participation in such Existing Letters of Credit and
with respect to Letters of Credit issued on or after
the Closing Date, upon issuance of a Letter of Credit,
shall be deemed to have purchased without recourse a
risk participation from the Issuing Bank in such Letter
of Credit and the obligations arising thereunder and
any collateral relating thereto, in each case in an
amount equal to its pro rata share of the obligations
under such Letter of Credit (based on the proportion
which each such Bank's Trade LOC Committed Amount or
Standby LOC Committed Amount bears to the aggregate
Trade LOC Committed Amount or aggregate Standby LOC
Committed Amount, as appropriate) and shall absolutely,
unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to
the Issuing Bank therefor and discharge when due, its
pro rata share of the obligations arising under such
Letter of Credit. Without limiting the scope and
nature of each Bank's participation in any Letter of
Credit, to the extent that the Issuing Bank has not
been reimbursed as required hereunder or under any such
Letter of Credit, each such Bank shall pay to the
Issuing Bank its pro rata share of such unreimbursed
drawing in same day funds on the day of notification by
the Issuing Bank of an unreimbursed drawing pursuant to
the provisions of subsection (d) hereof. The
obligation of each Bank to so reimburse the Issuing
Bank shall be absolute and unconditional and shall not
be affected by the occurrence of a Default, an Event of
Default or any other occurrence or event. Any such
reimbursement shall not relieve or otherwise impair the
obligation of the Borrower to reimburse the Issuing
Bank under any Letter of Credit, together with interest
as hereinafter provided.
(d) Reimbursement. In the event of any drawing
under any Letter of Credit, the Issuing Bank will
promptly notify the Borrower and the responsible Credit
Party. Unless the Borrower or responsible Credit Party
shall immediately notify the Issuing Bank of its intent
to otherwise reimburse the Issuing Bank, the Borrower
shall be deemed to have requested a Committed Revolving
Loan in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be
used to satisfy the reimbursement obligations. The
appropriate Credit Party shall reimburse the Issuing
Bank on the day of drawing under any Letter of Credit
(either with the proceeds of a Committed Revolving Loan
obtained hereunder or otherwise) in same day funds as
provided herein or in the LOC Documents. If the
appropriate Credit Party shall fail to reimburse the
Issuing Bank as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per
annum rate equal to the Base Rate plus two percent
(2%). The Credit Parties' reimbursement obligations
hereunder shall be absolute and unconditional under all
circumstances irrespective of any rights of set-off,
counterclaim or defense to payment the Credit Parties
may claim or have against the Issuing Bank, the
Administrative Agent, the Banks, the beneficiary of the
Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any
failure of the Credit Parties to receive consideration
or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Issuing
Bank will promptly notify the other Banks of the amount
of any unreimbursed drawing and each Bank shall
promptly pay to the Administrative Agent for the
account of the Issuing Bank in Dollars and in
immediately available funds, the amount of such Bank's
pro rata share of such unreimbursed drawing. Such
payment shall be made on the day such notice is
received by such Bank from the Issuing Bank if such
notice is received at or before 2:00 p.m., Charlotte,
North Carolina time, otherwise such payment shall be
made at or before 12:00 Noon, Charlotte, North Carolina
time, on the Business Day next succeeding the day such
notice is received. If such Bank does not pay such
amount to the Issuing Bank in full upon such request,
such Bank shall, on demand, pay to the Administrative
Agent for the account of the Issuing Bank interest on
the unpaid amount during the period from the date of
such drawing until such Bank pays such amount to the
Issuing Bank in full at a rate per annum equal to, if
paid within two (2) Business Days of the date of
drawing, the Federal Funds Effective Rate and
thereafter at a rate equal to the Base Rate. Each
Bank's obligation to make such payment to the Issuing
Bank, and the right of the Issuing Bank to receive the
same, shall be absolute and unconditional, shall not be
affected by any circumstance whatsoever and without
regard to the termination of this Credit Agreement or
the Commitments hereunder, the existence of a Default
or Event of Default or the acceleration of the
Obligations hereunder and shall be made without any
offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by
a Bank to the Issuing Bank, such Bank shall,
automatically and without any further action on the
part of the Issuing Bank or such Bank, acquire a
participation in an amount equal to such payment
(excluding the portion of such payment constituting
interest owing to the Issuing Bank) in the related
unreimbursed drawing portion of the LOC Obligation and
in the interest thereon and in the related LOC
Documents, and shall have a claim against the
respective Credit Parties with respect thereto.
(e) Repayment with Committed Revolving Loans. On
any day on which the Borrower shall have requested, or
been deemed to have requested, a Committed Revolving
Loan advance to reimburse a drawing under a Letter of
Credit, the Administrative Agent shall give notice to
the Banks that a Committed Revolving Loan has been
requested or deemed requested in connection with a
drawing under a Letter of Credit, in which case a
Committed Revolving Loan advance comprised solely of
Base Rate Loans (each such borrowing, a "Mandatory
Borrowing") shall be immediately made from all Banks
(without giving effect to any termination of the
Commitments pursuant to Section 8.02) pro rata based on
each of the Banks' respective Revolving Loan
Commitments (determined before giving effect to any
termination of the Commitments pursuant to Section
8.02) and the proceeds thereof shall be paid directly
to the appropriate Issuing Bank(s) for application to
the respective LOC Obligations. Each such Bank hereby
irrevocably agrees to make such Committed Revolving
Loans immediately upon any such request or deemed
request on account of each Mandatory Borrowing in the
amount and in the manner specified in the preceding
sentence and on the same such date notwithstanding (i)
the amount of Mandatory Borrowing may not comply with
the minimum amount for advances of Committed Revolving
Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 2.09 are then
satisfied, (iii) whether a Default or an Event of
Default then exists, (iv) failure for any such request
or deemed request for Committed Revolving Loan to be
made by the time otherwise required in Section 2.02(a),
(v) the date of such Mandatory Borrowing, or (vi) any
reduction in the Revolving Committed Amount after any
such Letter of Credit may have been drawn upon;
provided, however, that in the event any such Mandatory
Borrowing should be less than the minimum amount for
advances of Committed Revolving Loans otherwise
provided in Section 2.02(b), the Borrower shall pay to
the Agent for its own account an administrative fee of
$500. In the event that any Mandatory Borrowing cannot
for any reason be made on the date otherwise required
above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy
Code with respect to the Borrower or any other Credit
Party), then each such Bank hereby agrees that it shall
forthwith purchase (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted
for any payments received from the Borrower on or after
such date and prior to such purchase) from the Issuing
Bank(s) such participations in the outstanding LOC
Obligations as shall be necessary to cause each such
Bank to share in such LOC Obligations ratably based
upon its respective Revolving Loan Commitments
(determined before giving effect to any termination of
the Commitments pursuant to Section 8.02), provided
that at the time any purchase of participations
pursuant to this sentence is actually made, the
purchasing Bank shall be required to pay to the Issuing
Bank interest on the principal amount of participation
purchased for each day from and including the day upon
which the Mandatory Borrowing would otherwise have
occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within two
(2) Business Days of the date of the Mandatory
Borrowing, the Federal Funds Effective Rate, and
thereafter at a rate equal to the Base Rate.
(f) Modification, Extension. The issuance of any
supplement, modification, amendment, renewal, or
extension to any Letter of Credit shall, for purposes
hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing
Bank may have the Letters of Credit be subject to The
Uniform Customs and Practice for Documentary Credits,
as published as of the date of issue by the
International Chamber of Commerce (the "UCP"), in which
case the UCP may be incorporated therein and deemed in
all respects to be a part thereof.
(h) Provisions Relating to Trade Letters of Credit.
(i) Each of the respective Credit Parties agrees to procure
or to cause the beneficiaries of each Trade Letter of Credit
to procure promptly any necessary import and export or other
licenses for the import or export or shipping of any goods
referred to in or pursuant to a Trade Letter of Credit and
to comply and to cause the beneficiaries to comply with all
foreign and domestic governmental regulations with respect
to the shipment and warehousing of such goods or otherwise
relating to or affecting such Trade Letter of Credit,
including governmental regulations pertaining to
transactions involving designated foreign countries or their
nationals, and to furnish such certificates in that respect
as the Issuing Bank thereof may at any time reasonably
require, and to keep such goods adequately covered by
insurance in amounts, with carriers and for such risks as
shall be customary in the industry and to cause the Issuing
Bank's interest to be endorsed on such insurance and to
furnish the Issuing Bank at its request with reasonable
evidence thereof. Should such insurance (or lack thereof)
upon said goods for any reason not be reasonably
satisfactory to such Issuing Bank, the Issuing Bank may (but
is not obligated to) obtain, at such Credit Party's expense,
insurance satisfactory to the Issuing Bank.
(ii) In connection with each Trade Letter of Credit,
neither any Issuing Bank nor any of their correspondents
shall be responsible for: (A) the existence, character,
quality, quantity, condition, packing, value or delivery of
the property purporting to be represented by documents; (B)
any difference in character, quality, quantity, condition or
value of the property from that expressed in documents; (C)
the time, place, manner or order in which shipment of the
property is made; (D) partial or incomplete shipment
referred to in such credit; (E) the character, adequacy or
responsibility of any insurer, or any other risk connected
with insurance; (F) any deviation from instructions, delay,
default or fraud by the beneficiary or any one else in
connection with the property or the shipping thereof; (G)
the solvency, responsibility or relationship to the property
of any party issuing any documents in connection with the
property; (H) delay in arrival or failure to arrive of
either the property or any of the documents relating
thereto; (I) delay in giving or failure to give notice of
arrival or any other notice; (J) any breach of contract
between the shippers or vendors and the respective Credit
Party; (K) any laws, customs, and regulations which may be
effective in any jurisdiction where any negotiation and/or
payment of such Trade Letter of Credit occurs; (L) failure
of documents (other than documents required by the terms of
the Trade Letter of Credit) to accompany any draft at
negotiation; or (M) failure of any person to note the amount
of any document or drafts on the reverse of such Trade
Letter of Credit or to surrender or to take up such Trade
Letter of Credit or to forward documents other than
documents required by the terms of the Trade Letter of
Credit. In connection with each Trade Letter of Credit, no
Issuing Bank shall be responsible for any error, neglect or
default of any of their correspondents. None of the above
shall affect, impair or prevent the vesting of any of the
Issuing Bank's rights or powers hereunder. If a Trade
Letter of Credit provides that payment is to be made by the
Issuing Bank's correspondent, neither the Issuing Bank nor
such correspondent shall be responsible for the failure of
any of the documents specified in such Trade Letter of
Credit to come into the Issuing Bank's hands, or for any
delay in connection therewith, and Credit Parties respective
obligations to make reimbursements shall not be affected by
such failure or delay in the receipt of any such documents.
(iii) Notwithstanding but without limiting any of the
foregoing, with respect to any Trade Letter of Credit, the
Credit Parties and the Banks shall have a claim against the
respective Issuing Bank, and such Issuing Bank shall be
liable to such Credit Parties and the Banks, to the extent,
but only to the extent, of any direct, as opposed to
indirect or consequential, damages suffered by the Credit
Parties and the Banks caused by the Issuing Bank's willful
misconduct or gross negligence.
2.08 Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to and upon the
terms and conditions and relying upon the representations
and warranties herein set forth, the Swingline Lender, in
its individual capacity, agrees to make certain revolving
credit loans to the Borrower (each a "Swingline Loan" and,
collectively, the "Swingline Loans") from time to time from
the Closing Date until the Termination Date for the purposes
hereinafter set forth; provided, however, (i) the aggregate
amount of Swingline Loans outstanding at any time shall not
exceed TEN MILLION DOLLARS ($10,000,000) (the "Swingline
Committed Amount"), and (ii) the sum of Committed Revolving
Loans plus Swingline Loans plus LOC Obligations outstanding
at any time shall not exceed the Revolving Committed Amount.
Swingline Loans hereunder may consist of Base Rate Loans or
Fed Funds Swingline Loans as the Borrower may request and
may be repaid and reborrowed in accordance with the
provisions hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the
Borrower desires a Swingline Loan advance hereunder it
shall give written notice (or telephone notice promptly
confirmed in writing) to the Swingline Lender and to
the Administrative Agent (not later than 12:00 noon
(Charlotte, North Carolina time) on the Business Day of
the requested Swingline Loan advance. Each such notice
shall be irrevocable and shall specify (A) that a
Swingline Loan advance is requested, (B) the date of
the requested Swingline Loan advance (which shall be a
Business Day), (C) the aggregate principal amount of
the Swingline Loan advance requested and (D) whether
the Swingline Loan shall consist of Base Rate Loans or
Fed Funds Swingline Loans.
(ii) Minimum Amounts. Each Swingline Loan
advance shall be in a minimum principal amount of
$250,000 and integral multiples of $100,000 in excess
thereof.
(iii) Repayment of Swingline Loans. Each
Swingline Loan advance shall be due and payable on the
earliest of (A) 29 days from the date of advance
thereof, (B) the date of the next Committed Revolving
Loan advance, or (C) the Termination Date. If, and to
the extent, any Swingline Loan advances shall be
outstanding on the date of any Committed Revolving Loan
advance, such Swingline Loans shall first be repaid
from the proceeds of such Committed Revolving Loan
advance prior to distribution to the Borrower. If, and
to the extent, Committed Revolving Loans are not
requested prior to the Termination Date or the end of
any such 29 day period from the date of any such
Swingline Loan advance, the Borrower shall be deemed to
have requested a Committed Revolving Loan comprised
solely of Base Rate Loans in the amount of such
Swingline Loan advance then outstanding, the proceeds
of which shall be used to repay the Swingline Lender
for such Swingline Loan. In addition, the Swingline
Lender may, at any time, in its sole discretion, by
written notice to the Borrower and the Administrative
Agent, demand repayment of its Swingline Loans by way
of a Committed Revolving Loan advance, in which case
the Borrower shall be deemed to have requested a
Committed Revolving Loan advance comprised solely of
Base Rate Loans in the amount of such Swingline Loans;
provided, however, that any such demand shall be deemed
to have been given one Business Day prior to the
Termination Date and upon the occurrence of any Event
of Default described in Section 8.01(f) and also upon
acceleration of the Obligations hereunder, whether on
account of an Event of Default described in Section
8.01(f) or any other Event of Default, and the exercise
of remedies in accordance with the provisions of
Section 8.02 hereof (each such Committed Revolving Loan
advance made on account of any such deemed request
therefor as provided herein being hereinafter referred
to as a "Mandatory Borrowing"). Each Bank hereby
irrevocably agrees to make such Committed Revolving
Loans promptly upon any such request or deemed request
on account of each Mandatory Borrowing in the amount
and in the manner specified in the preceding sentence
and on the same such date notwithstanding (I) the
amount of Mandatory Borrowing may not comply with the
minimum amount for advances of Committed Revolving
Loans otherwise required hereunder, (II) whether any
conditions specified in Section 2.09 are then
satisfied, (III) whether a Default or an Event of
Default then exists, (IV) failure for any such request
or deemed request for Committed Revolving Loan to be
made by the time otherwise required in Section 2.02(a),
(V) the date of such Mandatory Borrowing, or (VI) any
reduction in the Revolving Committed Amount or
termination of the Commitments relating thereto
immediately prior to such Mandatory Borrowing or
contemporaneous therewith. In the event that any
Mandatory Borrowing cannot for any reason be made on
the date otherwise required above (including, without
limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to
the Borrower or any other Credit Party), then each Bank
hereby agrees that it shall forthwith purchase promptly
upon demand (as of the date the Mandatory Borrowing
would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such
date and prior to such purchase) from the Swingline
Lender such participations in the outstanding Swingline
Loans as shall be necessary to cause each such Bank to
share in such Swingline Loans ratably based upon its
respective Revolving Loan Commitment (determined before
giving effect to any termination of the Commitments
pursuant to Section 8.02), provided that (A) all
interest payable on the Swingline Loans shall be for
the account of the Swingline Lender until the date as
of which the respective participation is purchased, and
(B) at the time any purchase of participations pursuant
to this sentence is actually made, the purchasing Bank
shall be required to pay to the Swingline Lender
interest on the principal amount of participation
purchased for each day from and including the day upon
which the Mandatory Borrowing would otherwise have
occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within two
(2) Business Days of the date of the Mandatory
Borrowing, the Federal Funds Effective Rate, and
thereafter at a rate equal to the Base Rate.
(c) Interest on Swingline Loans. Swingline Loans
shall bear interest at a per annum rate equal to
(i) Base Rate Loans. During such periods
as a Swingline Loan shall consist of Base Rate Loans,
the Base Rate; and
(ii) Fed Funds Swingline Loans. During such
periods as a Swingline Loan shall consist of Fed Funds
Swingline Loans, the sum of the Adjusted Federal Funds
Rate plus the Applicable Percentage;
provided, however, that from and after any failure to make
any payment of principal or interest in respect of any of
the Loans hereunder when due, whether at scheduled or
accelerated maturity or on account of any mandatory
prepayment, the principal of and, to the extent permitted by
law, interest on, Swingline Loans shall bear interest,
payable on demand, at a per annum rate two percent (2%) in
excess of the Base Rate. Interest on Swingline Loans shall
be payable in arrears on each Interest Payment Date.
(d) Swingline Note. The Swingline Loans shall be
evidenced by a duly executed promissory note of the Borrower
to the Swingline Lender dated as of the Closing Date in the
original amount of the Swingline Committed Amount and
substantially in the form of Schedule 2.08(d) (as amended,
modified, supplemented, extended, renewed or replaced from
time to time, the "Swingline Note").
2.09 Conditions of Lending.
(a) Conditions. The obligation to make any
Extensions of Credit hereunder is subject to
satisfaction of the following conditions:
(i) receipt of a Notice of Borrowing
pursuant to Section 2.02(a) or request for Letter
of Credit pursuant to Section 2.07;
(ii) the representations and warranties
set forth in Section 5 hereof shall be true and
correct in all material respects as of such date
(except for those which expressly relate to an
earlier date);
(iii) immediately after giving effect to
the requested Extension of Credit, (A) with regard
to each Bank individually, the Bank's pro rata
share of the outstanding Committed Revolving Loans
plus Swingline Loans plus LOC Obligations shall
not exceed such Bank's Revolving Committed Amount,
and (B) with regard to the Banks collectively, (I)
the sum of Committed Revolving Loans plus
Swingline Loans plus LOC Obligations then
outstanding shall not exceed the aggregate
Revolving Committed Amount, (II) the aggregate
amount of Trade LOC Obligations shall not exceed
the Trade LOC Committed Amount, (III) the
aggregate amount of Standby LOC Obligations shall
not exceed the Standby LOC Committed Amount, and
(IV) the aggregate amount of Swingline Loans shall
not exceed the Swingline Committed Amount; and
(iv) no Default or Event of Default shall
exist and be continuing either prior to or after giving
effect thereto.
(b) Reaffirmation. Each request for a Committed
Revolving Loan advance pursuant to a Notice of
Borrowing or a Notice of Conversion, for a Swingline
Loan advance pursuant to a Notice of Borrowing and for
issuance, extension or modification of a Letter of
Credit shall be deemed to be representation and
warranty of the correctness of the matters specified in
this subsections (a)(ii), (iii) and (iv) hereof.
2.10 Termination of Commitments.
The Borrower may from time to time permanently terminate the
Revolving Committed Amount and/or the respective LOC Committed
Amounts in whole or in part (in minimum aggregate amounts of
$10,000,000 and integral multiples of $1,000,000 in excess
thereof) upon 3 Business Days' prior written notice to the
Administrative Agent.
2.11 Fees.
(a) Upfront Fee. The Borrower agrees to pay in
immediately available funds to the Administrative Agent
for the ratable benefit of the Banks on or before the
Closing Date an upfront fee (the "Upfront Fee") equal
to one-eighth of one percent (1/8%) on the aggregate
Revolving Committed Amount.
(b) Commitment Fee. In consideration of the
Commitments by the Banks hereunder, the Borrower agrees to
pay to the Administrative Agent quarterly in arrears on the
15th day following the last day of each of the Borrower's
fiscal quarters for the benefit of the Banks a commitment
fee (the "Commitment Fee") of one-fourth of one percent
(1/4%) per annum (i) to each Bank other than the Swingline
Lender, on each such Bank's pro rata share of the average
daily unused amount of the Revolving Committed Amount for
such prior quarter and (ii) to the Swingline Lender, on the
Swingline Lender's pro rata share of the average daily
unused amount of the Revolving Committed Amount for such
prior period adjusted as provided below for the average
daily amount of Swingline Loans outstanding during such
period. For purposes of computation of the Commitment Fee,
Committed Revolving Loans and LOC Obligations shall be
considered as usage, but Swingline Loans shall not be
considered as usage for any Banks other than the Swingline
Lender.
(c) Letter of Credit Fees.
(i) Standby Letter of Credit Fee. In
consideration of the issuance of Standby Letters
of Credit hereunder, the Borrower or other Credit
Party agrees to pay to the Issuing Bank a fee (the
"Standby Letter of Credit Fee") equal to the
Applicable Percentage per annum on the average
daily maximum amount available to be drawn under
each such Letter of Credit from the date of
issuance to the date of expiration. Of such
Standby Letter of Credit Fee, the Issuing Bank
shall retain for its own account without sharing
by the other Banks one-eighth of one percent
(1/8%) per annum thereon and shall promptly pay
over to the Administrative Agent for the ratable
benefit of the Banks (including the Issuing Bank)
the remainder thereof. The Standby Letter of
Credit Fee will be payable quarterly in arrears on
the 15th day following the last day of each of the
Borrower's fiscal quarters.
(ii) Trade Letter of Credit Fee. In
consideration of the issuance of Trade Letters of
Credit hereunder, the Borrower or other Credit
Party agrees to pay to the Issuing Bank a fee (the
"Trade Letter of Credit Fee") equal to one-fourth
of one percent (1/4%) of the amount of each
drawing under any such Letter of Credit or such
lesser amount as may be agreed upon by the Issuing
Bank and the Borrower or other Credit Party. Of
such Trade Letter of Credit Fee, the Issuing Bank
shall pay over to the Administrative Agent for the
ratable benefit of the Banks (including the
Issuing Bank) one-eighth of one percent (1/8%)
thereof and the Issuing Bank may retain for its
own account without sharing by the other Banks the
amount in excess thereof, if any. The Trade
Letter of Credit Fee will be collected by the
Issuing Bank on the date of each drawing, the
Banks' portion of which will be paid over to the
Administrative Agent quarterly on the last day of
each calendar quarter for distribution to the
Banks (including the Issuing Bank). Payment to
the Administrative Agent of the Banks' portion of
the Trade Letter of Credit Fee will be accompanied
by a report providing the appropriate information
necessary for computation of such Fee.
(iii) Issuing Bank Fees. In addition
to the Standby Letter of Credit Fees and Trade
Letter of Credit Fees payable pursuant to
subsections (i) and (ii) above, the Borrower shall
pay to the Issuing Bank for its own account
without sharing by the other Banks the customary
charges from time to time of the Issuing Bank with
respect to the issuance, amendment, transfer,
administration, cancellation and conversion of,
and drawings under, such Letters of Credit
(collectively, the "Issuing Bank Fees").
2.12 Prepayments.
(a) Voluntary Prepayments. The Borrower shall
have the right to prepay Loans in whole or in part from
time to time without premium or penalty; provided,
however, that (A) Eurodollar Loans and Adjusted CD
Loans may only be prepaid on the last day of an
Interest Period applicable thereto, and (B) each such
partial prepayment shall be a minimum principal amount
of $5,000,000 and integral multiples of $1,000,000 in
excess thereof (or the amount then outstanding, if
less). Amounts prepaid on the Loans may be reborrowed
in accordance with the provisions hereof. If the
Borrower shall fail to specify the manner of
application, prepayments shall be applied first to Base
Rate Loans, then to Eurodollar Loans and Adjusted CD
Loans in direct order of their Interest Period
maturities.
(b) Mandatory Prepayments. If at any time (i)
the sum of Committed Revolving Loans plus Swingline
Loans plus LOC Obligations shall exceed the aggregate
Revolving Committed Amount, (ii) the aggregate amount
of Trade LOC Obligations shall exceed the Trade LOC
Committed Amount, (iii) the aggregate amount of Standby
LOC Obligations shall exceed the Standby LOC Committed
Amount, or (iv) the aggregate amount of the Swingline
Loans shall exceed the Swingline Committed Amount, then
in any such instance the Borrower shall immediately
make payment on the Loans (or in respect of the LOC
Obligations) in an amount equal to the deficiency. In
the case of a mandatory payment required on account of
subsections (ii), (iii) or (iv) the amount required to
be paid hereby shall serve to temporarily reduce the
Revolving Committed Amount (for purposes of borrowing
availability hereunder, but not for purposes of
computation of fees) by the amount of the payment
required until such time as the situation described in
subsection (ii), (iii) or (iv) shall no longer exist.
Payments made hereunder shall be applied to Swingline
Loans, then to Committed Revolving Loans and then to a
cash collateral account in respect of the LOC
Obligations, and with respect to the types of Loans,
first to Base Rate Loans and then to Eurodollar Loans
and Adjusted CD Loans in direct order of their Interest
Period maturities.
(c) Notice. The Borrower will provide notice to
the Administrative Agent of any prepayment by 10:00
a.m. (Charlotte, North Carolina time) on the date of
prepayment.
2.13 Increased Costs, Illegality, etc.
In the event any Bank shall determine (which determination
shall be final and conclusive and binding on all the parties
hereto absent manifest error) that:
(i) Unavailability. On any date for determining
the appropriate Adjusted Eurodollar Rate or Adjusted CD
Rate for any Interest Period, that by reason of any
changes arising on or after the date of this Credit
Agreement affecting the interbank Eurodollar market or
the certificate of deposit market, dollar deposits in
the principal amount requested are not generally
available in the interbank Eurodollar Market, in the
case of Eurodollar Loans, or quotes for determination
of the Adjusted CD Rate are unavailable, in the case of
Adjusted CD Loans, or adequate and fair means do not
exist for ascertaining the applicable interest rate on
the basis provided for in the definition of Adjusted
Eurodollar Rate or Adjusted CD Rate, respectively; then
Eurodollar Loans or Adjusted CD Loans, as appropriate,
will no longer be available, and request for a
Eurodollar Loan or Adjusted CD Loans shall be deemed
requests for Base Rate Loans, until such time as such
Bank shall notify the Borrower that the circumstances
giving rise thereto no longer exist.
(ii) Increased Costs. At any time that such Bank
shall incur increased costs or reductions in the
amounts received or receivable hereunder with respect
to any Eurodollar Loans or Adjusted CD Loans because of
(x) any change since the date of this Credit Agreement
in any applicable law, governmental rule, regulation,
guideline or order (or in the interpretation or
administration thereof and including the introduction
of any new law or governmental rule, regulation,
guideline or order) including without limitation the
imposition, modification or deemed applicability of any
reserves, deposits or similar requirements as related
to Eurodollar Loans or Adjusted CD Loans (such as, for
example, but not limited to, a change in official
reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent
included in the computation of the Adjusted Eurodollar
Rate or Adjusted CD Rate, as appropriate) and/or (y)
other circumstances affecting such Bank, the
certificate of deposit market, the interbank Eurodollar
market or the position of such Bank in such market;
then the Borrower shall pay to such Bank promptly upon
written demand therefor, such additional amounts (in
the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Bank may
determine in its sole discretion) as may be required to
compensate such Bank for such increased costs or
reductions in amounts receivable hereunder (written
notice as to the additional amounts owed to such Bank,
showing the basis for calculation thereof, shall,
absent manifest error, be final and conclusive and
binding on all parties hereto; provided, however, that
such determinations are made on a reasonable basis).
(iii) Illegality. At any time, that the making
or continuance of any Eurodollar Loan has become
unlawful by compliance by such Bank in good faith with
any law, governmental rule, regulation, guideline or
order (or would conflict with any such governmental
rule, regulation, guideline or order not having the
force of law even though the failure to comply
therewith would not be unlawful), or has become
impractical as a result of a contingency occurring
after the date of this Credit Agreement which
materially and adversely affects the interbank
Eurodollar market; then Eurodollar Loans will no longer
be available, requests for Eurodollar Loans shall be
deemed requests for Base Rate Loans and the Borrower
may, and upon direction of the Bank, shall, as promptly
as possible and, in any event within the time period
required by law, have any such Eurodollar Loans then
outstanding converted into Base Rate Loans.
2.14 Capital Adequacy.
If after the date hereof, any Bank or any parent company of
a Bank (a "Parent Company") has determined that the adoption or
effectiveness of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such
Bank or Parent Company with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Bank's or
Parent Company's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which
such Bank or Parent Company could have achieved but for such
adoption, effectiveness, change or compliance (taking into
consideration such Bank's or Parent Company's policies with
respect to capital adequacy), then from time to time, within 15
days after demand by such Bank, the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such
Bank for such reduction. Upon determining in good faith that any
additional amounts will be payable pursuant to this Section, such
Bank will give prompt written notice thereof to the Borrower,
which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice
shall not release or diminish any of the Borrower's obligations
to pay additional amounts pursuant to this Section.
Determination by any such Bank of amounts owing under this
Section shall, absent manifest error, be final and conclusive and
binding on the parties hereto; provided, however, that such
determinations are made on a reasonable basis. Failure on the
part of any Bank to demand compensation for any period hereunder
shall not constitute a waiver of such Bank's rights to demand any
such compensation in such period or in any other period.
2.15 Compensation.
The Borrower shall compensate each Bank, upon its written
request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or
liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by the Bank to fund its
Eurodollar Loans or Adjusted CD Loans) which such Bank may
sustain:
(i) if for any reason (other than a default by
such Bank or the Administrative Agent) a borrowing of
Eurodollar Loans or Adjusted CD Loans does not occur on
a date specified therefor in a Notice of Borrowing or
Notice of Conversion;
(ii) if any repayment or conversion of any
Eurodollar Loan or Adjusted CD Loan occurs on a date
which is not the last day of an Interest Period
applicable thereto including without limitation in
connection with any demand, acceleration or otherwise;
(iii) if any prepayment of any Eurodollar Loan or
Adjusted CD Loan is not made on any date specified in a
notice of prepayment given by the Borrower; or
(iv) as a consequence of (x) any other default by
the Borrower to repay its Loans when required by the
terms of this Credit Agreement or (y) an election made
pursuant to this Section.
Calculation of all amounts payable to a Bank under this Section
shall be made as though the Bank has actually funded its relevant
Eurodollar Loan or Adjusted CD Loan through the purchase of a
Eurodollar deposit bearing interest at the Eurodollar Rate or a
certificate of deposit bearing interest at the Adjusted CD Rate,
as appropriate, in an amount equal to the amount of that Loan,
having a maturity comparable to the relevant Interest Period and
in the case of Eurodollar Loans, through the transfer of such
Eurodollar deposit from an offshore office of that Bank to a
domestic office of that Bank in the United States of America;
provided, however, that each Bank may fund each of its Eurodollar
Loans in any manner it sees fit and the foregoing assumption
shall be utilized only for the calculation of amounts payable
under this Section.
2.16 Net Payments.
All payments made by the Borrower hereunder will be made
without setoff or counterclaim. Promptly upon notice from any
Bank to the Borrower, the Borrower will pay, prior to the date on
which penalties attach thereto, all present and future income,
stamp and other taxes, levies, or costs and charges whatsoever
imposed, assessed, levied or collected on or in respect of a Loan
solely as a result of the interest rate being determined by
reference to the Adjusted Eurodollar Rate or Adjusted CD Rate, as
appropriate, and/or the provisions of this Credit Agreement
relating to the Adjusted Eurodollar Rate or Adjusted CD Rate, as
appropriate, and/or the recording, registration, notarization or
other formalization of any thereof and/or any payments of
principal, interest or other amounts made on or in respect of a
Loan when the interest rate is determined by reference to the
Adjusted Eurodollar Rate or Adjusted CD Rate (all such taxes,
levies, costs and charges being herein collectively call
"Taxes"), provided that Taxes shall not include taxes imposed on
or measured by the overall net income of such Bank by the United
States of America or any political subdivision or taxing
authority thereof or therein, or taxes on or measured by the
overall net income of any foreign office, branch or Subsidiary of
such Bank by any foreign country of subdivision thereof in which
that office, branch or Subsidiary is doing business. The
Borrower shall also pay such additional amounts equal to
increases in taxes payable by such Bank described in the
foregoing proviso which increases are attributable to payments
made by the Borrower described in the immediately preceding
sentence of this Section. Promptly after the date on which
payment of any such Tax is due pursuant to applicable law, the
Borrower will at the request of such Bank, furnish to such Bank
evidence, in form and substance satisfactory to such Bank, that
the Borrower has met its obligations under this Section. The
Borrower will indemnify such Bank against, and reimburse such
Bank on demand for, any Taxes, as determined by such Bank in its
good faith discretion. Such Bank shall provide the Borrower with
appropriate receipts for any payments or reimbursements made by
the Borrower pursuant to this Section.
2.17 Indemnification; Nature of Issuing Bank's Duties.
(a) In addition to its other obligations under
Sections 2.07, the Borrower hereby agrees to protect,
indemnify, pay and save each Issuing Bank harmless from
and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Bank may
incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit
or (B) the failure of the Issuing Bank to honor a
drawing under a Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or
governmental authority (all such acts or omissions,
herein called "Government Acts").
(b) As between the Borrower and the Issuing Bank,
the Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the
beneficiary thereof. The Issuing Bank shall not be
responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the
application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective
for any reason; (iii) for failure of the beneficiary of
a Letter of Credit to comply fully with conditions
required in order to draw upon a Letter of Credit; (iv)
for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not
they be in cipher; (v) for errors in interpretation of
technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (vii) for any consequences
arising from causes beyond the control of the Issuing
Bank, including, without limitation, any Government
Acts. None of the above shall affect, impair, or
prevent the vesting of the Issuing Bank's rights or
powers hereunder.
(c) In furtherance and extension and not in
limitation of the specific provisions hereinabove set
forth, any action taken or omitted by the Issuing Bank,
under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good
faith, shall not put such Issuing Bank under any
resulting liability to the Borrower. It is the
intention of the parties that this Credit Agreement
shall be construed and applied to protect and indemnify
the Issuing Bank against any and all risks involved in
the issuance of the Letters of Credit, all of which
risks are hereby assumed by the Borrower, including,
without limitation, any and all risks of the acts or
omissions, whether rightful or wrongful, of any present
or future Government Acts. The Issuing Bank shall not,
in any way, be liable for any failure by the Issuing
Bank or anyone else to pay any drawing under any Letter
of Credit as a result of any Government Acts or any
other cause beyond the control of the Issuing Bank.
(d) Nothing in this Section 2.17 is intended to
limit the reimbursement obligation of the Borrower
contained in Section 2.07(d) hereof. The obligations
of the Borrower under this Section 2.17 shall survive
the termination of this Credit Agreement. No act or
omissions of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the
rights of the Issuing Bank to enforce any right, power
or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary
contained in this Section 2.17, the Borrower shall have
no obligation to indemnify any Issuing Bank in respect
of any liability incurred by such Issuing Bank arising
solely out of the gross negligence or willful
misconduct of the Issuing Bank, as determined by a
court of competent jurisdiction.
2.18 Change of Lending Office.
(a) Each Bank agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.13(ii) or (iii) or
2.16, it will, if requested by the Borrower, use reasonable
efforts (subject to overall policy considerations of such Bank)
to designate another lending office for any Loans affected by
such event, provided that such designation is made on such terms
that such Bank and its lending office suffer no economic, legal
or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of any such
Section. Except in the case of a change of lending office made
at the request of the Borrower, no change in lending office will
be made if greater costs and expenses would result under Section
2.13(ii) or (iii) or 2.16 on account of any such change in
designation. Nothing in this Section shall affect or postpone
any of the obligations of the Borrower or the right of any Bank
provided in Section 2.13, 2.14 or 2.16.
(b) In the event that any Bank shall request compensation
under Sections 2.13, 2.14 or 2.16, the Borrower may, so long as
no Default or Event of Default then exists, upon three (3)
Business Days' prior written notice to such Bank (with a copy to
the Administrative Agent), repay or otherwise satisfy such Bank's
share of Obligations (including cash collateralization of such
Bank's share of LOC Obligations then outstanding) and cancel such
Bank's Commitment hereunder; provided, however, the Borrower
shall have the right to seek a substitute bank or financial
institution reasonably acceptable to the Administrative Agent
(which may be one or more of the Banks) to purchase at par such
Bank's share of the Obligations hereunder and to assume the
Bank's Commitment hereunder by way of assignment pursuant to the
provisions and requirements of Section 10.03.
2.19 Payments and Computations.
Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Administrative Agent in
U.S. dollars in immediately available funds at its offices at
NationsBank Corporate Center, Charlotte, North Carolina not later
than 2:00 p.m. (Charlotte, North Carolina time) on the date when
due. Payments received after such time shall be deemed to have
been received on the next succeeding Business Day. The
Administrative Agent may (but shall not be obligated to) debit
the amount of any such payment which is not made by such time to
any ordinary deposit account of the Borrower maintained with the
Administrative Agent (with notice to the Borrower). The Borrower
shall, at the time it makes any payment under this Credit
Agreement, specify to the Administrative Agent the Loans, LOC
Obligations, Fees or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the
event that it fails so to specify, or if such application would
be inconsistent with the terms hereof, the Administrative Agent
shall distribute such payment to the Banks in such manner as the
Administrative Agent may determine to be appropriate in respect
of obligations owing by the Borrower hereunder, subject to the
terms of Section 2.20). The Administrative Agent will thereafter
cause to be distributed promptly like funds relating to the
payment of principal, reimbursement of drawings under Letters of
Credit, or interest or fees ratably to the Banks entitled to
receive such payments in accordance with the terms of this Credit
Agreement. Whenever any payment hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day (subject to
accrual of interest and Fees for the period of such extension),
except that in the case of Eurodollar Loans, if the extension
would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next
preceding Business Day. Except as expressly provided otherwise
herein, all computations of interest and fees shall be made on
the basis of actual number of days elapsed over a year of 360
days. Interest shall accrue from and include the date of
advance, but exclude the date of payment.
2.20 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Committed Revolving Loans. Each Committed
Revolving Loan (including without limitation each
Mandatory Borrowing), each payment or prepayment of
principal of any Committed Revolving Loan, each payment
of interest on the Committed Revolving Loans, each
payment of Commitment Fees or Letter of Credit Fees
(except for the portion retained by the Issuing Bank
for its own account), each reduction of the Revolving
Committed Amount, and each conversion or continuation
of any Committed Revolving Loan, shall be allocated pro
rata among the relevant Banks in accordance with the
respective applicable Revolving Loan Commitments (or,
if the Commitments of such Banks have expired or been
terminated, in accordance with the principal amounts of
the outstanding Committed Revolving Loans and
Participation Interests of such Banks); and
(b) Letters of Credit. Each payment of
unreimbursed drawings in respect of LOC Obligations
shall be allocated to each Bank entitled thereto pro
rata in accordance with the respective applicable
Revolving Loan Commitments; provided that, if any Bank
shall have failed to pay its applicable pro rata share
of any drawing under any Letter of Credit, then any
amount to which such Bank would otherwise be entitled
pursuant to this subsection (b) shall instead be
payable to the Issuing Bank; provided further, that in
the event any amount paid to any Bank pursuant to this
subsection (b) is rescinded or must otherwise be
returned by the Issuing Bank, each Bank shall, upon the
request of the Issuing Bank, repay to the
Administrative Agent for the account of the Issuing
Bank the amount so paid to such Bank, with interest for
the period commencing on the date such payment is
returned by the Issuing Bank until the date the Issuing
Bank receives such repayment at a rate per annum equal
to, during the period to but excluding the date two (2)
Business Days after such request, the Federal Funds
Effective Rate, and thereafter, the Base Rate plus two
percent (2%).
2.21 Set-Off; Sharing of Payments.
(a) The Borrower agrees that, in addition to (and
without limitation of) any right of set-off, bankers'
lien or counterclaim a Bank may otherwise have, each
Bank shall be entitled, at its option, to offset
balances held by it for the account of the Borrower at
any of the offices of such Bank, in Dollars or in any
other currency, against any principal of or interest on
any Loan, any unreimbursed drawing or cash collateral
required in respect of any LOC Obligation, any Fees or
any other amounts, payable by the Borrower to such Bank
hereunder and which is not paid when due (regardless of
whether such balances are then due to the Borrower), in
which case it shall promptly notify the Borrower and
the Administrative Agent thereof (provided that such
Bank's failure to give such notice shall not affect the
validity thereof).
(b) The Banks agree among themselves that, in the
event that any Bank shall obtain payment in respect of
any Loan or unreimbursed drawing or obligation to
provide cash collateral with respect to any LOC
Obligations owing to such Bank under this Credit
Agreement through the exercise of a right of set-off,
banker's lien, counterclaim or otherwise in excess of
its pro rata share as provided for in this Credit
Agreement, such Bank shall promptly purchase from the
other Banks a participation in such Loans, LOC
Obligations and other obligations in such amounts, and
make such other adjustments from time to time, as shall
be equitable to the end that all Banks share such
payment in accordance with their respective ratable
shares as provided for in this Credit Agreement. The
Banks further agree among themselves that if payment to
a Bank obtained by such Bank through the exercise of a
right of set-off, banker's lien, counterclaim or
otherwise as aforesaid shall be rescinded or must
otherwise be restored, each Bank which shall have
shared the benefit of such payment shall, by repurchase
of a participation theretofore sold, return its share
of that benefit to each Bank whose payment shall have
been rescinded or otherwise restored. The Borrower and
each other Credit Party agrees that any Bank so
purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of
payment, including set-off, banker's lien or
counterclaim, with respect to such participation as
fully as if such Bank were a holder of such Loan, LOC
Obligation or other obligation in the amount of such
participation. Except as otherwise expressly provided
in this Credit Agreement, if any Bank or the
Administrative Agent shall fail to remit to the
Administrative Agent or any other Bank an amount
payable by such Bank or the Administrative Agent to the
Administrative Agent or such other Bank pursuant to
this Credit Agreement on the date when such amount is
due, such payments shall be made together with interest
thereon for each date from the date such amount is due
until the date such amount is paid to the
Administrative Agent or such other Bank at a rate per
annum equal to the Federal Funds Effective Rate.
2.22 Determination as a Highly Leveraged Transaction.
The Borrower recognizes that laws, rules, regulations or
guidelines of Governmental Authorities now or hereafter
applicable may require the Administrative Agent to determine
whether the transactions contemplated hereby should be classified
as "highly leveraged" or assigned any equivalent or successor
classification, and that such determination (hereinafter a
"Reclassification") may be binding upon all the Banks. The
Borrower understands that any such determination may be made by
the Administrative Agent based upon such factors (which may
include, without limitation, the Administrative Agent's internal
policies and prevailing market practices) as the Administrative
Agent shall deem relevant and agrees that neither the
Administrative Agent nor any of the Banks shall have any
liability for the consequences of any such Reclassification. The
Borrower further acknowledges and agrees that, upon a
Reclassification by the Administrative Agent, then,
notwithstanding any other provision of this Agreement to the
contrary, then automatically, (a) on and after the date of such
Reclassification and until the circumstances giving rise to such
Reclassification no longer exist, (i) the Applicable Percentage
for Eurodollar Loans shall be three percent (3%), (ii) the
Applicable Percentage for Adjusted CD Loans shall be three
percent (3%), (iii) the Applicable Percentage for Base Rate Loans
shall be one and one-half percent (1-1/2%), (iv) the Applicable
Percentage for Fed Funds Swingline Loans shall be three percent
(3%), (v) the Standby Letter of Credit Fee shall be increased to
a rate of three percent (3%) per annum and the Trade Letter of
Credit Fee shall be increased to a rate of one and one-fourth
percent (1-1/4%) per annum and (b) on or before the date ninety
(90) days following the date of such Reclassification, the
Borrower shall pay to the Administrative Agent for the ratable
benefit of the Banks in immediately available funds a fee (the
"Reclassification Fee") equal to 1% of the Revolving Committed
Amount as of the date of such Reclassification.
The Administrative Agent and the Banks hereby acknowledge
and agree that, based solely on circumstances existing as of the
Closing Date, the transactions contemplated by this Agreement do
not require a Reclassification as of such date.
SECTION 3
GUARANTEE
3.01 The Guarantee.
Each of the Credit Parties hereby jointly and severally
guarantees to each Bank, the Administrative Agent and the Issuing
Bank as hereinafter provided the prompt payment of the Credit
Party Obligations in full when due (whether at stated maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the
terms thereof. The Credit Parties hereby further agree that if
any of the Credit Party Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or
otherwise), the Credit Parties will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or
renewal of any of the Credit Party Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as
a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of
such extension or renewal.
3.02 Obligations Unconditional.
The obligations of the Credit Parties under Section 3.01
hereof are joint and several, absolute and unconditional,
irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents, or any other
agreement or instrument referred to therein, or any substitution,
release or exchange of any other guarantee of or security for any
of the Credit Party Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal
or equitable discharge or defense of a surety or guarantor, it
being the intent of this Section 3.02 that the obligations of the
Credit Parties hereunder shall be absolute and unconditional
under any and all circumstances. Without limiting the generality
of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not alter or impair the liability of
any Credit Party hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to
any Credit Party, the time for any performance of or
compliance with any of the Credit Party Obligations
shall be extended, or such performance or compliance
shall be waived;
(ii) any of the acts mentioned in any of the provisions
of any of the Credit Documents or any other agreement
or instrument referred therein shall be done or
omitted;
(iii) the maturity of any of the Credit Party
Obligations shall be accelerated, or any of the Credit
Party Obligations shall be modified, supplemented or
amended in any respect, or any right under any of the
Credit Documents or any other agreement or instrument
referred to therein shall be waived or any other
guarantee of any of the Credit Party Obligations or any
security therefor shall be released or exchanged in
whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the
Administrative Agent or any Bank or Banks as security
for any of the Credit Party Obligations shall fail to
attach or be perfected; or
(v) any of the Credit Party Obligations shall be
determined to be void or voidable (including, without
limitation, for the benefit of any creditor of any
Credit Party) or shall be subordinated to the claims of
any Person (including, without limitation, any creditor
of any Credit Party).
With respect to its obligations hereunder, each Credit Party
hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement
that the Administrative Agent or any Bank exhaust any right,
power or remedy or proceed against any Person under any of the
Credit Documents or any other agreement or instrument referred to
therein, or against any other Person under any other guarantee
of, or security for, any of the Credit Party Obligations.
3.03 Reinstatement.
The obligations of the Credit Parties under this Section 3
shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Person in respect
of the Credit Party Obligations is rescinded or must be otherwise
restored by any holder of any of the Credit Party Obligations,
whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Credit Party agrees that it
will indemnify each of the Administrative Agent and each Bank on
demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Administrative Agent
or such Bank in connection with such rescission or restoration,
including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
3.04 Certain Additional Waivers.
Without limiting the generality of the provisions of any
other Section of this Section 3, each Credit Party hereby
specifically waives the benefits of the Code of Virginia Sections
49-25 and 49-26, inclusive. Each Credit Party further agrees
that such Guarantor shall have no right of recourse to security
for the Credit Party Obligations. In addition, each Credit Party
hereby waives and renounces any and all rights it has or may have
for subrogation, indemnity, reimbursement or contribution against
the Borrower for amounts paid by such Credit Party pursuant to
Section 3.01. This waiver is expressly intended to prevent the
existence of any claim in respect to such reimbursement by any
Credit Party against the estate of the Borrower within the
meaning of Section 101 of the Bankruptcy Code, and to prevent any
Credit Party from constituting a creditor of the Borrower in
respect of such reimbursement within the meaning of Section
547(b) of the Bankruptcy Code in the event of a subsequent case
involving the Borrower.
3.05 Remedies.
The Guarantors agree that, as between the Credit Parties, on
the one hand, and the Administrative Agent and the Banks, on the
other hand, the Credit Party Obligations may be declared to be
forthwith due and payable as provided in Section 8.02 hereof (and
shall be deemed to have become automatically due and payable in
the circumstances provided in said Section 8.02) for purposes of
Section 3.01 hereof notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing such
Credit Party Obligations from becoming automatically due and
payable) as against any other Person and that, in the event of
such declaration (or such Credit Party Obligations being deemed
to have become automatically due and payable), such Credit Party
Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Credit Parties for
purposes of said Section 3.01.
3.06 Continuing Guarantee.
The guarantee in this Section 3 is a continuing guarantee,
and shall apply to all Credit Party Obligations whenever arising.
3.07 Limitation of Guarantee.
The liability of each Credit Party (other than the Borrower
whose liability under this guarantee shall not be limited) with
respect to the Credit Party Obligations guaranteed hereunder
shall not exceed the Maximum Guaranteed Amount as determined at
the earlier of the date of commencement of a case under the
Bankruptcy Code in which the Credit Party is a debtor or the date
enforcement is sought under this Section 3.
SECTION 4
CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT
4.01 Conditions to Closing.
The closing of the credit facility is subject to
satisfaction of the following conditions in form and substance
acceptable to the Administrative Agent and the Required Banks:
(a) Executed Credit Documents. Receipt by the
Administrative Agent of executed copies of this Credit
Agreement, the Notes, the Master Trade LOC Agreement and the
other Credit Documents (in sufficient numbers to provide a
fully executed original of each, to each Bank).
(b) Fees. Payment to the Administrative Agent of the
portion of the Upfront Fees and other fees, if any, payable
on the Closing Date.
4.02 Conditions to Initial Extensions of Credit.
The obligation of the Banks to make the initial Extensions
of Credit hereunder, is subject, at the time of the making of
such Extension of Credit, to satisfaction of the following
conditions in form and substance acceptable to the Administrative
Agent and the Required Banks:
(a) No Default; Representations and Warranties. Both
at the time of the making of such Loan or issuance of such
Letter of Credit and after giving effect thereto (i) there
shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein or in the
other Credit Documents then in effect shall be true and
correct in all material respects.
(b) Opinion of Counsel. Receipt by the Administrative
Agent of an opinion, or opinions, in form and substance
satisfactory to the Required Banks, addressed to the
Administrative Agent and the Banks and dated as of the
Closing Date from Hunton & Williams, counsel to the Borrower
and the Guarantors (in sufficient numbers to provide a fully
executed original to each Bank).
(c) Corporate Documents. Receipt by the
Administrative Agent of the following:
(i) Articles of Incorporation.
Copies of the articles of incorporation or charter
documents of the Borrower and the Guarantors
certified to be true and complete as of a recent
date by the appropriate governmental authority of
the state of its incorporation.
(ii) Resolutions. Copies of
resolutions of the Board of Directors of the
Borrower and the Guarantors approving and adopting
the Credit Documents, the transactions
contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or
assistant secretary as of the Closing Date to be
true and correct and in force and effect as of
such date.
(iii) Bylaws. A copy of the
bylaws of the Borrower and the Guarantors
certified by a secretary or assistant secretary as
of the Closing Date to be true and correct and in
force and effect as of such date.
(iv) Good Standing. Copies of (i)
certificates of good standing, existence or its
equivalent with respect to the Borrower and the
Guarantors certified as of a recent date by the
appropriate governmental authorities of the state
of incorporation and each other state in which the
failure to so qualify and be in good standing
would have a material adverse effect on the
business or operations of the Borrower or
Guarantor in such state and (ii) a certificate
indicating payment of all corporate franchise
taxes certified as of a recent date by the
appropriate governmental taxing authorities.
(d) Issuance of the 1997 Senior Notes. Receipt by the
Administrative Agent and the Banks of certified copies of
the form of the 1997 Senior Notes and the indenture or other
governing instrument pursuant to which such 1997 Senior
Notes shall have been issued, the form and substance of
which shall be acceptable to the Administrative Agent and
the Banks in their discretion, together with evidence of
receipt by the Borrower of gross proceeds of at least
$75,000,000 from the issuance of the Senior Notes.
(e) Termination of Existing Credit Facility. Evidence
of repayment of, and termination of the commitments under,
the credit facility established pursuant to that Credit
Agreement dated as of March 8, 1995 among the Borrower, the
other Credit Parties thereto, the banks and financial
institutions thereto, CoreStates Bank, N.A. and First Union
National Bank of Virginia, as co-agents, and NationsBank,
N.A. (Carolinas), as administrative agent, as amended and
modified.
SECTION 5
REPRESENTATIONS AND WARRANTIES
Each Credit Party hereby represents and warrants to each
Bank that:
5.01 Organization and Good Standing.
Each of the Borrower and its Restricted Subsidiaries is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of its incorporation, is
duly qualified and in good standing as a foreign corporation
authorized to do business in every jurisdiction where the failure
to so qualify would have a Material Adverse Effect, and has the
requisite corporate power and authority to own its properties and
to carry on its business as now conducted and as proposed to be
conducted.
5.02 Due Authorization.
Each Credit Party (i) has the requisite corporate power and
authority to execute, deliver and perform this Credit Agreement
and the other Credit Documents to which it is a party and to
incur the obligations herein and therein provided for, and (ii)
is duly authorized to, and has been authorized by all necessary
corporate action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.
5.03 No Conflicts.
With respect to each of the Credit Parties, neither the
execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor
performance of and compliance with the terms and provisions
thereof will (i) violate or conflict with any provision of its
articles of incorporation or bylaws, (ii) violate, contravene or
materially conflict with any law, regulation (including without
limitation Regulation U or Regulation X), order, writ, judgment,
injunction, decree or permit applicable to it, (iii) violate,
contravene or materially conflict with contractual provisions of,
or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement
or instrument to which it is a party or by which it may be bound,
(iv) result in or require the creation of any lien, security
interest or other charge or encumbrance (other than those
contemplated in or in connection with the Credit Documents) upon
or with respect its properties, the violation of which would or
might have a Material Adverse Effect.
5.04 Consents.
No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental
authority or third party in respect of any Credit Party is
required in connection with the execution, delivery or
performance of this Credit Agreement or any of the other Credit
Documents.
5.05 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have
been duly executed and delivered and constitute legal, valid and
binding obligations of each Credit Party enforceable in
accordance with their respective terms, except as may be limited
by bankruptcy or insolvency laws or similar laws affecting
creditors' rights generally.
5.06 Financial Condition.
The financial statements and financial information provided
to the Banks, consisting of, among other things, (i) an audited
consolidated balance sheet of the Borrower and its Subsidiaries
dated as of December 28, 1996, together with related consolidated
statements of income, stockholders' equity and changes in
financial position or cash flow certified by Price Waterhouse,
certified public accountants, and (ii) a company-prepared
consolidated and consolidating balance sheet of the Borrower and
its Subsidiaries dated as of December 28, 1996, together with
related consolidated and consolidating statements of income,
stockholders' equity and changes in financial position or cash
flow, are true and correct and fairly represent the financial
condition of the Borrower and its Subsidiaries as of such
respective dates; such financial statements were prepared in
accordance with generally accepted accounting principles applied
on a consistent basis (except as noted therein); and since the
date of such financial statements there have occurred no changes
or circumstances which have had or are likely to have a Material
Adverse Effect.
5.07 No Default.
No Default or Event of Default presently exists.
5.08 Liens.
Except for Permitted Liens, each of the Credit Parties has
good and marketable title to all of its properties and assets
free and clear of all liens, encumbrances, mortgages, pledges,
security interests and other adverse claims of any nature.
5.09 Indebtedness.
The Credit Parties have no Indebtedness (including without
limitation Guaranty, reimbursement or other contingent
obligations) except as disclosed in the financial statements
referenced in Section 5.06 and as set forth in Schedule 5.09.
5.10 Litigation.
Except as disclosed in Schedule 5.10 , there are no actions,
suits or legal, equitable, arbitration or administrative
proceedings, pending or, to the knowledge of the Borrower
threatened, against the Borrower or any of its Restricted
Subsidiaries which, if adversely determined, would likely have a
Material Adverse Effect. For purposes hereof, in the case of
proceedings involving only monetary damages, $5,000,000 or more
shall be considered as having a Material Adverse Effect. Since
the date of this Credit Agreement (or the date of the most recent
update hereunder), there has been no material adverse change in
the status of any actions, suits, investigations, litigation or
proceedings disclosed hereunder except as disclosed in writing to
the Banks prior to or upon reaffirmation of this provision as
provided herein.
5.11 Material Agreements.
None of the Credit Parties is in default in any material
respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other material agreement or
obligation to which it is a party or by which any of its
properties is bound which default would have a Material Adverse
Effect.
5.12 Taxes.
Each of the Credit Parties has filed, or caused to be filed,
all material tax returns (federal, state, local and foreign)
required to be filed and paid all amounts of taxes shown thereon
to be due (including interest and penalties) and has paid all
other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing (or necessary to preserve any liens in
favor of the Banks), by it, except for such taxes (i) which are
not yet delinquent or (ii) as are being contested in good faith
and by proper proceedings, and against which adequate reserves
are being maintained in accordance with generally accepted
accounting principles, but only so long as there is no liability
or risk of loss, sale or forfeiture of any collateral pledged to
the Banks. None of the Credit Parties is aware of any proposed
material tax assessments against it or any of members of the
Consolidated Borrower Group.
5.13 Compliance with Law.
Each of the Credit Parties is in substantial compliance with
all laws, rules, regulations, orders and decrees (including
without limitation environmental laws) applicable to it, or to
its properties.
5.14 ERISA.
(i) No Reportable Event (as defined in ERISA) has occurred
and is continuing with respect to any Plan; (ii) no Plan has an
unfunded current liability (determined under Section 412 of the
Code) or an accumulated funding deficiency, (iii) no proceedings
have been instituted, or, to the knowledge of the Borrower,
planned, to terminate any Plan, (iv) neither the Borrower, any
Subsidiary, any member of a Controlled Group, nor any duly-
appointed administrator of a Plan has instituted or intends to
institute proceedings to withdraw from any Multi-Employer Pension
Plan (as defined in Section 3(37) or ERISA); and (v) each Plan
has been maintained and funded in all material respects with its
terms and with the provisions of ERISA applicable thereto.
5.15 Subsidiaries.
Set forth in Schedule 5.15 is a complete and accurate list
of all Affiliates and Subsidiaries of each of the Credit Parties.
Information on the attached Schedule includes state of
incorporation; the number of shares of each class of capital
stock or other equity interests outstanding; the number and
percentage of outstanding shares of each class owned (directly or
indirectly) by the Borrower, Subsidiary or Affiliate; and the
number and effect, if exercised, of all outstanding options,
warrants, rights of conversion or purchase and similar rights.
The outstanding capital stock and other equity interests of all
such Subsidiaries is validly issued, fully paid and non-
assessable and is owned by the Borrower, directly or indirectly,
free and clear of all liens, security, interests and other
charges or encumbrances (other than those arising under or
contemplated in connection with the Credit Documents).
5.16 Use of Proceeds; Margin Stock.
The proceeds of the Loans hereunder will be used solely for
the purposes specified in Section 6.10. None of such proceeds
will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U, Regulation X or
Regulation G, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry
"margin stock" or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of
Regulation U, Regulation X or Regulation G. None of the Credit
Parties own "margin stock" except as identified in the financial
statements referred to in Section 5.06 hereof and, as of the date
hereof, the aggregate value of all "margin stock" owned by the
Borrower and its Subsidiaries does not exceed 25% of the value of
all the Borrower's and its Subsidiaries assets.
5.17 Government Regulation.
None of the Credit Parties is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power
Act, the Investment Company Act of 1940 or the Interstate
Commerce Act, each as amended. In addition, none of the Credit
Parties is (i) an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as
amended, and is not controlled by such a company, or (ii) a
"holding company," or a "Subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a
"Subsidiary" or a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended. No
director, executive officer or principal shareholder of any
Credit Party is a director, executive officer or principal
shareholder of any Bank. For purposes hereof, the terms
"director", "executive officer" and "principal shareholder" (when
used with reference to any Bank) shall have the meanings ascribed
to them in Regulation O issued by the Board of Governors of the
Federal Reserve System.
5.18 Hazardous Substances.
Except as disclosed on Schedule 5.18 or except as would not
reasonably be expected to have a Material Adverse Effect, the
real property owned or leased by the Borrower and its
Subsidiaries or on which the Borrower or its Subsidiaries
operates (the "Subject Property") is free from "hazardous
substances" as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601
et seq., as amended, and the regulations promulgated thereunder;
no portion of the Subject Property is subject to federal, state
or local regulation or liability because of the presence of
stored, leaked or spilled petroleum products, waste materials or
debris, "PCB's" or PCB items (as defined in 40 C.F.R. 763.3),
underground storage tanks, "asbestos" (as defined in 40 C.F.R.
763.63) or the past or present accumulation, spillage or leakage
of any such substance; and the Borrower and its Subsidiaries are
in substantial compliance with all federal, state and local
requirements relating to protection of health or the environment
in connection with the operation of their businesses; and the
Credit Parties know of no complaint or investigation regarding
real property which it or any other Credit Party owns or leases
or on which it or any other Credit Party operates.
5.19 Patents, Franchises, etc.
Each of the Credit Parties possesses all material patents,
trademarks, service marks, trade names, copyrights, licenses and
other rights, free from burdensome restrictions, that are
necessary for the operation of their respective businesses as
presently conducted and as proposed to be conducted. Each of the
Credit Parties has obtained all material licenses, permits,
franchises or other governmental authorizations necessary to the
ownership of its respective property and to the conduct of its
business.
5.20 Solvency.
The Borrower and each of its Restricted Subsidiaries, both
collectively and individually, is and, after consummation of this
Credit Agreement and after giving effect to all Indebtedness
incurred hereunder, will be, solvent.
5.21 Investments.
All investments of each of the Credit Parties are Permitted
Investments.
SECTION 6
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long
as this Credit Agreement is in effect and until the Loans and LOC
Obligations, together with interest, fees and other obligations
hereunder, have been paid in full and the Commitments hereunder
shall have terminated:
6.01 Information Covenants.
The Credit Parties will furnish, or cause to be furnished,
to the Administrative Agent and each Bank:
(a) Annual Financial Statements. As soon as
available and in any event within 90 days after the
close of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year together
with related consolidated statements of income and
retained earnings and of cash flows for such fiscal
year, setting forth in comparative form consolidated
figures for the preceding fiscal year, all in
reasonable detail and examined by Price Waterhouse, or
other independent certified public accountants of
recognized national standing reasonably acceptable to
the Required Banks and whose opinion shall be to the
effect that such consolidated financial statements have
been prepared in accordance with generally accepted
accounting principles applied on a consistent basis
(except for changes with which such accountants
concur). It is specifically understood and agreed that
failure of the annual financial statements to be
accompanied by an opinion and certificate of such
accountants in form and substance as provided herein
shall constitute a Default hereunder.
(b) Quarterly Financial Statements. As soon as
available and in any event within 45 days after the end
of the first, second and third fiscal quarters of each
fiscal year of the Borrower, a consolidated and
consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly period
together with related consolidated and consolidating
statements of income and retained earnings and of cash
flows for such quarterly period and for the portion of
the fiscal year ending with such period, in each case
setting forth in comparative form consolidated and
consolidating figures for the corresponding period of
the preceding fiscal year, all in reasonable form and
detail acceptable to the Required Banks, and
accompanied by a certificate of the chief financial
officer, treasurer or controller of the Borrower as
being true and correct and as having been prepared in
accordance with generally accepted accounting
principles applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit
adjustments.
(c) Officer's Certificate. At the time of
delivery of the financial statements provided for in
Sections 6.01(a) and (b) hereof, a certificate of the
chief financial officer, treasurer or controller of the
Borrower substantially in the form of Schedule 6.01(c)
to the effect that no Default or Event of Default
exists, or if any Default or Event of Default does
exist specifying the nature and extent thereof and what
action the Borrower proposes to take with respect
thereto. In addition, the Officer's Certificate shall
demonstrate compliance of the financial covenants
contained in Section 6.11 by calculation thereof as of
the end of each such fiscal period.
(d) Accountant's Certificate. Within the period
for delivery of the annual financial statements
provided in Section 6.01(a), a certificate of the
accountants conducting the annual audit stating that
they have reviewed this Credit Agreement and stating
further whether, in the course of their audit, they
have become aware of any Default or Event of Default
(insofar as any such terms or provisions pertain to
accounting matters) and, if any such Default or Event
of Default exists, specifying the nature and extent
thereof.
(e) Auditor's Reports. Promptly upon receipt
thereof, a copy of any other report or "management
letter" submitted by independent accountants to the
Borrower or a Subsidiary in connection with any annual,
interim or special audit of the books of the Borrower
or any of its Subsidiaries.
(f) SEC and Other Reports. Promptly upon
transmission thereof, copies of any filings and
registrations with, and reports to, (i) the Securities
and Exchange Commission, or any successor agency, by
the Borrower or any of its Subsidiaries, and copies of
all financial statements, proxy statements, notices and
reports as the Borrower or its Subsidiaries shall send
to its shareholders or to the holders of any other
Indebtedness (including specifically without
limitation, any Subordinated Debt) in their capacity as
such holders and (ii) the United States Environmental
Protection Agency, or any state or local agency
responsible for environmental matters, the United
States Occupational Health and Safety Administration,
or any state or local agency responsible for health and
safety matters, or any successor agencies or
authorities concerning environmental, health or safety
matters.
(g) Other Information. With reasonable
promptness upon any such request, such other
information regarding the business, properties or
financial condition of the Borrower and its
Subsidiaries as the Administrative Agent or the
Required Banks may reasonably request.
(h) Notice of Default or Litigation. Upon any
Credit Party obtaining knowledge thereof, it will give
written notice to the Administrative Agent (i)
immediately, of the occurrence of an event or condition
consisting of a Default or Event of Default, specifying
the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and
(ii) promptly, but in any event within 5 Business Days,
of the occurrence of any of the following with respect
to any member of the Consolidated Borrower Group: (A)
the pendency or commencement of any litigation,
arbitral or governmental proceeding against any member
of the Consolidated Borrower Group which if adversely
determined is likely to have a Material Adverse Effect,
(B) any levy of an attachment, execution or other
process against its assets having a value of $500,000
or more, (C) the occurrence of an event or condition
which shall constitute a default or event of default
under any Indebtedness of any member of the
Consolidated Borrower Group, (D) any development in its
business or affairs which has resulted in, or which any
Credit Party reasonably believes may result in, a
Material Adverse Effect, or (E) the institution of any
proceedings against any member of the Consolidated
Borrower Group with respect to, or the receipt of
notice by such Person of potential liability or
responsibility for violation, or alleged violation of
any federal, state or local law, rule or regulation,
including but not limited to, regulations promulgated
under the Resource Conservation and Recovery Act of
1976, 42 U.S.C. 6901 et seq., regulating the
generation, handling or disposal of any toxic or
hazardous waste or substance or the release into the
environment or storage of any toxic or hazardous waste
or substance, the violation of which would likely have
a Material Adverse Effect, or (F) any notice or
determination concerning the imposition of any
withdrawal liability by a multiemployer Plan against
any member of the Consolidated Borrower Group or any of
its ERISA Affiliates, the determination that a
multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV or ERISA,
the termination of any Plan, and the amount of
liability incurred or which may be incurred in
connection with any such event.
6.02 Preservation of Existence and Franchises.
Except as otherwise permitted under Section 7.04, each
member of the Consolidated Borrower Group will do all things
necessary to preserve and keep in full force and effect its
existence, rights, franchises and authority.
6.03 Books, Records and Inspections.
Each member of the Consolidated Borrower Group will keep
complete and accurate books and records of its transactions in
accordance with good accounting practices on the basis of
generally accepted accounting principles applied on a consistent
basis (including the establishment and maintenance of appropriate
reserves). Each member of the Consolidated Borrower Group will
permit on reasonable notice officers or designated
representatives of the Administrative Agent and the Banks to
visit and inspect its books of account and records and any of its
properties or assets (in whomever's possession) and to discuss
the affairs, finances and accounts of such member of the
Consolidated Borrower Group with, and be advised as to the same
by, its and their officers, directors and independent
accountants.
6.04 Compliance with Law.
Each member of the Consolidated Borrower Group will comply
with all applicable laws, rules, regulations and orders of, and
all applicable restrictions imposed by all applicable
Governmental Authorities applicable to it and its property
(including applicable statutes, regulations, orders and
restrictions relating to environmental standards and controls) if
noncompliance with any such law, rule, regulation or restriction
would have a Material Adverse Effect.
6.05 Payment of Taxes and Other Indebtedness.
Each member of the Consolidated Borrower Group will pay and
discharge (i) all taxes, assessments and governmental charges or
levies imposed upon it, or upon its income or profits, or upon
any of its properties, before they shall become delinquent,
(ii) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien or charge
upon any of its properties, and (iii) except as prohibited
hereunder, all of its other Indebtedness as it shall become due;
provided, however, that members of the Consolidated Borrower
Group shall not be required to pay any such tax, assessment,
charge, levy, claim or Indebtedness which is being contested in
good faith by appropriate proceedings and as to which adequate
reserves therefor have been established in accordance with
generally accepted accounting principles, unless the failure to
make any such payment (a) shall give rise to an immediate right
to foreclosure on a Lien securing such amounts or (b) otherwise
would have a Material Adverse Effect.
6.06 Insurance.
Each member of the Consolidated Borrower Group will at all
times maintain in full force and effect insurance (including
worker's compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts,
covering such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal
industry practice unless higher limits or other types of coverage
are required by the terms of the other Credit Documents or are
otherwise reasonably required by the Required Banks. The present
coverage of the members of the Consolidated Borrower Group is
outlined as to carrier, policy number, expiration date, type and
amount on Schedule 6.06 hereto and is acceptable to the
Administrative Agent and the Banks as of the Closing Date.
6.07 Maintenance of Property.
Each member of the Consolidated Borrower Group will maintain
and preserve its properties and equipment used or useful in its
business (in whomsoever's possession as they may be) in good
repair, working order and condition, normal wear and tear
excepted, and will make, or cause to be made, in such properties
and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements
thereto as may be needed or proper, to the extent and in the
manner customary for companies in similar businesses.
6.08 Performance of Obligations.
Each member of the Consolidated Borrower Group will perform
in all material respects all of its obligations (including,
except as may be otherwise prohibited or contemplated hereunder,
payment of Indebtedness in accordance with its terms) under the
terms of all material agreements, indentures, mortgages, security
agreements or other debt instruments to which it is a party or by
which it is bound.
6.09 ERISA.
Each Credit Party and ERISA Affiliate will, (a) at all
times, make prompt payment of all contributions required under
all employee pension benefit plans ("Plans") and required to meet
the minimum funding standard set forth in ERISA with respect to
its Plans; (b) promptly upon request, furnish the Administrative
Agent and the Banks copies of each annual report/return (Form
5500 Series), as well as all schedules and attachments required
to be filed with the Department of Labor and/or the Internal
Revenue Service pursuant to ERISA, and the regulations
promulgated thereunder, in connection with each of its Plans for
each Plan Year; (c) notify the Administrative Agent immediately
of any fact, including, but not limited to, any Reportable Event
(as defined in ERISA) arising in connection with any of its
Plans, which might constitute grounds for termination thereof by
the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan, together
with a statement, if requested by the Bank, as to the reason
therefor and the action, if any, proposed to be taken with
respect thereof; and (d) furnish to the Administrative Agent,
upon its request, such additional information concerning any of
its Plans as may be reasonably requested. The Borrower will not,
nor will it permit any of its Subsidiaries or ERISA Affiliates to
(I) terminate a Plan if any such termination would give rise to
or result in any material liability, or (II) cause or permit to
exist any Termination Event under ERISA or other event or
condition which presents a material risk of termination at the
request of the PBGC.
6.10 Use of Proceeds.
The proceeds of the Loans hereunder shall be used for the
purpose of financing working capital requirements and general
corporate purposes.
6.11 Financial Covenants.
(a) Consolidated Tangible Net Worth. The Borrower
will not permit Consolidated Tangible Net Worth on each
Determination Date after the Closing Date to be less than
$130,000,000; provided, however, the minimum Consolidated
Tangible Net Worth required hereunder shall increase on the
last day of each fiscal year to occur after the Closing Date
to an amount equal to the sum of (i) the Consolidated
Tangible Net Worth required to be maintained on the last day
of the immediately preceding fiscal year, plus (ii) an
amount equal to 50% of Consolidated Net Income for the
fiscal year ending as of such date (or if Consolidated Net
Income is a deficit figure for such year, then zero), plus
(iii) 100% of the net proceeds received by the Borrower or
any Restricted Subsidiary pursuant to any Equity Transaction
from and after the Closing Date (other than and to the
extent, the net proceeds from a Equity Transaction shall be
used within 90 days of receipt to redeem or purchase
preferred stock of the Borrower).
(b) Leverage Ratio. On each Determination Date the
Borrower will not permit the ratio of the aggregate
outstanding principal amount of Consolidated Funded Debt to
Consolidated Tangible Capitalization to exceed:
Fiscal 1QE 2QE 3QE 4QE
Year
1997 .60 .70 .70 .65
1998 .65 .67 .67 .63
1999 .63 .65 .65 .60
and on each Determination Date thereafter at .60.
(c) Fixed Charges Coverage Ratio. The Borrower will
keep and maintain as of each Determination Date a ratio of
Net Income Available for Fixed Charges to Fixed Charges for
a period of four consecutive fiscal quarters ending as of
the Determination Date of not less than 1.25 to 1.0.
(d) Current Ratio. There shall be maintained as of
each Determination Date, a Current Ratio, of at least
3.0:1.0.
6.12 Additional Subsidiaries.
Promptly upon any Person becoming an Additional Credit
Party, the Credit Parties shall so notify the Administrative
Agent and the Banks and shall cause such Person to become a
"Guarantor" hereunder pursuant to a Joinder Agreement.
SECTION 7
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long
as this Credit Agreement is in effect and until the Loans and LOC
Obligations, together with interest, fees and other obligations
hereunder, have been paid in full and the Commitments hereunder
shall have terminated:
7.01 Indebtedness.
Neither the Borrower nor any of its Restricted Subsidiaries
will contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement
and the other Credit Documents;
(b) Indebtedness evidenced by the Senior Notes (and a
refinancing thereof, so long as in the case of any such
refinancing, such Indebtedness (i) shall not exceed the
principal amount of the Senior Notes then outstanding, (ii)
has a weighted average life to maturity not shorter than
that of the Senior Notes, (ii) is unsecured, except by
guaranties of the Subsidiaries as provided in the case of
the Senior Notes, and the rights of payment are subordinate
to or pari pasu with, but not senior to or given a
preference in any material respect over, the Obligations
under this Credit Agreement and (iv) the terms of the credit
agreement, indenture, note or other instrument pursuant to
which such Indebtedness is issued or by which such
Indebtedness is governed, shall not, in any material
respect, be more restrictive to the Borrower or its
Subsidiaries than the terms of the Indenture pursuant to
which the Senior Notes shall have been issued);
(c) Indebtedness existing as of the Closing Date as
referenced in Section 5.09 (and renewals, refinancings or
extensions thereof on terms and conditions no more favorable
to such Person than such existing Indebtedness (taking into
account reasonable market conditions existing at such time)
and in a principal amount not in excess of that outstanding
as of the date of such renewal, refinancing or extension);
(d) Indebtedness in respect of current accounts
payable or accrued (other than for borrowed money or
purchase money obligations) and incurred in the ordinary
course of business, provided, that all such liabilities,
accounts and claims shall be paid when due (or in conformity
with customary trade terms);
(e) Purchase money indebtedness incurred to finance
the purchase of fixed assets provided that (i) the total of
all such indebtedness shall not exceed an aggregate
principal amount at any time outstanding of $10,000,000;
(ii) such indebtedness when incurred shall not exceed the
purchase price of the asset financed; and (iii) no such
indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the
time of such refinancing;
(f) Other short term unsecured indebtedness for
borrowed money (and specifically excluding for purposes
hereof any letters of credit issued outside of this Credit
Agreement other than any such letters of credit which may
have been issued and outstanding on the Closing Date, which
letters of credit may not be renewed or otherwise extended)
which do not exceed $10,000,000 in the aggregate at any time
outstanding; and
(g) up to (i) $14,700,000 in unsecured subordinated
seller financing with a minimum term of 10 years owing in
connection with the Cal-Shirt Acquisition on terms and
conditions reasonably acceptable to the Required Banks and
(ii) up to $1,000,000 in connection with the T-Shirt City
Acquisition.
7.02 Liens.
Neither the Borrower nor any of its Restricted Subsidiaries
will contract create, incur, assume or permit to exist any Lien
with respect to any of its property or assets of any kind
(whether real or personal, tangible or intangible), whether now
owned or after acquired, except for Permitted Liens.
7.03 Guaranty Obligations.
Neither the Borrower nor any of its Restricted Subsidiaries
will enter into or otherwise become or be liable in respect of
any Guaranty Obligations (excluding specifically therefrom
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) other than those in favor
of the Senior Notes and in favor of the Banks in connection
herewith.
7.04 Nature of Business.
Neither the Borrower nor any of its Restricted Subsidiaries
will substantively alter the character of its business from that
conducted as of the Closing Date.
7.05 Consolidation, Merger, Sale or Purchase of Assets,
etc.
Neither the Borrower nor any of its Restricted Subsidiaries
will
(a) dissolve, liquidate, or wind up its affairs, sell,
transfer, lease or otherwise dispose of all or any
substantial part of its property or assets (other than in
the ordinary course of business for fair consideration), or
agree to any of the foregoing at a future time, except for
the sale or disposition of machinery and equipment no longer
useful in the conduct of its business. As used herein,
"substantial part" shall mean if the book value of such
assets, when added to the book value of all other assets
sold, leased or otherwise disposed of by the Borrower and
its Restricted Subsidiaries (other than in the ordinary
course of business), (i) during the 12-month period ending
with the date of such sale, lease or other disposition
exceeds 10% of Consolidated Assets, determined as of the end
of the immediately preceding fiscal year, or (ii) during the
period beginning on the date of this Credit Agreement and
ending on the date of such sale, lease or other disposition,
exceeds an amount equal to 25% of Consolidated Assets
determined as of December 31, 1994; or
(b) purchase, lease or otherwise acquire (in a single
transaction or a series of related transactions) all or any
substantial part of the property or assets of any Person
(other than purchases or other acquisitions of inventory,
leases, materials, property and equipment in the ordinary
course of business, except as otherwise limited or
prohibited herein), or enter into any transaction of merger
or consolidation, or agree to do any of the foregoing at a
future time, except for (i) capital expenditures to the
extent of the limitations set out in Section 6.11(c), (ii)
investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 7.06, (iii) the
merger or consolidation of a Restricted Subsidiary into, or
a sale, transfer or lease of all or a substantial part of
its properties (at fair value) to, a Credit Party, and (iv)
the merger of any Person into a Credit Party, provided that
the Credit Party shall be the surviving corporation, and
management and control of the Credit Party shall remain
substantially unchanged and no Default or Event of Default
shall exist either immediately prior to or after giving
effect to such merger. Notwithstanding the foregoing, other
than (A) capital expenditures permitted pursuant to Section
6.11(c), (B) investments pursuant to Section 7.06, (C) the
Cal-Shirt Acquisition and (D) the T-Shirt City Acquisition,
in the case of an acquisition by the Borrower or its
Restricted Subsidiaries, whether by way of asset purchase,
stock or securities purchase or merger or consolidation, the
aggregate cash consideration paid in connection with such
acquisitions shall not exceed $15,000,000 in any instance or
$30,000,000 in the aggregate over the term of this credit
facility (including any extensions of the Termination Date).
7.06 Advances, Investments and Loans.
Neither the Borrower nor any of its Restricted Subsidiaries
will lend money or credit or make advances to any Person, or
purchase or acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to any
Person except for Permitted Investments.
7.07 Prepayments of Indebtedness, etc.
Neither the Borrower nor any of its Restricted Subsidiaries
will
(i) after the issuance thereof, amend or modify (or
permit the amendment or modification of), if reasonably
adverse to the interests of the Banks, any of the terms of
any subordinated or senior funded indebtedness for borrowed
money (including specifically, but without limitation, the
Indebtedness evidenced by the Senior Notes) to the extent
any such amendment or modification would be adverse to the
issuer thereof or to the interests of the Banks,
(ii) make (or give any notice with respect thereto) any
voluntary or optional payment, prepayment, redemption or
acquisition for value of (including without limitation, by
way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when
due) or exchange of any other Indebtedness for borrowed
money (including specifically, but without limitation, the
Indebtedness evidenced by the Senior Notes); except
(A) with the proceeds of an Equity Transaction,
(B) with the proceeds of Indebtedness incurred in a
refinancing of the Senior Notes permitted under Section
7.01(b), and
(C) where
(I) no Default or Event of Default shall
exist either immediately prior to or immediately after
giving effect thereto,
(II) the Borrower shall have achieved a ratio
of Consolidated Funded Debt to Consolidated Tangible
Capitalization of .50:1.0 or less as of the end of the
fiscal year then ending, or if not on the last day of a
fiscal year, then as of the end of the most recent
fiscal year preceding the transaction, and
(III) the Borrower can demonstrate compliance
with financial covenants (including without limitation,
the Fixed Charges Coverage Ratio of Section 6.11(c))
and availability hereunder on both a Pro Forma Basis,
then the Borrower may make optional or voluntary prepayments
of principal on, or redeem or otherwise acquire, Senior
Notes in an aggregate amount not to exceed 10% of the
principal amount of the Senior Notes outstanding at the end
of the fiscal year most recently ended,
(iii) make any payment, prepayment, redemption,
acquisition for value of (including without limitation, by
way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when
due) refund, refinance or exchange of any Subordinated Debt.
As used herein, "Subordinated Debt" means any indebtedness
for borrowed money which by its terms is, or upon the
happening of certain events may become, subordinated in
right of payment to the Loans and other amounts owing
hereunder or in connection herewith.
7.08 Transactions with Affiliates.
No member of the Consolidated Borrower Group will enter into
any transaction or series of transactions, whether or not in the
ordinary course of business, with any officer, director,
shareholder, Subsidiary or Affiliate other than on terms and
conditions substantially as favorable than would be obtainable in
a comparable arm's-length transaction with a Person other than an
Affiliate.
7.09 Ownership of Subsidiaries.
Neither the Borrower nor any of its Restricted Subsidiaries
will sell, transfer or otherwise dispose of, a substantial part
the shares of capital stock of the Subsidiaries or permit any
Subsidiaries to issue, sell or otherwise dispose of, a
substantial part of the shares of capital stock of the
Subsidiaries. Neither the Borrower nor any of its Restricted
Subsidiaries will create, form or acquire a Subsidiary unless
such Subsidiary is or would be a Restricted Subsidiary. As used
herein, "substantial part" shall mean any sale, transfer,
disposition or issuance which would (i) result in a Change of
Control, or (ii) involve more than 10% of the Borrower's
consolidated net shareholder's equity during the period ending as
of the date of any such sale, transfer, disposition or issuance,
or more than 25% of the Borrower's consolidated net shareholder's
equity determined as of December 31, 1994.
7.10 Fiscal Year.
Neither the Borrower nor any of its Restricted Subsidiaries
will change its fiscal year.
SECTION 8
EVENTS OF DEFAULT
8.01 Events of Default.
An Event of Default shall exist upon the occurrence of any
of the following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any
principal of any of the Loans or of any reimbursement
obligations arising from drawings under Letters of
Credit, or in providing cash collateral when due
pursuant to Section 8.02(iv), or
(ii) default, and such default shall continue
for five or more days, in the payment when due of any
interest on the Loans, or of any fees or other amounts
owing hereunder, under any of the other Credit
Documents or in connection herewith; or
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party
herein, in any of the other Credit Documents, or in any
statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in
any material respect on the date as of which it was deemed
to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or
observance of any term, covenant or agreement contained
in Sections 6.01(i), 6.02, 6.10, 6.11 or 7.01 through
7.10, inclusive, or
(ii) default in the due performance or
observance by it of any term, covenant or agreement
(other than those referred to in subsections (a), (b)
or (c)(i) or this Section 8.01) contained in this
Credit Agreement and such default shall continue
unremedied for a period of at least 30 days after the
earlier of a responsible officer of a Credit Party
becoming aware of such default or notice thereof by the
Administrative Agent; or
(d) Other Credit Documents. (i) Any Credit Party
shall default in the due performance or observance of any
term, covenant or agreement in any of the other Credit
Documents (subject to applicable grace or cure periods, if
any), or (ii) any Credit Document shall fail to be in full
force and effect or to give the Administrative Agent and/or
the Banks the liens, rights, powers and privileges purported
to be created thereby; or
(e) Guaranties. The guaranty given by the Credit
Parties hereunder or by any Additional Credit Party
hereafter or any provision thereof shall cease to be in full
force and effect, or any guarantor thereunder or any Person
acting by or on behalf of such guarantor shall deny or
disaffirm such guarantor's obligations under such guaranty,
or any guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to
be performed or observed pursuant to any guaranty; or
(f) Bankruptcy, etc. The Borrower or any Restricted
Subsidiary shall commence a voluntary case concerning itself
under the Bankruptcy Code; or an involuntary case is
commenced against the Borrower or any Restricted Subsidiary
under the Bankruptcy Code and the petition is not dismissed
within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of all or substantially all of the
property of the Borrower or any Restricted Subsidiary; or
the Borrower or any Restricted Subsidiary commences any
other proceeding under any reorganization, arrangement,
adjustment of the debt, relief of creditors, dissolution,
insolvency or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or any
Restricted Subsidiary; or there is commenced against the
Borrower or any Restricted Subsidiary any such proceeding
which remains undismissed for a period of 60 days; or the
Borrower or any Restricted Subsidiary is adjudicated
insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the
Borrower or any Restricted Subsidiary suffers appointment of
any custodian or the like for it or for any substantial part
of its property to continue unchanged or unstayed for a
period of 60 days; or the Borrower or any Restricted
Subsidiary makes a general assignment for the benefit of
creditors; or any corporate action is taken by the Borrower
or any Restricted Subsidiary for the purpose of effecting
any of the foregoing; or
(g) Defaults under Other Agreements. With respect to
any Indebtedness (other than Indebtedness outstanding under
this Credit Agreement) in excess of $5,000,000 in the
aggregate for the Borrower and its Restricted Subsidiaries,
(i) the Borrower or any of its Restricted Subsidiaries shall
(A) default in any payment (beyond the applicable grace
period with respect thereto, if any) with respect to any
such Indebtedness, or (B) default in the observance or
performance relating to such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or
condition exist, the effect of which default or other event
or condition is to cause, or permit, the holder or holders
of such Indebtedness (or trustee or agent on behalf of such
holders) to cause (determined without regard to whether any
notice or lapse of time is required), any such Indebtedness
to become due prior to its stated maturity; or (ii) any such
Indebtedness shall be declared due and payable, or required
to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall
be entered against the Borrower or any Restricted Subsidiary
involving a liability of $500,000 or more in the aggregate
(to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage) and any
such judgments or decrees shall not have been vacated,
discharged or stayed or bonded pending appeal within 30 days
from the entry thereof; or
(i) ERISA. (i) Any Credit Party or any member of the
Controlled Group shall fail to pay when due an amount or
amounts aggregating in excess of $1,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice
of intent to terminate a Plan or Plans which in the
aggregate have unfunded liabilities in excess of $1,000,000
(individually and collectively, a "Material Plan") shall be
filed under Title IV of ERISA by any such member of the
Consolidate Borrower Group or any member of the Controlled
Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability (other
than for premiums under Section 4007 of ERISA) in respect
of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default,
within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could
cause one or more members of the Controlled Group to incur a
current payment obligation in excess of $1,000,000; or
(j) Ownership. There shall occur a Change of Control;
or
(k) Senior Notes. The occurrence of an Event of
Default under any of the Senior Notes (as defined therein).
8.02 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived
by the Required Banks or cured to the satisfaction of the
Required Banks (pursuant to the voting procedures in Section
10.06), the Administrative Agent shall, upon the request and
direction of the Required Banks, by written notice to the
Borrower take any of the following actions without prejudice to
the rights of the Administrative Agent or any Bank to enforce its
claims against the Credit Parties, except as otherwise
specifically provided for herein:
(i) Termination of Commitments. Declare the
Commitments terminated whereupon the Commitments shall be
immediately terminated.
(ii) Acceleration of Loans. Declare the unpaid
principal of and any accrued interest in respect of all
Loans and unreimbursed drawings in respect of LOC
Obligations and any and all other indebtedness or
obligations of any and every kind owing by the Borrower to
any of the Banks hereunder to be due whereupon the same
shall be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.
(iii) Enforcement of Rights. Enforce any and all
rights and interests created and existing under the Credit
Documents and all rights of set-off.
(iv) Cash Collateral. Direct the Credit Parties to
pay (and the Credit Parties agree that upon receipt of such
notice, or upon the occurrence of an Event of Default under
Section 8.01(e), they will immediately pay) to the
Administrative Agent additional cash, to be held by the
Administrative Agent, for the benefit of the Banks, in a
cash collateral account as additional security for the LOC
Obligations for subsequent drawings under all then
outstanding Letters of Credit in an amount equal to the
maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.
Notwithstanding the foregoing, if an Event of Default specified
in Section 8.01(f) shall occur, then the Commitments shall
automatically terminate and all Loans and LOC Obligations, all
accrued interest in respect thereof, all accrued and unpaid Fees
and other indebtedness or obligations owing to the Banks
hereunder shall immediately become due and payable without the
giving of any notice or other action by the Administrative Agent
or the Banks.
SECTION 9
AGENCY PROVISIONS
9.01 Appointment.
Each Bank hereby designates and appoints CoreStates Bank,
N.A. and First Union National Bank of Virginia as co-agent (in
such capacity as Co-Agents hereunder, the "Co-Agents") and
NationsBank, N.A. as administrative agent (in such capacity as
Administrative Agent hereunder, the "Administrative Agent") of
such Bank to act as specified herein and the other Credit
Documents, and each such Bank hereby authorizes the
Administrative Agent and the Co-Agents, respectively, as the
agent for such Bank, to take such action on its behalf under the
provisions of this Credit Agreement and the other Credit
Documents and to exercise such powers and perform such duties as
are expressly delegated by the terms hereof and of the other
Credit Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere herein and in the other Credit Documents,
neither the Co-Agents nor the Administrative Agent shall have any
duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Credit
Agreement or any of the other Credit Documents, or shall
otherwise exist against the Agents. The provisions of this
Section are solely for the benefit of the Agents and the Banks
and none of the Credit Parties shall have any rights as a third
party beneficiary of the provisions hereof. In performing its
functions and duties under this Credit Agreement and the other
Credit Documents, the Administrative Agent and the Co-Agents
shall not act solely as agents of the Banks and do not assume and
shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for the Borrower or any
other Credit Party.
9.02 Delegation of Duties.
The Agents may execute any of their respective duties
hereunder or under the other Credit Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The
Agents shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable
care.
9.03 Exculpatory Provisions.
Neither the Co-Agents nor the Administrative Agent nor any
of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person
under or in connection herewith or in connection with any of the
other Credit Documents (except for its or such Person's own gross
negligence or willful misconduct), or (ii) responsible in any
manner to any of the Banks for any recitals, statements,
representations or warranties made by any of the Credit Parties
contained herein or in any of the other Credit Documents or in
any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under
or in connection herewith or in connection with the other Credit
Documents, or enforceability or sufficiency herefor of any of the
other Credit Documents, or for any failure of the Borrower to
perform its obligations hereunder or thereunder. Neither the Co-
Agents nor the Administrative Agent shall be responsible to any
Bank for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Credit
Agreement, or any of the other Credit Documents or for any
representations, warranties, recitals or statements made herein
or therein or made by the Borrower or any Credit Party in any
written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made
by the Co-Agents or the Administrative Agent to the Banks or by
or on behalf of the Credit Parties to the Co-Agents or the
Administrative Agent or any Bank or be required to ascertain or
inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein
or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any Default or Event of
Default or to inspect the properties, books or records of the
Credit Parties.
9.04 Reliance on Communications.
The Co-Agents or the Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the
Borrower or any of the other Credit Parties, independent
accountants and other experts selected by the Administrative
Agent with reasonable care). The Administrative Agent may deem
and treat the Banks as the owner of their respective interests
hereunder for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Administrative Agent in accordance with Section 10.03(b) hereof.
The Administrative Agent shall be fully justified in failing or
refusing to take any action under this Credit Agreement or under
any of the other Credit Documents unless it shall first receive
such advice or concurrence of the Required Banks as it deems
appropriate or it shall first be indemnified to its satisfaction
by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting,
hereunder or under any of the other Credit Documents in
accordance with a request of the Required Banks (or to the extent
specifically provided in Section 10.06, all the Banks) and such
request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks (including their successors
and assigns).
9.05 Notice of Default.
The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received
notice from a Bank or a Credit Party referring to the Credit
Document, describing such Default or Event of Default and stating
that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative
Agent shall give prompt notice thereof to the Banks. The
Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by
the Required Banks.
9.06 Non-Reliance on Agents and Other Banks.
Each Bank expressly acknowledges that neither the Co-Agents
nor the Administrative Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and
that no act by the Co-Agents or the Administrative Agent or any
affiliate thereof hereinafter taken, including any review of the
affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Co-Agents or the Administrative
Agent to any Bank. Each Bank represents to the Co-Agents and the
Administrative Agent that it has, independently and without
reliance upon the Co-Agents or the Administrative Agent or any
other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation
into the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrower
and made its own decision to make its Loans hereunder and enter
into this Credit Agreement. Each Bank also represents that it
will, independently and without reliance upon the Co-Agents or
the Administrative Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Credit
Agreement, and to make such investigation as it deems necessary
to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and
creditworthiness of the Borrower. Except for notices, reports
and other documents expressly required to be furnished to the
Banks by the Administrative Agent hereunder, neither the Co-
Agents nor the Administrative Agent shall have any duty or
responsibility to provide any Bank with any credit or other
information concerning the business, operations, assets,
property, financial or other conditions, prospects or
creditworthiness of the Borrower which may come into the
possession of the Co-Agents nor the Administrative Agent or any
of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates.
9.07 Indemnification.
The Banks agree to indemnify the Co-Agents and the
Administrative Agent in their respective capacities as such (to
the extent not reimbursed by the Borrower and without limiting
the obligation of the Borrower to do so), ratably according to
their respective Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at
any time following the payment of the Obligations) be imposed on,
incurred by or asserted against the Co-Agents or the
Administrative Agent in their respective capacities as such in
any way relating to or arising out of this Credit Agreement or
the other Credit Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Co-Agents
or the Administrative Agent under or in connection with any of
the foregoing; provided that no Bank shall be liable for the
payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful
misconduct of a Co-Agent or the Administrative Agent. If any
indemnity furnished to the Co-Agents or the Administrative Agent
for any purpose shall, in the opinion of the Co-Agents or the
Administrative Agent, be insufficient or become impaired, the
Administrative Agent may call for additional indemnity and cease,
or not commence, to do the acts indemnified against until such
additional indemnity is furnished. The agreements in this
Section shall survive the payment of the Obligations and all
other amounts payable hereunder and under the other Credit
Documents.
9.08 Agents in their Individual Capacity.
The Co-Agents and the Administrative Agent and their
respective affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower or any
other members of the Consolidated Borrower Group as though the Co-
Agents or the Administrative Agent were not a Co-Agent or
Administrative Agent hereunder. With respect to the Loans made
and all Obligations owing to it, the Co-Agent or the
Administrative Agent shall have the same rights and powers under
this Credit Agreement as any Bank and may exercise the same as
though they were not a Co-Agent or Administrative Agent, and the
terms "Bank" and "Banks" shall include the Co-Agents and the
Administrative Agent in their individual capacity.
9.09 Successor Agent.
The Administrative Agent and any Co-Agent may, at any time,
resign upon 20 days' written notice to the Banks, and be removed
with or without cause by the Required Banks upon 30 days' written
notice to the Co-Agent or Administrative Agent. Upon any such
resignation or removal, the Required Banks shall have the right
to appoint a successor Co-Agent or Administrative Agent. If no
successor Co-Agent or Administrative Agent shall have been so
appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the notice of resignation or
notice of removal, as appropriate, then the retiring Co-Agent or
Administrative Agent shall select a successor Co-Agent or
Administrative Agent provided such successor is a Bank hereunder
or a commercial bank organized under the laws of the United
States of America or of any State thereof and has a combined
capital and surplus of at least $400,000,000. Upon the
acceptance of any appointment as Co-Agent or Administrative Agent
hereunder by a successor, such successor Co-Agent or
Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Co-Agent or Administrative Agent, and the retiring Co-
Agent or Administrative Agent shall be discharged from its duties
and obligations as Co-Agent or Administrative Agent, as
appropriate, under this Credit Agreement and the other Credit
Documents and the provisions of this Section 9.09 shall inure to
its benefit as to any actions taken or omitted to be taken by it
while it was Co-Agent or Administrative Agent under this Credit
Agreement.
SECTION 10
MISCELLANEOUS
10.01 Notices.
Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be
effective (i) when delivered, (ii) when transmitted via telecopy
(or other facsimile device) to the number set out below, (iii)
the day following the day on which the same has been delivered
prepaid to a reputable national overnight air courier service, or
(iv) the third Business Day following the day on which the same
is sent by certified or registered mail, postage prepaid, in each
case to the respective parties at the address, in the case of the
Borrower and the Administrative Agent, set forth below, and in
the case of the Banks, set forth on Schedule 2.01(a), or at such
other address as such party may specify by written notice to the
other parties hereto:
if to the Borrower or the Guarantors:
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, Virginia 24112
Attn: Suzanne H. Wood
Vice President and Chief Financial Officer
Telephone: (703) 632-2961 Ext. 3034
Telecopy: (703) 634-2611
if to the Administrative Agent:
NationsBank, N.A.
101 N. Tryon Street
Independence Center
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Margaret Lydon
Telephone: (704) 386-9371
Telecopy: (704) 386-9923
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center, 8th Floor
NC1-007-08-11
100 North Tryon Street
Charlotte, North Carolina 28255
Attn: E. Phifer Helms
Telephone: (704)386-5358
Telecopy: (704)386-1270
10.02 Right of Set-Off.
In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each
Bank is authorized at any time and from time to time, without
presentment, demand, protest or other notice of any kind (all of
which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special)
and any other indebtedness at any time held or owing by such Bank
(including, without limitation branches, agencies or Affiliates
of such Bank wherever located) to or for the credit or the
account of the Borrower against obligations and liabilities of
the Borrower to such Bank hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Bank
shall have made any demand hereunder and although such
obligations, liabilities or claims, or any of them, may be
contingent or unmatured, and any such set-off shall be deemed to
have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books
of such Bank subsequent thereto. The Borrower hereby agrees that
any Person purchasing a participation in the Loans and
Commitments hereunder pursuant to Section 10.03(c) or Section
2.21. may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Bank
hereunder.
10.03 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be
binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of
the parties hereto; provided that the none of the
Credit Parties may assign and transfer any of its
rights, obligations or interests without prior written
consent of the Banks; provided further that the rights
of each Bank to transfer, assign or grant
participations in its rights and/or obligations
hereunder shall be limited as set forth in this Section
10.03, provided however that nothing herein shall
prevent or prohibit any Bank from (i) pledging its
Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve
Bank, or (ii) granting assignments or participation in
such Bank's Loans and/or Commitments hereunder to its
parent company and/or to any affiliate of such Bank
which is at least 50% owned by such Bank or its parent
company.
(b) Assignments. Each Bank may assign all or a
portion of its rights and obligations hereunder
pursuant to an assignment agreement substantially in
the form of Schedule 10.03(b) to one or more Eligible
Assignees, provided that any such assignment shall be
in a minimum aggregate amount of $10,000,000 of the
Commitments and in integral multiples of $1,000,000
above such amount, that each such assignment shall be
of a constant not varying, percentage of all of the
assigning Bank's rights and obligations under this
Credit Agreement. Any assignment hereunder shall be
effective upon delivery to the Administrative Agent of
written notice of the assignment together with a
transfer fee of $1,500 payable to the Administrative
Agent for its own account. The assigning Bank will
give prompt notice to the Administrative Agent and the
Borrower of any such assignment. Upon the
effectiveness of any such assignment (and after notice
to the Borrower as provided herein), the assignee shall
become a "Bank" for all purposes of this Credit
Agreement and the other Credit Documents and, to the
extent of such assignment, the assigning Bank shall be
relieved of its obligations hereunder to the extent of
the Loans and Commitment components being assigned.
Along such lines the Borrower agrees that upon notice
of any such assignment and surrender of the appropriate
Note or Notes, it will promptly provide to the
assigning Bank and to the assignee separate promissory
notes in the amount of their respective interests
substantially in the form of the original Note (but
with notation thereon that it is given in substitution
for and replacement of the original Note or any
replacement notes thereof).
(c) Participations. Each Bank may sell,
transfer, grant or assign participations in all or any
part of such Bank's interests and obligations
hereunder; provided that (i) such selling Bank shall
remain a "Bank" for all purposes under this Credit
Agreement (such selling Bank's obligations under the
Credit Documents remaining unchanged) and the
participant shall not constitute a Bank hereunder, (ii)
no such participant shall have, or be granted, rights
to approve any amendment or waiver relating to this
Credit Agreement or the other Credit Documents except
to the extent any such amendment or waiver would (A)
reduce the principal of or rate of interest on or fees
in respect of any Loans in which the participant is
participating, (B) postpone the date fixed for any
payment of principal (including extension of the
Termination Date or the date of any mandatory
prepayment), interest or fees in which the participant
is participating, or (C) release all or substantially
all of the collateral or guaranties (except as
expressly provided in the Credit Documents) supporting
any of the Loans or Commitments in which the
participant is participating, (iii) sub-participations
by the participant (except to an affiliate, parent
company or affiliate of a parent company of the
participant) shall be prohibited and (iv) any such
participations shall be in a minimum aggregate amount
of $5,000,000 of the Commitments and in integral
multiples of $1,000,000 in excess thereof. In the case
of any such participation, the participant shall not
have any rights under this Credit Agreement or the
other Credit Documents (the participant's rights
against the selling Bank in respect of such
participation to be those set forth in the
participation agreement with such Bank creating such
participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not
sold such participation, provided, however, that such
participant shall be entitled to receive additional
amounts under Sections 2.13, 2.14, 2.15 and 2.16 on the
same basis as if it were a Bank.
10.04 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Administrative Agent
or any Bank in exercising any right, power or privilege hereunder
or under any other Credit Document and no course of dealing
between the Borrower or any Guarantor and the Administrative
Agent or any Bank shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any
rights or remedies which the Administrative Agent or any Bank
would otherwise have. No notice to or demand on the Borrower in
any case shall entitle the Borrower or any Guarantor to any other
or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or
the Banks to any other or further action in any circumstances
without notice or demand.
10.05 Payment of Expenses, etc.
The Borrower agrees to: (i) pay all reasonable out-of-
pocket costs and expenses of the Administrative Agent in
connection with the negotiation, preparation, execution and
delivery and administration of this Credit Agreement and the
other Credit Documents and the documents and instruments referred
to therein (including, without limitation, the reasonable fees
and expenses of Moore & Van Allen, special counsel to the
Administrative Agent) and any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any
such amendments, waivers or consents resulting from or related to
any work-out, renegotiation or restructure relating to the
performance by the Borrower under this Credit Agreement and of
the Administrative Agent and the Banks in connection with
enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation,
in connection with any such enforcement, the reasonable fees and
disbursements of counsel for the Administrative Agent and each of
the Banks); (ii) pay and hold each of the Banks harmless from and
against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the
Banks harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to
the extent attributable to such Bank) to pay such taxes; and
(iii) indemnify each Bank, its officers, directors, employees,
representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or
expenses incurred by any of them as a result of, or arising out
of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not any Bank is a
party thereto) related to the entering into and/or performance of
any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit
Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any
such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified).
10.06 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document
nor any of the terms hereof or thereof may be amended, changed,
waived, discharged or terminated unless such amendment, change,
waiver, discharge or termination is in writing signed by the
Required Banks, provided that no such amendment, change, waiver,
discharge or termination shall, without the consent of each Bank,
(i) extend the scheduled maturities (including the final maturity
and any mandatory prepayments) of any Loan, or any portion
thereof, or reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of
any post-default increase in interest rates) thereon or fees
hereunder or reduce the principal amount thereof, or increase the
Commitments of the Banks over the amount thereof in effect (it
being understood and agreed that a waiver of any Default or Event
of Default shall not constitute a change in the terms of any
Commitment of any Bank) or issue or extend Letters of Credit in
contravention of the provisions of Section 2.07 requiring
unanimous consent, (ii) release any Guarantor from its guaranty
obligations hereunder,, (iii) amend, modify or waive any
provision of this Section or Section 2.13, 2.14, 2.15, 2.16,
2.20, 8.01(a), 9.07, 10.02 and 10.03 (iv) reduce any percentage
specified in, or otherwise modify, the definition of Required
Banks or (v) consent to the assignment or transfer by the
Borrower (or Guarantor) of any of its rights and obligations
under (or in respect of) this Credit Agreement. No provision of
Section 9 may be amended without the consent of the
Administrative Agents.
10.07 Counterparts.
This Credit Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall
be an original, but all of which shall constitute one and the
same instrument. It shall not be necessary in making proof of
this Credit Agreement to produce or account for more than one
such counterpart.
10.08 Headings.
The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Credit
Agreement.
10.09 Survival of Indemnification.
All indemnities set forth herein, including, without
limitation, in Sections 2.13, 2.15 or 10.05 shall survive the
execution and delivery of this Credit Agreement, and the making
of the Loans, the repayment of the Loans and other obligations
and the termination of the Commitment hereunder.
10.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF VIRGINIA. Any legal action or proceeding
with respect to this Credit Agreement or any other Credit
Document may be brought in the courts of the Commonwealth of
Virginia in the City of Richmond, or of the United States
for the Eastern District of Virginia, and, by execution and
delivery of this Credit Agreement, each of the Credit
Parties hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the
jurisdiction of such courts. Each of the Credit Parties
further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set
out notices pursuant to Section 10.01, such service to
become effective 30 days after such mailing. Nothing herein
shall affect the right of the Agent to serve process in any
other manner permitted by law or to commence legal
proceedings or to otherwise proceed against the Borrower in
any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably
waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Credit
Agreement or any other Credit Document brought in the courts
referred to in subsection (a) hereof and hereby further
irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
(c) EACH OF THE AGENTS, EACH OF THE BANKS AND EACH OF
THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
10.11 Severability.
If any provision of any of the Credit Documents is
determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable
provisions.
10.12 Entirety.
This Credit Agreement together with the other Credit
Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
10.13 Survival of Representations and Warranties.
All representatives and warranties made by the Borrower
herein shall survive delivery of the Notes and the making of the
Loans hereunder.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and
delivered as of the date first above written.
BORROWER:
TULTEX CORPORATION,
a Virginia corporation
By______________________________________
Title_____________________________________
GUARANTORS:
DOMINION STORES, INC.,
a Virginia corporation
By______________________________________
Title_____________________________________
LOGOATHLETIC, INC.,
a Virginia corporation
By______________________________________
Title_____________________________________
LOGOATHLETIC HEADWEAR, INC.,
a Massachusetts corporation
By______________________________________
Title_____________________________________
CALIFORNIA SHIRT SALES, INC.
By______________________________________
Title_____________________________________
Signature Pages to
Tultex Corporation Credit Agreement
BANKS:
NATIONSBANK, N.A.,
individually in its capacity as a
Bank and in its capacity as Co-Agent and
Administrative Agent
By
Title
CORESTATES BANK, N.A.,
individually in its capacity as a Bank
and in its capacity as a Co-Agent
By
Title
FIRST UNION NATIONAL
BANK OF VIRGINIA, individually in its
capacity as a Bank and in its capacity
as a Co-Agent
By
Title
SIGNET BANK
By
Title
Signature Pages to
Tultex Corporation Credit Agreement
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By
Title
THE FIRST NATIONAL BANK OF CHICAGO
By
Title
PNC BANK, NATIONAL ASSOCIATION
By
Title
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By
Title
<TABLE>
<CAPTION>
Schedule 2.01(a)
Schedule of Banks and
Commitment
Address Revolving Trade LOC Standby LOC
for Funding Address for Committed Committed Committed
Bank and Payments Other Notices Amount Amount Amount Percent
- ---- ------------ ------------- --------- --------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
NationsBank, N.A. NationsBank, N.A. NationsBank, N.A. $37,000,000 $13,850,267.38 $1,978,609.26 19.786096%
101 N. Tryon St. NationsBank Corporate
Independence Center Center, 8th Floor
NC1-001-15-04 NC1-007-08-11
Charlotte, NC 28255 100 N. Tryon St.
Attn: Margaret Lydon Charlotte, NC 28255
Phone: (704)386-9371 Attn: E. Phifer Helms
Fax: (704)386-9973 Phone: (704)386-5358
Fax: (704)386-1270
CoreStates Bank, N.A. CoreStates Bank, N.A. $35,000,000 $13,101,604.28 $1,871,657.75 18.716578%
1345 Chestnut Street
FC1-1-2-25
Phil., PA 19101-7618
Attn: James P. Richards
Phone: (215)973-7397
Fax: (215)973-6745
Signet Bank Signet Bank $15,000,000 $5,614,973.26 $802,139.04 8.021390%
800 East Main Street
Upper Mezzanine
Richmond, VA 23219
Attn: William D. Garrison
Phone: (804)771-7395
Fax: (804)771-7151
First Union National First Union National Bank $30,000,000 $11,229,946.53 $1,604.278.08 16.042781%
Bank of Virginia of Virginia
201 South Jefferson Street
Roanoke, VA 24011
Attn: Grayson Goldsmith
Phone: (540)563-6135
Fax: (540)561-5262
The First National Bank The First National Bank $25,000,000 $9,358,288.77 $1,336,898.40 13.368984%
of Chicago of Chicago
One First National Plaza
Suite 0167
Chicago, IL 60670
Attn: Courtenay Wood
Phone: (312)732-1563
Fax: (312)732-5435
Bank of Toyko - Bank of Tokyo - $15,000,000 $5,614,973.26 $802,139.04 8.021390%
Mitsubishi Trust Mitsubishi Trust
Company
1251 Avenue of the Americas
New York, NY 10020-1104
Attn: Rolando Uy
Phone: (212)413-8570
Fax: (212)766-3127
PNC Bank, N.A. PNC Bank, N.A. $15,000,000 $5,614,973.26 $802,139.04 8.021390%
1600 Market Street
Philadelphia, PA 19103
Attn: Gary Tyrell
Phone: (215)585-5934
Fax: (215)585-5972
Morgan Guaranty Trust Morgan Guaranty Trust $15,000,000 $5,614,973.26 $802,139.04 8.021390%
Company of New York Company of New York
60 Wall Street,
22nd Floor
New York, NY 10260
Attn: David Common
Phone: (212)648-3319
Fax: (212)648-5336
___________ ______________ ______________ ____________
$187,000,000 $70,000,000.00 $10,000,000.00 100.000000%
</TABLE>
Schedule 2.02(1)
FORM OF NOTICE OF BORROWING
NationsBank, N.A., NationsBank, N.A.,
as Administrative Agent for as Swingline Lender
the Lenders referred to below 101 N. Tryon Street
101 N. Tryon Street Independence Center
Independence Center NC1-001-15-04
NC1-001-15-04 Charlotte, North Carolina 28255
Charlotte, North Carolina 28255 Attn: Agency Services
Attn: Agency Services Margaret Lydon
Margaret Lydon
Ladies and Gentlemen:
The undersigned, Tultex Corporation (the "Borrower"), refers
to the Credit Agreement dated as of May 15, 1997 (as it may be
amended, modified, extended or restated from time to time, the
"Credit Agreement"), among the Borrower, the other Credit Parties
party thereto, the Banks party thereto, and NationsBank, N.A., as
Administrative Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The Borrower hereby gives you
notice that it requests a Committed Revolving Loan advance or a
Swingline Loan advance pursuant to the provisions of Section 2.07
or 2.08 of the Credit Agreement, as appropriate, and in
connection herewith sets forth below the terms on which such
advance is requested to be made:
(A) Type of Loan Advance Requested (Check One)
_______ Committed Revolving Loan
_______ Swingline Loan
(B) Date of Borrowing
(which is a Business Day) _______________________
(C) Principal Amount of
Borrowing1 _______________________
(D) Interest rate basis2 _______________________
(E) Interest Period and the
last day thereof3 _______________________
Upon acceptance of any or all of the Loans made by the Banks
in response to this request, the Borrower shall be deemed to have
represented and warranted that the conditions to lending
specified in Section 2.09(b) of the Credit Agreement have been
satisfied.
Very truly yours,
TULTEX CORPORATION
By:
Title:
Schedule 2.02(2)
FORM OF NOTICE OF CONVERSION
NationsBank, N.A.,
as Administrative Agent for
the Lenders referred to below
101 N. Tryon Street
Independence Center
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Margaret Lydon
Ladies and Gentlemen:
The undersigned, Tultex Corporation (the "Borrower"), refers
to the Credit Agreement dated as of May 15, 1997 (as it may be
amended, modified, extended or restated from time to time, the
"Credit Agreement"), among the Borrower, the other Credit Parties
party thereto, the Banks party thereto, and NationsBank, N.A., as
Administrative Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The Borrower hereby gives you
notice pursuant to Section 2.03 of the Credit Agreement that it
requests an extension or conversion of a Committed Revolving Loan
outstanding under the Credit Agreement, and in that connection
sets forth below the terms on which such extension or conversion
is requested to be made:
(A) Date of Extension or Conversion
(which is the last day of the _______________________
the applicable Interest Period)
(B) Principal Amount of
Extension or Conversion4 _______________________
(C) Interest rate basis5 _______________________
(D) Interest Period and the
last day thereof6 _______________________
Upon acceptance of extension or conversion of any or all of
the Loans made by the Banks in response to this request, the
Borrower shall be deemed to have represented and warranted that
the conditions to lending specified in Section 2.09(b) of the
Credit Agreement have been satisfied.
Very truly yours,
TULTEX CORPORATION
By:
Title:
Schedule 2.06
FORM OF COMMITTED REVOLVING NOTE
$____________________ May 15, 1997
FOR VALUE RECEIVED, TULTEX CORPORATION, a Virginia
corporation (the "Borrower"), hereby promises to pay to the order
of __________________________ (the "Bank"), at the office of
NationsBank, N.A., as Administrative Agent (the "Administrative
Agent"), at 101 N. Tryon Street, Independence Center, NC1-001-15-
04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set
forth in the Credit Agreement dated as of the date hereof among
the Borrower, certain other Credit Parties party thereto, the
Administrative Agent, the Bank and certain other lenders (as it
may be amended, modified, extended or restated from time to time,
the "Credit Agreement"; all capitalized terms not otherwise
defined herein shall have the meanings set forth in the Credit
Agreement), but in no event later than the Termination Date, in
Dollars and in immediately available funds, the principal amount
of ________________________ ($____________) or, if less than such
principal amount, the aggregate unpaid principal amount of all
Committed Revolving Loans made by the Bank to the Borrower
pursuant to the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money,
at said office, on the dates and at the rates selected in
accordance with Section 2.05 of the Credit Agreement.
Upon the occurrence and during the continuance of an Event
of Default the balance outstanding hereunder shall bear interest
as provided in Section 2.05 of the Credit Agreement. Further, in
the event the payment of all sums due hereunder is accelerated
under the terms of the Credit Agreement, this Note, and all other
indebtedness of the Borrower to the Bank shall become immediately
due and payable, without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to
the principal and interest, all costs of collection, including
reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the
respective dates thereof shall be endorsed by the holder hereof
on Schedule A attached hereto and incorporated herein by
reference, or on a continuation thereof which shall be attached
hereto and made a part hereof; provided, however, that any
failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect the
obligation of the Borrower to make payments of principal and
interest in accordance with the terms of this Note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
duly executed by its duly authorized officer as of the day and
year first above written.
TULTEX CORPORATION
By
Title
SCHEDULE A TO THE
COMMITTED REVOLVING NOTE
OF TULTEX CORPORATION
DATED MAY 15, 1997
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
- ---- ---- -------- -------- -------- --------- ---------
Schedule 2.07(c)
EXISTING LETTERS OF CREDIT
Schedule 2.08(d)
FORM OF SWINGLINE NOTE
$10,000,000 May 15, 1997
FOR VALUE RECEIVED, TULTEX CORPORATION, a Virginia
corporation (the "Borrower"), hereby promises to pay to
NATIONSBANK, N.A. (the "Swingline Lender"), its successors
and registered assigns, at the office of NationsBank, N.A.,
as Administrative Agent (the "Administrative Agent"), at 101
N. Tryon Street, Independence Center, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set
forth in the Credit Agreement dated as of the date hereof
among the Borrower, certain other Credit Parties party
thereto, the Administrative Agent, the Swingline Lender and
certain other lenders (as it may be amended, modified,
extended or restated from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined
herein shall have the meanings set forth in the Credit
Agreement), but in no event later than the Termination Date,
in Dollars and in immediately available funds, the principal
amount of TEN MILLION DOLLARS ($10,000,000) or, if less than
such principal amount, the aggregate unpaid principal amount
of all Swingline Loans made by the Swingline Lender to the
Borrower pursuant to the Credit Agreement, and to pay
interest from the date hereof on the unpaid principal amount
hereof, in like money, at said office, on the dates and at
the rates selected in accordance with Section 2.08(c) of the
Credit Agreement.
From and after any failure to make any payment of
principal or interest in respect of any of the Loans when
due, whether at scheduled or accelerated maturity or on
account of any mandatory prepayment, the principal of and,
to the extent permitted by law, interest on, the Swingline
Loans evidenced hereby, shall bear interest as provided in
Section 2.07(c) of the Credit Agreement. Further, in the
event the payment of all sums due hereunder is accelerated
under the terms of the Credit Agreement, this Note, and all
other indebtedness of the Borrower to the Swingline Lender
shall become immediately due and payable, without
presentment, demand, protest or notice of any kind (except
as expressly provided in the Credit Agreement), all of which
are hereby waived by the Borrower.
In the event this Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of
collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments
and prepayments of the principal hereof and interest hereon
and the respective dates thereof shall be endorsed by the
holder hereof on Schedule A attached hereto and incorporated
herein by reference, or on a continuation thereof which
shall be attached hereto and made a part hereof; provided,
however, that any failure to endorse such information on
such schedule or continuation thereof shall not in any
manner affect the obligation of the Borrower to make
payments of principal and interest in accordance with the
terms of this Note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
duly executed by its duly authorized officer as of the day and
year first above written.
TULTEX CORPORATION
By
Title
SCHEDULE A TO THE
SWINGLINE NOTE EXECUTED IN FAVOR OF
NATIONSBANK, N.A., AS SWINGLINE LENDER
OF TULTEX CORPORATION
DATED MAY 15, 1997
Person
Making Interest Payments Balance
Date Notation Amount Period Rate Principal Interest of Note
- ---- -------- ------ -------- ---- --------- -------- --------
Schedule 4.01(a)
Form of Master Trade LOC Agreement
Schedule 5.09
Schedule of Outstanding Indebtedness
Schedule 5.10
Schedule of Legal Proceedings
NONE
Schedule 5.15
Schedule of Subsidiaries
Schedule 5.18
Schedule of Environmental Exceptions
NONE
Schedule 6.01(d)
Form of Officer's Compliance Certificate
For the fiscal quarter ended _________________, 19___.
I, ______________________, chief financial officer of
Tultex Corporation (the "Borrower") hereby certify that,
with respect to that certain Credit Agreement dated as of
May 15, 1997 (as it may be amended, modified, extended or
restated from time to time, the "Credit Agreement"; all of
the defined terms in the Credit Agreement are incorporated
herein by reference) among the Borrower, the other Credit
Parties party thereto, the Banks party thereto and
NationsBank, N.A., as Administrative Agent:
a. Since ___________ (the date of the last
similar certification, or, if none, the Closing
Date) (i) the Credit Parties have kept, observed,
performed and fulfilled each and every agreement
binding on them contained in the Credit Documents
in all material respects and (ii) no Default or
Event of Default has occurred under the Credit
Agreement(7); and
b. The representations and warranties of the
Credit Parties set forth in Section 5 of the
Credit Agreement are true and correct in all
respects on and as of the date hereof as though
made on and as of such date, except to the extent
such representations and warranties expressly
relate to an earlier date.
Delivered herewith are detailed calculations demonstrating
compliance by the Credit Parties with the financial
covenants contained in Section 6.11 of the Credit Agreement
as of the end of the fiscal period referred to above.
This ______ day of ___________, 19__.
[Corporate Seal]
Chief Financial Officer
Tultex Corporation
Financial Covenants
Schedule 6.06
Schedule of Insurance
Schedule 6.12
Form of Joinder Agreement
THIS JOINDER AGREEMENT (the "Agreement"), dated as of
_____________, 19__, is by and between _____________________, a
___________________ (the "Subsidiary"), and NATIONSBANK, N.A., in
its capacity as Administrative Agent under that certain Credit
Agreement (as it may be amended, modified, extended or restated
from time to time, the "Credit Agreement"), dated as of May 15,
1997, by and among Tultex Corporation (the "Borrower"), the other
Credit Parties party thereto, the Banks party thereto and
NationsBank, N.A., as Administrative Agent. All of the defined
terms in the Credit Agreement are incorporated herein by
reference.
The Subsidiary is an Additional Credit Party, and,
consequently, the Credit Parties are required by Section 6.12 of
the Credit Agreement to cause the Subsidiary to become a
"Guarantor".
Accordingly, the Subsidiary hereby agrees as follows with the
Administrative Agent, for the benefit of the Banks:
1. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Credit Agreement and a "Guarantor"
for all purposes of the Credit Agreement, and shall have all of
the obligations of a Guarantor thereunder as if it had executed
the Credit Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Credit Agreement,
including without limitation (i) all of the representations and
warranties of the Credit Parties set forth in Section 5 of the
Credit Agreement, (ii) all of the affirmative and negative
covenants set forth in Sections 6 and 7 of the Credit Agreement
and (iii) all of the undertakings and waivers set forth in
Section 3 of the Credit Agreement. Without limiting the
generality of the foregoing terms of this paragraph 1, the
Subsidiary hereby (i) subject to the limitation set forth in
Section 3.07 of the Credit Agreement, jointly and severally
together with the other Guarantors, guarantees to each Bank, the
Administrative Agent and the Issuing Banks, as provided in
Section 3 of the Credit Agreement, the prompt payment and
performance of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof and (ii) agrees
that if any of the Credit Party Obligations are not paid or
performed in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Subsidiary will, jointly and
severally together with the other Guarantors, promptly pay and
perform the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal
of any of the Credit Party Obligations, the same will be promptly
paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of
such extension or renewal.
2. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all
of which when taken together shall constitute one contract.
IN WITNESS WHEREOF, the Subsidiary has caused this Agreement
to be duly executed by its authorized officers, and the
Administrative Agent, for the benefit of the Banks, has caused
the same to be accepted by its authorized officer, as of the day
and year first above written.
[SUBSIDIARY]
By
Title
Acknowledged and accepted:
NATIONSBANK, N.A.,
as Administrative Agent
By
Title
Schedule 7.02
Schedule of Permitted Liens
NONE
Schedule 10.03(b)
Form of Assignment and Acceptance
THIS ASSIGNMENT AND ACCEPTANCE dated as of ________, 199_ is
entered into between ________________ ("Assignor") and
____________________ ("Assignee").
Reference is made to the Credit Agreement dated as of May 15,
1997, as amended and modified from time to time thereafter (the
"Credit Agreement") among Tultex Corporation, the other Credit
Parties party thereto, the Banks party thereto and NationsBank,
N.A., as Administrative Agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse,
to the Assignee, and the Assignee hereby purchases and assumes,
without recourse, from the Assignor, effective as of the
Effective Date set forth below, the interests set forth below
(the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without
limitation, the interests set forth below in the Commitments of
the Assignor on the effective date of the assignment designated
below (the "Effective Date") and the Committed Revolving Loans
owing to the Assignor and in the LOC Obligations and Swingline
Loans in which Assignor has a participation interest which are
outstanding on the Effective Date, together with unpaid interest
accrued on the assigned Loans from the Effective Date and the
amount, if any, set forth below of the Fees accrued from the
Effective Date for the account of the Assignor. The Assignor
represents and warrants that it owns the interests assigned
hereby free and clear of liens, encumbrances or other claims.
The Assignee represents that it is an Eligible Assignee within
the meaning of the term in the Credit Agreement. Each of the
Assignor and the Assignee hereby makes and agrees to be bound by
all the representations, warranties and agreements set forth in
Section 10.03(b) of the Credit Agreement, a copy of which has
been received by each such party. From and after the Effective
Date (i) the Assignee, if it is not already a Bank under the
Credit Agreement, shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the
rights and obligations of a Bank thereunder and (ii) the Assignor
shall, to the extent of the interests assigned by this Assignment
and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
2. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the Commonwealth of
Virginia.
3. Terms of Assignment
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment:
(e) Revolving Loan Commitment
Percentage Assigned (expressed
as a percentage of the total
Commitment of the Banks to
make Committed Revolving Loans and set
forth to at least 8 decimals)
(f) Revolving Loan Commitment
Percentage of Assignor after
Assignment (set forth to at
least 8 decimals)
(g) Total Committed Revolving Loans outstanding
as of the Date of Assignment $ _____________
(h) Principal Amount of Committed Revolving
Loans assigned on the Date of
Assignment (the amount set forth
in (g) multiplied by the
percentage set forth in (e)) $ _____________
The terms set forth above
are hereby agreed to:
____________________, as Assignor
By:
Title:
___________________, as Assignee
By:
Title:
ACCEPTED BY:
NATIONSBANK, N.A.,
as Administrative Agent
By:
Title:
TULTEX CORPORATION
By:
Title:
_______________________________
1 In the case of Committed Revolving Loans, a minimum of
$5,000,000 and $1,000,000 increments in excess thereof (or the
remaining Revolving Committed Amount, if less) and in the case of
Swingline Loans, a minimum of $250,000 and $100,000 increments in
excess thereof (or the remaining Swingline Committed Amount, if
less).
2 Eurodollar, Adjusted CD and Base Rate Loans available for
Committed Revolving Loans. Money Market and Base Rate Loans
available for Swingline Loans.
3 Interest Periods of one, two, three and six months' duration
for Eurodollar Loans and 30, 60, 90 and 180 days' duration for
Adjusted CD Loans.
4 A minimum of $5,000,000 and $1,000,000 increments in excess
thereof (or the remaining Revolving Committed Amount, if less).
5 Eurodollar, Adjusted CD and Base Rate Loans available.
6 Interest Periods of one, two, three and six months' duration
for Eurodollar Loans and 30, 60, 90 and 180 days' duration for
Adjusted CD Loans.
7 If a Default or Event of Default shall have
occurred during the applicable period, a detailed
explanation of such Default or Event of Default shall
be provided on a separate page together with an
explanation of the action taken or proposed to be taken
by the Credit Parties with respect thereto.
