<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 1-8941
FRUIT OF THE LOOM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3361804
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5000 SEARS TOWER,
233 SOUTH WACKER DRIVE,
CHICAGO, ILLINOIS 60606
(Address of principal executive offices, including Zip Code)
(312) 876-1724
(Registrant's telephone number, including area code)
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
------- --------
Common shares outstanding at October 31, 1997: 67,526,520 shares of Class A
Common Stock, $.01 par value, and 5,684,276 shares of Class B Common Stock,
$.01 par value.
<PAGE> 2
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Condensed Consolidated Balance Sheet;
September 30, 1997 (Unaudited) and
December 31, 1996 2
Condensed Consolidated Statement of Operations
(Unaudited); Three and Nine Months Ended
September 30, 1997 and 1996 3
Condensed Consolidated Statement of Cash
Flows (Unaudited); Nine Months Ended
September 30, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements
(Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 6. Exhibits and Reports on Form 8-K 18
<PAGE> 3
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands of dollars)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
ASSETS (UNAUDITED)
- ------
<S> <C> <C>
Current Assets
Cash and cash equivalents (including restricted cash)........ $ 18,200 $ 18,700
Notes and accounts receivable (less allowance for possible
losses of $19,500 and $20,600, respectively).............. 262,600 167,300
Inventories
Finished goods............................................ 492,800 396,800
Work in process........................................... 197,300 176,700
Materials and supplies.................................... 60,900 44,500
------------- ------------
Total inventories...................................... 751,000 618,000
Other........................................................ 43,900 38,100
------------- ------------
Total current assets................................... 1,075,700 842,100
------------- ------------
Property, Plant and Equipment................................... 1,546,200 1,541,000
Less accumulated depreciation............................... 719,000 641,100
------------- ------------
Net property, plant and equipment...................... 827,200 899,900
------------- ------------
Other Assets
Goodwill (less accumulated amortization of
$304,600 and $284,500, respectively)...................... 724,200 744,300
Other........................................................ 83,700 60,700
------------- ------------
Total other assets..................................... 807,900 805,000
------------- ------------
$2,710,800 $2,547,000
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Current maturities of long-term debt........................ $ 33,200 $ 18,200
Trade accounts payable....................................... 135,400 111,900
Other accounts payable and accrued expenses.................. 294,500 196,600
------------- ------------
Total current liabilities.............................. 463,100 326,700
------------- ------------
Noncurrent Liabilities
Long-term debt............................................... 1,118,400 867,400
Deferred income taxes........................................ 18,900 16,900
Other........................................................ 285,800 271,200
------------- ------------
Total noncurrent liabilities........................... 1,423,100 1,155,500
------------- ------------
Common Stockholders' Equity..................................... 824,600 1,064,800
------------- ------------
$2,710,800 $2,547,000
============= ============
</TABLE>
See accompanying notes.
2
<PAGE> 4
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ----------------------------
1997 1996 1997 1996
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net sales................................ $ 569,700 $ 628,000 $1,711,400 $1,866,400
Cost of sales............................ 427,600 427,400 1,257,500 1,320,000
----------- ------------ ----------- ------------
Gross earnings......................... 142,100 200,600 453,900 546,400
Selling, general and
administrative expenses................ 116,800 99,700 307,700 280,400
Goodwill amortization.................... 6,700 6,700 20,100 20,100
----------- ------------ ----------- ------------
Operating earnings..................... 18,600 94,200 126,100 245,900
Interest expense......................... (22,500) (25,400) (62,500) (79,800)
Other expense - net...................... (36,400) (400) (42,400) (3,300)
----------- ------------ ----------- ------------
Earnings (loss) before income tax
expense (benefit)................... (40,300) 68,400 21,200 162,800
Income tax expense (benefit)............. (2,200) 20,600 14,900 54,700
----------- ------------ ----------- ------------
Earnings (loss) from continuing
operations......................... (38,100) 47,800 6,300 108,100
Discontinued operations:
Loss on LMP litigation............. (101,200) - (101,200) -
----------- ------------ ----------- ------------
Net earnings (loss)................... $ (139,300) $ 47,800 $ (94,900) $ 108,100
=========== ============ =========== ============
Earnings (loss) per common share:
Continuing operations................. $ (0.52) $ 0.63 $ 0.08 $ 1.42
Discontinued operations............... (1.38) - (1.35) -
----------- ------------ ----------- ------------
Net earnings (loss) per common share.. $ (1.90) $ 0.63 $ (1.27) $ 1.42
=========== ============ =========== ============
Average common shares outstanding........ 73,200 76,400 74,900 76,200
=========== ============ =========== ============
</TABLE>
See accompanying notes.
3
<PAGE> 5
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)................................................. $ (94,900) $ 108,100
Adjustments to reconcile net earnings (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization.................................... 116,500 113,900
Deferred income tax expense...................................... 1,900 27,000
Increase in working capital...................................... (193,400) (121,400)
Loss on LMP litigation - net of $28,600 paid..................... 72,600 -
Other-net........................................................ (6,200) (3,500)
------------- -------------
Net cash provided by (used for) operating activities.......... (103,500) 124,100
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures................................................ (41,800) (27,100)
Other-net........................................................... (800) (2,200)
------------- -------------
Net cash used for investing activities........................ (42,600) (29,300)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt............................ 98,300 63,000
Proceeds under line-of-credit agreements............................ 975,000 308,500
Payments under line-of-credit agreements............................ (785,800) (483,100)
Principal payments on long-term debt and capital leases............. (11,800) (19,000)
Common stock issued................................................. 11,100 11,300
Common stock repurchased............................................ (141,200) -
------------- -------------
Net cash provided by (used for) financing activities.......... 145,600 (119,300)
------------- -------------
Net decrease in Cash and cash equivalents (including
restricted cash)................................................... (500) (24,500)
Cash and cash equivalents (including restricted cash)
at beginning of period............................................. 18,700 26,500
------------- -------------
Cash and cash equivalents (including restricted cash)
at end of period................................................... $ 18,200 $ 2,000
============= =============
</TABLE>
See accompanying notes.
4
<PAGE> 6
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The condensed consolidated financial statements contained herein should
be read in conjunction with the consolidated financial statements and
related notes contained in the Annual Report on Form 10-K of Fruit of the
Loom, Inc. (the "Company") for the year ended December 31, 1996. The
information furnished herein reflects all adjustments (consisting of
normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the results of operations of the
interim periods. Operating results for the three and nine months ended
September 30, 1997 are not necessarily indicative of results that may be
expected for the year ended December 31, 1997.
The Company uses the last-in, first-out ("LIFO") method of accounting
for the majority of inventories for financial reporting purposes. Interim
determinations of LIFO inventories are necessarily based on management's
estimates of year-end inventory levels and costs. Subsequent changes in
these estimates, including the final year-end LIFO determination, and the
effect of such changes on earnings are recorded in the interim periods in
which they occur.
2. No dividends were declared on the Company's common stock for the
nine-month periods ended September 30, 1997 and 1996.
3. The Company's effective income tax rate for the first nine months of 1997
was significantly impacted by the $32,000,000 charge related to the Acme
Boot Company guarantee for which no tax benefit was recorded (see Note 5).
Excluding this charge, the Company's effective income tax rate of 28% for
the nine-month period differed from the Federal statutory rate of 35%
primarily due to the impact of foreign earnings, certain of which are
taxed at lower rates than in the United States, partially offset by
goodwill amortization, a portion of which is not deductible for Federal
income taxes, and state income taxes. For the first nine months of 1996,
the Company's effective income tax rate differed from the Federal
statutory rate primarily due to foreign earnings, substantially offset by
goodwill amortization, state income taxes and interest on prior years'
income taxes.
The most significant difference in both years (excluding the $32,000,000
charge) relates to the impact of undistributed earnings of the foreign
subsidiaries, which is estimated to reduce the effective income tax rate
by 21.7% and 10.8% for the first nine months of 1997 and 1996,
respectively.
4. In 1995, management announced plans to close certain manufacturing
operations and to take other actions to reduce costs and improve
operations. As a result, the Company recorded charges of approximately
$372,900,000 ($287,400,000 after tax) related to impairment writedowns of
goodwill, costs associated with the closing or realignment of certain
domestic manufacturing facilities and attendant personnel reductions and
charges related to inventory writedowns and valuations, foreign operations
and other corporate issues. These charges were taken in an effort to
reduce the Company's cost structure, streamline operations and further
improve customer service.
5
<PAGE> 7
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
During the first quarter of 1997, the Company finalized certain of the
estimates recorded in connection with the above noted charges. As a
result of finalizing these estimates, earnings before income tax expense
for the first quarter of 1997 increased by $7,500,000. These amounts were
substantially offset by additional expenses recorded related to a
performance share compensation plan for certain executive officers earned
in the first quarter of 1997.
5. The Company and its subsidiaries are involved in certain legal
proceedings and have retained liabilities, including certain environmental
liabilities, such as those under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, its regulations and
similar state statutes ("Superfund Legislation"), in connection with the
sale of certain discontinued operations, some of which were significant
generators of hazardous waste. The Company and its subsidiaries have also
retained certain liabilities related to the sale of products in connection
with the sale of certain discontinued operations. The Company's retained
liability reserves at September 30, 1997 related to discontinued
operations consist primarily of certain environmental and product
liability reserves of approximately $70,600,000. The Company has recorded
receivables related to these environmental liabilities of approximately
$23,600,000 which management believes will be recovered from insurance and
other sources. Management believes that adequate reserves have been
established to cover potential claims based on facts currently available
and current Superfund Legislation.
Generators of hazardous wastes which were disposed of at offsite locations
which are now superfund sites are subject to claims brought by state and
Federal regulatory agencies under Superfund Legislation and by private
citizens under Superfund Legislation and common law theories. Since 1982,
the United States Environmental Protection Agency (the "EPA") has actively
sought compensation for response costs and remedial action at offsite
disposal locations from waste generators under the Superfund Legislation,
which authorizes such action by the EPA regardless of fault, legality of
original disposal or ownership of a disposal site. The EPA's activities
under the Superfund Legislation can be expected to continue during the
remainder of 1997 and future years.
In February 1986, the Company completed the sale of stock of its then
wholly owned subsidiary, Universal Manufacturing Corporation ("Universal")
to MagneTek, Inc. ("MagneTek"). At the time of the sale there was a suit
pending against Universal and the Company's predecessor, Northwest
Industries, Inc. ("Northwest"), by LMP Corporation ("LMP"). The suit (the
"LMP Litigation") alleged that Universal and Northwest fraudulently
induced LMP to sell its business to Universal and then suppressed the
development of certain electronic lighting ballasts in breach of the
agreement of sale, which required Universal to pay to LMP a percentage of
the net profits from such business from 1982 through 1986. Two additional
plaintiffs, Stevens Luminoptics Partnership and Calmont Technologies,
Inc., joined the litigation in 1986. In December 1989 and January 1990, a
jury returned certain verdicts against Universal and also returned
verdicts in favor of Northwest and on certain issues in favor of
Universal. A judgment totaling $25,800,000, of which $7,500,000
represented punitive damages, reflecting these verdicts was entered by the
Alameda County, California Superior Court in January 1990 against
Universal.
6
<PAGE> 8
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
In April 1992, the California Court of Appeals reversed the $25,800,000
judgment against Universal and affirmed those verdicts favorable to
Universal and Northwest. In July 1992, the California Supreme Court
denied the plaintiffs' petition for review. The case was then remanded to
the trial court.
Pursuant to the stock purchase agreement (the "Stock Purchase Agreement")
under which Universal was sold, the Company agreed to indemnify MagneTek
for a two-year period following the sale of Universal for certain
contingent liabilities. MagneTek brought suit against the Company for
declaratory and other relief in connection with the indemnification under
the Stock Purchase Agreement. In April 1992, the Los Angeles County,
California Superior Court found that the Company was obligated by the
Stock Purchase Agreement to indemnify MagneTek for any liability that may
be assessed against MagneTek or Universal in the LMP Litigation and to
reimburse MagneTek for, among other things, its costs and expenses in
defending that case. The court entered a judgment requiring the Company
to reimburse and indemnify MagneTek in two stages: currently, to
reimburse MagneTek for costs of defense and related expenses in the LMP
Litigation, plus costs of litigating the indemnity case with the Company;
and at a later date, if and when any liability in the LMP Litigation is
finally determined or a settlement is reached in that case, to reimburse
and/or indemnify MagneTek for that amount as well.
In October 1994, following a retrial of the LMP Litigation, a jury
returned a verdict of approximately $96,000,000 against Universal. The
jury verdict included breach of contract and fraud damages and
approximately $6,000,000 in punitive damages. The Company is obligated to
indemnify Universal for damages incurred in this case.
In August 1997, the Court of Appeal of the State of California upheld the
1994 judgment of $96,000,000 against Universal and MagneTek. In
accordance with an agreement between the Company and the plaintiffs, the
Company paid $28,600,000 to the plaintiffs on August 18, 1997. Under the
agreement, the Company will be required, should further appeals fail, to
pay an additional $71,400,000 plus interest dating from August 1, 1997.
As a result of the most recent judgement, the Company has taken a charge
of $101,200,000 in the third quarter of 1997 which is classified as
Discontinued operations in the Company's Condensed Consolidated Statement
of Operations. Although the payment is probable, the Company continues to
disagree with the decision by the Court of Appeal and has filed a petition
for review with the California Supreme Court.
In March 1988, a class action suit entitled Endo, et al v. Albertine, et
al. was filed in the United States District Court for the Northern
District of Illinois (the "District Court") against the Company, its then
directors, certain of its then executive officers, its then underwriters
and the Company's current independent auditors in connection with the
Company's initial public offering of Class A Common Stock and certain debt
securities in March 1987. The suit alleged, among other things,
violations of Federal and state securities laws against all of the
defendants, as well as breaches of fiduciary duties by the director and
officer defendants, and sought unspecified damages.
7
<PAGE> 9
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
In October 1997, the Company and the other remaining defendants reached a
tentative settlement with the plaintiff class. The settlement is subject
to preliminary approval by the District Court at a court hearing. If that
preliminary approval is given, the settlement is also subject to final
approval by the District Court, at another court hearing that will occur
after notice of the settlement and the right to object to the settlement
is provided to members of the plaintiff class. Assuming preliminary
approval of the settlement, it is not expected that final approval by the
District Court will occur before January 1998. As a result of the
foregoing, the trial that was scheduled to begin on November 3, 1997, has
been continued generally while this settlement process proceeds. The
additional cost recorded in the third quarter of 1997 of $1,500,000, net
of insurance proceeds, is included in Other expense-net in the Company's
Condensed Consolidated Statement of Operations, to reflect the settlement.
In November 1996, in connection with the sale of a substantial portion of
its hosiery operations and related assets, the Company guaranteed the
purchaser's $10,000,000 subordinated note payable to a bank. The note
bears interest at a rate of 7.66% per annum and is due November 2006.
In June 1994, pursuant to authorization from the Company's Board of
Directors, the Company guaranteed a loan from a bank in an amount up to
$12,000,000 to Mr. William Farley, the Company's Chairman and Chief
Executive Officer. In exchange for the guarantee the Company receives an
annual fee from Mr. Farley equal to 1% of the value of the loan covered by
the guarantee. The guarantee is secured by a second lien on certain
shares of the Company held by the bank for other loans made to Mr. Farley.
The Company has negotiated grants from the governments of the Republic of
Ireland, Northern Ireland and Germany. The grants are being used for
employee training, the acquisition of property and equipment and other
governmental business incentives such as general employment. At September
30, 1997, the Company has a contingent liability to repay, in whole or in
part, grants received of approximately $49,800,000 in the event that the
Company does not meet defined average employment levels or terminates
operations in the Republic of Ireland, Northern Ireland and Germany.
The Company has guaranteed, on an unsecured basis, the repayment of
certain debt incurred or created by Acme Boot Company, Inc. ("Acme Boot"),
formerly a wholly-owned subsidiary of the Company, under Acme Boot's bank
credit facilities (the "Acme Boot Credit Facilities"). Acme Boot is a
majority owned subsidiary of Farley Inc. ("FI"). Mr. Farley holds 100% of
the common stock of FI. At September 30, 1997, the Acme Boot Credit
Facilities provide for up to approximately $67,000,000 of loans and
letters of credit. The Acme Boot Credit Facilities are secured by liens on
substantially all of the assets of Acme Boot and its subsidiaries. At
September 30, 1997 approximately $64,000,000 in loans and letters of
credit were outstanding under the Acme Boot credit facilities. In
addition, the Company loaned Acme Boot $8,000,000 in August 1997 to
provide Acme Boot with supplemental working capital during Acme Boot's
peak selling season. The loan was made in the form of a demand note
payable and is senior to all indebtedness of Acme Boot.
8
<PAGE> 10
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
Summarized unaudited financial information for Acme Boot follows (in
thousands of dollars):
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
-------------- -------------
<S> <C> <C>
Current assets $ 33,400 $ 30,400
Noncurrent assets 3,800 1,600
-------------- -------------
$37,200 $32,000
============== =============
Current liabilities $ 83,100 $ 11,400
Noncurrent liabilities 8,900 68,400
Preferred stock 4,100 3,400
Common stockholders' deficit (58,900) (51,200)
-------------- -------------
$ 37,200 $ 32,000
</TABLE> ============== =============
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- --------------------------
1997 1996 1997 1996
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 12,100 $ 20,400 $ 35,500 $ 62,300
=========== ========= =========== ===========
Gross earnings $ 1,600 $ 4,200 $ 5,700 $ 16,400
=========== ========= =========== ===========
Operating loss ($ 2,500) ($ 3,700) ($ 5,700) ($ 7,800)
=========== ========= =========== ===========
Net loss ($ 3,600) ($ 4,800) ($ 9,400) ($ 10,200)
=========== ========= =========== ===========
</TABLE>
As a result of the operating performance of Acme Boot and management's
assessment of existing facts and circumstances of Acme Boot's financial
condition, the Company increased its reserve by $32,000,000 from
$35,000,000 to $67,000,000 during the third quarter to fully reserve the
Company's exposure under the Acme Boot guarantees.
In August 1994, the Company acquired Pro Player, Inc. ("Pro Player") for
approximately $55,700,000 including approximately $14,200,000 of Pro
Player debt which was repaid by the Company. The principals of Pro
Player, who are also key employees of that business, may also be entitled
to receive compensation of varying amounts in 1999 and 2000 up to a
maximum of $47,100,000 combined, based in part on the attainment of
certain levels of operating performance by the acquired entity.
9
<PAGE> 11
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
6. The Securities and Exchange Commission recently adopted new rules that
require expanded disclosure of accounting policies for derivative
financial instruments. The following accounting policy disclosures
supplement the disclosures included in the Summary of Significant
Accounting Policies in the Notes to Consolidated Financial Statements
contained in Item 8 of the Company's 1996 Annual Report on Form 10-K.
Cotton futures contracts are the primary derivative commodity instruments
utilized by the Company. These instruments are designated and effective
as hedges of a portion of the probable periodic cotton purchases that
would otherwise expose the Company to the risk of increases in the price
of cotton consumed in manufacturing the Company's products. The contract
terms match the Company's purchasing cycle. Options (caps and floors) are
also used but are not currently material to the Company's financial
condition or net income. Futures contracts are closed by cash settlement.
Open futures contracts are marked to market. Realized and unrealized
gains and losses are deferred and recognized in earnings as cotton costs
are recovered through sales of the Company's products (the deferral
accounting method). Deferred gains and losses are included in other
liabilities or assets and in cash flows from investing activities.
Unrealized changes in fair value of contracts no longer effective as
hedges would be recognized in income from the date the contracts become
ineffective until they are sold. Historically, the Company has not closed
futures contracts prior to fixing prices on cotton contracted for
delivery.
Interest rate swap agreements are the primary derivative financial
instruments utilized by the Company. These instruments limit the
Company's risk of exposure to increases in interest rates on selected
portions of its variable rate debt. These agreements involve the exchange
of amounts based on a variable interest rate for amounts based on fixed
interest rates over the life of the agreement without an exchange of the
notional amount upon which the payments are based. The differential to be
paid or received as interest rates change is accrued and recognized as an
adjustment of interest expense related to the debt (the accrual accounting
method). The related amount payable to or receivable from counterparties
is included in interest payable. The fair values of the swap agreements
are not recognized in the financial statements. Gains and losses on
terminations of interest-rate swap agreements would be deferred as an
adjustment to the carrying amount of the outstanding debt and amortized as
an adjustment to interest expense related to the debt over the remaining
term of the original contract life of the terminated swap agreement. In
the event of the early extinguishment of a designated debt obligation, any
realized or unrealized gain or loss from the swap would be recognized in
income coincident with the extinguishment. Any swap agreements that are
not designated with outstanding debt or notional amounts (or durations) of
interest-rate swap agreements in excess of the principal amounts (or
maturities) of the underlying debt obligations would be recorded as an
asset or liability at fair value, with changes in fair value recorded in
other income or expense (the fair value method).
10
<PAGE> 12
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING INFORMATION
The Company desires to provide investors with meaningful and useful
information. Therefore, this Quarterly Report on Form 10-Q contains certain
statements which describe the Company's beliefs concerning future business
conditions and the outlook for the Company based on currently available
information. Wherever possible, the Company has identified these "forward
looking" statements (as defined in Section 21E of the Securities Exchange Act
of 1934) by words such as "anticipates," "believes," "estimates," "expects" and
similar expressions. These forward looking statements are subject to risks and
uncertainties which could cause the Company's actual results, performance and
achievements to differ materially from those expressed in, or implied by, these
statements. These risks and uncertainties include but are not limited to the
following: the financial strength of the retail industry (particularly the
mass merchant channel), the level of consumer spending for apparel, demand for
the Company's activewear screenprint products, the competitive pricing
environment within the basic apparel segment of the apparel industry, the
Company's ability to develop, market and sell new products, the Company's
effective income tax rate, the Company's ability to successfully move
labor-intensive segments of the manufacturing process offshore, the success of
planned advertising, marketing and promotional campaigns, international
activities and the outcome of legal proceedings and other contingent
liabilities. The Company assumes no obligation to update publicly any forward
looking statements, whether as a result of new information, future events or
otherwise.
RESTRUCTURING AND SPECIAL CHARGES
In 1995, management announced plans to close certain manufacturing operations
and to take other actions to reduce costs and improve operations. As a result,
the Company recorded charges of approximately $372,900,000 ($287,400,000 after
tax) related to impairment write-downs of goodwill, costs associated with the
closing or realignment of certain domestic manufacturing facilities and
attendant personnel reductions and charges related to inventory write-downs and
valuations, foreign operations and other corporate issues. These charges were
taken in an effort to reduce the Company's cost structure, streamline
operations and further improve customer service.
By early 1998, the Company expects to complete the migration of its sewing
operations to lower cost, offshore locations along with the realignment of
certain domestic manufacturing operations. On August 7, 1997, the Company
announced plans to close one domestic plant and relocate sewing operations from
five additional domestic facilities, with the termination of approximately
4,800 production and administrative personnel at these facilities. In
conjunction with these actions, the Company incurred charges of $16,800,000 in
the third quarter of 1997 for production inefficiencies, severance, fringe
benefits (principally health insurance representing the net cost of COBRA),
lease termination and other costs. The majority of the charges incurred are
expected to result in cash payments. In addition, the Company incurred charges
of $4,800,000 in the third quarter of 1997 related to reduced work weeks to
balance inventories.
11
<PAGE> 13
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the accompanying
condensed consolidated financial statements and related notes for the period
ended September 30, 1997 and the Company's consolidated financial statements
and related notes contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
The table below sets forth selected operating data (in millions of dollars and
as percentages of net sales) of the Company.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- -------- -------- -----------
<S> <C> <C> <C> <C>
Net sales $ 569.7 $628.0 $1,711.4 $1,866.4
Gross earnings $ 142.1 $200.6 $ 453.9 $ 546.4
Gross margin 24.9% 31.9% 26.5% 29.3%
Operating earnings $ 18.6 $ 94.2 $ 126.1 $ 245.9
Operating margin 3.3% 15.0% 7.4% 13.2%
</TABLE>
NET SALES
Net sales decreased $58,300,000 or 9.3% in the third quarter and $155,000,000
or 8.3% in the first nine months of 1997 compared with the same periods of
1996, due mainly to significantly lower activewear sales in 1997 and inclusion
of hosiery sales in 1996. Third quarter underwear shipments were also off from
a year ago as retailers reduced inventory levels. The Company sold its hosiery
division in November 1996. Excessive T-shirt inventories at wholesale
activewear accounts and widespread promotional activity in the highly competive
wholesale activewear market were major negative factors. In addition, both
activewear and casualwear fleece shipments were hampered by product shortages.
Retail product sales, before considering hosiery sales ($28,600,000 in the
third quarter and $78,400,000 in the first nine months of 1996), declined
modestly in the third quarter of 1997 due to lower underwear sales but were
essentially equal to 1996 for the nine-month period. Sharply higher Gitano
sales and improved sales of Wilson* branded products were favorable factors in
both 1997 periods. Sports & Licensing sales improved in both 1997 periods
while European sales were essentially flat with volume improvement offset by
unfavorable currency translation.
*WILSON(R) is a registered trademark of Wilson Sporting Goods Company and is
used by the Company under license for the sale of sweatshirts and sweatpants,
T-shirts, shorts and other athletic activewear.
12
<PAGE> 14
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
GROSS EARNINGS
Gross earnings decreased $58,500,000 or 29.2% in the third quarter and
$92,500,000 or 16.9% in the first nine months of 1997 compared with the same
periods of 1996. Gross margin declined 7.0 percentage points to 24.9% in the
third quarter of 1997 and 2.8 percentage points to 26.5% for the first nine
months of 1997 compared to the same periods of 1996. The principal unfavorable
factor in the quarter was the absorption of $21,600,000 of costs due to reduced
work weeks to balance inventories or shutdowns at a number of manufacturing
facilities. Retail promotional activities and the inclusion of hosiery
earnings last year also had significant negative effects on the year to year
comparison. Activewear earnings were flat and gross margin improved compared
to the third quarter of 1996 primarily reflecting offshore cost benefits.
Sports & Licensing gross earnings improved and gross margin was essentially
flat. For the first nine months of 1997, unfavorable factors were as noted for
the quarter along with the impact of unfavorable activewear volume and retail
and activewear pricing and related promotional activities in the first half of
1997 compared with the first half of 1996.
OPERATING EARNINGS
Operating earnings declined $75,600,000 or 80.3% in the third quarter and
$119,800,000 or 48.7% in the first nine months of 1997 compared with the same
periods of 1996. Operating margin dropped 11.7 percentage points to 3.3% in
the third quarter and 5.8 percentage points to 7.4% for the first nine months
of 1997 compared with 1996. Gross earnings and margin were lower as noted
above, and the Company has continued to maintain increased levels of
advertising and promotion and to implement management information systems to
meet customer demand for more sophisticated distribution and inventory control.
Consequently, selling, general and administrative expense increased $17,100,000
or 17.2% in the third quarter and $27,300,000 or 9.7% in the first nine months
of 1997 over the respective 1996 periods. The nine-month period ended
September 30, 1997 included the finalization of certain of the estimates
recorded in connection with the special charges taken in 1995 which reduced
selling, general and administrative expenses by $7,500,000 in the first quarter
of 1997. Additional expenses of a substantially similar amount, however, were
also recorded in the first quarter of 1997 related to a performance share
compensation plan for certain executive officers. Selling, general and
administrative expense was 20.5% and 18.0% of sales in the third quarter and
first nine months of 1997 compared with 15.9% and 15.0% in the same periods of
1996, respectively.
INTEREST EXPENSE
Interest expense decreased $2,900,000 or 11.4% and $17,300,000 or 21.7% for the
third quarter and first nine months of 1997 compared with the same periods of
1996. The decrease was principally attributable to the effect of lower average
debt levels in 1997. The lower debt levels were due to repayment of debt out
of the Company's positive cash flow from operating activities in the fourth
quarter of 1996 (including the sale of accounts receivable) and proceeds from
the sale of the Company's hosiery division in November 1996.
13
<PAGE> 15
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
OTHER EXPENSE - NET
During the third quarter of 1997 the Company increased its reserve relating to
the Company's guarantees of debt incurred or created by Acme Boot under Acme
Boot's credit facilities by $32,000,000 from $35,000,000 to $67,000,000 to
fully reserve the Company's exposure under the guarantees. This charge is
reflected on the Other expense - net line of the Company's Condensed
Consolidated Statement of Operations. Other expense for the third quarter and
first nine months of 1997 included losses totaling $2,500,000 and $8,000,000
from sales of accounts receivable pursuant to its receivables purchase
agreement. Accounts receivable were not sold during the third quarter and
first nine months of 1996.
INCOME TAXES
The Company's effective income tax rate for the first nine months of 1997 was
significantly impacted by the $32,000,000 charge related to the Acme Boot
guarantee for which no tax benefit was recorded. Excluding this charge, the
Company's effective income tax rate of 28% for the nine-month period differed
from the Federal statutory rate of 35% primarily due to the impact of foreign
earnings, certain of which are taxed at lower rates than in the United States,
partially offset by goodwill amortization, a portion of which is not deductible
for Federal income taxes, and state income taxes. For the first nine months of
1996, the Company's effective income tax rate differed from the Federal
statutory rate primarily due to foreign earnings, substantially offset by
goodwill amortization, state income taxes and interest on prior years' income
taxes.
The most significant difference in both years (excluding the $32,000,000
charge) relates to the impact of undistributed earnings of the Company's
foreign subsidiaries, which is estimated to reduce the effective income tax
rate by 21.7% and 10.8% for the first nine months of 1997 and 1996,
respectively.
DISCONTINUED OPERATIONS
In August 1997, the Court of Appeal of the State of California upheld a 1994
judgment of $96,000,000 against Universal and MagneTek. In accordance with an
agreement between the Company and the plaintiffs, the Company paid $28,600,000
to the plaintiffs on August 18, 1997. Under the agreement, the Company will be
required, should further appeals fail, to pay an additional $71,400,000 plus
interest dating from August 1, 1997. As a result of the most recent judgement,
the Company has taken a charge of $101,200,000 in the third quarter of 1997
which is classified as discontinued operations in the Company's Condensed
Consolidated Statement of Operations. Although the payment is probable, the
Company continues to disagree with the decision by the Court of Appeal and has
filed a petition for review with the California Supreme Court.
14
<PAGE> 16
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
EARNINGS (LOSS) PER COMMON SHARE
In 1997, earnings (loss) per common share from continuing operations was a loss
of $.52 and earnings of $.08 for the third quarter and first nine months
compared to earnings of $.63 and $1.42 for the respective 1996 periods. The
loss per common share in 1997 from discontinued operations was $1.38 in the
third quarter and $1.35 in the first nine months.
LIQUIDITY AND CAPITAL RESOURCES
Funds generated from the Company's operations are the major source of liquidity
and are supplemented by funds obtained from capital markets including bank
facilities. The Company has available for the funding of its operations
approximately $945,000,000 from bank credit lines. As of October 31, 1997,
approximately $465,900,000 was available and unused under these facilities.
In September 1997, the Company entered into a five-year $900,000,000 credit
agreement with its banks. The agreement provides a $600,000,000 revolving
credit facility, a $200,000,000, 364-day facility, renewable annually, and a
$100,000,000 term loan facility.
Net cash used for operating activities was $103,500,000 in the nine months
ended September 30, 1997 compared with net cash provided by operating
activities of $124,100,000 in the same period of 1996. The unfavorable
comparison to 1996 resulted primarily from increased working capital, lower
revenues and the $28,600,000 paid August 18, 1997 under agreement with the
plaintiff to limit the Company's liability under the LMP litigation. The
comparison in working capital changes reflected a greater increase in
inventories partially offset by a lesser increase in receivables. The largest
single factor in the inventory growth comparison was the abnormally high level
of inventories at the beginning of the 1996 period. Lesser factors were
softness in 1997 shipments and, to a limited extent, issues related to the
offshore movement of the Company's sewing and support, and packaging
operations. The favorable comparison in receivable growth reflected lower
revenues and the conclusion of promotional dating programs.
Net cash used for investing activities in the nine months ended September 30,
1997 and 1996 was $42,600,000 and $29,300,000, respectively. Capital
expenditures were $41,800,000 and $27,100,000 in the first nine months of 1997
and 1996, respectively. Capital spending, primarily to enhance finished cloth
manufacturing capabilities and to establish and support offshore assembly
operations, is anticipated to approximate $65,000,000 in 1997.
Net cash provided by financing activities in the nine months ended September
30, 1997 was $145,600,000. Net cash used for financing activities was
$119,300,000 in the comparable 1996 period. In 1997 the Company borrowed a net
of $189,200,000 under its revolving credit facilities, compared with a net
repayment of $174,600,000 in 1996. The Company also borrowed $100,000,000
under its bank term loan facility in 1997 and repurchased a total of
$141,200,000 of its common stock. Total long-term debt
15
<PAGE> 17
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES - (CONTINUED)
(including current portion) was $1,151,600,000 at September 30, 1997, down
$157,100,000 from September 30, 1996.
In November 1996, the Company's Board of Directors authorized the purchase of
up to $200,000,000 of the Company's common stock in open market and privately
negotiated transactions. Total purchases under the program through September
30, 1997 were 4,459,300 shares at an aggregate cost of $158,000,000.
In December 1996, the Company entered into a three-year receivables purchase
agreement whereby it can currently sell up to a $250,000,000 undivided interest
in a defined pool of its trade accounts receivable. The maximum amount
outstanding as defined under the agreement varies based upon the level of
eligible receivables. Under the agreement, approximately $200,000,000 of trade
accounts receivable had been sold at September 30, 1997 and December 31, 1996.
The proceeds were used to reduce amounts outstanding under the Company's
revolving lines of credit.
In September 1994, the Company entered into a five-year operating lease
agreement, with two annual renewal options, primarily for certain machinery and
equipment. The total cost of the assets to be covered by the lease is limited
to $175,000,000. At September 30, 1997, approximately $30,400,000 was
available and unused under this facility. The lease provides for a substantial
residual value guarantee by the Company at the termination of the lease and
includes purchase and renewal options at fair market values.
On July 11, 1997, the Company filed with the Securities and Exchange Commission
a shelf registration statement on Form S-3 (the "Registration Statement") to
register under the Securities Act of 1933, as amended, the sale of up to
$850,000,000 of its debt securities, preferred stock and Class A Common Stock
(collectively, the "Securities"). The Registration Statement does not relate
to any particular offering of Securities; rather, the Registration Statement
was filed to provide the Company with the flexibility to engage in future
offerings without the delay which could result from the filing of new
registration statements at that time. The types of Securities offered, and
their terms, will be determined prior to any particular offering. The Company
anticipates that the net proceeds from any future sale of the Securities would
be used for general corporate purposes, including, but not limited to, working
capital, capital expenditures, expansion of existing properties, development of
new projects, prepayment of outstanding indebtedness, investments and
acquisitions.
Management believes the funding available to the Company is sufficient to meet
anticipated requirements for capital expenditures, working capital and other
needs. The Company's debt instruments, principally its bank agreements,
contain covenants restricting the Company's ability to sell assets, incur debt,
pay dividends and make investments and require the Company to maintain certain
financial ratios.
16
<PAGE> 18
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("Statement No. 128"), Earnings per
Share, which is required to be adopted on December 31, 1997. At that time, the
Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Statement No. 128 is not
expected to have any impact on the Company's computation of primary earnings
per share.
The Company does expect to include a computation of diluted earnings per share
in future periods for the effect of common stock equivalents. As a result of
the net loss in the third quarter of 1997, the Company does not expect any
impact in diluted earnings per common share for the third quarter and first
nine months of 1997.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("Statement No. 131"), Disclosures about
Segments of an Enterprise and Related Information, which is required to be
adopted for years beginning after December 15, 1997. Statement No. 131
requires that companies disclose segment data based on how management makes
decisions about allocating resources to segments and measuring their
performance. The Company is currently evaluating the requirements of Statement
No. 131.
Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 125 ("Statement No. 125"), Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, which
requires an entity to recognize the financial and servicing assets it controls
and the liabilities it has incurred and to derecognize financial assets when
control has been surrendered in accordance with the criteria provided in
Statement No. 125. Adoption of Statement No. 125 did not have a material
impact on the condensed consolidated financial statements.
17
<PAGE> 19
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The response to this item is incorporated by reference to the accompanying
condensed consolidated financial statements and related notes for the period
ended September 30, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
4(a) $900,000,000 Credit Agreement dated as of September 19, 1997, among the
several banks and other financial institutions from time to time parties
thereto (the "Lenders"), NationsBank, N.A., as administrative agent for
the Lenders thereunder, Chase Manhattan Bank, Bankers Trust Company, The
Bank of New York and the Bank of Nova Scotia, as co-agents.
4(b)* Rights Agreement, dated as of March 8, 1996 between Fruit of the Loom,
Inc. and Chase Mellon Shareholder Services, L.L.C., Rights Agent
(incorporated herein by reference to Exhibit 4(c) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995).
27 Financial Data Schedule.
99.1* Press Release of Registrant dated October 22, 1997 (incorporated herein
by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K
filed on October 27, 1997).
_______________________________
* Document is available at the Public Reference Section of the Securities and
Exchange Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D. C.
20549 (Commission file No. 1-8941).
The Registrant has not listed nor filed as an Exhibit to this Quarterly Report
certain instruments with respect to long-term debt representing indebtedness of
the Registrant and its subsidiaries which do not individually exceed 10% of the
total assets of the Registrant and its subsidiaries on a consolidated basis.
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the Registrant agrees to
furnish such instruments to the Securities and Exchange Commission upon
request.
B. REPORTS ON FORM 8-K
No report on Form 8-K was filed by the Registrant during the quarter ended
September 30, 1997.
18
<PAGE> 20
SIGNATURE
Pursuant to the requirements 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.
FRUIT OF THE LOOM, INC.
-----------------------
(Registrant)
Date: November 5, 1997 LARRY K. SWITZER
-----------------------
Larry K. Switzer
Senior Executive Vice President
and Chief Financial Officer
(Principal Financial Officer
and duly authorized to sign
on behalf of Registrant)
19
<PAGE> 1
Exhibit 4(a)
CREDIT AGREEMENT
among
FRUIT OF THE LOOM, INC.
as Borrower,
AND
CERTAIN SUBSIDIARIES OF FRUIT OF THE LOOM, INC.
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.
as Administrative Agent
BANKERS TRUST COMPANY
as Syndication Agent
THE CHASE MANHATTAN BANK
AND
THE BANK OF NOVA SCOTIA
as Co-Documentation Agents
and
THE BANK OF NEW YORK
as L/C Agent
DATED AS OF SEPTEMBER 19, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS...................................................... 1
1.1 Definitions........................................................................... 1
1.2. Computation of Time Periods and Other Definitional Provisions........................ 25
1.3. Accounting Terms..................................................................... 25
SECTION 2 CREDIT FACILITIES..................................................................... 26
2.1. Revolving-A Loans.................................................................... 26
2.2 Letter of Credit Subfacility.......................................................... 26
2.3 Swing Line Loans Subfacility.......................................................... 32
2.4 Revolving-B Loans..................................................................... 33
2.5 Method of Borrowing for Revolving Loans............................................... 34
2.6 Funding of Revolving Loans............................................................ 34
2.7 Reductions of Revolving Committed Amounts............................................. 35
2.8 Term Loans............................................................................ 35
2.9 Continuations and Conversions......................................................... 37
2.10 Minimum Amounts of Loans............................................................. 38
2.11 Notes................................................................................ 38
2.12 Currency Equivalents................................................................. 39
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF
CREDIT....................................................................... 39
3.1. Interest............................................................................. 39
3.2 Place and Manner of Payments.......................................................... 39
3.3 Prepayments........................................................................... 40
3.4 Fees.................................................................................. 41
3.5 Payment in full at Maturity........................................................... 42
3.6 Computations of Interest and Fees..................................................... 42
3.7 Pro Rata Treatment.................................................................... 43
3.8 Sharing of Payments................................................................... 44
3.9 Capital Adequacy...................................................................... 45
3.10 Inability To Determine Eurocurrency Rate or Make Loans in Foreign.................... 45
Currency.................................................................................. 45
3.11 Illegality........................................................................... 46
3.12 Requirements of Law.................................................................. 46
3.13 Taxes................................................................................ 47
3.14 Compensation......................................................................... 50
3.15 Substitution of Lender; Relocation................................................... 50
3.16 All Borrowers Treated Equally........................................................ 51
SECTION 4 GUARANTY.............................................................................. 51
4.1 Guaranty of Payment................................................................... 51
4.2 Obligations Unconditional............................................................. 51
</TABLE>
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<TABLE>
<S> <C>
4.3 Modifications........................................................................ 52
4.4 Waiver of Rights..................................................................... 53
4.5 Reinstatement........................................................................ 53
4.6 Remedies............................................................................. 53
4.7 Limitation of Guaranty............................................................... 54
4.8 Rights of Contribution............................................................... 54
SECTION 5 CONDITIONS PRECEDENT................................................................. 54
5.1 Closing Conditions................................................................... 54
5.2 Conditions to All Extensions of Credit............................................... 56
SECTION 6 REPRESENTATIONS AND WARRANTIES....................................................... 57
6.1 Financial Condition.................................................................. 57
6.2 No Material Change................................................................... 58
6.3 Organization and Good Standing....................................................... 58
6.4 Due Authorization.................................................................... 58
6.5 No Conflicts......................................................................... 58
6.6 Consents............................................................................. 58
6.7 Enforceable Obligations.............................................................. 59
6.8 No Default........................................................................... 59
6.9 Ownership............................................................................ 59
6.10 Indebtedness........................................................................ 59
6.11 Litigation.......................................................................... 59
6.12 Taxes............................................................................... 59
6.13 Compliance with Law................................................................. 60
6.14 ERISA............................................................................... 60
6.15 Subsidiaries........................................................................ 61
6.16 Use of Proceeds; Margin Stock....................................................... 61
6.17 Government Regulation............................................................... 62
6.18 Environmental Matters............................................................... 62
6.19 Intellectual Property............................................................... 63
6.20 Solvency............................................................................ 64
6.21 Investments......................................................................... 64
6.22 Disclosure.......................................................................... 64
6.23 Licenses, etc....................................................................... 64
6.24 No Burdensome Restrictions.......................................................... 64
SECTION 7 AFFIRMATIVE COVENANTS................................................................ 64
7.1 Information Covenants................................................................ 65
7.2 Financial Covenants.................................................................. 68
7.3 Preservation of Existence and Franchises............................................. 68
7.4 Books and Records.................................................................... 69
7.5 Compliance with Law.................................................................. 69
7.6 Payment of Taxes and Other Indebtedness.............................................. 69
7.7 Insurance............................................................................ 69
7.8 Maintenance of Property.............................................................. 69
</TABLE>
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<TABLE>
<S> <C>
7.9 Performance of Obligations........................................................... 70
7.10 Use of Proceeds..................................................................... 70
7.11 Audits/Inspections.................................................................. 70
7.12 Additional Credit Parties........................................................... 70
7.13 Collateral Effective Date........................................................... 71
SECTION 8 NEGATIVE COVENANTS................................................................... 72
8.1 Indebtedness......................................................................... 72
8.2 Liens................................................................................ 73
8.3 Nature of Business................................................................... 73
8.4 Consolidation and Merger............................................................. 74
8.5 Sale or Lease of Assets.............................................................. 74
8.6 Sale Leasebacks...................................................................... 75
8.7 Advances, Investments and Loans...................................................... 76
8.8 Restricted Payments.................................................................. 76
8.9 Transactions with Affiliates......................................................... 76
8.10 Fiscal Year; Organizational Documents............................................... 76
8.11 No Limitations...................................................................... 77
8.12 No Other Negative Pledges........................................................... 77
8.13 Receivables Securitization.......................................................... 77
8.14 Limitation on Non Credit Party Operations........................................... 77
SECTION 9 EVENTS OF DEFAULT.................................................................... 78
9.1 Events of Default.................................................................... 78
9.2 Acceleration; Remedies............................................................... 80
9.3 Allocation of Payments After Event of Default........................................ 81
SECTION 10 AGENCY PROVISIONS................................................................... 83
10.1 Appointment......................................................................... 83
10.2 Delegation of Duties................................................................ 83
10.3 Exculpatory Provisions.............................................................. 83
10.4 Reliance on Communications.......................................................... 84
10.5 Notice of Default................................................................... 84
10.6 Non-Reliance on Agents and Other Lenders............................................ 84
10.7 Indemnification..................................................................... 85
10.8 Agents in Their Individual Capacity................................................. 85
10.9 Successor Agent..................................................................... 86
SECTION 11 MISCELLANEOUS....................................................................... 86
11.1 Notices............................................................................. 86
11.2 Right of Set-Off.................................................................... 86
11.3 Benefit of Agreement................................................................ 87
11.4 No Waiver; Remedies Cumulative...................................................... 89
11.5 Payment of Expenses; Indemnification................................................ 89
11.6 Amendments, Waivers and Consents.................................................... 90
11.7 Counterparts........................................................................ 91
</TABLE>
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<TABLE>
<S> <C>
11.8 Headings............................................................................ 91
11.9 Defaulting Lender................................................................... 91
11.10 Survival of Indemnification and Representations and Warranties..................... 92
11.11 Governing Law; Jurisdiction........................................................ 92
11.12 Waiver of Jury Trial............................................................... 93
11.13 Time. ............................................................................. 93
11.14 Severability....................................................................... 93
11.15 Further Assurances................................................................. 93
11.16 Confidentiality.................................................................... 93
11.17 Entirety........................................................................... 94
11.18 Binding Effect..................................................................... 94
11.19 Survival of Rights; Remedies....................................................... 94
11.20 Collateral Termination Date........................................................ 94
</TABLE>
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<TABLE>
<S> <C>
SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 1.2 Receivables Documents
Schedule 2.2 Existing Letters of Credit
Schedule 3.1 MLA Cost
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.21 Investments
Schedule 7.13 Representation Regarding Collateral Documents
Schedule 8.2 Liens
Schedule 8.6 Existing Sale Leaseback Transactions
Schedule 8.9 Existing Transactions with Affiliates
Schedule 8.11 Existing Accounts Receivable Securitization Transactions
Schedule 11.1 Notices
EXHIBITS
Exhibit 2.3(b) Form of Swing Line Loan Request
Exhibit 2.5 Form of Notice of Borrowing
Exhibit 2.9 Form of Notice of Continuation/Conversion
Exhibit 2.11(a) Form of Revolving-A Promissory Note
Exhibit 2.11(b) Form of Revolving-B Promissory Note
Exhibit 2.11(c) Form of Swing Line Loan Note
Exhibit 2.11(d) Form of Term Loan Note
Exhibit 7.1(c) Form of Officer's Certificate
Exhibit 7.12 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
</TABLE>
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<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), is entered into as of
September 19, 1997 among FRUIT OF THE LOOM, INC., a Delaware corporation
("Borrower"), each of the Borrower's Material Domestic Subsidiaries
(individually a "Guarantor" and collectively the "Guarantors"), the Lenders (as
defined herein), and NATIONSBANK, N.A., as Administrative Agent for the
Lenders, Bankers Trust Company, as Syndication Agent, The Chase Manhattan Bank
and The Bank of Nova Scotia, as Co-Documentation Agents and The Bank of New
York, as L/C Agent.
RECITALS
WHEREAS, the Borrower and the Guarantors have requested the Lenders to
provide a senior credit facility in the amount of $900 million; and
WHEREAS, the Lenders party hereto have agreed to make the requested senior
credit facility available to the Borrower on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date, as provided in Section 7.12.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurocurrency Rate" means the Eurocurrency Rate plus the
Applicable Percentage.
"Administrative Agent" means NationsBank, N.A. (or any successor
thereto) or any successor administrative agent appointed pursuant to
Section 10.9.
<PAGE> 8
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including without limitation all
directors and officers of any other Person directly or indirectly
controlling 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.
"Agency Services Address" means NationsBank, N.A., NC1-001-15-04,
101 North Tryon Street, Charlotte, North Carolina 28255, Attn: Agency
Services, or such other address as may be identified by written notice
from the Administrative Agent to the Borrower.
"Agents" mean the Administrative Agent, the Collateral Agent and any
successors and assigns in either such capacity.
"Applicable Percentage" means the appropriate applicable percentages
corresponding to the lowest Pricing Level available, as determined by
either the Leverage Ratio or the Unsecured Senior Debt Rating in effect
as of the most recent Calculation Date, as shown below:
2
<PAGE> 9
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Applicable Applicable
Percentage Applicable Applicable Percentage Applicable
for Percentage for Applicable Percentage for Percentage
Unsecured Revolving-A Revolving-B Percentage for Letter Revolving- for
Pricing Leverage Senior Eurocurrency Eurocurrency for Term of A Facility Revolving-B
Level Ratio Debt Rating Loans Loans Loans Credit Fees Fees Facility Fees
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
I N/A >= BBB+ from S&P or .205% .24% .30% .205% .095% .06%
Baa1 from Moody's
- -----------------------------------------------------------------------------------------------------------------------------------
II N/A >= BBB from S&P or .25% .27% .35% .25% .10% .08%
Baa2 from Moody's
but < BBB+ from S&P
or Baa1 from
Moody's
- -----------------------------------------------------------------------------------------------------------------------------------
III >= 2.0 to >= BBB- from S&P or .30% .33% .45% .30% .15% .12%
1.0 but < Baa3 from Moody's
2.5 to 1.0 but BBB from S&P
or Baa2 from
Moody's
- -----------------------------------------------------------------------------------------------------------------------------------
IV >= 2.5 to >= BB+ from S&P or Ba1 .40% .45% .60% .40% .20% .15%
1.0 but < from Moody's but
3.25 to BBB- from S&P or
1.0 Baa3 from Moody's
- -----------------------------------------------------------------------------------------------------------------------------------
V >= 3.25 to >= BB from S&P or Ba2 .55% .60% .80% .55% .25% .20%
1.0 but < from Moody's but
4.0 to 1.0 BB+ from S&P or Ba1
from Moody's
- -----------------------------------------------------------------------------------------------------------------------------------
VI >=4.0 to =< BB- from S&P or Ba3 .80% .85% 1.10% .80% .30% .25%
1.0 from Moody's
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------
Applicable
Percentage
for
Pricing Base Rate
Level Loans
- -----------------------------------------
<S> <C>
I 0%
- -----------------------------------------
II 0%
- -----------------------------------------
III 0%
- -----------------------------------------
IV 0%
- -----------------------------------------
V 0%
- -----------------------------------------
VI 0%
- -----------------------------------------
</TABLE>
3
<PAGE> 10
The Applicable Percentage for Loans, the Letter of Credit Fees and the
Facility Fees shall, in each case, be determined and adjusted on the date (each
a "Calculation Date") five Business Days after (x) the date by which the
Borrower is required to provide the officer's certificate in accordance with the
provisions of Section 7.1(c) or (y) the date there is a change in the Unsecured
Senior Debt Rating; provided that the initial Applicable Percentage for Loans,
the Letter of Credit Fees and the Facility Fees shall be based on Pricing Level
III (as shown above) and shall remain at Pricing Level III until the Unsecured
Senior Debt Rating has been (i) changed by S&P and/or Moody's or (ii) reaffirmed
by S&P and, thereafter, the Pricing Level shall be determined by the then
current Leverage Ratio or Unsecured Senior Debt Rating, as applicable; and
provided further that if the Borrower fails to timely provide the officer's
certificate required by Section 7.1(c), the Applicable Percentage for Loans, the
Letter of Credit Fees and the Facility Fees shall be based on the then current
Unsecured Senior Debt Rating until such time that an appropriate officer's
certificate is provided whereupon the Pricing Level shall be determined by the
then current Leverage Ratio or Unsecured Senior Debt Rating, as applicable.
Each determination of the Applicable Percentage shall be effective from one
Calculation Date until the next Calculation Date. Any adjustment in the
Applicable Percentage shall be applicable to all existing Loans and Letters of
Credit as well as any new Loans made or Letters of Credit issued.
In the event the two Unsecured Senior Debt Ratings would provide for two
different Pricing Levels, the Pricing Level determined by reference to the
Unsecured Senior Debt Rating shall be the Pricing Level that is one level lower
(i.e. lower pricing) than the highest (i.e. most expensive) Pricing Level
indicated by the two Unsecured Senior Debt Ratings.
The Borrower shall promptly deliver to the Administrative Agent, at the
address set forth on Schedule 11.1 and at the Agency Services Address,
information regarding any change in the Unsecured Senior Debt Rating, as
determined by S&P and Moody's, that would change the existing Pricing Level
pursuant to the preceding paragraph.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Base Rate" means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greater of
(a) the Federal Funds Rate in effect on such day plus 1/2 of 1% or (b) the
Prime Rate in effect on such day. If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable after due inquiry to ascertain the Federal Funds Rate
for any reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms hereof, the Base
Rate shall be determined without regard to clause (a) of the first sentence of
this definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or the Federal Funds Rate, respectively.
4
<PAGE> 11
"Base Rate Loan" means any Swing Line Loan and any other Loan bearing
interest at a rate determined by reference to the Base Rate.
"Borrower" means Fruit of the Loom, Inc., a Delaware corporation,
together with any 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 or required by
law or other governmental action to close in Chicago, Illinois, Charlotte, North
Carolina or New York, New York; provided that in the case of Eurocurrency Loans,
such day is also a day on which dealings between banks are carried on in U.S.
dollar deposits in the London interbank market; provided further that in the
case of Loans made in any Foreign Currency, such day is also a day on which
dealings between banks are carried on in U.S. dollar deposits and in such
Foreign Currency in the London interbank market.
"Calculation Date" has the meaning set forth in the definition of
Applicable Percentage.
"Capital Expenditures" means all expenditures of the Credit Parties and
their Subsidiaries which, in accordance with GAAP, would be classified as
capital expenditures, including, without limitation, Capital Leases.
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twenty-four months from the date of acquisition, (b) U.S. dollar
denominated time and demand deposits and certificates of deposit of (i) any
Lender, (ii) any domestic commercial bank having capital and surplus in excess
of $500,000,000 or (iii) any bank whose short-term commercial paper rating from
S&P is at least A-2 or the equivalent thereof or from Moody's is at least P-2 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, or
Investments in overnight Nassau time deposits and Eurocurrency deposits in
branches or offices of an Approved Bank, (c) commercial paper and variable or
fixed rate notes issued by any Approved Bank (or by the parent company thereof)
or any variable rate notes issued by, or guaranteed by, any domestic corporation
rated A-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, (d) repurchase agreements with a bank or trust company (including
any of the Lenders) or recognized securities dealer having capital and surplus
in excess of $500,000,000 for direct obligations
5
<PAGE> 12
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) and having, on the date of purchase thereof, a fair market value
of at least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of 1940,
as amended, which are administered by reputable financial institutions having
capital of at least $500,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing subdivisions (a)
through (d).
"Change of Control" means any of the following events: (a) other than as
a result of the share repurchases permitted pursuant to Sections 7.10(e) and
8.8(iii), any "person" or "group" (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) has become, directly or indirectly, the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
Person shall be deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), by way of merger, consolidation
or otherwise, of 35% or more of the voting power of the Voting Stock of the
Borrower on a fully-diluted basis, after giving effect to the conversion and
exercise of all outstanding warrants, options and other securities of the
Borrower (whether or not such securities are then currently convertible or
exercisable), or (b) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the board of
directors of the Borrower cease for any reason to constitute a majority of the
directors of the Borrower then in office unless such new directors were elected
by the directors of the Borrower who constituted the board of directors of the
Borrower at the beginning of such period.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended, modified, succeeded or replaced
from time to time.
"Collateral" means all collateral described in and covered by the
Collateral Documents.
"Collateral Agent" means NationsBank, N.A. (or any successor thereto) or
any successor collateral agent appointed pursuant to Section 10.9.
"Collateral Documents" means the Pledge Agreements, and such other
documents executed and delivered in connection with the attachment and
perfection of the Lenders' security interests in the Collateral, including
without limitation, UCC financing statements; provided that it is understood
that such Collateral Documents will be effective only during a Collateral
Period.
6
<PAGE> 13
"Collateral Effective Date" means any date that the Unsecured Senior
Debt Rating is BB+ or worse from S&P and Ba1 or worse from Moody's.
"Collateral Period" means the period in time from a Collateral Effective
Date until a subsequent Collateral Termination Date.
"Collateral Termination Date" means any date after a Collateral
Effective Date that the Unsecured Senior Debt Rating is better than BB+ from S&P
or Ba1 from Moody's.
"Commission" means the United States Securities and Exchange Commission.
"Commitments" means the commitment of each Lender with respect to the
Revolving-A Committed Amount, the Revolving-B Committed Amount and the Term Loan
Committed Amount, and the commitment of NationsBank with respect to the Swing
Line Committed Amount.
"Consolidated Net Tangible Assets" means the total assets shown on the
balance sheet of the Borrower and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP as of the end of the most recent
fiscal quarter of the Borrower ending at least 45 days prior to the taking of
any action for the purpose of which the determination is being made, less (i)
all current liabilities and minority interests and (ii) goodwill and other
intangibles.
"Consolidated Total Assets" means, as of any date of determination, the
total assets shown on the balance sheet of the Borrower and its consolidated
Subsidiaries, as determined on a consolidated basis in accordance with GAAP.
"Credit Documents" means this Credit Agreement, the Notes, any Joinder
Agreement, the Collateral Documents, the LOC Documents, and all other related
agreements and documents issued or delivered hereunder or thereunder or pursuant
hereto or thereto and pertaining to the Loans.
"Credit Parties" means the Borrower and the Guarantors and "Credit
Party" means any one of them.
"Credit Party Obligations" means, without duplication, (a) all of the
obligations of the Credit Parties to the Lenders (including the Issuing Lenders)
and the Agents, whenever arising, under this Credit Agreement, the Notes, the
Collateral Documents or any of the other Credit Documents to which the Borrower
or any other Credit Party is a party and (b) all liabilities and obligations
owing from such Credit Party to any Lender, or any Affiliate of a Lender,
arising under Hedging Agreements or Loans actually made by an Affiliate of a
Lender; including, without limitation (to the extent permitted by applicable
law), any amounts that would have accrued but for the automatic stay under the
Bankruptcy Code.
7
<PAGE> 14
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a) has failed
to make a Loan or purchase a Participation Interest required pursuant to the
terms of this Credit Agreement (but only for so long as such Loan is not made or
such Participation Interest is not purchased), (b) has failed to pay to the
Agents or any Lender an amount owed by such Lender pursuant to the terms of this
Credit Agreement (but only for so long as such amount has not been repaid) or
(c) has been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.
"Dollars" and "$" means dollars in lawful currency of the United States
of America.
"Domestic Subsidiary" means each direct and indirect Subsidiary of the
Borrower that (a) is domiciled, incorporated or organized under the laws of any
State of the United States or the District of Columbia or (b) maintains the
major portion of its assets (determined on a consolidated basis) in the United
States of America.
"EBIT" means, for any period, with respect to the Credit Parties and
their Subsidiaries on a consolidated basis, the sum of (a) Net Income for such
period (excluding the effect of any extraordinary or other non-recurring gains
(including any gain from the sale of property) or non-cash losses to the extent
that any such gain or loss is required in accordance with GAAP to be disclosed
as a separate line item in the financial statements of the Credit Parties) plus
(b) an amount which, in the determination of Net Income for such period, has
been deducted for (i) Interest Expense for such period, (ii) total Federal,
state, foreign or other income taxes for such period, all as determined in
accordance with GAAP, (iii) charges for such period associated with the lawsuit
brought by L.M.P. Corporation against Universal Manufacturing Corporation and
Northwest Industries, Inc., but only to the extent such charges, together with
related charges from prior periods, do not exceed $100 million in the aggregate,
(iv) charges for such period associated with satisfying Guaranty Obligations
incurred for the benefit of Acme Boot Company, Inc., but only to the extent such
charges, together with related charges from prior periods (but only to the
extent such related charges were incurred on or subsequent to the Closing Date),
do not exceed $40 million in the aggregate from the Closing Date and (v) charges
for such period associated with additional compensation or earnouts paid in
connection with the 1994 acquisition of Pro Player, Inc., but only to the extent
such charges, together with related charges from prior periods, do not exceed
$47.1 million in the aggregate.
"EBITDA" means, for any period, with respect to the Credit Parties and
their Subsidiaries on a consolidated basis, the sum of (a) EBIT plus (b) all
depreciation and amortization for such period, all as determined in accordance
with GAAP.
"Effective Date" means the date on which the conditions set forth in
Section 5.1 shall have been fulfilled (or waived in the sole discretion of the
Lenders) and on which the
8
<PAGE> 15
initial Loans shall have been made and/or the initial Letters of Credit shall
have been issued, but in no event later than September 30, 1997.
"Eligible Assignee" means (a) any Lender or Affiliate or subsidiary of a
Lender and (b) any other commercial bank, financial institution, mutual fund,
institutional lender or "accredited investor" (as defined in Regulation D of the
Securities and Exchange Commission).
"Environmental Claim" means any investigation, written notice,
violation, written demand, written allegation, action, suit, injunction,
judgment, order, consent decree, penalty, fine, lien, proceeding, or written
claim whether administrative, judicial, or private in nature arising (a)
pursuant to, or in connection with, an actual or alleged violation of, any
Environmental Law, (b) in connection with any Hazardous Material, (c) from any
assessment, abatement, removal, remedial, corrective, or other response action
in connection with an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged damage, injury, threat, or harm to
health, safety, natural resources, or the environment.
"Environmental Laws" means any current or future legal requirement of
any Governmental Authority pertaining to (a) the protection of health, safety,
and the indoor or outdoor environment, (b) the conservation, management, or use
of natural resources and wildlife, (c) the protection or use of surface water
and groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure to, any
hazardous or toxic substance or material or (e) pollution (including any release
to land surface water and groundwater) and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC
9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC
6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401
et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and
Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of 1990,
33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986,
42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321 et
seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any
analogous implementing or successor law, and any amendment, rule, regulation,
order, or directive issued thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
9
<PAGE> 16
"ERISA Affiliate" means an entity, whether or not incorporated, which is
under common control with any Credit Party or any of its Subsidiaries within the
meaning of Section 4001(a)(14) of ERISA, or is a member of a group which
includes any Credit Party or any of its Subsidiaries and which is treated as a
single employer under Sections 414(b), (c), (m), or (o) of the Code.
"Eurocurrency Loan" means a Loan bearing interest based at a rate
determined by reference to the Eurocurrency Rate.
"Eurocurrency Rate" means, for the Interest Period for each Eurocurrency
Loan comprising part of the same borrowing (including conversions, extensions
and renewals), a per annum interest rate determined pursuant to the following
formula:
London Interbank Offered Rate
Eurocurrency Rate = -----------------------------------
1 - Eurocurrency Reserve Percentage
"Eurocurrency Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurocurrency Loans is determined), whether or not any
Lender has any Eurocurrency liabilities subject to such reserve requirement at
that time. The Eurocurrency Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Percentage.
"Event of Default" means any of the events or circumstances described in
Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, as amended, modified,
succeeded or replaced from time to time.
"Existing Credit Agreement" means that certain Credit Agreement, dated
as of August 16, 1993, among Fruit of the Loom, Inc., as the borrower, Bankers
Trust Company as Administrative Agent and the other lenders party thereto, as it
has been amended or modified from time to time.
"Existing Letters of Credit" shall mean the Letters of Credit set forth
on Schedule 2.2.
10
<PAGE> 17
"Extension of Credit" means, as to any Lender, the making of a Loan by
such Lender (or a participation therein by a Lender) or the issuance of, or
participation in, a Letter of Credit by such Lender.
"Facility Fees" means the fees payable to the Lenders pursuant to
Section 3.4(a).
"Federal Funds Rate" means for any day the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day and (b) if no such rate is so published on such next
preceding Business Day, the Federal Funds Rate for such day shall be the average
rate quoted to the Administrative Agent on such day on such transactions as
determined by the Administrative Agent.
"Fee Letter" means that certain letter agreement between the Borrower
and the Administrative Agent dated as of July 25, 1997.
"Financial Officer" means, with respect to any Person, the chief
financial officer, principal accounting officer, a financial vice president,
treasurer or assistant treasurer of such Person.
"First Tier Foreign Subsidiary" means, at any date of determination,
each Foreign Subsidiary in which any one or more of the Borrower and its
Domestic Subsidiaries owns more than 50%, in the aggregate, of the Voting Stock
of such Foreign Subsidiary.
"Fixed Charge Coverage Ratio" means the ratio of (a) EBITDA minus
Capital Expenditures to (b) Interest Expense plus Scheduled Funded Debt
Payments.
"Foreign Currency" means British Pounds Sterling, Swiss Francs, German
Marks, French Francs, Canadian Dollars and Japanese Yen or such other currency
as agreed to between the Borrower and all the Lenders. Each Foreign Currency
must be one (a) that is freely transferable and convertible into Dollars and (b)
in which deposits are generally available to the Lenders in the London interbank
market.
"Foreign Subsidiaries" means all Subsidiaries of the Borrower that are
not Domestic Subsidiaries.
"Funded Debt" means, without duplication, the sum of (a) all
Indebtedness of the Credit Parties and their Subsidiaries for borrowed money
(other than any Indebtedness incurred in connection with Permitted Accounts
Receivable Securitizations), (b) all purchase money Indebtedness of the Credit
Parties and their Subsidiaries (other than any
11
<PAGE> 18
Indebtedness incurred in connection with existing synthetic leases, tax
retention operating leases, off-balance sheet loans or similar off-balance sheet
financing products to the extent such Indebtedness appears on Schedule 6.10 and
refinancings thereof permitted pursuant to Section 8.1(c)), (c) the principal
portion of all obligations of the Borrower and its Subsidiaries under Capital
Leases, (d) all obligations of the Credit Parties and their Subsidiaries
relative to (i) the amount drawn and unreimbursed on all letters of credit and
banker's acceptances issued for the account of any such Person and (ii) the face
amount of all undrawn letters of credit and banker's acceptances issued other
than in the ordinary course of business (it being understood that, to the extent
an undrawn letter of credit supports another obligation consisting of
Indebtedness, in calculating aggregated Indebtedness only such other obligation
shall be included), (e) all Guaranty Obligations of the Credit Parties and their
Subsidiaries with respect to Funded Debt of another Person, (f) all Funded Debt
of another entity secured by a Lien on any property of the Credit Parties and
their Subsidiaries whether or not such Funded Debt has been assumed by a Credit
Party or any of its Subsidiaries, and (g) all Funded Debt of any partnership or
unincorporated joint venture to the extent a Credit Party or one of its
Subsidiaries is legally obligated or has a reasonable expectation of being
liable with respect thereto, net of any assets of such partnership or joint
venture and in an amount equal to the product of (i) the percentage ownership of
such Credit Party or Subsidiary in such partnership or unincorporated joint
venture multiplied by (ii) the Funded Debt of such partnership or unincorporated
joint venture as of the date in question.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to Section 1.3.
"Governmental Authority" means any Federal, state, local, provincial or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantor" means each of the Material Domestic Subsidiaries of the
Borrower (other than a Receivables Subsidiary) and each Additional Credit Party
which has executed a Joinder Agreement, together with their successors and
assigns.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) guaranteeing any
Indebtedness of any other Person in any manner, whether direct or indirect, and
including without limitation any obligation, whether or not contingent, (a) to
purchase any such Indebtedness or other obligation or any property constituting
security therefor, (b) to advance or provide funds or other support for the
payment or purchase of such indebtedness or obligation or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including, without limitation, maintenance agreements, comfort letters, take or
pay arrangements, put agreements or similar agreements or arrangements) for the
benefit of the holder of Indebtedness of such other Person, (c) to lease or
purchase property, securities or services primarily for the purpose of assuring
the owner of such Indebtedness or (d) to otherwise
12
<PAGE> 19
assure or hold harmless the owner of such Indebtedness or obligation against
loss in respect thereof. The amount of any Guaranty Obligation hereunder shall
(subject to any limitations set forth therein) be deemed to be an amount equal
to the lesser at such time of (x) the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made or (y) the maximum amount for which such Person may
be liable pursuant to the terms of the instrument embodying such Guaranty
Obligations.
"Hazardous Materials" means any substance, material or waste defined or
regulated in or under any Environmental Laws.
"Hedging Agreements" means, collectively, interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price hedging
agreements, in each case, entered into or purchased by a Credit Party.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person to the extent of the value of such property (other than
customary reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (d) all obligations, other
than intercompany items, of such Person issued or assumed as the deferred
purchase price of property or services purchased by such Person which would, in
accordance with GAAP, appear as liabilities on a balance sheet of such Person,
(e) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on, or payable out of the proceeds of production from, property owned
or acquired by such Person, whether or not the obligations secured thereby have
been assumed, (f) all Guaranty Obligations of such Person, (g) the principal
portion of all obligations of such Person under (i) Capital Leases and (ii) any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product of such Person where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP, (h) all net
obligations of such Person in respect of Hedging Agreements, (i) the maximum
amount of all performance and standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (j) all
preferred stock issued by such Person and required by the terms thereof to be
redeemed, or for which mandatory sinking fund payments are due prior to the Term
Loan Maturity Date and (k) the aggregate amount of uncollected accounts
receivable of such Person subject at such time to a sale of receivables (or
similar transaction) regardless of whether such transaction is effected without
recourse to such Person or in a manner that would not be reflected on the
balance sheet of such Person in accordance with GAAP. The Indebtedness of any
Person shall include the Indebtedness of any partnership
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or unincorporated joint venture in which such Person is legally obligated to
the extent of the product of (x) the percentage equity interest of such Person
in such partnership or unincorporated joint venture multiplied by (y) the
Indebtedness of such partnership or unincorporated joint venture as of the date
in question.
"Industrial Development Bonds" means those bonds (and any replacements
thereof) issued from time to time by one or more Governmental Authorities which
are purchased by the Borrower or any of its Subsidiaries in respect of Permitted
IDB Indebtedness.
"Interest Coverage Ratio" means, for the applicable period, the ratio of
(a) EBIT to (b) Interest Expense.
"Interest Expense" means, for any period, with respect to the Credit
Parties and their Subsidiaries on a consolidated basis, all net interest
expense, including the interest component under Capital Leases, as determined in
accordance with GAAP.
"Interest Payment Date" means (a) as to Base Rate Loans and Loans that,
subsequent to the immediately preceding Interest Payment Date, bore interest for
one or more days at a rate determined by reference to the Base Rate, the first
Business Day of each calendar quarter and the Revolving-A Loan Maturity Date,
the Revolving-B Loan Maturity Date or the Term Loan Maturity Date, as
applicable, and (b) as to Eurocurrency Loans, the last day of each applicable
Interest Period or, if earlier, the date such Loan or a portion of such Loan is
prepaid, the Revolving-A Loan Maturity Date, the Revolving-B Loan Maturity Date
or the Term Loan Maturity Date, as applicable, and in addition where the
applicable Interest Period for a Eurocurrency Loan is greater than three months,
then also the date three months from the beginning of the Interest Period and
each three months thereafter.
"Interest Period" means, as to Eurocurrency Loans, a period of one, two,
three or six months' duration, as the Borrower may elect, commencing, in each
case, on the date of the borrowing (including continuations and conversions
thereof); provided, however, (a) if any Interest Period would end on a day which
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day), (b) no Interest Period shall extend beyond the Revolving-A Loan Maturity
Date, the Revolving-B Loan Maturity Date or the Term Loan Maturity Date, as
applicable, (c) with regard to the Term Loans, no Interest Period shall extend
beyond any Principal Amortization Payment Date unless the portion of Term Loans
comprised of Base Rate Loans together with the portion of Term Loans comprised
of Eurocurrency Loans with Interest Periods expiring prior to the date such
Principal Amortization Payment is due, is at least equal to the amount of such
Principal Amortization Payment due on such date and (d) where an Interest Period
begins on a day for which there is no numerically corresponding day in the
calendar month in which the Interest Period is to end, such Interest Period
shall end on the last Business Day of such calendar month.
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"Investment" in any Person means (a) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities or otherwise) of
assets, shares of capital stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of such other Person
or (b) any deposit with, or advance, loan or other extension of credit to, such
Person (other than deposits made in connection with the purchase of equipment or
other assets in the ordinary course of business) or (c) any other capital
contribution to or investment in such Person.
"Issuing Lender" means any Lender that agrees, at the request of the
Borrower, to issue a Letter of Credit pursuant to Section 2.2.
"Issuing Lender Fees" has the meaning set forth in Section 3.4(b)(ii).
"Joinder Agreement" means a Joinder Agreement substantially in the form
of Exhibit 7.12.
"Lender" means any of the Persons identified as a "Lender" on the
signature pages hereto, and any Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their successors
and permitted assigns.
"Letter of Credit" means a Letter of Credit issued for the account of a
Credit Party by an Issuing Lender pursuant to Section 2.2, as such Letter of
Credit may be amended, modified, extended or replaced.
"Letter of Credit Fees" has the meaning assigned to such term in Section
3.4(b)(i).
"Leverage Ratio" means, as of the end of each fiscal quarter, the ratio
of (a) total Funded Debt on such date to (b) EBITDA for the twelve month period
ending on such date.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind, including, without limitation, any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, and any lease in the nature thereof.
"Loan" or "Loans" means the Revolving Loans, the Term Loans and the
Swing Line Loans, individually or collectively, as appropriate.
"LOC Documents" means, with respect to any Letter of Credit, such Letter
of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments, guarantees
or other documents (whether general in application or applicable only to such
Letter of Credit) governing or providing for (a) the rights and obligations of
the parties concerned or at risk or (b) any collateral security for such
obligations.
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"LOC Obligations" means, at any time, the sum of (a) the maximum amount
which is, or at any time thereafter may become, available to be drawn under
Letters of Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus (b) the aggregate amount
of all drawings under Letters of Credit honored by an Issuing Lender but not
theretofore reimbursed.
"LOC Participants" means the Lenders.
"London Interbank Offered Rate" means, with respect to any Eurocurrency
Loan for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars (or the applicable Foreign Currency) at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Telerate Page 3750, the
applicable rate shall be the arithmetic mean of all such rates. If, for any
reason, such rate is not available, the term "London Interbank Offered Rate"
shall mean, with respect to any Eurocurrency Loan for the Interest Period
applicable thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars (or the applicable
Foreign Currency) at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"Mandatory Borrowing" has the meaning set forth in Section 2.2(e).
"Material Adverse Effect" means a material adverse effect on (a) the
operations, financial condition, business or prospects of the Credit Parties and
their Subsidiaries taken as a whole, (b) the ability of the Borrower or the
Credit Parties, taken as a whole, to perform its or their respective obligations
under this Credit Agreement or any of the other Credit Documents, or (c) the
validity or enforceability of this Credit Agreement, any of the other Credit
Documents, or the rights and remedies of the Lenders hereunder or thereunder
taken as a whole.
"Material Domestic Subsidiary" means any Domestic Subsidiary that is
also a Material Subsidiary. The Borrower's Material Domestic Subsidiaries
initially shall include, without limitation, Fruit of the Loom, Inc., a New York
corporation.
"Material First Tier Foreign Subsidiary" mean any First Tier Foreign
Subsidiary that is also a Material Subsidiary.
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"Material Subsidiary" means, as of any date of determination, any
Domestic Subsidiary or any First Tier Foreign Subsidiary that, together with its
Subsidiaries on a consolidated basis, (i) during the twelve months preceding
such date of determination accounts for (or to which may be attributed) 5% or
more of the sales, earnings or assets (determined on a consolidated basis) of
the Borrower and its Subsidiaries or (ii) is otherwise necessary for the ongoing
business operations of the Borrower and its Subsidiaries taken as a whole.
"MLA Cost" means the cost imputed to a Lender of compliance with the
Mandatory Liquid Assets requirements of the Bank of England during the term of
any Loan hereunder, as determined in accordance with Schedule 3.1.
"Moody's" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating securities.
"Multiemployer Plan" means a Plan covered by Title IV of ERISA which is
a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of ERISA,
other than a Multiemployer Plan, which any Credit Party or any of its
Subsidiaries or any ERISA Affiliate and at least one employer other than a
Credit Party or any of its Subsidiaries or any ERISA Affiliate are contributing
sponsors.
"NationsBank" means NationsBank, N.A. (or any successor thereto).
"Net Income" means, for any period, the net income after taxes for such
period of the Credit Parties and their Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Non-Excluded Taxes" has the meaning set forth in Section 3.13(a).
"Note" or "Notes" means the Revolving Loan Notes, the Term Loan Notes
and the Swing Line Loan Note, individually or collectively, as appropriate.
"Notice of Borrowing" means a request by the Borrower for a Revolving
Loan, in the form of Exhibit 2.5.
"Notice of Continuation/Conversion" means a request by the Borrower to
continue an existing Eurocurrency Loan to a new Interest Period or to convert a
Eurocurrency Loan to a Base Rate Loan (other than a Swing Line Loan) or a Base
Rate Loan (other than a Swing Line Loan) to a Eurocurrency Loan, in the form of
Exhibit 2.9.
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"Participation Interest" means the Extension of Credit by a Lender by
way of a purchase of a participation in Letters of Credit or LOC Obligations as
provided in Section 2.2 or in any Loans as provided in Section 2.3 or 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
"Permitted Accounts Receivable Securitization" means a domestic or
foreign program of sales or transfers of Receivables Facility Assets by certain
Subsidiaries of the Borrower to a Receivables Subsidiary and the transfer of
interests in such Receivables Facility Assets by a Receivables Subsidiary,
provided that such program is (a) on the terms and conditions consistent with
the documentation identified on Schedule 1.2, or otherwise on terms and
conditions no more adverse to the Lenders, or (b) consented to in writing by the
Required Lenders.
"Permitted Acquisition" means the acquisition of (a) all of the capital
stock of another Person or (b) all or substantially all of the assets of another
Person, in each case if such Person is in a similar line of business as
currently engaged in by the Credit Parties; provided that before and after
giving effect to any such acquisition (i) the Credit Parties and their
Subsidiaries are in compliance with all the financial covenants set forth in
Section 7.2 and (ii) no Default or Event of Default has occurred and is
continuing.
"Permitted IDB Indebtedness" means Indebtedness of one or more Domestic
Subsidiaries created, incurred, assumed or outstanding in connection with
Industrial Development Bond financings for the acquisition, construction and
equipping of manufacturing facilities located in the United States and which
manufacturing facilities are owned or to be owned by either (i) any wholly owned
Subsidiary of the Borrower or (ii) one or more Governmental Authorities and, in
each such case, leased to the Domestic Subsidiary that created, incurred or
assumed such Indebtedness; provided, however, that:
(A) the principal amount of such Indebtedness does not exceed the
principal amount of the related Industrial Development Bonds; and
(B) the Industrial Development Bond or Bonds issued by such Governmental
Authorities from time to time outstanding at any one time in connection with
such financing(s) are purchased and held by a Subsidiary of the Borrower.
"Permitted Investments" means Investments which are (a) cash or Cash
Equivalents, (b) accounts receivable created, acquired or made in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, (c) inventory, raw materials and general intangibles (to the extent
such general intangible is not a Capital Expenditure) acquired in the ordinary
course of business, (d) Investments by one Credit Party in another Credit Party,
(e) Investments by a Credit Party in Foreign Subsidiaries, not to exceed 3% of
Consolidated Net Tangible Assets, in the aggregate, at any one time
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<PAGE> 25
outstanding, (f) loans to directors, officers or employees in the ordinary
course of business for (i) reasonable relocation expenses and (ii) other
reasonable business expenses; provided, however, that loans made pursuant to
this clause (ii) shall not exceed, in the aggregate, $500,000 at any one time
outstanding to any one Person; (g) Investments in Capital Expenditures, (h)
Investments in Permitted Acquisitions, (i) Industrial Development Bonds which
constitute Permitted IDB Indebtedness, (j) Investments required to be made
pursuant to the Assumption and Indemnity Agreement dated December 12, 1986 by
and among Farley/Northwest Industries, Inc., NWI Land Management Corp., True
Specialty Corporation and Velsicol Chemical Corporation, (k) purchases of
capital stock of the Borrower to the extent permitted by the provisions of
Sections 7.10 and 8.8 hereof, (l) Investments in Receivables Facility Assets
that are made in connection with Receivables Facility Attributed Indebtedness
permitted under Section 8.1(h), (m) Investments in synthetic leases, tax
retention operating leases, off-balance sheet loans or similar off-balance
sheet financing products to the extent such financing products are permitted
under the terms of this Credit Agreement, (n) Investments identified on
Schedule 6.21 and (o) other Investments not to exceed, in the aggregate,
$40,000,000 at any one time outstanding.
"Permitted Liens" means (a) Liens securing Credit Party Obligations, (b)
Liens for taxes not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale, collection, levy or loss on
account thereof), (c) Liens in respect of property imposed by law arising in
the ordinary course of business such as materialmen's, mechanics',
warehousemen's, carrier's, landlords' and other nonconsensual statutory Liens
which are not yet due and payable or which are being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account thereof),
(d) pledges or deposits made in the ordinary course of business to secure
payment of worker's compensation insurance, unemployment insurance, pensions or
social security programs, (e) Liens arising from good faith deposits in
connection with or to secure performance of tenders, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business (other than obligations in respect
of the payment of borrowed money), (f) Liens arising from good faith deposits
in connection with or to secure performance of statutory obligations and surety
and appeal bonds, (g) easements, rights-of-way, restrictions (including zoning
restrictions), matters of plat, minor defects or irregularities in title and
other similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered property for its intended purposes, (h) judgment
Liens that would not constitute an Event of Default, (i) Liens in connection
with Indebtedness permitted by Section 8.1(f), (j) Liens arising by virtue of
any statutory or common law provision relating to banker's liens, rights of
setoff or similar rights as to deposit accounts or other funds maintained with
a creditor depository institution, (k) Liens on Receivables Facility Assets
transferred (i) to a Receivables Subsidiary or (ii) by a Receivables Subsidiary
to the purchaser of such receivables (and the filing of financing statements in
connection therewith), (l) Liens
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existing on the date hereof and identified on Schedule 8.2 and any renewals and
extensions thereof or amendments thereto not otherwise prohibited by the
provisions of this definition; provided that no such Lien shall extend to any
property other than the property subject thereto on the Closing Date and any
additions thereto in the ordinary course of business (so long as the amount of
Indebtedness secured thereby is not increased other than as permitted
hereunder) and (m) Liens not described in clauses (a) through (l) above;
provided, however, that the aggregate amount of Indebtedness secured by Liens
permitted under this clause (m), when added (without duplication) to (i) the
aggregate amount of Indebtedness then outstanding and permitted under Section
8.1(l) and (ii) the aggregate amount of sale leaseback transactions then
outstanding and permitted under Section 8.6, shall not exceed 10% of
Consolidated Net Tangible Assets (it being understood that the calculation of
each such aggregate amount will not include Indebtedness outstanding and
permitted under Sections 8.1(a)-(k), including Indebtedness listed on Schedule
6.10 and refinancings thereof permitted pursuant to Section 8.1(c)).
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated), or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which any Credit Party or
any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreements" means any Pledge Agreement executed and delivered by a
Credit Party in favor of the Collateral Agent, for the benefit of the Lenders,
to secure its obligations under the Credit Documents, as amended, modified,
extended, renewed or replaced from time to time; provided that it is understood
that the Pledge Agreements will be effective only during a Collateral Period.
"Prime Rate" means the per annum rate of interest established from time to
time by the Administrative Agent at its principal office in Charlotte, North
Carolina (or such other principal office of the Administrative Agent as
communicated in writing to the Borrower and the Lenders) as its Prime Rate.
Any change in the interest rate resulting from a change in the Prime Rate shall
become effective as of 12:01 a.m. of the Business Day on which each change in
the Prime Rate is announced by the Administrative Agent. The Prime Rate is a
reference rate used by the Administrative Agent in determining interest rates
on certain loans and is not intended to be the lowest rate of interest charged
on any extension of credit to any debtor.
"Principal Amortization Payment" means a principal payment on the Term
Loans as set forth in Section 2.8(c).
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"Principal Amortization Payment Date" means the date a Principal
Amortization Payment is due.
Documents" means all documentation relating to a Permitted Accounts
Receivable Securitization.
"Receivables Facility Assets" means all accounts receivable, together with
other rights applicable thereto, (whether now existing or arising in the
future) of certain Subsidiaries of the Borrower which are transferred to a
Receivables Subsidiary pursuant to a Permitted Accounts Receivable
Securitization.
"Receivables Facility Attributed Indebtedness" means at any time the
aggregate net outstanding amount theretofore paid to a Receivables Subsidiary
in respect of the Receivables Facilities Assets sold or transferred by it in
connection with a Permitted Accounts Receivable Securitization (it being
understood that the amount of Receivables Facility Attributed Indebtedness
outstanding at any time is the principal amount of Indebtedness which would be
outstanding at such time under a Permitted Accounts Receivable Securitization
if the same were structured as a secured lending agreement rather than a
purchase agreement and shall not necessarily be calculated by adding all
amounts paid to the Receivables Subsidiary since its creation).
"Receivables Subsidiary" means FTL Receivables Company, a special
purpose, bankruptcy remote Delaware corporation formed for the sole and
exclusive purpose of engaging in activities in connection with the purchase,
sale and financing of accounts receivable in connection with and pursuant to a
Permitted Accounts Receivable Securitization or any other Subsidiary of the
Borrower established for such purpose.
"Regulation D, G, U, or X" means Regulation D, G, U or X, respectively, of
the Board of Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Reportable Event" means a "reportable event" as defined in Section 4043
of ERISA with respect to which the notice requirements to the PBGC have not
been waived.
"Required Lenders" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes at least 51% of the Credit Exposure of all
Lenders at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For purposes of the preceding sentence,
the term "Credit Exposure" as applied to each Lender shall mean (a) at any time
prior to the termination of the Commitments, the sum of (i) the Revolving Loan
Commitment Percentage of such Lender multiplied by the Revolving-A Committed
Amount plus (ii) the Revolving Loan Commitment Percentage of such Lender
multiplied by the Revolving-B Committed Amount plus (iii) the Term Loan
Commitment Percentage of
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such Lender multiplied by the aggregate principal amount of Term Loans
outstanding at such time and (b) at any time after the termination of the
Commitments, the sum of (i) the principal balance of the outstanding Loans of
such Lender plus (ii) such Lender's Participation Interests in (A) the face
amount of the outstanding Letters of Credit and (B) any outstanding Swing Line
Loans.
"Requirement of Law" means, as to any Person, the articles or certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or to which any of its
material property is subject.
"Revolving Loan Commitment Percentage" means, for each Lender, the
percentage identified as its Revolving Loan Commitment Percentage on Schedule
1.1(a), as such percentage may be modified in connection with any assignment
made in accordance with the provisions of Section 11.3.
"Revolving-A Committed Amount" means SIX HUNDRED MILLION DOLLARS
($600,000,000) or such lesser amount as the Revolving-A Committed Amount may be
reduced pursuant to Section 2.7.
"Revolving-B Committed Amount" means TWO HUNDRED MILLION DOLLARS
($200,000,000) or such lesser amount as the Revolving-B Committed Amount may be
reduced pursuant to Section 2.7.
"Revolving Loan Notes" means the Revolving-A Notes and/or the Revolving-B
Notes.
"Revolving Loans" means the Revolving-A Loans and/or the Revolving-B Loans.
"Revolving-A Loans" means the Revolving Loans made by the Lenders pursuant
to Section 2.1.
"Revolving-B Loans" means the Revolving Loans made by the Lenders pursuant
to Section 2.4.
"Revolving-A Loan Maturity Date" means September 19, 2002.
"Revolving-B Loan Maturity Date" means September 18, 1998.
"Revolving-A Note" or "Revolving-A Notes" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Revolving-A Loans
provided pursuant to Section 2.1, individually or collectively, as appropriate,
as such promissory
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notes may be amended, modified, supplemented, extended, renewed or replaced f
rom time to time and as evidenced in the form of Exhibit 2.11(a).
"Revolving-B Note" or "Revolving-B Notes" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Revolving-B Loans
provided pursuant to Section 2.4, individually or collectively, as appropriate,
as such promissory notes may be amended, modified, supplemented, extended,
renewed or replaced from time to time and as evidenced in the form of Exhibit
2.11(b).
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., or any successor or assignee of the business of such division in the
business of rating securities.
"Scheduled Funded Debt Payments" means, as of the end of each fiscal
quarter, with respect to the Credit Parties and their Subsidiaries on a
consolidated basis, the sum of all scheduled payments of principal on Funded
Debt for the applicable period ending on such date (including the principal
component of payments due on Capital Leases during the applicable period ending
on such date); it being understood that Scheduled Funded Debt Payments shall
not include (a) voluntary prepayments permitted, or the mandatory prepayments
required, pursuant to Section 3.3 or (b) scheduled payments to be made with
respect to the 7 Senior Notes due October 15, 1999 issued by the Borrower
pursuant to that certain Indenture, dated as of October 15, 1992, between the
Borrower and The Bank of New York, as Trustee.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a particular date, that
on such date (a) such Person is able to pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal
course of business, (b) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature in their ordinary course, (c) such Person is
not engaged in a business or a transaction, and is not about to engage in a
business or a transaction, for which such Person's assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged or is to engage, (d)
the fair value of the assets of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person and (e) the present fair saleable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed as the amount which, in light of all
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the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
"Subsidiary" means, as to any Person, (a) any corporation more than
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
person directly or indirectly through Subsidiaries has more than a 50%
equity interest at any time.
"Swing Line Loans" means the loans made by NationsBank pursuant to
Section 2.3.
"Swing Line Committed Amount" means TWENTY-FIVE MILLION DOLLARS
($25,000,000).
"Swing Line Loan Request" means a request by the Borrower for a
Swing Line Loan in substantially the form of Exhibit 2.3(b).
"Swing Line Loan Note" means the promissory note of the Borrower in
favor of NationsBank evidencing the Swing Line Loans provided pursuant to
Section 2.3, as such promissory note may be amended, modified,
supplemented, extended, renewed or replaced from time to time in and as
evidenced by the form of Exhibit 2.11(c).
"Term Loans" means the Term Loans made to the Borrower pursuant to
Section 2.8(a).
"Term Loan Commitment Percentage" means, for each Lender, the
percentage identified as its Term Loan Commitment Percentage on Schedule
1.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3(b).
"Term Loan Committed Amount" means ONE HUNDRED MILLION DOLLARS
($100,000,000).
"Term Loan Maturity Date" means September 19, 2002.
"Term Loan Note" or "Term Loan Notes" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Term Loans
provided pursuant to Section 2.8, individually or collectively, as
appropriate, as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to time as
evidenced in the form of Exhibit 2.11(d).
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"Termination Event" means (a) with respect to any Single Employer
Plan, the occurrence of a Reportable Event or the substantial cessation
of operations (within the meaning of Section 4062(e) of ERISA); (b) the
withdrawal of any Credit Party or any of its Subsidiaries or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section 4001(a)(2)
of ERISA), or the termination of a Multiple Employer Plan; (c) the
distribution of a notice of intent to terminate or the actual termination
of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (d) the
institution of proceedings to terminate or the actual termination of a
Plan by the PBGC under Section 4042 of ERISA; (e) any event or condition
which might reasonably constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
Plan; or (f) the complete or partial withdrawal of any Credit Party or
any of its Subsidiaries or any ERISA Affiliate from a Multiemployer Plan.
"Unsecured Senior Debt Rating" means the debt rating provided by S&P
and/or Moody's with respect to unsecured senior long term debt of the
Borrower.
"U.S. Dollar Equivalent" means the amount of Dollars that would be
realized by converting a Foreign Currency into Dollars using the
arithmetic average of the spot buying rates for such Foreign Currency in
Dollars as quoted to the Administrative Agent by three foreign exchange
dealers of recognized standing in the United States selected by the
Administrative Agent at approximately 10:00 a.m. on any day on which a
computation thereof is required to be made hereunder.
"Voting Stock" of a corporation means all classes of the capital
stock of such corporation then outstanding and normally entitled to vote
in the election of directors.
1.2. COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding." References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Agreement unless otherwise specifically provided.
1.3. ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All financial statements delivered to the Lenders hereunder shall be
accompanied by a statement from the Borrower that GAAP has not changed since
the most recent financial statements delivered by the Borrower to the Lenders
or if GAAP has changed describing such changes in detail and explaining how
such changes affect the financial statements. All calculations made for the
purposes of determining compliance with this Credit Agreement shall (except as
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otherwise expressly provided herein) be made by application of GAAP applied on
a basis consistent with the most recent annual or quarterly financial
statements delivered pursuant to Section 7.1 (or, prior to the delivery of the
first financial statements pursuant to Section 7.1, consistent with the
financial statements described in Section 5.1(d)); provided, however, if (a)
the Borrower shall object to determining such compliance on such basis at the
time of delivery of such financial statements due to any change in GAAP or the
rules promulgated with respect thereto or (b) either Agent or the Required
Lenders shall so object in writing within 60 days after delivery of such
financial statements (or after the Lenders have been informed of the change in
GAAP affecting such financial statements, if later), then such calculations
shall be made on a basis consistent with the most recent financial statements
delivered by the Borrower to the Lenders as to which no such objection shall
have been made.
SECTION 2
CREDIT FACILITIES
2.1. REVOLVING-A LOANS.
Subject to the terms and conditions set forth herein, each Lender
severally agrees to make revolving loans (each a "Revolving-A Loan" and
collectively the "Revolving-A Loans") to the Borrower, in Dollars or in Foreign
Currency, at any time and from time to time, during the period from and
including the Effective Date to but not including the Revolving-A Loan Maturity
Date (or such earlier date if the Revolving-A Committed Amount has been
terminated as provided herein); provided, however, that (a) the sum of the
aggregate amount of Revolving-A Loans outstanding plus the aggregate amount of
LOC Obligations outstanding plus the aggregate amount of Swing Line Loans
outstanding shall not exceed the Revolving-A Committed Amount, (b) with respect
to each individual Lender, the Lender's pro rata share of outstanding
Revolving-A Loans plus such Lender's pro rata share of outstanding LOC
Obligations plus (other than NationsBank) such Lender's pro rata share of Swing
Line Loans outstanding shall not exceed such Lender's Revolving Loan Commitment
Percentage of the Revolving-A Committed Amount and (c) the sum of the aggregate
amount of Revolving-A Loans outstanding in Foreign Currency plus the aggregate
amount of LOC Obligations outstanding in Foreign Currency shall not exceed the
U.S. Dollar Equivalent of One Hundred Million Dollars ($100,000,000). Subject
to the terms of this Credit Agreement (including Section 3.3), the Borrower may
borrow, repay and reborrow Revolving-A Loans.
2.2 LETTER OF CREDIT SUBFACILITY.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which an
Issuing Lender may reasonably require (so long as such terms and
conditions do not impose any financial obligation on or require any Lien
(not otherwise contemplated by this Agreement) to be given by any Credit
Party or conflict with any obligation of, or detract from any action
which may be taken by, any Credit Party or their Subsidiaries under this
Agreement), an Issuing Lender shall from time to time upon request issue
(from the Effective Date to the Revolving-A Loan Maturity Date and in a
form reasonably acceptable to such Issuing
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Lender), in Dollars or any Foreign Currency, and the LOC Participants
shall participate in, letters of credit (the "Letters of Credit") for the
account of the Borrower; provided, however, that (i) the aggregate amount
of LOC Obligations shall not at any time exceed the U.S. Dollar
Equivalent of TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000), (ii) the
sum of the aggregate amount of LOC Obligations outstanding in Foreign
Currency plus the aggregate amount of Revolving-A Loans outstanding in
Foreign Currency shall not exceed the U.S. Dollar Equivalent of One
Hundred Million Dollars ($100,000,000), (iii) the sum of the aggregate
amount of LOC Obligations outstanding plus the aggregate amount of
Revolving-A Loans outstanding plus Swing Line Loans outstanding shall not
exceed the Revolving-A Committed Amount and (iv) with respect to each
individual LOC Participant, the LOC Participant's pro rata share of
outstanding Revolving-A Loans plus its pro rata share of outstanding LOC
Obligations plus (other than NationsBank) its pro rata share of Swing
Line Loans outstanding shall not exceed such LOC Participant's Revolving
Loan Commitment Percentage of the Revolving-A Committed Amount. The
Issuing Lender may require the issuance and expiry date of each Letter of
Credit to be a day other than (i) a Saturday or a Sunday or (ii) any
other day on which the letter of credit issuing office of the Issuing
Lender is authorized or required by law or executive order to close.
Except as otherwise expressly agreed upon by all the LOC Participants, no
Letter of Credit shall have an original expiry date more than one year
from the date of issuance, or, as extended, shall have an expiry date
extending beyond the Revolving-A Loan Maturity Date. Each Letter of
Credit shall be either (x) a standby letter of credit issued to support
the obligations (including pension or insurance obligations), contingent
or otherwise, of the Borrower or any of its Subsidiaries, or (y) a
commercial letter of credit in respect of the purchase of goods or
services by the Borrower or any of its Subsidiaries in the ordinary
course of business. Each Letter of Credit shall comply with the related
LOC Documents.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted to an Issuing Lender at least three Business
Days prior to the requested date of issuance unless otherwise agreed to
between the Borrower and the Issuing Lender. Each Issuing Lender will (i)
immediately notify the Administrative Agent regarding the issuance of a
Letter of Credit and the terms thereof and (ii) at least monthly and more
frequently upon request, provide to the Administrative Agent for
dissemination to the Lenders a detailed report specifying the Letters of
Credit which are then issued and outstanding and any activity with
respect thereto which may have occurred since the date of the prior
report, and including therein, among other things, the account party, the
beneficiary, the face amount (including, if applicable, the U.S. Dollar
Equivalent of such face amount), and the expiry date as well as any
payments or expirations which may have occurred. Each Issuing Lender
will further provide to the Administrative Agent, promptly upon request,
copies of the Letters of Credit and the other LOC Documents.
(c) Participations.
(i) On the Effective Date, each LOC Participant shall
automatically acquire a participation in the liability of the
applicable Issuing Lender under each
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Existing Letter of Credit in an amount equal to its Revolving Loan
Commitment Percentage of such Existing Letters of Credit. Each
Existing Letter of Credit shall be deemed for all purposes of this
Credit Agreement and the other Credit Documents to be a Letter of
Credit.
(ii) Each LOC Participant, upon issuance of a Letter of
Credit, shall be deemed to have purchased without recourse a risk
participation from the applicable Issuing Lender in such Letter of
Credit and each LOC Document related thereto and the rights and
obligations arising thereunder and any collateral relating thereto,
in each case in an amount equal to its Revolving Loan Commitment
Percentage of the obligations under such Letter of Credit, and
shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to pay to such
Issuing Lender therefor and discharge when due, its Revolving Loan
Commitment Percentage of the obligations arising under such Letter
of Credit. Without limiting the scope and nature of each LOC
Participant's participation in any Letter of Credit, to the extent
that such Issuing Lender has not been reimbursed as required
hereunder or under any such Letter of Credit, each such LOC
Participant shall pay to such Issuing Lender its Revolving Loan
Commitment Percentage of such unreimbursed drawing in same day
funds on the day of notification by such Issuing Lender of an
unreimbursed drawing pursuant to the provisions of subsection (d)
hereof. The obligation of each LOC Participant to so reimburse
each Issuing Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of Default
or any other occurrence or event. Any such reimbursement shall not
relieve or otherwise impair the obligation of the Borrower or any
other Credit Party to reimburse an Issuing Lender under any Letter
of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the applicable Issuing Lender will promptly notify the Borrower.
Unless the Borrower shall immediately notify such Issuing Lender of its
intent to otherwise reimburse such Issuing Lender, the Borrower shall be
deemed to have requested a Revolving-A Loan at the Adjusted Base Rate in
the amount of the drawing as provided in subsection (e) hereof, the
proceeds of which will be used to satisfy the reimbursement obligations.
The Borrower shall reimburse the applicable Issuing Lender on the day any
drawing under any Letter of Credit is paid either with the proceeds of a
Revolving-A Loan obtained hereunder or otherwise in same day funds as
provided herein or in the LOC Documents. If the Borrower shall fail to
reimburse an Issuing Lender as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to
the Base Rate plus the Applicable Percentage for the Base Rate Loans that
are Revolving-A Loans plus two percent (2%). The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of (but without waiver of) any
rights of set-off, counterclaim or defense to payment the applicable
account party or the Borrower may claim or have against the applicable
Issuing Lender, the Agent, the Lenders, the beneficiary of the Letter of
Credit drawn upon or any other Person, including without limitation, any
defense
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based on any failure of the applicable account party, the Borrower or any
other Credit Party to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. Each Issuing
Lender will promptly notify the LOC Participants of the amount of any
unreimbursed drawing and each LOC Participant shall promptly (or if the
Letter of Credit is in Foreign Currency within two Business Days) pay to
the applicable Issuing Lender, in Dollars (or in the applicable Foreign
Currency) and in immediately available funds, the amount of such LOC
Participant's Revolving Loan Commitment Percentage of such unreimbursed
drawing. Such payment shall be made on the day such notice is received
by such Lender from an Issuing Lender if such notice is received at or
before 2:00 p.m., otherwise such payment shall be made at or before 12:00
noon on the Business Day next succeeding the day such notice is received.
If such LOC Participant does not pay such amount to the applicable
Issuing Lender in full upon such request, such LOC Participant shall, on
demand, pay to the applicable Issuing Lender interest on the unpaid
amount during the period from the date the LOC Participant received the
notice regarding the unreimbursed drawing until such LOC Participant pays
such amount to such Issuing Lender in full at a rate per annum equal to,
if paid within two Business Days of the date of drawing, the Federal
Funds Rate and thereafter at a rate equal to the Base Rate. Each LOC
Participant's obligation to make such payment to an Issuing Lender, and
the right of an Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and
without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or
the acceleration of the obligations hereunder and shall be made without
any offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a LOC Participant
to an Issuing Lender, such LOC Participant shall, automatically and
without any further action on the part of an Issuing Lender or such LOC
Participant, acquire a participation in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to an
Issuing Lender) in the related unreimbursed drawing portion of the LOC
Obligation and in the interest thereon and in the related LOC Documents,
and shall have a claim against the Borrower and the other Credit Parties
with respect thereto.
(e) Repayment with Revolving-A Loans. On any day on which the
Borrower shall have requested, or been deemed to have requested, a
Revolving-A Loan borrowing to reimburse a drawing under a Letter of
Credit, the Administrative Agent shall give notice to the applicable
Lenders that a Revolving-A Loan has been requested or deemed requested in
connection with a drawing under a Letter of Credit, in which case a
Revolving-A Loan borrowing comprised solely of Base Rate Loans (each such
borrowing, a "Mandatory Borrowing") shall be immediately made from all
applicable Lenders (without giving effect to any termination of the
Commitments pursuant to Section 9.2) pro rata based on each Lender's
respective Revolving Loan Commitment Percentage and the proceeds thereof
shall be paid directly to the applicable Issuing Lender for application
to the respective LOC Obligations. Each such Lender hereby irrevocably
agrees to make such Revolving-A Loans upon any such request or deemed
request on account of each such Mandatory Borrowing in the amount and in
the manner specified in the preceding sentence and on the same such date
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notwithstanding (i) the amount of Mandatory Borrowing may not comply with
the minimum amount for borrowings of Revolving-A Loans otherwise required
hereunder, (ii) whether any conditions specified in Section 5 are then
satisfied, (iii) whether a Default or Event of Default then exists, (iv)
failure of any such request or deemed request for Revolving-A Loans to be
made by the time otherwise required hereunder, (v) the date of such
Mandatory Borrowing, or (vi) any reduction in the Revolving-A Committed
Amount or any termination of the Commitments. Such funding of Revolving
A Loans shall be made on the day notice of such Mandatory Borrowing is
received by such Lender from an Issuing Lender if such notice is received
at or before 2:00 p.m., otherwise such payment shall be made at or before
12:00 noon on the Business Day next succeeding the day such notice is
received. 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 Lender hereby agrees that it shall forthwith fund (as of
the date the Mandatory Borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrower on or after such
date and prior to such purchase) its Participation Interest in the
outstanding LOC Obligations; provided, further, that in the event any
Lender shall fail to fund its Participation Interest on the day the
Mandatory Borrowing would otherwise have occurred, then the amount of
such Lender's unfunded Participation Interest therein shall bear interest
payable to the applicable Issuing Lender upon demand, at the rate equal
to, if paid within two Business Days of such date, the Federal Funds
Rate, and thereafter at a rate equal to the Base Rate.
(f) Modification and Extension. The issuance of any supplement,
modification, amendment, or extensions to any Letter of Credit shall, for
purposes hereof, be treated in all respects the same as the issuance of a
new Letter of Credit hereunder.
(g) Uniform Customs and Practices. An Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (Publication No. 500 or the most recent
publication, the "UCP"), in which case the UCP may be incorporated
therein and deemed in all respects to be a part thereof.
(h) Responsibility of Issuing Lenders. It is expressly understood
and agreed as between the Lenders that the obligations of the Issuing
Lenders hereunder to the LOC Participants are only those expressly set
forth in this Credit Agreement and that the Issuing Lenders shall be
entitled to assume that the conditions precedent set forth in Section 5
have been satisfied unless it shall have acquired actual knowledge that
any such condition precedent has not been satisfied; provided, however,
that nothing set forth in this Section 2.2 shall be deemed to prejudice
the right of any LOC Participant to recover from an Issuing Lender any
amounts made available by such LOC Participant to such Issuing Lender
pursuant to this Section 2.2 in the event that it is determined by a
court of competent jurisdiction that the issuance of or payment with
respect to a Letter of Credit constituted gross negligence or willful
misconduct on the part of such Issuing Lender.
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(i) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document, this Credit Agreement
shall govern.
(j) Indemnification of Issuing Lenders.
(i) In addition to its other obligations under this Credit
Agreement, the Borrower hereby agrees to protect, indemnify, pay
and save the Issuing Lenders harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable, documented attorneys' fees) that
the Issuing Lenders 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 an Issuing Lender to honor a drawing under a
Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions,
herein called "Government Acts").
(ii) As between the Borrower and an Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of
any Letter of Credit by the beneficiary thereof. An Issuing Lender
shall not be responsible for (except in the case of (A), (B) and
(C) below if such Issuing Lender has actual knowledge to the
contrary): (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party
in connection with the application for and issuance of any Letter
of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(B) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole
or in part, that may prove to be invalid or ineffective for any
reason; (C) failure of the beneficiary of a Letter of Credit to
comply fully with conditions required in order to draw upon a
Letter of Credit; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher;
(E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (G) any consequences arising from causes beyond the
control of an Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or
prevent the vesting of an Issuing Lender's rights or powers
hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by an Issuing Lender, under or in connection with any
Letter of Credit or the related certificates, if taken or omitted
in good faith and not deemed to constitute gross negligence or
willful misconduct, shall not put an Issuing Lender under any
resulting liability to the
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Borrower or any other Credit Party. It is the intention of the
parties that this Credit Agreement shall be construed and applied
to protect and indemnify the Issuing Lenders 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. An
Issuing Lender shall not, in any way, be liable for any failure by
such Issuing Lender or anyone else to pay any drawing under any
Letter of Credit as a result of any Government Acts or any other
cause beyond the control of such Issuing Lender.
(iv) Nothing in this subsection (j) is intended to limit the
reimbursement obligation of the Borrower contained in this Section
2.2. The obligations of the Borrower under this subsection (j)
shall survive the termination of this Credit Agreement. No act or
omission of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of an Issuing Lender
to enforce any right, power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (j), neither the Borrower nor any LOC Participant shall
have any obligation to indemnify the Issuing Lenders in respect of
any liability incurred by an Issuing Lender arising solely out of
the gross negligence or willful misconduct of an Issuing Lender, as
determined by a court of competent jurisdiction. Nothing in this
Agreement shall relieve an Issuing Lender of any liability to the
Borrower or any LOC Participant in respect of any action taken by
such Issuing Lender which action constitutes gross negligence or
willful misconduct of such Issuing Lender or a violation of the UCP
or Uniform Commercial Code (as applicable), as determined by a
court of competent jurisdiction.
2.3 SWING LINE LOANS SUBFACILITY.
(a) Swing Line Loans. NationsBank hereby agrees, on the terms and
subject to the conditions set forth herein and in the other Credit
Documents, to make loans to the Borrower, in Dollars, at any time and
from time to time during the period from and including the Effective Date
to but not including the Revolving-A Loan Maturity Date (each such loan,
a "Swing Line Loan" and collectively, the "Swing Line Loans"); provided
that (i) the aggregate principal amount of the Swing Line Loans
outstanding at any one time shall not exceed the Swing Line Committed
Amount and (ii) the sum of the aggregate amount of Swing Line Loans
outstanding plus the aggregate amount of Revolving-A Loans outstanding
plus the aggregate amount of LOC Obligations outstanding shall not exceed
the Revolving-A Committed Amount. Prior to the Revolving-A Loan Maturity
Date, Swing Line Loans may be repaid and reborrowed by the Borrower in
accordance with the provisions hereof.
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(b) Method of Borrowing and Funding Swing Line Loans. By no later
than 1:00 p.m., on the date of the requested borrowing of Swing Line
Loans, the Borrower shall provide telephonic notice to NationsBank,
followed promptly by a written Swing Line Loan Request in the form of
Exhibit 2.3(b) (which may be submitted via telecopy), each of such
telephonic notice and such written Swing Line Loan Request setting forth
(i) the amount of the requested Swing Line Loan and (ii) the date of the
requested Swing Line Loan and complying in all respects with Section 5.2.
NationsBank shall initiate the transfer of funds representing the Swing
Line Loan advance to the Borrower by 3:00 p.m. on the Business Day of the
requested borrowing.
(c) Repayment and Participations of Swing Line Loans. The Borrower
agrees to repay all Swing Line Loans within one Business Day of demand
therefor by NationsBank. Each repayment of a Swing Line Loan may be
accomplished by requesting Revolving-A Loans which request is not subject
to the conditions set forth in Section 5.2. In the event that the
Borrower shall fail to timely repay any Swing Line Loan, and in any event
upon (i) a request by NationsBank, (ii) the occurrence of an Event of
Default described in Section 9.1(f) or (iii) the acceleration of any Loan
or termination of any Commitment pursuant to Section 9.2, each other
Lender shall irrevocably and unconditionally purchase from NationsBank,
without recourse or warranty, an undivided interest and participation in
such Swing Line Loan in an amount equal to such other Lender's Revolving
Loan Commitment Percentage thereof, by directly purchasing a
participation in such Swing Line Loan in such amount (regardless of
whether the conditions precedent thereto set forth in Section 5.2 hereof
are then satisfied, whether or not the Borrower has submitted a Notice of
Borrowing and whether or not the Commitments are then in effect, any
Event of Default exists or all the Loans have been accelerated) and
paying the proceeds thereof to NationsBank at the address provided on
Schedule 11.1, or at such other address as NationsBank may designate, in
Dollars and in immediately available funds. If such amount is not in
fact made available to NationsBank by any Lender, NationsBank shall be
entitled to recover such amount on demand from such Lender, together with
accrued interest thereon for each day from the date of demand thereof, at
the Federal Funds Rate. If such Lender does not pay such amount
forthwith upon NationsBank's demand therefor, and until such time as such
Lender makes the required payment, NationsBank shall be deemed to
continue to have outstanding Swing Line Loans in the amount of such
unpaid participation obligation for all purposes of the Credit Documents
other than those provisions requiring the other Lenders to purchase a
participation therein. Further, such Lender shall be deemed to have
assigned any and all payments made of principal and interest on its
Loans, and any other amounts due to it hereunder to NationsBank to fund
Swing Line Loans in the amount of the participation in Swing Line Loans
that such Lender failed to purchase pursuant to this Section 2.3(c) until
such amount has been purchased (as a result of such assignment or
otherwise).
2.4 REVOLVING-B LOANS.
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Subject to the terms and conditions set forth herein, each Lender
severally agrees to make revolving loans (each a "Revolving-B Loan" and
collectively the "Revolving-B Loans") to the Borrower, in Dollars, at any time
and from time to time, during the period from and including the Effective Date
to but not including the Revolving-B Loan Maturity Date (or such earlier date
if the Revolving-B Committed Amount has been terminated as provided herein);
provided, however, that (a) with respect to each individual Lender, the
Lender's pro rata share of outstanding Revolving-B Loans shall not exceed such
Lender's Revolving Loan Commitment Percentage of the Revolving-B Committed
Amount and (b) the aggregate amount of Revolving-B Loans outstanding shall not
exceed the Revolving-B Committed Amount. Subject to the terms of this Credit
Agreement (including Section 3.3), the Borrower may borrow, repay and reborrow
Revolving-B Loans.
2.5 METHOD OF BORROWING FOR REVOLVING LOANS.
By no later than 12:00 noon (a) on the date of the requested borrowing of
Revolving Loans that will be Base Rate Loans or (b) three Business Days prior
to the date of the requested borrowing of Revolving Loans that will be
Eurocurrency Loans, the Borrower shall provide telephonic notice to the
Administrative Agent, followed promptly by a written Notice of Borrowing in the
form of Exhibit 2.5 (which may be submitted via telecopy), each of such
telephonic notice and such written Notice of Borrowing setting forth (i) the
amount requested, (ii) whether the Revolving Loans are Revolving-A Loans or
Revolving-B Loans, (iii) whether such Revolving Loans shall accrue interest at
the Adjusted Base Rate or the Adjusted Eurocurrency Rate, (iv) with respect to
Revolving Loans that will be Eurocurrency Loans, the Interest Period applicable
thereto, (v) if such Revolving Loans are Revolving-A Loans, whether such
Revolving-A Loans requested are in Dollars or in a Foreign Currency and (vi)
certification that the Borrower has complied in all respects with Section 5.2.
All Revolving Loans made on the Effective Date, other than those requested
pursuant to the Notice from the Borrower dated September 17, 1997 regarding
Loans to be made in Foreign Currency on the Effective Date shall be Base Rate
Loans. Thereafter, Revolving Loans may be converted to Eurocurrency Loans in
accordance with Section 2.9.
2.6 FUNDING OF REVOLVING LOANS.
Upon receipt of a Notice of Borrowing, the Administrative Agent shall
promptly inform the Lenders as to the terms thereof. Each Lender shall make
its Revolving Loan Commitment Percentage of the requested Revolving Loans
available to the Administrative Agent by 2:00 p.m. on the date specified in the
Notice of Borrowing by deposit, in Dollars or the applicable Foreign Currency,
of immediately available funds at the offices of the Administrative Agent at
its principal office in Charlotte, North Carolina or at such other address as
the Administrative Agent may designate in writing. The amount of the requested
Revolving Loans will then be made available to the Borrower by the
Administrative Agent by crediting the account of the Borrower on the books of
such office of the Administrative Agent, to the extent the amount of such
Revolving Loans are made available to the Administrative Agent.
No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make Revolving Loans hereunder; provided, however,
that the failure of any Lender to fulfill its
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<PAGE> 41
obligations hereunder shall not relieve any other Lender of its obligations
hereunder. Unless the Administrative Agent shall have been notified by any
Lender prior to the date of any such Revolving Loan that such Lender does not
intend to make available to the Administrative Agent its portion of the
Revolving Loans to be made on such date, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent on
the date of such Revolving Loans, and the Administrative Agent in reliance upon
such assumption, may (in its sole discretion but without any obligation to do
so) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent,
the Administrative Agent shall be able to recover such corresponding amount
from such Lender. If such Lender does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the Administrative
Agent will promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover from the Lender 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) from the Borrower at the
applicable rate for such Revolving Loan pursuant to the Notice of Borrowing and
(ii) from a Lender at the Federal Funds Rate.
2.7 REDUCTIONS OF REVOLVING COMMITTED AMOUNTS.
Upon at least three Business Days' notice, the Borrower shall have the
right to permanently reduce all or part of the aggregate unused amount of the
Revolving-A Committed Amount or the Revolving-B Committed Amount at any time or
from time to time; provided that (a) each partial reduction shall be in an
aggregate amount at least equal to $5,000,000 and in integral multiples of
$1,000,000 above such amount, (b) no reduction shall be made which would reduce
the Revolving-A Committed Amount to an amount less than the aggregate amount of
outstanding Revolving-A Loans plus the aggregate amount of outstanding LOC
Obligations plus the aggregate amount of Swing Line Loans outstanding and (c)
no reduction shall be made which would reduce the Revolving-B Committed Amount
to an amount less than the aggregate amount of outstanding Revolving-B Loans.
Any reduction in (or termination of) a Revolving Committed Amount shall be
permanent and may not be reinstated.
2.8 TERM LOANS.
(a) Term Loan. Subject to the terms and conditions set forth
herein, each Lender severally agrees, on the Effective Date, to make a
term loan (collectively, the "Term Loans") to the Borrower, in Dollars,
in an amount equal to such Lender's Term Loan Commitment Percentage of
the Term Loan Committed Amount; provided that the aggregate amount of
such Term Loans made on the Effective Date shall not exceed the Term Loan
Committed Amount. Once repaid, Term Loans cannot be reborrowed.
(b) Funding of Term Loans. On the Effective Date, each applicable
Lender will make its Term Loan Commitment Percentage of the Term Loan
Committed Amount
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available to the Administrative Agent by deposit, in Dollars and in
immediately available funds, at the offices of the Administrative Agent
at its principal office in Charlotte, North Carolina or at such other
address as the Administrative Agent may designate in writing. The amount
of the Term Loans will then be made available to the Borrower by the
Administrative Agent by crediting the account of the Borrower on the
books of such office of the Administrative Agent, to the extent the
amount of such Term Loans are made available to the Administrative Agent.
All Term Loans on the Effective Date shall be Base Rate Loans.
Thereafter, all or any portion of the Term Loans may be converted into
Eurocurrency Loans in accordance with the terms of Section 2.9.
No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make a Term Loan hereunder; provided,
however, that the failure of any Lender to fulfill its obligations
hereunder shall not relieve any other Lender of its obligations
hereunder. If the Administrative Agent shall have received an executed
signature page to this Credit Agreement (whether an original or via
telecopy) from a Lender, the Administrative Agent may assume that such
Lender has or will make the amount of its Term Loans available to the
Administrative Agent on the Effective Date, and the Administrative Agent
in reliance upon such assumption, may (in its sole discretion but without
any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to
the Administrative Agent, the Administrative Agent shall be able to
recover such corresponding amount from such Lender. If such Lender does
not pay such corresponding amount forthwith upon the Administrative
Agent's demand therefor, the Administrative Agent will promptly notify
the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also
be entitled to recover from the Lender 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) from the
Borrower at the applicable rate for such Term Loan and (ii) from a Lender
at the Federal Funds Rate.
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(c) Amortization. The principal amount of the Term Loans shall be
repaid in quarterly payments on the dates set forth below:
<TABLE>
<CAPTION>
Principal Amortization Term Loan Principal
Payment Dates Amortization Payment
---------------------- --------------------
<S> <C>
January 1, 1998 $5,000,000
April 1, 1998 $5,000,000
July 1, 1998 $5,000,000
October 1, 1998 $5,000,000
January 1, 1999 $5,000,000
April 1, 1999 $5,000,000
July 1, 1999 $5,000,000
October 1, 1999 $5,000,000
January 1, 2000 $5,000,000
April 1, 2000 $5,000,000
July 1, 2000 $5,000,000
October 1, 2000 $5,000,000
January 1, 2001 $5,000,000
April 1, 2001 $5,000,000
July 1, 2001 $5,000,000
October 1, 2001 $5,000,000
January 1, 2002 $5,000,000
April 1, 2002 $5,000,000
July 1, 2002 $5,000,000
September 19, 2002 $5,000,000
Total $100,000,000
</TABLE>
2.9 CONTINUATIONS AND CONVERSIONS.
Subject to the terms of Section 5.2, the Borrower shall have the option,
on any Business Day, to continue existing Eurocurrency Loans for a subsequent
Interest Period, to convert Base Rate Loans (other than Swing Line Loans) into
Eurocurrency Loans or to convert Eurocurrency Loans into Base Rate Loans (other
than Swing Line Loans); provided, however, that (a) each such continuation or
conversion must be requested by the Borrower pursuant to telephonic notice to
the Administrative Agent, followed promptly by a written Notice of
Continuation/Conversion, in the form of Exhibit 2.9 (which may be submitted via
telecopy), each of such telephonic notice and such written Notice of
Continuation/Conversion in compliance with the terms set forth below, (b)
except as provided in Section 3.11, Eurocurrency Loans may only be continued or
converted into Base Rate Loans on the last day of the Interest Period
applicable thereto, (c) Eurocurrency Loans may not be continued nor may Base
Rate Loans be converted into Eurocurrency Loans during the existence and
continuation of an Event of Default and (d) any request to continue a
Eurocurrency Loan that fails to comply with the terms hereof or any failure to
request a continuation of a Eurocurrency Loan at the end of an Interest Period
shall constitute a conversion to a Base Rate Loan on the last day of the
applicable Interest Period. Each continuation or conversion must be requested
by the Borrower no later than 12:00 noon (i) on the date for a requested
conversion of a Eurocurrency Loan to a Base Rate Loan or (ii) three Business
Days prior to the date for a requested continuation of a Eurocurrency Loan or
conversion of a Base Rate Loan to a Eurocurrency Loan, in each case pursuant to
telephonic notice and a written Notice of Continuation/Conversion (which may be
submitted via telecopy) submitted to the Administrative Agent, each of which
shall set forth (x) whether the Borrower wishes to continue or convert such
Loans, (y) whether the Loans to be continued or converted are Revolving-A
Loans, Revolving-B Loans or Term Loans and (z) if the request is to continue a
Eurocurrency Loan or convert a Base Rate Loan to a Eurocurrency Loan,
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<PAGE> 44
the Interest Period applicable thereto. Notwithstanding the foregoing,
Revolving-A Loans made in Foreign Currency may not be continued or converted
pursuant to this Section 2.9 but instead must be repaid at the end of the
applicable Interest Period in the Foreign Currency in which such Loan was made.
2.10 MINIMUM AMOUNTS OF LOANS.
Each request for a borrowing, conversion or continuation shall be subject
to the requirements that (a) each Eurocurrency Loan shall be in a minimum
amount of $10,000,000 and integral multiples of $1,000,000 in excess thereof,
(b) each Revolving-A Loan made in a Foreign Currency shall be in a minimum
amount of the U.S. Dollar Equivalents of $5,000,000 and in integral multiples
of the U.S. Dollar Equivalents of $1,000,000 in excess thereof, (c) each Base
Rate Loan (other than a Swing Line Loan or a Revolving-A Loan made in a Foreign
Currency) shall be in a minimum amount of the lesser of $1,000,000 (and
integral multiples of $500,000 in excess thereof) or the remaining amount
available under the applicable Revolving Committed Amount or the Term Loan
Committed Amount, as applicable, (d) each Swing Line Loan shall be in a minimum
amount of $100,000 and in integral multiples of $100,000 in excess thereof or
the remaining amount of the Swing Line Committed Amount and (e) no more than 15
Eurocurrency Loans shall be outstanding hereunder at any one time. For the
purposes of this Section, all Eurocurrency Loans with the same Interest Periods
that begin and end on the same date shall be considered as one Eurocurrency
Loan, but Eurocurrency Loans with different Interest Periods, even if they
begin on the same date, shall be considered as separate Eurocurrency Loans.
2.11 NOTES.
(a) Revolving-A Promissory Notes. The Revolving-A Loans made by
each Lender shall be evidenced by a duly executed promissory note of the
Borrower to each applicable Lender in substantially the form of Exhibit
2.11(a).
(b) Revolving-B Promissory Notes. The Revolving-B Loans made by
each Lender shall be evidenced by a duly executed promissory note of the
Borrower to each applicable Lender in the face amount of its Revolving
Loan Commitment Percentage of the Revolving-B Committed Amount in
substantially the form of Exhibit 2.11(b).
(c) Swing Line Note. The Swing Line Loans made by NationsBank shall
be evidenced by a duly executed promissory note of the Borrower to
NationsBank in the face amount of the Swing Line Committed Amount and in
substantially the form of Exhibit 2.11(c).
(d) Term Loan Notes. The Term Loan made by each Lender shall be
evidenced by a duly executed promissory note of the Borrower to each
applicable Lender in the face amount of its Term Loan Commitment
Percentage of the Term Loan Committed Amount in substantially the form of
Exhibit 2.11(d).
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<PAGE> 45
2.12 CURRENCY EQUIVALENTS.
For purposes of determining compliance with Section 2.1, Section 2.2(a)
and Section 3.3(b), the amount of each Revolving-A Loan and each Letter of
Credit outstanding in a Foreign Currency: (a) shall be converted to its U.S.
Dollar Equivalent on (i) the date of each Notice of Borrowing, Notice of
Continuation/Conversion or request for a Letter of Credit with respect thereto
and (ii) on any other date requested by the Required Lenders and (b) from and
after any such date, shall be deemed to remain equivalent to the U.S. Dollar
Equivalent determined in accordance with clause (a) notwithstanding any
fluctuation in exchange rates occurring thereafter.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1. INTEREST.
(a) Interest Rate. All Base Rate Loans shall accrue interest at the
Adjusted Base Rate and all Eurocurrency Loans shall accrue interest at
the Adjusted Eurocurrency Rate.
(b) Default Rate of Interest. Upon the occurrence, and during the
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand, at
a per annum rate equal to 2% plus the rate which would otherwise be
applicable (or if no rate is applicable, then the rate for Revolving-A
Loans that are Base Rate Loans plus two percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due and payable
in arrears on each Interest Payment Date. If an Interest Payment Date
falls on a date which is not a Business Day, such Interest Payment Date
shall be deemed to be the next succeeding Business Day, except that in
the case of Eurocurrency Loans where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding
day.
(d) Additional Interest. Any Loan made in British Pounds Sterling
shall have added to the interest otherwise applicable to such Loan the
MLA Cost associated with such Loan. Such MLA Cost and the calculation
thereof shall be reflected in an invoice sent by the Administrative Agent
to the Borrower in connection with any demand for payment of such MLA
Cost.
3.2 PLACE AND MANNER OF PAYMENTS.
All payments of principal, interest, fees, expenses and other amounts to
be made by a Credit Party under this Agreement shall be received not later than
3:00 p.m. on the date when due, in
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<PAGE> 46
Dollars (or, in the case of Revolving-A Loans or Letters of Credit issued in
Foreign Currency, in the applicable Foreign Currency), without set-off,
counterclaim, withholding or other reduction except as permitted in Section
3.13, and in immediately available funds, by the Administrative Agent at its
offices in Charlotte, North Carolina. Payments received after such time shall
be deemed to have been received on the next Business Day. The Borrower shall,
at the time it makes any payment under this Agreement, specify to the
Administrative Agent, the Loans, Letters of Credit, fees or other amounts
payable by the Borrower hereunder to which such payment is to be applied (and
in the event that it fails to specify, or if such application would be
inconsistent with the terms hereof, the Administrative Agent shall, subject to
Section 3.7, distribute such payment to the Lenders in such manner as the
Administrative Agent may deem appropriate). The Administrative Agent will
distribute such payments to the applicable Lenders on the same Business Day if
any such payment is received prior to 3:00 p.m.; otherwise the Administrative
Agent will distribute such payment to the applicable Lenders prior to 12:00
noon on the next succeeding Business Day. Whenever any payment hereunder shall
be stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day (subject to accrual of
interest and fees for the period of such extension), except that in the case of
Eurocurrency Loans, if the extension would cause the payment to be made in the
next following calendar month, then such payment shall instead be made on the
next preceding Business Day.
3.3 PREPAYMENTS.
(a) Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time without premium or
penalty; provided, however, that (i) Eurocurrency Loans may only be
prepaid on three Business Days' prior written notice to the
Administrative Agent and any prepayment of Eurocurrency Loans will be
subject to Section 3.14, (ii) each such partial prepayment of Loans shall
be in the minimum principal amount of (A) $5,000,000 for Revolving Loans
and Term Loans (and integral multiples of $1,000,000 in excess thereof)
or with respect to Revolving-A Loans made in Foreign Currency, the U.S.
Dollar Equivalent thereof and (B) $100,000 for Swing Line Loans (and
integral multiples of $100,000 in excess thereof) and (iii) voluntary
prepayments with respect to the Term Loans shall be applied pro rata
among the remaining Principal Amortization Payments.
(b) Mandatory Prepayments.
(i) Revolving-A Committed Amount; Revolving-B Committed
Amount. If at any time (A) the sum of the aggregate amount of
Revolving-A Loans outstanding plus LOC Obligations outstanding plus
Swing Line Loans outstanding exceeds the Revolving-A Committed
Amount, or (B) the sum of Revolving-B Loans outstanding exceeds the
Revolving-B Committed Amount, or (C) the sum of Revolving-A Loans
made in Foreign Currency plus the LOC Obligations issued in Foreign
Currency exceeds $100 million, the Borrower shall immediately make
a principal payment to the Administrative Agent in the manner and
in an amount necessary to be in compliance with Section 2.1, 2.2 or
2.4, as applicable.
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<PAGE> 47
(ii) Application of Prepayments. All amounts required to be
paid pursuant to Section 3.3(b)(i)(A) shall be applied first to
Revolving-A Loans (first to Base Rate Loans and then to
Eurocurrency Loans in direct order of Interest Period maturities),
second to Swing Line Loans and third to a cash collateral account
in respect of LOC Obligations. All amounts required to be paid
pursuant to Section 3.3(b)(i)(B) shall be applied first to Base
Rate Loans and then to Eurocurrency Loans in direct order of
Interest Period maturities.
3.4 FEES.
(a) Facility Fees. In consideration of the Revolving-A Committed
Amount and the Revolving-B Committed Amount being made available by the
Lenders hereunder, the Borrower agrees to pay to the Administrative
Agent, for the pro rata benefit of each applicable Lender (based on each
Lender's Revolving Loan Commitment Percentage of the Revolving-A
Committed Amount or the Revolving-B Committed Amount, as applicable), a
fee equal to the sum of (i) the Applicable Percentage for Revolving-A
Facility Fees on the Revolving-A Committed Amount (whether used or
unused) and (ii) the Applicable Percentage for Revolving-B Facility Fees
on the Revolving-B Committed Amount (whether used or unused) (the
"Facility Fees"). The Facility Fees shall commence to accrue on the
Effective Date and shall be due and payable in arrears on the first
Business Day of each fiscal quarter of the Borrower (as well as on the
Revolving-A Loan Maturity Date, the Revolving-B Loan Maturity Date and on
any date that a Revolving Committed Amount is reduced) for the
immediately preceding fiscal quarter (or portion thereof), beginning with
the first of such dates to occur after the Closing Date.
(b) Letter of Credit Fees.
(i) Letter of Credit Fees. In consideration of the issuance
of Letters of Credit hereunder, the Borrower agrees to pay to the
Administrative Agent for the pro rata benefit of the applicable
Lenders (based on each Lender's Revolving Loan Commitment
Percentage of the Revolving-A Committed Amount), a fee (the "Letter
of Credit Fees") equal to the Applicable Percentage for the Letter
of Credit Fees on the average daily maximum amount available to be
drawn under each such Letter of Credit from the date of issuance
through the date of expiration. The Letter of Credit Fees will be
payable in arrears on the first day of each fiscal quarter of the
Borrower (as well as on the Revolving-A Loan Maturity Date) for the
immediately preceding fiscal quarter (or portion thereof),
beginning with the first of such dates to occur after the Closing
Date.
(ii) Issuing Lender Fees. In addition to the Letter of Credit
Fees payable pursuant to subsection (i) above, the Borrower shall
pay to an Issuing Lender for its own account, without sharing by
the other Lenders, (A) a fee equal to (x) if the Leverage Ratio and
the Unsecured Senior Debt Rating provide that Pricing Level I,
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<PAGE> 48
II, III, IV or V is applicable on the date of issuance of the
Letter of Credit (as set forth in the definition of Applicable
Percentage), one-eighth of one percent (.125%) per annum on the
total sum of all Letters of Credit issued by such Issuing Lender,
or (y) if the Leverage Ratio and the Unsecured Senior Debt Rating
provide that Pricing Level VI is applicable on the date of issuance
of the Letter of Credit (as set forth in the definition of
Applicable Percentage), one-fifth of one percent (.20%) per annum
on the total sum of all Letters of Credit issued by such Issuing
Lender, such fee to be paid in arrears on the first day of each
fiscal quarter of the Borrower (as well as on the Revolving-A Loan
Maturity Date) for the immediately preceding fiscal quarter (or
portion thereof) and (B) the customary charges from time to time to
such Issuing Lender for its services in connection with the
issuance, amendment, payment, transfer, administration,
cancellation and conversion of such Letters of Credit
(collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, an annual fee in accordance
with the terms of the Fee Letter.
3.5 PAYMENT IN FULL AT MATURITY.
On (a) the Revolving-A Loan Maturity Date, the entire outstanding
principal balance of all Revolving-A Loans, all Swing Line Loans and all LOC
Obligations shall be due and payable in full, unless accelerated sooner
pursuant to Section 9.2, (b) the Revolving-B Loan Maturity Date, the entire
outstanding principal balance of all Revolving-B Loans shall be due and payable
in full, unless accelerated sooner pursuant to Section 9.2 and (c) the Term
Loan Maturity Date, the entire outstanding principal balance of all Term Loans
shall be due and payable in full, unless accelerated sooner pursuant to Section
9.2, in each case together with accrued but unpaid interest and all other sums
owing with respect thereto.
3.6 COMPUTATIONS OF INTEREST AND FEES.
(a) All computations of interest and fees hereunder shall be made on
the basis of the actual number of days elapsed over a year of 360 days.
Interest shall accrue from and include the date of borrowing (or
continuation or conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit Parties to
conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between the Lenders and the
Borrower are hereby limited by the provisions of this paragraph which
shall override and control all such agreements, whether now existing or
hereafter arising and whether written or oral. In no way, nor in any
event or contingency (including but not limited to prepayment or
acceleration of the maturity of any obligation), shall the interest
taken, reserved, contracted for, charged, or received under this Credit
Agreement, under the Notes or otherwise, exceed the maximum nonusurious
amount permissible under applicable law. If, from any possible
construction of any of the Credit
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<PAGE> 49
Documents or any other document, interest would otherwise be payable in
excess of the maximum nonusurious amount, any such construction shall be
subject to the provisions of this paragraph and such documents shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable law, without the necessity of execution of any amendment or
new document. If any Lender shall ever receive anything of value which
is characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum lawful
amount, an amount equal to the amount which would have been excessive
interest shall, without penalty, be applied to the reduction of the
principal amount owing on the Loans and not to the payment of interest,
or refunded to the Borrower or the other payor thereof if and to the
extent such amount which would have been excessive exceeds such unpaid
principal amount of the Loans. The right to demand payment of the Loans
or any other indebtedness evidenced by any of the Credit Documents does
not include the right to accelerate the payment of any interest which has
not otherwise accrued on the date of such demand, and the Lenders do not
intend to charge or receive any unearned interest in the event of such
demand. All interest paid or agreed to be paid to the Lenders with
respect to the Loans shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated
term (including any renewal or extension) of the Loans so that the amount
of interest on account of such indebtedness does not exceed the maximum
nonusurious amount permitted by applicable law.
3.7 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan borrowing (including, without limitation, each
Mandatory Borrowing), each payment or prepayment of principal of any
Loan, each payment of fees (other than the Issuing Lender Fees retained
by an Issuing Lender for its own account and the Administrative Fees
retained by the Administrative Agent for its own account), each reduction
of the Revolving-A Committed Amount or the Revolving-B Committed Amount,
and each conversion or continuation of any Loan, shall (except as
otherwise provided in Section 3.11) be allocated pro rata among the
relevant Lenders in accordance with the respective Revolving Loan
Commitment Percentages or Term Loan Commitment Percentages, as
applicable, of such Lenders (or, if the Commitments of such Lenders have
expired or been terminated, in accordance with the respective principal
amounts of the outstanding Loans and Participation Interests of such
Lenders); provided that, if any Lender shall have failed to pay its
applicable pro rata share of any Loan, then any amount to which such
Lender would otherwise be entitled pursuant to this subsection (a) shall
instead be payable to the Administrative Agent until the share of such
Loan not funded by such Lender has been repaid; provided further, that in
the event any amount paid to any Lender pursuant to this subsection (a)
is rescinded or must otherwise be returned by the Administrative Agent,
each Lender shall, upon the request of the Administrative Agent,
repay to the Administrative Agent the amount so paid to such Lender, with
interest for the period commencing on the date such payment is returned
by the Administrative Agent until
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the date the Administrative Agent receives such repayment at a rate per
annum equal to, during the period to but excluding the date two Business
Days after such request, the Federal Funds Rate, and thereafter, the Base
Rate plus two percent (2%) per annum; and
(b) Letters of Credit. Each payment of unreimbursed drawings in
respect of LOC Obligations shall be allocated to each LOC Participant pro
rata in accordance with its Revolving Loan Commitment Percentage;
provided that, if any LOC Participant shall have failed to pay its
applicable pro rata share of any drawing under any Letter of Credit, then
any amount to which such LOC Participant would otherwise be entitled
pursuant to this subsection (b) shall instead be payable to the
applicable Issuing Lender until the share of such unreimbursed drawing
not funded by such Lender has been repaid; provided further, that in the
event any amount paid to any LOC Participant pursuant to this subsection
(b) is rescinded or must otherwise be returned by such Issuing Lender,
each LOC Participant shall, upon the request of such Issuing Lender,
repay to the Administrative Agent for the account of such Issuing Lender
the amount so paid to such LOC Participant, with interest for the period
commencing on the date such payment is returned by such Issuing Lender
until the date such Issuing Lender receives such repayment at a rate per
annum equal to, during the period to but excluding the date two Business
Days after such request, the Federal Funds Rate, and thereafter, the Base
Rate plus two percent (2%) per annum.
3.8 SHARING OF PAYMENTS.
The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect
of any Loan, unreimbursed drawing with respect to any LOC Obligations or any
other obligation owing to such Lender under this Credit Agreement through the
exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a
secured claim under Section 506 of the Bankruptcy Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
pay in cash or purchase from the other Lenders a participation in such Loans,
LOC Obligations, and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares
as provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by payment in cash or a
repurchase of a participation theretofore sold, return its share of that
benefit (together with its share of any accrued interest payable with respect
thereto) to each Lender whose payment shall have been rescinded or otherwise
restored. The Borrower agrees that any Lender so purchasing such a
participation may, to the fullest extent permitted by law, exercise all rights
of payment, including setoff, banker's lien or counterclaim, with respect to
such participation as fully as if such Lender were a holder of such Loan, LOC
Obligation or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or an
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Agent shall fail to remit to an Agent or any other Lender an amount payable by
such Lender or such Agent to such Agent or such other Lender pursuant to this
Credit Agreement on the date when such amount is due, such payments shall be
made together with interest thereon for each date from the date such amount is
due until the date such amount is paid to such Agent or such other Lender at a
rate per annum equal to the Federal Funds Rate. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured
claim in lieu of a setoff to which this Section 3.8 applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders under this Section 3.8 to
share in the benefits of any recovery on such secured claim.
3.9 CAPITAL ADEQUACY.
If, after the date hereof, any Lender has determined that the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any
applicable law, rule or regulation regarding capital adequacy, or compliance by
such Lender, or its parent corporation, with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's (or parent corporation's) capital
or assets as a consequence of its commitments or obligations hereunder to a
level below that which such Lender, or its parent corporation, could have
achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Lender's (or parent corporation's) policies with
respect to capital adequacy), then, upon notice from such Lender to the
Borrower, the Borrower shall be obligated to pay to such Lender such additional
amount or amounts as will compensate such Lender on an after-tax basis (after
taking into account applicable deductions and credits in respect of the amount
indemnified) for such reduction. Each determination by any such Lender of
amounts owing under this Section shall, absent manifest error, be conclusive
and binding on the parties hereto. This covenant shall survive the termination
of this Credit Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.10 INABILITY TO DETERMINE EUROCURRENCY RATE OR MAKE LOANS IN FOREIGN
CURRENCY.
If the Administrative Agent shall have determined in good faith (which
determination shall be conclusive and binding upon the Borrower) that, (a) by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurocurrency Rate or (b) Loans cannot
be made in a Foreign Currency, the Administrative Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter, and will also give prompt written notice to the
Borrower when such conditions no longer exist. If such notice is given in
connection with (a) above (i) any Eurocurrency Loans requested to be made on
the first day of such Interest Period shall be made as Base Rate Loans, (ii)
any Loans that were to have been converted on the first day of such Interest
Period to or continued as Eurocurrency Loans shall be converted to or continued
as Base Rate Loans and (iii) any outstanding Eurocurrency Loans shall be
converted, on the first day of such Interest Period, to Base Rate Loans. Until
such notice
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has been withdrawn by the Administrative Agent, no further Eurocurrency Loans
shall be made or continued as such, nor shall the Borrower have the right to
convert Base Rate Loans to Eurocurrency Loans. If such notice is given in
connection with (b) above, any request for a Loan in such Foreign Currency
shall be a request for such loan to be made in Dollars.
3.11 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof occurring after the Closing Date shall make it unlawful for any Lender
to make or maintain Eurocurrency Loans as contemplated by this Credit
Agreement, (a) such Lender shall promptly give written notice of such
circumstances to the Borrower and the Administrative Agent (which notice shall
be withdrawn whenever such circumstances no longer exist), (b) the commitment
of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency
Loans as such and convert a Base Rate Loan to Eurocurrency Loans shall
forthwith be canceled and, until such time as it shall no longer be unlawful
for such Lender to make or maintain Eurocurrency Loans, such Lender shall then
have a commitment only to make a Base Rate Loan when a Eurocurrency Loan is
requested and (c) such Lender's Loans then outstanding as Eurocurrency Loans,
if any, shall be converted automatically to Base Rate Loans on the respective
last days of the then current Interest Periods with respect to such Loans or
within such earlier period as required by law. If any such conversion of a
Eurocurrency Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender
such amounts, if any, as may be required pursuant to Section 3.14; provided,
however, that no such conversion shall be required to occur before the end of
an Interest Period unless otherwise required by law.
3.12 REQUIREMENTS OF LAW.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind whatsoever with
respect to any Letter of Credit, any Eurocurrency Loans made by it or its
obligation to make Eurocurrency Loans, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by Section 3.13 (including Non-Excluded Taxes imposed solely by
reason of any failure of such Lender to comply with its obligations under
Section 3.13(b)) and changes in taxes measured by or imposed upon the
overall net income, or franchise tax (imposed in lieu of such net income
tax), of such Lender or its applicable lending office, branch, or any
affiliate thereof);
(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in
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or for the account of, advances, loans or other extensions of credit by,
or any other acquisition of funds by, any office of such Lender which is
not otherwise included in the determination of the Eurocurrency Rate
hereunder; or
(c) shall impose on such Lender any other condition (excluding any
tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurocurrency Loans or issuing or participating
in Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Administrative Agent, in accordance herewith, the Borrower shall be
obligated to promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender on an after-tax basis (after taking into
account applicable deductions and credits in respect of the amount indemnified)
for such increased cost or reduced amount receivable, provided that, in any
such case, the Borrower may elect to convert the Eurocurrency Loans made by
such Lender hereunder to Base Rate Loans by giving the Administrative Agent at
least one Business Day's notice of such election, in which case the Borrower
shall promptly pay to such Lender, upon demand, without duplication, such
amounts, if any, as may be required pursuant to Section 3.14; provided,
however, that no such conversion shall be required to occur before the end of
an Interest Period unless otherwise required by law. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section 3.12, it
shall provide prompt notice thereof to the Borrower, through the Administrative
Agent, certifying (x) that one of the events described in this Section 3.12 has
occurred and describing in reasonable detail the nature of such event, (y) as
to the increased cost or reduced amount resulting from such event and (z) as to
the additional amount demanded by such Lender and a reasonably detailed
explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this Section 3.12 submitted by such
Lender, through the Administrative Agent, to the Borrower shall be conclusive
and binding on the parties hereto in the absence of manifest error. This
covenant shall survive the termination of this Credit Agreement and the payment
of the Loans and all other amounts payable hereunder.
3.13 TAXES.
(a) Except as provided below in this Section 3.13, all payments made
by the Borrower under this Credit Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes measured by
or imposed upon the overall net income of any Lender or its applicable
lending office, or any branch or affiliate thereof, and all franchise
taxes, branch taxes, taxes on doing business or taxes on the overall
capital or net worth of any Lender or its applicable lending office, or
any branch or affiliate thereof, in each case imposed in lieu of net
income taxes: (i) by the jurisdiction under the laws of which such
Lender, applicable lending office, branch or affiliate is organized or is
located,
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or in which its principal executive office is located, or any nation
within which such jurisdiction is located or any political subdivision
thereof; or (ii) by reason of any connection between the jurisdiction
imposing such tax and such Lender, applicable lending office, branch or
affiliate other than a connection arising solely from such Lender having
executed, delivered or performed its obligations, or received payment
under or enforced, this Credit Agreement or any Notes. If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to an Agent or any Lender hereunder or under any Notes,
(A) the amounts so payable to an Agent or such Lender shall be increased
to the extent necessary to yield to an Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Credit
Agreement and any Notes, provided, however, that the Borrower shall be
entitled to deduct and withhold any Non-Excluded Taxes and shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state
thereof if such Lender fails to comply with the requirements of paragraph
(b) of this Section 3.13 whenever any Non-Excluded Taxes are payable by
the Borrower, and (B) as promptly as possible after requested the
Borrower shall send to such Agent for its own account or for the account
of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative
Agent the required receipts or other required documentary evidence, the
Borrower shall indemnify the Agents and any Lender for any incremental
taxes, interest or penalties that may become payable by an Agent or any
Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) (A) on or before the date of any payment by the Borrower
under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Administrative Agent (x) two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, certifying that it
is entitled to receive payments under this Credit Agreement and any
Notes without deduction or withholding of any United States federal
income taxes and (y) an Internal Revenue Service Form W-8 or W-9,
or successor applicable form, as the case may be, certifying that
it is entitled to an exemption from United States backup
withholding tax;
(B) deliver to the Borrower and the Administrative Agent
two further copies of any such form or certification on or before
the date that any such form or certification expires or becomes
obsolete and after the occurrence of any
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event requiring a change in the most recent form previously
delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent; or
(ii) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (A) represent to the Borrower (for the benefit of the
Borrower and the Agents) that it is not a bank within the meaning
of Section 881(c)(3)(A) of the Internal Revenue Code, (B) agree to
furnish to the Borrower, on or before the date of any payment by
the Borrower, with a copy to the Administrative Agent, two accurate
and complete original signed copies of Internal Revenue Service
Form W-8, or successor applicable form certifying to such Lender's
legal entitlement at the date of such certificate to an exemption
from U.S. withholding tax under the provisions of Section 881(c) of
the Internal Revenue Code with respect to payments to be made under
this Credit Agreement and any Notes (and to deliver to the Borrower
and the Administrative Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrower or the Administrative Agent
for filing and completing such forms), and (C) agree, to the extent
legally entitled to do so, upon reasonable request by the Borrower,
to provide to the Borrower (for the benefit of the Borrower and the
Agents) such other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an exemption from
withholding with respect to payments under this Credit Agreement
and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it and
such Lender so advises the Borrower and the Administrative Agent then
such Lender shall be exempt from such requirements. Each Person that
shall become a Lender or a participant of a Lender pursuant to Section
11.3 shall, upon the effectiveness of the related transfer, be required
to provide all of the forms, certifications and statements required
pursuant to this subsection (b); provided that in the case of a
participant of a Lender, the obligations of such participant of a Lender
pursuant to this subsection (b) shall be determined as if the participant
of a Lender were a Lender except that such participant of a Lender shall
furnish all such required forms, certifications and statements to the
Lender from which the related participation shall have been purchased.
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3.14 COMPENSATION.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurocurrency Loans after the Borrower has given a
notice requesting the same in accordance with the provisions of this Credit
Agreement, (b) default by the Borrower in making any prepayment of a
Eurocurrency Loan after the Borrower has given a notice thereof in accordance
with the provisions of this Credit Agreement and (c) the making of a prepayment
of Eurocurrency Loans on a day which is not the last day of an Interest Period
with respect thereto. Such indemnification may include an amount equal to (i)
the amount of interest which would have accrued on the amount so prepaid, or
not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurocurrency
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any) minus (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank Eurocurrency market. The agreements in this Section
shall survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
3.15 SUBSTITUTION OF LENDER; RELOCATION.
In the event a Lender makes a request to the Borrower for compensation in
accordance with Section 3.9, 3.11 3.12, 3.13 or 3.14, or due to any of the
circumstances described in any of such Sections, claims it is unable to make or
maintain Eurocurrency Loans, then, provided that no Event of Default has
occurred and is continuing at such time, the Borrower may, at its option either
(a) at its own expense (such expense to include any transfer fee
payable to the Administrative Agent under Section 11.3(b) and any expense
pursuant to Section 3.14), and in its sole discretion require such Lender
to transfer and assign in whole (but not in part), without recourse (in
accordance with and subject to the terms and conditions of Section
11.3(b), all of its interests, rights and obligations under this Credit
Agreement to an assignee (which is reasonably acceptable to the Required
Lenders) which shall assume such assigned obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that
(i) such assignment shall not conflict with any law, rule or regulation
or order of any court or other governmental authority, and (ii) the
Borrower or such assignee shall have paid to the assigning Lender in
immediately available funds the principal of and interest accrued to the
date of such payment on the portion of the Loans hereunder held by such
assigning Lender and all other amounts owed to such assigning Lender
hereunder, or
(b) request that such Lender use its reasonable efforts (consistent
with legal and regulatory restrictions) to avoid the need for paying such
compensation or such inability,
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including changing the jurisdiction of its applicable lending office;
provided, however, that the taking of such action would not, in the sole
judgment of such Lender, be disadvantageous to such Lender and provided
further that, if and to the extent the Borrower shall make the request
described in this paragraph (b) and such request shall be denied, such
denial shall not preclude the Borrower from exercising its rights under
paragraph (a) above.
3.16 ALL BORROWERS TREATED EQUALLY.
Each Lender agrees that it will not make a request for compensation
pursuant to any of Sections 3.9, 3.11, 3.12, 3.13 or 3.14, or claim it is
unable to make or maintain Eurocurrency Loans, unless such Lender at such time
is making a similar claim for compensation or inability of all its borrowers
which are similarly situated.
SECTION 4
GUARANTY
4.1 GUARANTY OF PAYMENT.
Subject to Section 4.7 below, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Lender, each Affiliate of Lender
that enters into a Hedging Agreement or that actually makes a Loan hereunder,
and the Agents the prompt payment of the Credit Party Obligations in full when
due (whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise). The Guarantors additionally, jointly and severally,
unconditionally guarantee to each Lender, each Affiliate of a Lender that
enters into a Hedging Agreement or that actually makes a Loan hereunder, and
the Agents the timely performance of all other obligations under the Credit
Documents and such Hedging Agreements. This Guaranty is a guaranty of payment
and not of collection and is a continuing guaranty and shall apply to all
Credit Party Obligations whenever arising.
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced
by the Lenders without the necessity at any time of resorting to or exhausting
any security or collateral and without the necessity at any time of having
recourse to the Notes or any other of the Credit Documents or any collateral,
if any, hereafter securing the Credit Party Obligations or otherwise and each
Guarantor hereby waives the right to require the Lenders to proceed against the
Borrower or any other Person (including a co-guarantor) or to require the
Lenders to pursue any other remedy or enforce any other right. Each Guarantor
further agrees that it shall have no right of subrogation, indemnity,
reimbursement or
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contribution against the Borrower or any other Guarantor of the Credit Party
Obligations for amounts paid under this Guaranty until such time as the Lenders
(and any Affiliates of Lenders entering into Hedging Agreements or that
actually makes a Loan hereunder) have been paid in full, all Commitments under
the Credit Agreement have been terminated and no Person or Governmental
Authority shall have any right to request any return or reimbursement of funds
from the Lenders in connection with monies received under the Credit Documents.
Each Guarantor further agrees that nothing contained herein shall prevent the
Lenders from suing on the Notes or any of the other Credit Documents or any of
the Hedging Agreements or foreclosing its security interest in or Lien on any
collateral, if any, securing the Credit Party Obligations or from exercising
any other rights available to it under this Credit Agreement, the Notes, any
other of the Credit Documents, or any other instrument of security, if any, and
the exercise of any of the aforesaid rights and the completion of any
foreclosure proceedings shall not constitute a discharge of any of any
Guarantor's obligations hereunder; it being the purpose and intent of each
Guarantor that its obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances. Neither any Guarantor's
obligations under this Guaranty nor any remedy for the enforcement thereof
shall be impaired, modified, changed or released in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of the
Borrower or by reason of the bankruptcy or insolvency of the Borrower. Each
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Credit Party Obligations and notice of or proof of
reliance of by any Agent or any Lender upon this Guaranty or acceptance of this
Guaranty. The Credit Party Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this Guaranty. All dealings between the
Borrower and any of the Guarantors, on the one hand, and the Agents and the
Lenders, on the other hand, likewise shall be conclusively presumed to have
been had or consummated in reliance upon this Guaranty.
4.3 MODIFICATIONS.
Each Guarantor agrees that (a) all or any part of the security which
hereafter may be held for the Credit Party Obligations, if any, may be
exchanged, compromised or surrendered from time to time; (b) the Lenders shall
not have any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances which hereafter may be held, if any, for the
Credit Party Obligations or the properties subject thereto; (c) the time or
place of payment of the Credit Party Obligations may be changed or extended, in
whole or in part, to a time certain or otherwise, and may be renewed or
accelerated, in whole or in part; (d) the Borrower and any other party liable
for payment under the Credit Documents may be granted indulgences generally;
(e) any of the provisions of the Notes or any of the other Credit Documents may
be modified, amended or waived; (f) any party (including any co-guarantor)
liable for the payment thereof may be granted indulgences or be released; and
(g) any deposit balance for the credit of the Borrower or any other party
liable for the payment of the Credit Party Obligations or liable upon any
security therefor may be released, in whole or in part, at, before or after the
stated, extended or accelerated maturity of the Credit Party Obligations, all
without notice to or further assent by such Guarantor, which shall remain
bound thereon, notwithstanding any such exchange, compromise, surrender,
extension, renewal, acceleration, modification, indulgence or release.
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4.4 WAIVER OF RIGHTS.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and
of all extensions of credit to the Borrower by the Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required
in the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining,
amending, substituting for, releasing, waiving or modifying any security
interest, lien or encumbrance, if any, hereafter securing the Credit Party
Obligations, or the Lenders' subordinating, compromising, discharging or
releasing such security interests, liens or encumbrances, if any; (e) all other
notices to which such Guarantor might otherwise be entitled; and (f) demand for
payment under this Guaranty.
4.5 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit
Party Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agents and each Lender on demand for all reasonable, documented costs and
expenses (including, without limitation, reasonable, documented fees of
counsel) incurred by an Agent or such Lender in connection with such rescission
or restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
4.6 REMEDIES.
The Guarantors agree that, as between the Guarantors, on the one hand, and
the Agents and the Lenders, on the other hand, the Credit Party Obligations may
be declared to be forthwith due and payable as provided in Section 9.2 (and
shall be deemed to have become automatically due and payable in the
circumstances provided in Section 9.2) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have become automatically due and payable), such
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The Guarantors
acknowledge and agree that, during any Collateral Period, their obligations
hereunder shall be secured in accordance with the terms of the Collateral
Documents and that, during any such Collateral Period, the Lenders may exercise
their remedies thereunder in accordance with the terms thereof.
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4.7 LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in any
of the other Credit Documents, to the extent the obligations of any Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
4.8 RIGHTS OF CONTRIBUTION.
The Credit Parties agree among themselves that, in connection with
payments made hereunder, each Credit Party shall have contribution rights
against the other Credit Parties as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Credit Parties under the Credit Documents and no Credit
Party shall exercise such rights of contribution until all Credit Party
Obligations have been paid in full and the Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
5.1 CLOSING CONDITIONS.
The obligation of the Lenders to enter into this Credit Agreement and make
the initial Extension of Credit is subject to satisfaction of the following
conditions:
(a) Executed Credit Documents. Receipt by the Administrative Agent
of duly executed copies of: (i) this Credit Agreement; (ii) the Notes;
(iii) the Pledge Agreements; and (iv) all other Credit Documents, each in
form and substance reasonably acceptable to the Agents in their sole
discretion.
(b) Corporate Documents. Receipt by the Administrative Agent of the
following:
(i) Charter Documents. Copies of the articles or certificates
of incorporation or other charter documents of each Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as
of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each Credit Party
certified by a secretary or assistant secretary of such Credit
Party to be true and correct as of the Effective Date.
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(iii) Resolutions. Copies of resolutions of the Board of
Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified
by a secretary or assistant secretary of such Credit Party to be
true and correct and in force and effect as of the Effective Date.
(iv) Good Standing. Copies of (A) certificates of good
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be
in good standing would reasonably be expected to have a Material
Adverse Effect on the business or operations of a Credit Party in
such jurisdiction and (B) to the extent available and not otherwise
covered by the certificate described in subclause (A), a
certificate indicating payment of all corporate franchise taxes
certified as of a recent date by the appropriate governmental
taxing authorities.
(v) Incumbency. An incumbency certificate of each Credit
Party certified by a secretary or assistant secretary to be true
and correct as of the Effective Date.
(c) Opinion of Counsel. Receipt by the Administrative Agent of an
opinion, or opinions (which shall cover, among other things, authority,
legality, validity, binding effect, and enforceability), reasonably
satisfactory to the Administrative Agent, addressed to the Administrative
Agent on behalf of the Lenders and dated as of the Effective Date, from
domestic legal counsel to the Credit Parties.
(d) Financial Statements. Receipt by the Administrative Agent and
the Lenders of the consolidated financial statements of the Borrower and
its Subsidiaries, including balance sheets and income and cash flow
statements, for the fiscal years ended December 31, 1995 and December 31,
1996 as summarized on the Borrower's Form 10-K filed with the Commission
for each of such years.
(e) Litigation. There shall not exist any pending or threatened
action, suit, investigation or proceeding against a Credit Party or any
of its Subsidiaries of which an authorized officer of the Borrower has
knowledge that would have or would reasonably be expected to have a
Material Adverse Effect.
(f) Officer's Certificates. The Administrative Agent shall have
received a certificate or certificates executed by a Financial Officer of
the Borrower on behalf of the Borrower and its Subsidiaries as of the
Effective Date stating that (i) the Borrower and each of the Borrower's
Subsidiaries are in compliance with all existing financial obligations,
if the failure to comply with same would have or would be reasonably
expected to have a Material Adverse Effect, (ii) no action, suit,
investigation or proceeding is pending or, to such Financial Officer's
knowledge, threatened in any court or before any arbitrator or
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governmental instrumentality that purports to effect the Borrower, any of
the Borrower's Subsidiaries or any transaction contemplated by the Credit
Documents, if such action, suit, investigation or proceeding would have or
would be reasonably expected to have a Material Adverse Effect, (iii) the
financial statements and information delivered to the Administrative Agent
on or before the Effective Date were prepared in good faith and using
reasonable assumptions and (iv) immediately after giving effect to this
Credit Agreement, the other Credit Documents and all the transactions
contemplated therein to occur on such date, (A) no Default or Event of
Default exists, (B) all representations and warranties contained herein
and in the other Credit Documents, specifically including the
representation made in Section 6.20, are true and correct in all material
respects on and as of the date made, and (C) the Credit Parties are in
compliance with each of the financial covenants set forth in Section 7.2.
(g) Fees and Expenses. Payment by the Credit Parties of all fees
and expenses owed by them to the Lenders and the Agents.
(h) Existing Credit Agreement. Receipt by the Administrative Agent
of evidence that all obligations under the Existing Credit Agreement have
been paid in full and all commitments thereunder terminated.
(i) Material Adverse Change. There shall not have occurred (unless
disclosed by the Borrower in the Form 10-Q of the Borrower filed with the
Commission for the quarter ended June 30, 1997) a material adverse change
since December 31, 1996 in the business, assets, operations, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries or in the facts and information regarding such entities.
Each of the Administrative Agent and each Lender hereby acknowledges and
agrees that no information disclosed pursuant to such Form 10-Q in and of
itself constitutes a material adverse change.
(j) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably and timely requested by
any Lender.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make new Loans nor shall an Issuing Lender be
required to issue or extend a Letter of Credit unless:
(a) Notice. The Borrower shall have delivered (i) in the case of
any new Revolving Loan, a Notice of Borrowing, duly executed and
completed, by the time specified in Section 2.5, (ii) in the case of any
Swing Line Loan, a Swing Line Loan Request, duly executed and completed,
by the time specified in Section 2.3, and (iii) in the case of any Letter
of Credit, to the applicable Issuing Lender an appropriate request for
issuance in accordance with the provisions of Section 2.2;
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(b) Representations and Warranties. The representations and
warranties made by the Credit Parties in any Credit Document are true and
correct in all material respects at and as if made as of such date except
to the extent they expressly relate to an earlier date;
(c) No Default. No Default or Event of Default shall exist or be
continuing either prior to or after giving effect thereto;
(d) Availability. Immediately after giving effect to the making of
a Revolving-A Loan or a Swing Line Loan (and, in each case, the
application of the proceeds thereof) or to the issuance of a Letter of
Credit, as the case may be, the sum of the Revolving-A Loans outstanding
plus LOC Obligations outstanding plus Swing Line Loans outstanding shall
not exceed the Revolving-A Commitment Amount. Immediately after giving
effect to the making of a Revolving-B Loan (and the application of the
proceeds thereof) the sum of Revolving-B Loans outstanding shall not
exceed the Revolving-B Commitment Amount.
The delivery of each Notice of Borrowing, Swing Line Loan Request and each
request for a Letter of Credit shall constitute a representation and warranty
by the Borrower of the correctness of the matters specified in subsections (b),
(c) and (d) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agents and each Lender that:
6.1 FINANCIAL CONDITION.
(a) The financial statements delivered to the Lenders prior to the
Effective Date and pursuant to Section 7.1(a) and (b): (i) have been
prepared in accordance with GAAP and (ii) present fairly in all material
respects the consolidated financial condition, results of operations and
cash flows of the Credit Parties and their Subsidiaries as of such date
and for such periods.
(b) Since December 31, 1996, there has been no sale, transfer or
other disposition by any Credit Party or any of their Subsidiaries of any
material part of the business or property of the Credit Parties, taken as
a whole, and no purchase or other acquisition by any of them of any
business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of the
Credit Parties, taken as a whole, in each case, which, is not (i)
reflected in the most recent financial statements delivered to the
Lenders pursuant to Section 7.1 or in the notes thereto or (ii) otherwise
permitted by the terms of this Credit Agreement and communicated to the
Administrative Agent.
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6.2 NO MATERIAL CHANGE.
Since the Effective Date, there has been no development or event relating
to or affecting a Credit Party or any of their Subsidiaries which has had or
would be reasonably expected to have a Material Adverse Effect.
6.3 ORGANIZATION AND GOOD STANDING.
Each Credit Party and each of its Subsidiaries (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
(or other jurisdiction) of its incorporation, (b) is duly qualified and in good
standing as a foreign corporation and authorized to do business in every
jurisdiction unless the failure to be so qualified, in good standing or
authorized would not be reasonably expected to have a Material Adverse Effect
and (c) has the requisite corporate power and authority to own its properties
and to carry on its business as now conducted and as proposed to be conducted.
6.4 DUE AUTHORIZATION.
Each Credit Party (a) has the requisite corporate power and authority to
execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party and to incur the obligations herein and
therein provided for and (b) is duly authorized to, and has been authorized by
all necessary corporate action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.
6.5 NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws, (b) violate, contravene or materially conflict with
any Requirement of Law or any other law, regulation (including, without
limitation, Regulation U or Regulation X), order, writ, judgment, injunction,
decree or permit applicable to it, if such violation would have or would be
reasonably expected to have a Material Adverse Effect, (c) violate, contravene
or conflict with contractual provisions of, or cause an event of default under,
any indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which it may be bound, the
violation of which would have or would be reasonably expected to have a
Material Adverse Effect, or (d) result in or require the creation of any Lien
(other than those contemplated in or created in connection with the Credit
Documents) upon or with respect to its properties.
6.6 CONSENTS.
Except for consents, approvals and authorizations which have been
obtained, and unless the failure to obtain any such consents, approvals or
authorizations would not have or be reasonably
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expected to have a Material Adverse Effect, no consent, approval, authorization
or order of, or filing, registration or qualification with, any court or
Governmental Authority or third party in respect of any Credit Party is
required in connection with the execution, delivery or performance of this
Credit Agreement or any of the other Credit Documents by such Credit Party.
6.7 ENFORCEABLE OBLIGATIONS.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with
their respective terms, except as may be limited by bankruptcy or insolvency
laws or similar laws affecting creditors' rights generally or by general
equitable principles.
6.8 NO DEFAULT.
No Credit Party, nor any of its Subsidiaries, is in default in any respect
under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which it is a party or by which
any of its properties is bound which default would have or would be reasonably
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred or exists except as previously disclosed in writing to the Lenders.
6.9 OWNERSHIP.
Each Credit Party, and each of its Subsidiaries, is the owner of, and has
good and marketable title to, all of its respective assets (other than those
assets consisting of leasehold estates) and none of such assets is subject to
any Lien other than Permitted Liens.
6.10 INDEBTEDNESS.
The Credit Parties and their Subsidiaries have no Indebtedness except (a)
as disclosed in the financial statements referenced in Section 6.1, (b) as set
forth on Schedule 6.10 and (c) as otherwise permitted by this Credit Agreement.
6.11 LITIGATION.
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against, the Borrower or any of its Subsidiaries which would have or
would be reasonably expected to have a Material Adverse Effect.
6.12 TAXES.
Each Credit Party, and each of its Subsidiaries, has filed, or caused to
be filed, all tax returns (federal, state, local and foreign) required to be
filed (except those for which an extension is in full force and effect) and
paid (a) all amounts of taxes shown thereon to be due (including
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interest and penalties) and (b) all other taxes, fees, assessments and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) owing by it, except for such taxes (i) which are
not yet delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. No Credit Party is aware of any proposed tax assessments
against it.
6.13 COMPLIANCE WITH LAW.
Each Credit Party, and each of its Subsidiaries, is in compliance with all
Requirements of Law and all other laws, rules, regulations, orders and decrees
(including without limitation Environmental Laws) applicable to it, or to its
properties, unless such failure to comply would not have or would not be
reasonably expected to have a Material Adverse Effect.
6.14 ERISA.
Except as would not result or be reasonably expected to result in a
Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has
occurred, and, to the best knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination
Event would be reasonably expected to occur, with respect to any Plan;
(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not waived,
has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and in
material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor or the PBGC
or a Plan has arisen or is reasonably likely to arise on account of any
Plan.
(b) The actuarial present value of all "benefit liabilities" under
each Single Employer Plan (determined within the meaning of Section
401(a)(2) of the Code, utilizing the actuarial assumptions used to fund
such Plans), whether or not vested, did not, as of the last annual
valuation date prior to the date on which this representation is made or
deemed made, exceed the current value of the assets of such Plan
allocable to such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries nor any ERISA
Affiliate has incurred, or, to the best knowledge of the Credit Parties,
are reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower,
nor any of its Subsidiaries nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within the
meaning of Section 4241 of ERISA), is insolvent (within the meaning of
Section 4245 of ERISA), or has been terminated (within the meaning of
Title IV of ERISA), and no Multiemployer Plan is, to the best knowledge
of the Credit Parties, reasonably expected to be in reorganization,
insolvent, or terminated.
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(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
has occurred with respect to a Plan which has subjected or would be
reasonably likely to subject the Borrower or any of its Subsidiaries or
any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or
other instrument pursuant to which the Borrower or any of its
Subsidiaries or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability.
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the benefits provided
and the employees participating) of the liability of the Borrower and its
Subsidiaries and each ERISA Affiliate for post-retirement welfare
benefits to be provided to their current and former employees under Plans
which are welfare benefit plans (as defined in Section 3(1) of ERISA),
net of all assets under all such Plans allocable to such benefits, are
reflected on the financial statements referenced in Section 6.1 in
accordance with FASB 106.
(f) Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code
apply has been administered in compliance in all material respects with
such sections.
6.15 SUBSIDIARIES.
Set forth on Schedule 6.15 is a complete and accurate list of all
Subsidiaries of each Credit Party. During any Collateral Period, information
on Schedule 6.15 shall be amended to include jurisdiction of incorporation, the
number of shares of each class of capital stock or other equity interests
outstanding, the number and percentage of outstanding shares of each class
owned (directly or indirectly) by such Credit Party; and the number and effect,
if exercised, of all outstanding options, warrants, rights of conversion or
purchase and all other similar rights with respect thereto. The outstanding
capital stock and other equity interests of all such Subsidiaries is validly
issued, fully paid and non-assessable, except as indicated otherwise on such
Schedule 6.15, and is owned by each such Credit Party, directly or indirectly,
free and clear of all Liens (other than those arising under or contemplated in
connection with the Credit Documents). Such amended Schedule 6.15 also will
set forth whether any Credit Party or any Subsidiary thereof has outstanding
any securities convertible into or exchangeable for its capital stock or if any
such Person has outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock. Schedule 6.15 may be updated from
time to time by the Borrower by giving written notice thereof to the
Administrative Agent.
6.16 USE OF PROCEEDS; MARGIN STOCK.
The proceeds of the Loans hereunder will be used solely for the purposes
specified in Section 7.10. None of the proceeds of the Loans will be used for
the purpose of purchasing or
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carrying any "margin stock" as defined in Regulation U, Regulation X or
Regulation G, or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry "margin stock" or any "margin
security" or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation U, Regulation X, Regulation G
or Regulation T unless the Administrative Agent has received an opinion of
counsel reasonably satisfactory to it that such use of proceeds will not cause
a violation Regulation U, Regulation X, Regulation G or Regulation T.
6.17 GOVERNMENT REGULATION.
No Credit Party, nor any of its Subsidiaries, is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Investment Company Act of 1940 or the Interstate Commerce Act, each as
amended. In addition, no Credit Party is an "investment company" registered
or required to be registered under the Investment Company Act of 1940, as
amended, or controlled by such a company, or a "holding company," or a
"Subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "Subsidiary" of 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 the Borrower or any of its Subsidiaries is
a director, executive officer or principal shareholder of any Lender. For the
purposes hereof the terms "director", "executive officer" and "principal
shareholder" (when used with reference to any Lender) have the respective
meanings assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
6.18 ENVIRONMENTAL MATTERS.
(a) Except as would not have or be reasonably expected to have a Material
Adverse Effect:
(i) Each of the real properties owned by the Credit Parties
(the "Real Properties") and all operations at the Real Properties
are in compliance with all applicable Environmental Laws, and there
is no violation of any Environmental Law with respect to the Real
Properties or the businesses operated by the Borrower or any of its
Subsidiaries (the "Businesses"), and there are no conditions
relating to the Businesses or Real Properties that would be
reasonably expected to give rise to liability under any applicable
Environmental Laws.
(ii) No Credit Party has received any written notice of, or
inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability
regarding Hazardous Materials or compliance with Environmental Laws
with regard to any of the Real Properties or the Businesses, nor
does the Borrower or any of its Subsidiaries have knowledge or
reason to believe that any such notice is being threatened.
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(iii) Hazardous Materials have not been transported or
disposed of from the Real Properties, or generated, treated, stored
or disposed of at, on or under any of the Real Properties or any
other location, in each case by, or on behalf or with the
permission of, the Borrower or any of its Subsidiaries in a manner
that would be reasonably expected to give rise to a Material
Adverse Effect.
(iv) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower or any of
its Subsidiaries, threatened, under any Environmental Law to which
the Borrower or any of its Subsidiaries is or, to the best
knowledge of Borrower, will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect
to the Borrower or any of its Subsidiaries, the Real Properties or
the Businesses, in any amount reportable under the federal
Comprehensive Environmental Response, Compensation and Liability
Act or any analogous state law, except releases in compliance with
any Environmental Laws.
(v) There has been no release or, to the best knowledge of
Borrower, threat of release of Hazardous Materials at or from the
Real Properties, or arising from or related to the operations
(including, without limitation, disposal) of the Borrower or any of
its Subsidiaries in connection with the Real Properties or
otherwise in connection with the Businesses.
(vi) None of the Real Properties contains, or has previously
contained, any Hazardous Materials at, on or under the Real
Properties in amounts or concentrations that, if released,
constitute or constituted a violation of, or would give rise to
liability under, Environmental Laws and would be reasonably
expected to have a Material Adverse Effect.
(vii) No Credit Party, nor any of its Subsidiaries, has
assumed any liability of any Person (other than another Credit
Party, or one of its Subsidiaries) under any Environmental Law.
(b) The Borrower has adopted procedures that are designed to (i)
ensure that each Credit Party, any of its operations and each of the
properties owned or leased by each Credit Party remains in compliance
with applicable Environmental Laws, to the extent that the failure to
comply with such Environmental Laws would have or would be reasonably
expected to have a Material Adverse Effect, and (ii) minimize any
liabilities or potential liabilities that each Credit Party, any of its
operations and each of the properties owned or leased by each Credit
Party may have under applicable Environmental Laws.
6.19 INTELLECTUAL PROPERTY.
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Each Credit Party owns, or has the legal right to use, all patents,
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal
right to use would not have or would not be reasonably expected to have a
Material Adverse Effect.
6.20 SOLVENCY.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.21 INVESTMENTS.
All Investments of each Credit Party and its Subsidiaries are (a) as set
forth on Schedule 6.21, (b) Permitted Investments or (c) otherwise permitted by
the terms of this Credit Agreement.
6.22 DISCLOSURE.
Neither this Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Credit Party in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
therein or herein, taken as a whole, not misleading.
6.23 LICENSES, ETC.
The Credit Parties have obtained and hold in full force and effect, all
franchises, licenses, permits, certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights, consents and
approvals which are necessary for the operation of their respective businesses
as presently conducted, except where the failure to obtain same would not be
reasonably expected to have a Material Adverse Effect.
6.24 NO BURDENSOME RESTRICTIONS.
No Credit Party, nor any of its Subsidiaries, is a party to any agreement
or instrument or subject to any other obligation or any charter or corporate
restriction or any provision of any applicable law, rule or regulation which,
individually or in the aggregate, would have or be reasonably expected to have
a Material Adverse Effect.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest and fees and other
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obligations hereunder, have been paid in full and the Commitments and Letters
of Credit hereunder shall have terminated:
7.1 INFORMATION COVENANTS.
The Borrower will furnish, or cause to be furnished, to the Administrative
Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any
event within 120 days after the close of each fiscal year of the
Borrower, a consolidated balance sheet and income statement of the
Borrower and its Subsidiaries, as of the end of such fiscal year,
together with related consolidated statements of operations and of cash
flows for such fiscal year, setting forth in comparative form
consolidated figures for the preceding fiscal year, all such consolidated
financial information described above to be in reasonable form and detail
and audited by independent certified public accountants of recognized
national standing reasonably acceptable to the Agents and whose opinion
shall be to the effect that such financial statements have been prepared
in accordance with GAAP (except for changes with which such accountants
concur) and shall not be limited as to the scope of the audit or
qualified in any manner.
(b) Quarterly Financial Statements. As soon as available, and in
any event within 60 days after the close of each of the first three
fiscal quarters of the Borrower, a consolidated balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of such
fiscal quarter, together with related consolidated statements of
operations and of cash flows for such fiscal quarter in each case setting
forth in comparative form consolidated figures for the corresponding
period of the preceding fiscal year (except for the consolidated balance
sheet, which will be compared to the consolidated balance sheet as of the
end of the immediately preceding fiscal year), all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate of a
Financial Officer of the Borrower to the effect that such quarterly
financial statements fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries and have been
prepared in accordance with GAAP, 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 7.1(a) and 7.1(b) above, a
certificate of a Financial Officer of the Borrower substantially in the
form of Exhibit 7.1(c), (i) demonstrating compliance with the financial
covenants contained in Section 7.2 by calculation thereof as of the end
of each such fiscal period, (ii) demonstrating compliance with any other
terms of the Credit Agreement as requested by the Agents and (iii)
stating 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.
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(d) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have
reviewed this Credit Agreement and stating further whether, in the course
of their audit, they have (based on the financial statements prepared in
accordance with then existing GAAP) become aware of any Default or Event
of Default and, if any such Default or Event of Default exists,
specifying the nature and extent thereof.
(e) Reports. Promptly upon or at least within 20 Business Day after
transmission or receipt thereof, (a) copies of any filings and
registrations with, and reports to or from, the Securities and Exchange
Commission, or any successor agency, and copies of all financial
statements, proxy statements, notices and reports as the Borrower or any
of its Subsidiaries shall send to its shareholders generally or to a
holder of public Indebtedness of the Borrower or any of its Subsidiaries
in its capacity as such a holder and (b) upon the written request of the
Administrative Agent, all reports and written information to and from the
United States Environmental Protection Agency, or any state or local
agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety
matters; provided, however, that no such information set forth in this
subclause (b) shall be requested unless the Agent knows or has reason to
believe that such information will reveal a liability or potential
liability in excess of $10,000,000.
(f) Notices. Upon the Borrower obtaining knowledge thereof, the
Borrower will give written notice to the Administrative Agent immediately
of (a) the occurrence of an event or condition consisting of a Default or
Event of Default, specifying the nature and existence thereof and what
action the Borrower proposes to take with respect thereto, and (b) the
occurrence of any of the following with respect to the Borrower or any of
its Subsidiaries (i) the pendency or commencement of any litigation,
arbitral or governmental proceeding against the Borrower or any of its
Subsidiaries which if adversely determined would have or would be
reasonably expected to have a Material Adverse Effect, or (ii) the
institution of any proceedings against the Borrower or any of its
Subsidiaries 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, Environmental Laws, the violation of which
would have or would be reasonably expected to have a Material Adverse
Effect.
(g) ERISA. Upon any of the Credit Parties or any ERISA Affiliate
obtaining knowledge thereof, the Borrower will give written notice to the
Administrative Agent and each of the Lenders promptly (and in any event
within five Business Days) of: (i) any event or condition, including, but
not limited to, any Reportable Event, that constitutes, or would be
reasonably expected to lead to, a Termination Event; (ii) with respect to
any Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against the Borrowers or
any of their ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the
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meaning of Title IV of ERISA); (iii) the failure to make full payment on
or before the due date (including extensions) thereof of all amounts
which the Borrower or any of its Subsidiaries or ERISA Affiliates is
required to contribute to each Plan pursuant to its terms and as required
to meet the minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any Plan
that would be reasonably expected to have a Material Adverse Effect;
together, with a description of any such event or condition or a copy of
any such notice and a statement by a Financial Officer of the Borrower
briefly setting forth the details regarding such event, condition, or
notice, and the action, if any, which has been or is being taken or is
proposed to be taken by the Credit Parties with respect thereto.
Promptly upon request, the Borrower shall furnish the Administrative
Agent and each of the Lenders with such additional information concerning
any Plan as may be reasonably requested, including, but not limited to,
copies of each annual report/return (Form 5500 series), as well as all
schedules and attachments thereto required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant to ERISA
and the Code, respectively, for each "plan year" (within the meaning of
Section 3(39) of ERISA).
(h) Environmental.
(i) Subsequent to a notice from any Governmental Authority
that describes an event or circumstance which, if determined
adversely to the applicable Credit Party, would have or would be
reasonably expected to have a Material Adverse Effect or during the
existence of an Event of Default, and upon the written request of
an Agent, the Borrower will furnish or cause to be furnished to the
Administrative Agent, at the Borrower's expense, a report of an
environmental assessment of reasonable scope, form and depth,
including, where appropriate, invasive soil or groundwater
sampling, by a consultant reasonably acceptable to the Agents as to
the nature and extent of the presence of any Hazardous Materials on
any property owned, leased or operated by a Credit Party and as to
the compliance by the Credit Parties with Environmental Laws. If
the Borrower fails to deliver such an environmental report within
seventy-five (75) days after receipt of such written request, then
the Agents may arrange for same, and the Borrower hereby grants to
the Agents and their representatives access to the Real Properties
and a license of a scope reasonably necessary to undertake such an
assessment (including, where appropriate, invasive soil or
groundwater sampling). The reasonable, documented cost of any
assessment arranged for by the Agents pursuant to this provision
will be payable by the Borrower on demand and, during any
Collateral Period, added to the obligations secured by the
Collateral Documents.
(ii) Each Credit Party will conduct and complete all
investigations, studies, sampling, and testing and all remedial,
removal, and other actions necessary to address all Hazardous
Materials on, from, or affecting any real property owned or
leased by a Credit Party to the extent necessary to be in
compliance with all Environmental Laws and all other applicable
federal, state, and local laws,
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regulations, rules and policies and with the orders and directives
of all Governmental Authorities exercising jurisdiction over such
real property to the extent any failure would have or be reasonably
expected to have a Material Adverse Effect.
(i) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of the Credit Parties and their Subsidiaries as an
Agent may reasonably request.
7.2 FINANCIAL COVENANTS.
As of the end of each fiscal quarter set forth below, the Leverage Ratio,
Interest Coverage Ratio and Fixed Charge Coverage Ratio shall satisfy the
following minimum and maximum requirements:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Minimum Fixed
Minimum Interest Charge Coverage
Coverage Ratio Ratio
(for the twelve- (for the twelve-
Fiscal Quarter Maximum month period ending month period ending
Ending: Leverage Ratio on such date) on such date)
================================================================================
<S> <C> <C> <C>
September 30, 1997 4.0 to 1.0 1.75 to 1.0 2.0 to 1.0
- --------------------------------------------------------------------------------
December 31, 1997 4.0 to 1.0 1.75 to 1.0 2.0 to 1.0
- --------------------------------------------------------------------------------
March 31, 1998 4.0 to 1.0 2.00 to 1.0 2.0 to 1.0
- --------------------------------------------------------------------------------
June 30, 1998 4.0 to 1.0 2.25 to 1.0 2.0 to 1.0
- --------------------------------------------------------------------------------
September 30, 1998 3.75 to 1.0 2.25 to 1.0 2.0 to 1.0
- --------------------------------------------------------------------------------
December 31, 1998 3.5 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
March 31, 1999 3.5 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
June 30, 1999 3.5 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
September 30, 1999 3.25 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
December 31, 1999 3.25 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
March 31, 2000 3.25 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
June 30, 2000 3.25 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
September 30, 2000 3.0 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
December 31, 2000
and thereafter 3.0 to 1.0 3.0 to 1.0 2.25 to 1.0
- --------------------------------------------------------------------------------
</TABLE>
7.3 PRESERVATION OF EXISTENCE AND FRANCHISES.
Each of the Credit Parties will do all things necessary to preserve and
keep in full force and effect its existence, rights, franchises and authority
except as permitted by Sections 8.4 or 8.5.
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7.4 BOOKS AND RECORDS.
Each of the Credit Parties will keep complete and accurate books and
records of its transactions in accordance with good accounting practices on the
basis of GAAP.
7.5 COMPLIANCE WITH LAW.
Each of the Credit Parties will comply with all material laws, rules,
regulations and orders, and all applicable material restrictions imposed by all
Governmental Authorities, applicable to it and its property (including, without
limitation, Environmental Laws), except to the extent that any non-compliance
would not have or be reasonably expected to have a Material Adverse Effect.
7.6 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each of the Credit Parties will pay, settle or discharge (a) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (b) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, would be reasonably expected to give rise to a Lien
upon any of its properties, and (c) all of its other Indebtedness as it shall
become due; provided, however, that a Credit Party shall not be required to pay
any such tax, assessment, charge, levy, claim or Indebtedness which is being
contested in good faith by appropriate proceedings and as to which adequate
reserves therefor have been established in accordance with GAAP, unless the
failure to make any such payment (i) would give rise to an immediate right to
foreclose or collect on a Lien securing such amounts or (ii) would have or
would be reasonably expected to have a Material Adverse Effect.
7.7 INSURANCE.
Each of the Credit Parties will at all times maintain in full force and
effect insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption insurance) in such
amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal industry practice.
7.8 MAINTENANCE OF PROPERTY.
Each of the Credit Parties will maintain and preserve its properties and
equipment in good repair, working order and condition, normal wear and tear
excepted, except to the extent any of such property no longer is necessary to
the operation of the business of the applicable Credit Party, 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.
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7.9 PERFORMANCE OF OBLIGATIONS.
Each of the Credit Parties will perform in all respects all of its
obligations under the terms of all agreements, indentures, mortgages, security
agreements or other debt instruments to which it is a party or by which it is
bound, except to the extent that the failure to perform any of such obligations
would not have or be reasonably expected to have a Material Adverse Effect.
7.10 USE OF PROCEEDS.
The Credit Parties will use the proceeds of the Loans solely (a) to
refinance existing Indebtedness owing under the Existing Credit Agreement and
other existing Indebtedness described on Schedule 6.10, (b) to pay related fees
and expenses in connection with the execution and delivery of the Credit
Documents, (c) to provide working capital, (d) to make Capital Expenditures and
(e) for general corporate purposes, including, but not limited to acquisitions
and the repurchase of shares as permitted by this Credit Agreement. The Credit
Parties will use the Letters of Credit solely for the purposes set forth in
Section 2.2(a).
7.11 AUDITS/INSPECTIONS.
Upon reasonable notice and during normal business hours, each Credit Party
will permit representatives appointed by the Administrative Agent, including,
without limitation, independent accountants, agents, attorneys and appraisers,
to visit and inspect such Credit Party's property, including its books and
records, its accounts receivable and inventory, its facilities and its other
business assets, and to make photocopies or photographs thereof and to write
down and record any information such representative obtains and shall permit
such Agent or its representatives to investigate and verify the accuracy of
information provided to the Lenders, and to discuss all such matters with the
executive officers, pertinent employees and representatives of the Credit
Parties; provided, however, that (a) so long as neither (x) an Event of Default
shall have occurred and be continuing nor (y) a Collateral Period shall have
begun and be continuing, (i) no verification of accuracy of information shall
include contacting the account debtors under any accounts receivable of any
Credit Party and (ii) such visits and inspections shall not (A) disrupt the
normal business operations of any Credit Party, (B) be conducted by more than 5
Persons at any one time or (C) occur more frequently than annually and (b) all
information obtained during any such visit or inspection shall be subject to
the provisions of Section 11.16 hereof.
7.12 ADDITIONAL CREDIT PARTIES.
At the time any Person becomes a Material Domestic Subsidiary of a
Credit Party, the Borrower shall so notify the Administrative Agent and
promptly thereafter (but in any event within 30 days after the date thereof)
shall (a) cause such Person to execute a Joinder Agreement in substantially the
same form as Exhibit 7.12, (b) execute an appropriate pledge agreement in
substantially the form of the Pledge Agreements and otherwise in a form
reasonably acceptable to the Collateral Agent, which pledge agreement will be
effective only during a Collateral Period and which will obligate the Borrower
to, upon the occurrence of a Collateral Effective Date (or within
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30 days of the notice referred to above if a Collateral Period shall have begun
and shall then be continuing), cause all of the capital stock of such Person to
be delivered to the Collateral Agent (together with undated stock powers, if
applicable, signed in blank) and pledged to the Collateral Agent, (c) if such
Person has any Subsidiaries, cause such Person to execute a pledge agreement in
substantially the form of the Pledge Agreements and otherwise in a form
reasonably acceptable to the Collateral Agent, which pledge agreement will be
effective only during a Collateral Period and which will obligate such Person
to, upon the occurrence of a Collateral Effective Date (or within 30 days of
the notice referred to above if a Collateral Period shall have begun and shall
then be continuing), cause all of the capital stock of its Domestic
Subsidiaries and 65% of the capital stock of its Material First Tier Foreign
Subsidiaries to be delivered to the Collateral Agent (together with undated
stock powers, if applicable, signed in blank) and pledged to the Collateral
Agent, and (d) deliver, or cause such Person to deliver, such other
documentation as the Collateral Agent may reasonably request in connection with
the foregoing, including, without limitation, certified resolutions and other
organizational and authorizing documents of such Person, favorable opinions of
counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to
above) and, if a Collateral Period shall have begun and shall then be
continuing, appropriate UCC-1 financing statements, all in form, content and
scope reasonably satisfactory to the Collateral Agent.
7.13 COLLATERAL EFFECTIVE DATE.
Upon the occurrence of a Collateral Effective Date and during the ensuing
Collateral Period, the Pledge Agreements shall be in full force and effect and
the Collateral Agent, on behalf of the Lenders, shall have a Lien on the
Collateral described in the Pledge Agreements and there shall be added to
Section 6 a new representation and warranty in the form set forth on Schedule
7.13 hereof. Within ten Business Days following the Collateral Effective Date,
the Borrower shall deliver to the Collateral Agent, in form and substance
reasonably satisfactory to the Collateral Agent:
(a) all stock certificates evidencing the stock pledged to the
Collateral Agent pursuant to the Pledge Agreements, together with duly
executed in blank undated stock powers attached thereto;
(b) duly executed UCC financing statements for each appropriate
jurisdiction as is necessary, in the Collateral Agent's sole discretion,
to perfect the Lenders' security interest in the Collateral; and
(c) an opinion of counsel addressed to the Collateral Agent, on
behalf of the Lenders, covering such issues as reasonably requested by the
Collateral Agent, including the attachment and perfection of the liens.
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SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest, fees and other obligations hereunder, have been paid in full and the
Commitments and Letters of Credit hereunder shall have terminated:
8.1 INDEBTEDNESS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness in respect of standby and documentary letters of
credit obtained in the ordinary course of business;
(c) Indebtedness existing as of the Closing Date as referenced in
Section 6.10 (and renewals, refinancings, replacements or extensions
thereof on terms and conditions no more favorable, in the aggregate, to
the holder of such Indebtedness, than such existing Indebtedness and in a
principal amount not in excess of that outstanding as of the date of such
renewal, refinancing, replacement or extension plus any financed fees and
expenses, including without limitation prepayment premiums and break
funding fees, incurred by the applicable Credit Party in connection with
any such renewal, refinancing, replacement or extension; provided,
however, that, with respect to any Indebtedness which is being renewed,
refinanced, replaced or extended, the principal amount thereof which is
permitted to be renewed, refinanced, replaced or extended pursuant to the
terms of this clause (c) shall be an amount equal to the aggregate
commitments of the lenders under the documents evidencing the Indebtedness
which is being so renewed, refinanced, replaced or extended plus any
financed fees and expenses, including without limitation prepayment
premiums and break funding fees, incurred by the applicable Credit Party
in connection with any such renewal, refinancing, replacement or
extension);
(d) Indebtedness in respect of current accounts payable and accrued
expenses incurred in the ordinary course of business and to the extent not
current, accounts payable and accrued expenses that are subject to bona
fide dispute;
(e) Indebtedness owing by one Credit Party, or a Subsidiary of a
Credit Party, to another Credit Party, or a Subsidiary of a Credit Party;
(f) purchase money Indebtedness (including Capital Leases) incurred
by a Credit Party or any of its Subsidiaries to finance the purchase of
fixed assets (including
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equipment); provided that (i) the total of all such Indebtedness for
all such Persons taken together shall not exceed an aggregate principal
amount of $5,000,000 at any one time outstanding; (ii) such Indebtedness
when incurred shall not exceed the purchase price of the asset(s)
financed; and (iii) no such Indebtedness shall be refinanced for a
principal amount in excess of the principal balance outstanding thereon at
the time of such refinancing;
(g) Indebtedness arising from Hedging Agreements entered into in the
ordinary course and not for speculative purposes;
(h) Receivables Facility Attributed Indebtedness not to exceed $275
million, in the aggregate, at any one time outstanding;
(i) Indebtedness in the form of unsecured public notes as long as,
substantially concurrently with the issuance thereof, (i) the lesser of
(A) $100 million and (B) the proceeds thereof are used to repay the Term
Loans and (ii) the remainder of the proceeds thereof, if any, will be used
to pay down existing Indebtedness (without reducing any revolving
Commitments);
(j) Permitted IDB Indebtedness;
(k) Guaranty Obligations of any Credit Party, or a Subsidiary of a
Credit Party, with respect to any Indebtedness of another Credit Party, or
a Subsidiary of a Credit Party, permitted under this Section 8.1; and
(l) other unsecured Indebtedness; provided, however, that the
aggregate amount of Indebtedness permitted under this Section 8.1(l), when
added (without duplication) to (i) the aggregate amount of Indebtedness
then outstanding secured by Liens and permitted under clause (m) of the
definition of Permitted Liens and (ii) the aggregate amount of sale
leaseback transactions then outstanding and permitted under Section 8.6,
shall not exceed 10% of Consolidated Net Tangible Assets (it being
understood that the calculation of each such aggregate amount will not
include Indebtedness outstanding and permitted under Sections 8.1(a)-(k),
including Indebtedness listed on Schedule 6.10 and refinancings thereof
permitted pursuant to Section 8.1(c)).
8.2 LIENS.
No Credit Party will, nor will it permit its Subsidiaries to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS.
No Credit Party will, nor will it permit its Subsidiaries to, alter the
character of its business from that, or substantially similar to that,
conducted as of the Closing Date or engage in any
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business other than the business conducted as of the Closing Date with
reasonable extensions and expansions of such business.
8.4 CONSOLIDATION AND MERGER.
No Credit Party will, nor will it permit any Subsidiary to, enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve
itself; provided that a Credit Party or a Subsidiary of a Credit Party may
merge or consolidate with or into another Person if the following conditions
are satisfied:
(a) the Administrative Agent is given prior written notice of such
action;
(b) if the merger or consolidation involves a Credit Party, the
Person formed by such consolidation or into which a Credit Party is merged
shall either (i) be such Credit Party or (ii) be a Domestic Subsidiary and
shall expressly assume in writing all of the obligations of such Credit
Party under the Credit Documents; provided that if the transaction is
between the Borrower and another Person, the Borrower must be the
surviving entity;
(c) if the merger or consolidation involves a Material First Tier
Foreign Subsidiary, and if a Collateral Period shall have begun and shall
then be continuing, the Lenders receive 65% of the Voting Stock of the
surviving Material First Tier Foreign Subsidiary, if any;
(d) to the extent otherwise required by Section 7.12, the Credit
Parties execute and deliver such documents, instruments and certificates
as the Administrative Agent may request (including, if necessary, to
maintain its perfection and priority in the collateral pledged pursuant to
the Collateral Documents);
(e) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and
(f) the Borrower delivers to the Administrative Agent an officer's
certificate demonstrating compliance with clause (b) or (c) above, as
applicable, and an opinion of counsel stating that such consolidation or
merger and any written agreement entered into in connection therewith,
comply with this Section 8.4.
8.5 SALE OR LEASE OF ASSETS.
No Credit Party will, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a series
of transactions, all or any part of its business or assets whether now owned or
hereafter acquired, including, without limitation, inventory,
receivables, equipment, real property interests (whether owned or leasehold),
and securities, other than (a) any inventory sold or otherwise disposed of in
the ordinary course of business; (b) the sale,
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lease, transfer or other disposal by a Credit Party (other than the Borrower)
of any or all of its assets to the Borrower or to another Credit Party or
pursuant to a Sale Leaseback permitted pursuant to Section 8.6; (c) obsolete,
slow-moving, idle or worn-out assets no longer used or useful in its business;
(d) the transfer of assets which constitute a Permitted Investment; (e) sales
of Receivable Facility Assets in accordance with the terms of a Permitted
Accounts Receivable Securitization; (f) licensing of trademarks, patents or
other intellectual property by a Credit Party in the ordinary course of
business (so long as such licensing does not prevent a Credit Party, or a
Subsidiary of a Credit Party, from using any intellectual property material to
its business); (g) a merger or consolidation permitted pursuant to Section 8.4;
(h) if applicable, in connection with any Indebtedness permitted pursuant to
Section 8.1 or Liens permitted pursuant to Section 8.2; (i) any transfer of the
business or assets of a Credit Party or any its Subsidiaries having a value of
less than $5 million; or (j) such other transfer of assets if (i) such transfer
is for fair market value, (ii) at the time of such transfer no Default or Event
of Default exists and is continuing, (iii) as a result of such transfer no
Material Adverse Effect would occur or be reasonably likely to occur and (iv)
the proceeds from such transfer are, within three months from the date of such
transfer, reinvested in similar assets or in a business of a type similar to
that which the Credit Parties and their Subsidiaries are already engaged or
used to prepay the Loans; provided, however, that transfers permitted under
clauses (i) and (j) of this Section 8.5 shall not, in the aggregate, exceed 35%
of Consolidated Total Assets as of the Closing Date. For the purposes of this
Section 8.5, no Permitted Accounts Receivable Securitization shall be
considered a transaction which is subject to the provisions of this Section
8.5.
8.6 SALE LEASEBACKS.
No Credit Party will, nor will it permit its Subsidiaries to, directly or
indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party has sold
or transferred or is to sell or transfer to any other Person other than a
Credit Party or (b) which such Credit Party intends to use for substantially
the same purpose as any other property which has been sold or is to be sold or
transferred by such Credit Party to any Person in connection with such lease,
other than (i) any transaction which exists as of the date hereof and listed on
Schedule 8.6 hereof, and any refinancings, renewals, extensions or replacements
thereof and (ii) other sale leaseback transactions; provided, however, that the
aggregate amount of sale leaseback transactions permitted under this clause
(ii), when added (without duplication) to (A) the aggregate amount of
Indebtedness then outstanding and permitted under Section 8.1(l) and (B) the
aggregate amount of Indebtedness then outstanding secured by Liens and
permitted under clause (m) of the definition of Permitted Liens, shall not
exceed 10% of Consolidated Net Tangible Assets (it being understood that the
calculation of each such aggregate amount will not include Indebtedness
outstanding and permitted under Sections 8.1(a)-(k), including Indebtedness
listed on Schedule 6.10 and refinancings thereof permitted pursuant to Section
8.1(c)).
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8.7 ADVANCES, INVESTMENTS AND LOANS.
No Credit Party will, nor will it permit its Subsidiaries to, make any
Investments except for Permitted Investments.
8.8 RESTRICTED PAYMENTS.
No Credit Party will, nor will it permit its Subsidiaries to, directly or
indirectly, do the following (collectively, "Restricted Payments") (a) declare
or pay any dividends or make any other distribution upon any shares of its
capital stock of any class or (b) purchase, redeem or otherwise acquire or
retire or make any provisions for redemption, acquisition or retirement of any
shares of its capital stock of any class or any warrants or options to purchase
any such shares; provided that (i) any Subsidiary of the Borrower may pay
dividends to its parent, (ii) the Borrower may pay dividends within 60 days
after the date of declaration thereof if at such date of declaration such
dividend would have otherwise complied with this Section 8.8 and (iii) as long
as (A) no Event of Default exists or is caused as a result thereof and (B)
after giving effect thereto, the Borrower is in pro forma compliance with the
financial covenants set forth in Section 7.2, the Borrower or any of its
Subsidiaries may make Restricted Payments in an aggregate amount for all such
Persons not to exceed (x) from the date hereof until December 31, 1998, $300
million, (y) from December 31, 1998 until September 30, 1999, an additional $50
million, and (z) on and after September 30, 1999, an additional $50 million.
8.9 TRANSACTIONS WITH AFFILIATES.
No Credit Party will, nor will it permit its Subsidiaries to, enter into
any transaction or series of transactions, whether or not in the ordinary
course of business, with any officer, director, shareholder, Subsidiary or
Affiliate other than transactions (a) listed on Schedule 8.9, and any renewals,
replacements, refinancings or extension thereof, (b) on terms and conditions
substantially as favorable as would be obtainable in a comparable arm's-length
transaction with a Person other than an officer, director, shareholder,
Subsidiary or Affiliate or, if such transaction is not one which by its nature
could be obtained from such Person, is on fair and reasonable terms and (c) in
the ordinary course of business or, if not in the ordinary course of business,
that are set forth in writing and the board of directors of the Borrower or
such Subsidiary, as applicable, has determined in good faith that such business
or transaction or series of transactions meets the applicable criteria set
forth in subclause (b) preceding.
8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
No Credit Party will, nor will it permit its Subsidiaries to, (a) change
its fiscal year or (b) change its articles or certificate of incorporation or
its bylaws in any manner that would reasonably be likely to adversely affect
the rights of the Lenders.
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8.11 NO LIMITATIONS.
No Credit Party will, nor will it permit its Subsidiaries to (other than a
Receivables Subsidiary in connection with a Permitted Accounts Receivable
Securitization and other transactions listed on Schedule 8.11 and any permitted
renewals, replacements, refinancings or extensions thereof), directly or
indirectly, create or otherwise cause, incur, assume, suffer or permit to exist
or become effective any consensual encumbrance or restriction of any kind on
the ability of any such Person to (a) pay dividends or make any other
distribution on any of such Person's capital stock, (b) pay any Indebtedness
owed to the Borrower or any other Credit Party, (c) make loans or advances to
any other Credit Party or (d) transfer any of its property to any other Credit
Party, except for encumbrances or restrictions existing under or by reason of
(i) customary non-assignment or net worth provisions in any lease governing a
leasehold interest, (ii) any agreement or other instrument of a Person existing
at the time it becomes a Subsidiary of the Borrower; provided that such
encumbrance or restriction is not applicable to any other Person, or any
property of any other Person, other than such Person becoming a Subsidiary of
the Borrower and was not entered into in contemplation of such Person becoming
a Subsidiary of the Borrower, and (iii) this Credit Agreement and the other
Credit Documents.
8.12 NO OTHER NEGATIVE PLEDGES.
Other than with respect to Foreign Subsidiaries and in connection with
Indebtedness incurred by such Foreign Subsidiaries as permitted hereunder, no
Credit Party will, nor will it permit its Subsidiaries to, enter into, assume
or become subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation.
8.13 RECEIVABLES SECURITIZATION.
No Credit Party will, nor will it permit its Subsidiaries to, amend,
modify or waive the terms of any of the Receivables Documents in a manner that
would be adverse to the Lenders; provided, however, that an increase in the
amount thereof shall not by itself be deemed to be adverse to the Lenders so
long as the Credit Parties are in compliance with Section 8.1(h).
8.14 LIMITATION ON NON CREDIT PARTY OPERATIONS.
No Credit Party will, nor will it permit any of its Subsidiaries to, allow
the Foreign Subsidiaries, together with the Domestic Subsidiaries that are not
Guarantors, to have assets which in the aggregate constitute more than 50% of
Consolidated Total Assets at any time.
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SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall default in the payment (i) when
due of any principal of any of the Loans or any reimbursement obligation
arising from drawings under Letters of Credit or (ii) within five Business
Days of when due of any interest on the Loans or any fees or other amounts
owing hereunder, under any of the other Credit Documents or in connection
herewith.
(b) Representations. Any representation, warranty or statement
made or deemed to be made by any Credit Party herein, in any of the other
Credit Documents, or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto shall prove untrue in any
material respect on the date as of which it was made or deemed to have
been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.4, 7.10,
7.11, 7.12, or 8.1 through 8.13 inclusive; or
(ii) default in the due performance or observance by it of any
term, covenant or agreement contained in Section 7.1(a), (b), (c),
(d) or (f) and such default shall continue unremedied for a period of
five days after the earlier of an executive officer of the Borrower
becoming aware of such default or notice thereof is given by an
Agent; or
(iii) 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 (ii) of this Section 9.1) contained
in this Credit Agreement and such default shall continue unremedied
for a period of at least 30 days after the earlier of an executive
officer of the Borrower becoming aware of such default or notice
thereof given by an Agent.
(d) Other Credit Documents. (i) Any Credit Party shall default in
the due performance or observance of any term, covenant or agreement in
any of the other Credit Documents and such default shall continue
unremedied for a period of at least 30 days after the earlier of an
executive officer of the Borrower becoming aware of such default or notice
thereof given by the Agent, or (ii) any Credit Document shall fail to be
in full force and
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effect or any Credit Party shall so assert or any Credit Document shall
fail to give the Agents and/or the Lenders the security interests, liens,
rights, powers and privileges purported to be created thereby.
(e) Guaranties. The guaranty given by the Credit Parties hereunder
or by any Additional Credit Party hereafter or any provision thereof shall
cease to be in full force and effect, or any guarantor thereunder or any
Person acting by or on behalf of such guarantor shall deny or disaffirm
such Guarantor's obligations under such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the following with
respect to the Borrower or any of its Material Subsidiaries (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Borrower or any of such
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Borrower or any of such Subsidiaries or for any
substantial part of its property or ordering the winding up or liquidation
of its affairs; or (ii) an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect is
commenced against the Borrower or any of such Subsidiaries and such
petition remains unstayed and in effect for a period of 60 consecutive
days; or (iii) the Borrower or any of such Subsidiaries shall commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to
the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment for the
benefit of creditors; or (iv) the Borrower or any of such Subsidiaries
shall admit in writing its inability to pay its debts generally as they
become due or any action shall be taken by such Person in furtherance of
any of the aforesaid purposes.
(g) Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) of the Borrower or any of its Subsidiaries in an aggregate
principal amount in excess of $10,000,000, (i) a Credit Party shall (A)
default in any payment (beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness, or (B) default
(after giving effect to any applicable grace period) in the observance or
performance relating to such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
or condition shall occur or condition exist, the effect of which default
or other event or condition is to cause, 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 (iii) any such
Indebtedness shall mature and remain unpaid.
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(h) Judgments. One or more judgments, orders, or decrees shall be
entered against any one or more of the Credit Parties and its Subsidiaries
involving a liability of $10,000,000 or more, in the aggregate (to the
extent not paid or covered by insurance provided by a carrier who has
acknowledged coverage), and such judgments, orders or decrees (i) are the
subject of any enforcement proceeding commenced by any creditor or (ii)
shall continue unsatisfied, undischarged, unbonded or unstayed for a
period ending on the first to occur of (A) the last day on which such
judgment, order or decree becomes final and unappealable or (B) 60 days.
(i) ERISA. The occurrence of any of the following events or
conditions if any of the same would be reasonably expected to have a
Material Adverse Effect: (A) any "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, shall exist with respect to any Plan, or any lien
shall arise on the assets of the Borrower or any of Material Subsidiaries
or any ERISA Affiliate in favor of the PBGC or a Plan; (B) a Termination
Event shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (C) a
Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the
Administrative Agent, likely to result in (i) the termination of such Plan
for purposes of Title IV of ERISA, or (ii) the Borrower or any of its
Material Subsidiaries or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the meaning
of Section 4241 of ERISA), or insolvency (within the meaning of Section
4245 of ERISA) of such Plan; or (D) any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility shall occur which would be reasonably expected to
subject the Borrower or any of its Material Subsidiaries or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of
ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Borrower or any of its Material
Subsidiaries or any ERISA Affiliate has agreed or is required to indemnify
any person against any such liability.
(j) Ownership. There shall occur a Change of Control.
(k) Receivables Documents Default. Any event (after the expiration
of any applicable grace periods) as specified in the Receivables Documents
shall entitle the Persons (other than a Receivables Subsidiary) financing
accounts receivable pursuant to a Permitted Accounts Receivable
Securitization to terminate or permanently cease funding the financing of
accounts receivable pursuant to a Permitted Accounts Receivable
Securitization.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence and during the continuation of an Event of Default,
and at any time thereafter unless and until such Event of Default has been
waived in writing by the Required
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Lenders (or the Lenders as may be required hereunder), the Administrative Agent
shall, upon the request and direction of the Required Lenders, take the
following actions without prejudice to the rights of the Agents or any Lender
to enforce its claims against the Credit Parties, except as otherwise
specifically provided for herein:
(a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid amount of all Credit
Party Obligations to be due whereupon the same shall be immediately due
and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Credit Parties.
(c) Cash Collateral. Direct the Borrower to pay (and the Borrower
agrees that upon receipt of such notice, or upon the occurrence of an
Event of Default under Section 9.1(f), it will immediately pay) to the
Administrative Agent additional cash, to be held by the Administrative
Agent, for the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of subsequent
drawings under all then outstanding Letters of Credit in an amount equal
to the maximum aggregate amount which may be drawn under all Letters of
Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents, including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders hereunder shall immediately become due and
payable without the giving of any notice or other action by the Agents or the
Lenders, which notice or other action is expressly waived by the Credit
Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.
9.3 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.
Notwithstanding any other provisions of this Credit Agreement, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by an Agent or any Lender on account of amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:
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FIRST, to the payment of all reasonable, documented out-of-pocket
costs and expenses (including without limitation reasonable, documented
attorneys' fees) of the Agents in connection with enforcing the rights of
the Lenders under the Credit Documents and any protective advances made by
the Agents with respect to the Collateral under or pursuant to the terms
of the Collateral Documents;
SECOND, to payment of any fees owed to an Agent or an Issuing Lender;
THIRD, to the payment of all reasonable, documented out-of-pocket
costs and expenses, (including, without limitation, reasonable, documented
attorneys' fees) of each of the Lenders in connection with enforcing its
rights under the Credit Documents;
FOURTH, to the payment of all accrued fees and interest payable to the
Lenders hereunder;
FIFTH, to the payment of the outstanding principal amount of the Loans
and unreimbursed drawings under Letters of Credit and to the payment or
cash collateralization of the outstanding LOC Obligations, pro rata as set
forth below;
SIXTH, to any principal amounts outstanding under Hedging Agreements,
pro rata, as set forth below;
SEVENTH, to all other obligations which shall have become due and
payable under the Credit Documents and not repaid pursuant to clauses
"FIRST" through "SIXTH" above; and
EIGHTH, to the payment of the surplus, if any, to whomever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans,
LOC Obligations and obligations under Hedging Agreements held by such Lender
bears to the aggregate then outstanding Loans, LOC Obligations and obligations
under Hedging Agreements) of amounts available to be applied pursuant to
clauses "THIRD," "FOURTH," "FIFTH," "SIXTH" and "SEVENTH" above; and (c) to the
extent that any amounts available for distribution pursuant to clause "FIFTH"
above are attributable to the issued but undrawn amount of outstanding Letters
of Credit, such amounts shall be held by the Collateral Agent in a cash
collateral account and applied (x) first, to reimburse the Issuing Lenders from
time to time for any drawings under such Letters of Credit and (y) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses "FIFTH," "SIXTH" and "SEVENTH" above in the
manner provided in this Section 9.3.
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SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT.
Each Lender hereby designates and appoints NationsBank, N.A. as
Administrative Agent and Collateral Agent of such Lender to act as specified
herein and the other Credit Documents, and each such Lender hereby authorizes
the Agents, as the agents for such Lender, to take such action on its behalf
under the provisions of this Credit Agreement and the other Credit Documents
and to exercise such powers and perform such duties as are expressly delegated
by the terms hereof and of the other Credit Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere herein and in the other Credit Documents, the Agents
shall not have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any of the other Credit
Documents, or shall otherwise exist against the Agents. The provisions of this
Section are solely for the benefit of the Agents and the Lenders and none of
the Credit Parties shall have any rights as a third party beneficiary of the
provisions hereof. In performing its functions and duties under this Credit
Agreement and the other Credit Documents, each Agent shall act solely as an
agent of the Lenders and does not assume and shall not be deemed to have
assumed any obligation or relationship of agency or trust with or for any
Credit Party.
10.2 DELEGATION OF DUTIES.
An Agent may execute any of its duties hereunder or under the other Credit
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. An Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS.
Neither the Agents nor any of their officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (a) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Credit Agreement or any of the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct),
(b) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by or on behalf of any of the
Credit Parties in this Credit Agreement or in any of the other Credit Documents
or in any certificate, report, document, financial statement or other written
or oral statement referred to or provided for in, or received by an Agent under
or in connection with this Credit Agreement or the other Credit Documents, or
for any failure of any of the Credit Parties to perform its obligations under
this Credit Agreement or the other Credit Documents, (c) responsible for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Credit Agreement or any of the other Credit Documents or
(d) responsible to ascertain or inquire as to the performance or observance
of any of the terms, conditions, provisions, covenants or agreements
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contained in this Credit Agreement or the other Credit Documents or as to the
use of the proceeds of the Loans or the use of the Letters of Credit or of the
existence or possible existence of any Default or Event of Default or to
inspect the properties, books or records of the Credit Parties. The Agents are
not trustees for the Lenders and owe no fiduciary duty to the Lenders.
10.4 RELIANCE ON COMMUNICATIONS.
The Agents shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any of the Credit Parties, independent accountants and
other experts selected by the Agents with reasonable care). The Agents may
deem and treat each of the Lenders as the owner of its interests hereunder for
all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Administrative Agent in accordance with
Section 11.3(b). The Agents shall be fully justified in failing or refusing to
take any action under this Credit Agreement or under any of the other Credit
Documents unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. The Agents shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or under any of the other Credit Documents in
accordance with a request of the Required Lenders (or to the extent
specifically provided in Section 11.6, all the Lenders) and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
the Lenders (including their successors and assigns).
10.5 NOTICE OF DEFAULT.
An Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless such Agent has received
notice from a Lender or a Credit Party referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give prompt notice thereof to the
Lenders. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders.
10.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Agents nor any of
their officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representations or warranties to it and that no act by the Agents
or any affiliate thereof hereinafter taken, including any review of the affairs
of any Credit Party, shall be deemed to constitute any representation or
warranty by the Agents to any Lender. Each Lender represents to the Agents
that it has, independently and without reliance upon the Agents or any other
Lender, and based on such
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documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, assets, operations, property, financial
and other conditions, prospects and creditworthiness of the Credit Parties and
made its own decision to make its Loans hereunder and enter into this Credit
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Agents or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Credit Parties. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Agents shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, assets, property, financial or
other conditions, prospects or creditworthiness of the Credit Parties which may
come into the possession of the Agents or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION.
The Lenders agree to indemnify each Agent in its capacity as such (to the
extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitments (or
if the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interest of
the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following payment in full of the Credit Party Obligations) be imposed
on, incurred by or asserted against an Agent in its capacity as such in any way
relating to or arising out of this Credit Agreement or the other Credit
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by an Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of an Agent. If any indemnity furnished to an Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other Credit
Documents.
10.8 AGENTS IN THEIR INDIVIDUAL CAPACITY.
Each Agent and its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower or any other Credit
Party as though such Agent were not an Agent hereunder. With respect to the
Loans made and Letters of Credit issued and all obligations owing to it, an
Agent shall have the same rights and powers under this Credit
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Agreement as any Lender and may exercise the same as though they were not an
Agent, and the terms "Lender" and "Lenders" shall include each Agent in its
individual capacity.
10.9 SUCCESSOR AGENT.
Any Agent may, at any time, resign upon 20 days written notice to the
Lenders. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Agent with the consent of the Borrower (provided that no
consent of the Borrower shall be required during the existence and continuation
of a Default or an Event of Default). If no successor Agent shall have, within
45 days after the notice of resignation, (a) been appointed by the Required
Lenders and (b) accepted such appointment, then the retiring Agent shall select
a successor Agent; provided that such successor is a Lender hereunder or
qualifies as an Eligible Assignee. Upon the acceptance of any appointment as
an Agent hereunder by a successor, such successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations as an Agent, as appropriate, under this Credit Agreement and the
other Credit Documents and the provisions of this Section 10.9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
an Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.
11.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any
time held or owing by such Lender (including, without limitation, branches,
agencies or Affiliates of such Lender wherever located) to or for the credit or
the account of any Credit Party against obligations and liabilities of such
Credit Party to the Lenders hereunder, under the Notes, the other Credit
Documents or otherwise,
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irrespective of whether the Administrative Agent or the Lenders shall have made
any demand hereunder and although such obligations, liabilities or claims, or
any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. The Credit Parties hereby agree that any Person purchasing
a participation in the Loans and Commitments hereunder pursuant to Section
11.3(c) or 3.8 may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender hereunder.
11.3 BENEFIT OF AGREEMENT.
(a) Generally. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that none of the Credit Parties
may assign and transfer any of its interests (except as permitted by
Section 8.4 or 8.5) without the prior written consent of the Lenders; and
provided further that the rights of each Lender to transfer, assign or
grant participations in its rights and/or obligations hereunder shall be
limited as set forth below in subsections (b) and (c) of this Section
11.3. Notwithstanding the above (including anything set forth in
subsections (b) and (c) of this Section 11.3), nothing herein shall
restrict, prevent or prohibit any Lender from (A) pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank, or (B) granting assignments or
participations in such Lender's Loans and/or Commitments hereunder to its
parent company and/or to any Affiliate of such Lender or to any existing
Lender or Affiliate thereof.
(b) Assignments. Each Lender may, with the prior written consent of
the Borrower and the Administrative Agent (provided that no consent of the
Borrower shall be required during the existence and continuation of an
Event of Default), which consent shall not be unreasonably withheld or
delayed, assign all or a portion of its rights and obligations hereunder
pursuant to an assignment agreement substantially in the form of Exhibit
11.3 to one or more Eligible Assignees; provided that (i) any such
assignment shall be in a minimum aggregate amount of $5,000,000 of the
Commitments and in integral multiples of $1,000,000 above such amount (or
the remaining amount of Commitments held by such Lender), (ii) each such
assignment shall be of a constant, not varying, percentage of all of the
assigning Lender's rights and obligations under the Commitment being
assigned and (iii) after giving effect to any such assignment, no then
existing Lender shall hold less than $10,000,000 of the Commitments. Any
assignment hereunder shall be effective upon satisfaction of the
conditions set forth above and delivery to the Administrative Agent of a
duly executed assignment agreement together with (except in the case of an
assignment to an Affiliate) a transfer fee of $3,500 payable to the
Administrative Agent for its own account. Upon the effectiveness of any
such assignment, the assignee shall become a "Lender" for all purposes of
this Credit Agreement and the other Credit Documents and, to the extent of
such assignment, the assigning Lender shall be relieved of its obligations
hereunder to the extent of the Loans and Commitment components being
assigned. Along
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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 Lender and to the assignee separate promissory notes in
the amount of their respective interests substantially in the form of the
original Note or Notes (but with notation thereon that it is given in
substitution for and replacement of the original Note or Notes or any
replacement notes thereof).
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the
other parties hereto as follows: (i) such assigning Lender warrants that
it is the legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim and the assignee warrants that
it is an Eligible Assignee; (ii) except as set forth in clause (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, any
of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition
of any Credit Party or the performance or observance by any Credit Party
of any of its obligations under this Credit Agreement, any of the other
Credit Documents or any other instrument or document furnished pursuant
hereto or thereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement,
the other Credit Documents and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into such assignment agreement; (v) such assignee will independently
and without reliance upon the Agents, such assigning Lender or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other
Credit Documents; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action on its behalf and to exercise
such powers under this Credit Agreement or any other Credit Document as
are delegated to the Administrative Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Credit Agreement and the
other Credit Documents are required to be performed by it as a Lender.
(c) Participations. Each Lender may sell, transfer, grant or assign
participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall remain
a "Lender" for all purposes under this Credit Agreement (such selling
Lender's obligations under the Credit Documents remaining unchanged) and
the participant shall not constitute a Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment or
waiver relating to this Credit Agreement or the other Credit Documents
except to the extent any such amendment or waiver would (A)
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<PAGE> 95
reduce the principal of or rate of interest on or fees in respect of
any Loans in which the participant is participating or increase any
Commitments with respect thereto, (B) postpone the date fixed for any
payment of principal (including the extension of the final maturity of any
Loan or the date of any mandatory prepayment), interest or fees in which
the participant is participating, or (C) release all or substantially all
of the collateral or guaranties (except as expressly provided in the
Credit Documents) supporting any of the Loans or Commitments in which the
participant is participating, (iii) sub-participations by the participant
(except to an Affiliate, parent company or Affiliate of a parent company
of the participant) shall be prohibited, (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 and (v) after
giving effect to any such participation, no then existing Lender shall
hold less than $10,000,000 of the Commitments. In the case of any such
participation, the participant shall not have any rights under this Credit
Agreement or the other Credit Documents (the participant's rights against
the selling Lender in respect of such participation to be those set forth
in the participation agreement with such Lender creating such
participation) and all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation; provided,
however, that such participant shall be entitled to receive additional
amounts under Sections 3.9, 3.12, 3.13 and 3.14 to the same extent that
the Lender from which such participant acquired its participation would be
entitled to the benefit of such cost protection provisions.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of an Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Borrower or any Credit Party and the Agents or
any Lender shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agents or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agents or the Lenders to any other or
further action in any circumstances without notice or demand.
11.5 PAYMENT OF EXPENSES; INDEMNIFICATION.
The Credit Parties agree to: (a) pay all reasonable, documented
out-of-pocket costs and expenses of (i) the Administrative Agent and
NationsBanc Capital Markets, Inc. ("NCMI") in connection with (A) the
negotiation, preparation, execution and delivery and administration of this
Credit Agreement and the other Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable,
documented fees and expenses of Moore & Van Allen, special counsel to the
Administrative Agent), and (B) any amendment, waiver or consent relating hereto
and thereto including, but not limited to, any such amendments, waivers or
89
<PAGE> 96
consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under this Credit
Agreement and (ii) the Agents and the Lenders in connection with (A)
enforcement of the Credit Documents and the documents and instruments referred
to therein, including, without limitation, in connection with any such
enforcement, the reasonable, documented fees and disbursements of counsel for
the Agents and each of the Lenders, and (B) any bankruptcy or insolvency
proceeding of a Credit Party or any of its Subsidiaries and (b) indemnify each
Agent, NCMI and each Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not any Agent, NCMI
or Lender is a party thereto) related to (i) the entering into and/or
performance of any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the consummation of any
other transactions contemplated in any Credit Document, including, without
limitation, the reasonable, documented 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), (ii) any Environmental
Claim and (iii) any claims for Non-Excluded Taxes.
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement, nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in writing and signed by the Required Lenders and the then Credit Parties;
provided that no such amendment, change, waiver, discharge or termination shall
without the consent of each Lender affected thereby:
(a) extend the Revolving-A Loan Maturity Date, the Revolving-B Loan
Maturity Date or the Term Loan Maturity Date or postpone or extend the
time for any payment or prepayment of principal;
(b) reduce the rate or extend the time of payment of interest (other
than as a result of waiving the applicability of any post-default increase
in interest rates) thereon or fees or other amounts payable hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend the Commitment of a Lender or the total
Commitments over the amount thereof in effect (it being understood and
agreed that a waiver of any Default or Event of Default or a waiver of any
mandatory reduction in the Commitments shall not constitute a change in
the terms of any Commitment of any Lender);
(e) except upon the occurrence of a Collateral Termination Date,
release all or substantially all of the Collateral securing the Credit
Party Obligations hereunder;
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<PAGE> 97
(f) release the Borrower from its obligations or release all or
substantially all of the other Credit Parties from their respective
obligations under the Credit Documents, unless such Credit Party no longer
shall be a Material Domestic Subsidiary or Material First Tier Foreign
Subsidiary, in which case (i) all Liens on the capital stock of such
Person shall be released and (ii) such Person no longer shall be deemed to
be a Guarantor or a Credit Party hereunder, all without the consent of any
Person except the Collateral Agent;
(g) amend, modify or waive any provision of this Section or Section
3.4(a), 3.4(b)(i), 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 9.1(a),
11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise modify, the
definition of Required Lenders; or
(i) consent to the assignment or transfer by the Borrower of any of
its rights and obligations under (or in respect of) the Credit Documents.
No provision of Section 10 may be amended or modified without the
consent of the Administrative Agent.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote
as such Lender sees fit on any reorganization plan that affects the Loans or
the Letters of Credit, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to allow a
Credit Party to use cash collateral in the context of a bankruptcy or
insolvency proceeding.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts, each
of which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. Delivery of executed
counterparts by telecopy shall be as effective as an original and shall
constitute a representation that an original will be delivered.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 DEFAULTING LENDER.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 11.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all
91
<PAGE> 98
the Lenders; provided, however, that all other benefits and obligations under
the Credit Documents shall apply to such Defaulting Lender.
11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES.
All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, the issuance of the Letters of Credit and the
repayment of the Loans, LOC Obligations and other obligations and the
termination of the Commitments hereunder.
11.11 GOVERNING LAW; JURISDICTION.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA. Any legal action or proceeding with respect to this
Agreement or any other Credit Document may be brought in the courts of the
State of North Carolina or of the United States for the Western District
of North Carolina, and, by execution and delivery of this Credit
Agreement, each Credit Party hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction
of such courts. Each Credit Party further irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address for notices pursuant
to Section 11.1, such service to become effective 15 days after such
mailing. Nothing herein shall affect the right of a Lender to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against a Credit Party in any other
jurisdiction. Each Credit Party agrees that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law; provided that nothing in this Section 11.11(a) is intended to impair
a Credit Party's right under applicable law to appeal or seek a stay of
any judgment.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
92
<PAGE> 99
11.12 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.13 TIME.
All references to time herein shall be references to Eastern Standard Time
or Eastern Daylight time, as the case may be, unless specified otherwise.
11.14 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 FURTHER ASSURANCES.
The Credit Parties agree, upon the request of the Agents, to promptly take
such actions, as reasonably requested, as are necessary to carry out the intent
of this Credit Agreement and the other Credit Documents, including, but not
limited to, such actions as are necessary to ensure that, during any Collateral
Period, the Lenders have a perfected security interest in the Collateral
subject to no Liens other than Permitted Liens.
11.16 CONFIDENTIALITY.
Each Lender agrees that it will use its reasonable best efforts to keep
confidential and to cause any representative designated under Section 7.11 to
keep confidential any non-public information from time to time supplied to it
under any Credit Document; provided, however, that nothing herein shall prevent
the disclosure of any such information to (a) the extent a Lender in good faith
believes such disclosure is required by Requirement of Law, (b) counsel for a
Lender or to its accountants, (c) bank examiners or auditors or comparable
Persons, (d) any affiliate of a Lender, (e) any other Lender, or any assignee,
transferee or participant, or any potential assignee, transferee or
participant, of all or any portion of any Lender's rights under this Agreement
who is notified of the confidential nature of the information and who agrees,
orally or otherwise, to be bound by the provisions of this Section 11.16 or (f)
any other Person in connection with any litigation to which any one or more of
the Lenders is a party; and provided further that no Lender shall have any
obligation under this Section 11.16 to the extent any such information becomes
available on a non-confidential basis from a source other than a Credit Party
or that any information becomes publicly available other than by a breach of
this Section 11.16.
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<PAGE> 100
11.17 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.
11.18 BINDING EFFECT.
This Credit Agreement shall become effective at such time when all of the
conditions set forth in Section 5.1 have been satisfied or waived by the
Lenders and it shall have been executed by the Borrower, the Guarantors and the
Agents, and the Agents shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each Lender, and
thereafter this Credit Agreement shall be binding upon and inure to the benefit
of the Borrower, the Guarantors, the Agents and each Lender and their
respective successors and assigns.
11.19 SURVIVAL OF RIGHTS; REMEDIES.
All rights and remedies of the Agents and/or the Lenders which are
required to survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder only shall survive until all
statutes of limitation which pertain to any actions which might be brought by
the Agents or any Lender with respect to this Agreement or the transactions
contemplated hereby have lapsed.
11.20 COLLATERAL TERMINATION DATE.
Upon any Collateral Termination Date and until the occurrence of a
subsequent Collateral Effective Date:
(a) The pledges and grants of security interests pursuant to the
Pledge Agreements, and the covenants and other agreements contained
therein, shall no longer be effective and otherwise cease and be of no
further force and effect;
(b) The Collateral Agent shall, at the expense of the Borrower, (i)
return all items described in Section 7.13 to the applicable Credit Party
and (ii) execute and deliver such Uniform Commercial Code termination
statements to evidence the termination described in clause (a) above; and
(c) the representation and warranty set forth on Schedule 7.13 no
longer shall be deemed to be included in this Agreement.
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<PAGE> 101
Notwithstanding the provisions of this Section 11.20 to the contrary, if,
after a Collateral Termination Date, a Collateral Effective Date shall occur
again, then the provisions of Section 7.13 again shall apply.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
95
<PAGE> 102
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:
FRUIT OF THE LOOM, INC.,
a Delaware corporation
By:
--------------------------
Name: Brian J. Hanigan
Title: Vice President and Treasurer
1
<PAGE> 103
GUARANTORS:
UNION UNDERWEAR COMPANY, INC.,
a New York corporation
ALICEVILLE COTTON MILL, INC.,
an Alabama corporation
THE B.V.D. LICENSING CORPORATION,
a Delaware corporation
FAYETTE COTTON MILL, INC.,
an Alabama corporation
FOL CARIBBEAN CORPORATION,
a Delaware corporation
FRUIT OF THE LOOM ARKANSAS, INC.,
an Arkansas corporation
2
<PAGE> 104
FRUIT OF THE LOOM CARIBBEAN, INC.,
a Delaware corporation
FRUIT OF THE LOOM, INC.,
a New York corporation
FRUIT OF THE LOOM TEXAS, INC.,
a Texas corporation
FTL SALES COMPANY, INC.,
a New York corporation
GITANO FASHIONS LIMITED,
a Delaware corporation
GREENVILLE MANUFACTURING, INC.,
a Mississippi corporation
JET SEW TECHNOLOGIES, INC.,
a New York corporation
3
<PAGE> 105
MARTIN MILLS, INC.,
a Louisiana corporation
PRO PLAYER, INC.,
a New York corporation
RABUN APPAREL, INC.,
a Georgia corporation
RUSSELL HOSIERY MILLS, INC.,
a North Carolina corporation
SALEM SPORTSWEAR CORPORATION,
a Delaware corporation
SHERMAN WAREHOUSE CORPORATION,
a Mississippi corporation
4
<PAGE> 106
UNION SALES, INC.,
a Delaware corporation
UNION YARN MILLS, INC.,
an Alabama corporation
WHITMIRE MANUFACTURING, INC.,
a South Carolina corporation
WINFIELD COTTON MILL, INC.,
an Alabama corporation
FTL REGIONAL SALES COMPANY, INC.,
a Delaware corporation
LEESBURG YARN MILLS, INC.,
an Alabama corporation
SALEM SPORTSWEAR, INC.,
a New Hampshire corporation
FRUIT OF THE LOOM TRADING COMPANY,
a Delaware corporation
5
<PAGE> 107
DEKALB KNITTING CORPORATION,
an Alabama corporation
By:
-----------------------------
Name: Brian J. Hanigan
Title: Vice President and a Financial
Officer of each of the foregoing
entities identified as a Guarantor
6
<PAGE> 108
LENDERS:
NATIONSBANK, N.A.,
individually in its capacity as a Lender and in
its capacity as Administrative Agent and
Collateral Agent
By:
---------------------------------
Name: Lisa S. Donoghue
Title: Vice President
7
<PAGE> 109
BANKERS TRUST COMPANY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
8
<PAGE> 110
THE BANK OF NEW YORK
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
9
<PAGE> 111
THE BANK OF NOVA SCOTIA
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
10
<PAGE> 112
THE CHASE MANHATTAN BANK
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
11
<PAGE> 113
ABN AMRO BANK N.V.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
12
<PAGE> 114
BANK AUSTRIA AG, NEW YORK BRANCH
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
13
<PAGE> 115
BANK OF AMERICA NT & SA
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
14
<PAGE> 116
CAISSE NATIONALE DE CREDIT AGRICOLE
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
15
<PAGE> 117
CREDIT LYONNAIS CHICAGO BRANCH
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
16
<PAGE> 118
CREDIT SUISSE FIRST BOSTON
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
17
<PAGE> 119
THE FIRST NATIONAL BANK OF CHICAGO
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
18
<PAGE> 120
THE FUJI BANK, LIMITED
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
19
<PAGE> 121
GULF INTERNATIONAL BANK B.S.C.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
20
<PAGE> 122
HIBERNIA NATIONAL BANK
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
21
<PAGE> 123
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
22
<PAGE> 124
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
23
<PAGE> 125
THE NORTHERN TRUST COMPANY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
24
<PAGE> 126
COOPERATIEVE CENTRALE RAIFFEISEN-
BOEVENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
25
<PAGE> 127
SOCIETE GENERALE
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
26
<PAGE> 128
TORONTO DOMINION (TEXAS), INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
27
<PAGE> 129
UNION BANK OF CALIFORNIA, N.A.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
28
<PAGE> 130
THE ASAHI BANK, LTD., NEW YORK BRANCH
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
29
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's quarterly report on Form 10-Q and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CAPTION>
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,200
<SECURITIES> 0
<RECEIVABLES> 282,100
<ALLOWANCES> 19,500
<INVENTORY> 751,000
<CURRENT-ASSETS> 1,075,700
<PP&E> 1,546,200
<DEPRECIATION> 719,000
<TOTAL-ASSETS> 2,710,800
<CURRENT-LIABILITIES> 463,100
<BONDS> 1,118,400
0
0
<COMMON> 353,500
<OTHER-SE> 471,100
<TOTAL-LIABILITY-AND-EQUITY> 2,710,800
<SALES> 1,711,400
<TOTAL-REVENUES> 1,711,400
<CGS> 1,257,500
<TOTAL-COSTS> 1,257,500
<OTHER-EXPENSES> 42,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62,500
<INCOME-PRETAX> 21,200
<INCOME-TAX> 14,900
<INCOME-CONTINUING> 6,300
<DISCONTINUED> (101,200)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94,900)
<EPS-PRIMARY> (1.27)
<EPS-DILUTED> (1.27)
</TABLE>
