UNITED STATES 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 March 30, 1996
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 1-10095
DELTA WOODSIDE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-
0535180
(State or other jurisdiction of
(I.R.S. Employer
Incorporation or organization)
Identification No.)
233 North Main Street
Hammond Square, Suite 200
Greenville, South Carolina
29601
(Address of principal executive offices)
(Zip Code)
864/232-8301
Registrant's telephone number, including area code
Not
Applicable
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.01 Par Value--24,459,651 shares as of May 4,
1996.
INDEX
DELTA WOODSIDE INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Page
Condensed consolidated balance sheets--
March 30, 1996 and July 1, 1995 3-4
Condensed consolidated statements of income --
Three and nine months ended March 30, 1996 and
April 1, 1995. 5
Condensed consolidated statements of cash
flows-- Nine months ended March 30, 1996
and April 1, 1995. 6
Notes to condensed consolidated financial
statements--March 30, 1996. 7-8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 9-11
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DELTA WOODSIDE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 30, July 1,
1996 1995
(Unaudited)
(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,766 $ 719
Accounts receivable:
Factor 45,401 63,085
Trade 72,705 64,143
118,106 127,228
Less allowances for doubtful
accounts and returns 4,335 5,634
113,771 121,594
Inventories
Finished goods 118,212 137,675
Work in process 64,839 58,806
Raw materials and supplies 23,511 29,553
206,562 226,034
Prepaid and other current assets 8,983 8,951
Deferred income taxes 6,665 5,826
TOTAL CURRENT ASSETS 337,747
363,124
PROPERTY, PLANT AND EQUIPMENT
Cost 358,981 312,452
Less accumulated depreciation 119,752 104,393
239,229 208,059
EXCESS OF COST OVER ASSIGNED VALUE OF NET
ASSETS ACQUIRED 26,676 27,310
OTHER ASSETS 10,884 11,803
$614,536 $610,296
DELTA WOODSIDE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS--Continued
March 30, July 1,
1996 1995
(Unaudited)
(In thousands)
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 51,295 $ 50,593
Accrued and sundry liabilities 20,729 25,368
Current portion of long-term debt 239,738 276
TOTAL CURRENT LIABILITIES 311,762 76,237
LONG-TERM DEBT, less current portion 172 219,119
DEFERRED INCOME TAXES 22,022 21,473
OTHER LIABILITIES AND DEFERRED CREDITS 7,407 6,968
SHAREHOLDERS' EQUITY
Common Stock, par value $.01--
authorized 50,000,000 shares, issued
and outstanding 24,459,651 shares
at March 30, 1996 and 24,357,000
shares at July 1, 1995 245 244
Additional paid-in capital 164,334 163,364
Retained earnings 108,594 122,891
273,173 286,499
$614,536 $610,296
See notes to condensed consolidated financial statements
DELTA WOODSIDE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended
March 30, April 1, March 30, April 1,
1996 1995 1996 1995
(In thousands, except per share data)
Net sales $ 143,269 $ 150,894 $ 434,870$ 434,689
Cost of goods sold 131,117 127,138 386,340 363,873
Gross profit on sales 12,152 23,756 48,530 70,816
Selling, general and
administrative expenses 19,958 18,572 54,097 55,195
Litigation charge (credit) (9,000)
Restructuring charge (credit) (553)
(7,806) 5,184 3,433 16,174
Other expense (income):
Interest expense 4,718 3,885 13,289 10,009
Interest income
and other (446) (234) (1,040) (2,742)
4,272 3,651 12,249 7,267
INCOME (LOSS) BEFORE
INCOME TAXES (12,078) 1,533 (8,816) 8,907
Income taxes (benefit) (3,419) 590 (1,851) 3,429
NET INCOME (LOSS) $ (8,659)$ 943$ (6,965)$ 5,478
Net income per share $ (.35) $ .04 $ (.28)$ .23
Dividends per share of
common stock $ .10 $ .10 $ .30 $ .30
Weighted average shares
outstanding 24,459 24,316 24,442 24,304
See notes to condensed consolidated financial statements
DELTA WOODSIDE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
March 30, April 1,
1996 1995
(In thousands)
OPERATING ACTIVITIES
Net income (loss) $ (6,965)$ 5,478
Depreciation 19,974 17,167
Amortization 1,577 1,636
Other (1,366) (3,106)
Changes in operating assets and
liabilities 24,721 (30,338)
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 37,941 (9,163)
INVESTING ACTIVITIES
Property, plant and equipment
purchases (53,737) (21,883)
Other 3,680 1,137
NET CASH (USED) BY INVESTING ACTIVITIES (50,057) (20,746)
FINANCING ACTIVITIES
Proceeds from revolving line of credit 229,663 238,792
Principal payments on revolving line
of credit (208,842) (201,446)
Scheduled principal payments of long-term
debt and capital lease obligations (182) (756)
Dividends paid (7,332) (7,292)
Other (144) (444)
NET CASH PROVIDED BY FINANCING ACTIVITIES 13,163 28,854
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,047 (1,055)
Cash and cash equivalents at beginning of period 719 2,077
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,766$ 1,022
See notes to condensed consolidated financial statements
DELTA WOODSIDE INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 30, 1996
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements of Delta Woodside Industries, Inc. ("the Company")
have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of only normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended March 30,
1996 are not necessarily indicative of the results that may be
expected for the year ending June 29, 1996. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form
10-K for the year ended July 1, 1995.
NOTE B--SHORT-TERM DEBT
The Company has requested, and believes it will receive, a waiver
from its lenders under the Credit Agreement with respect to
defaults of the minimum tangible net worth requirement, and the
ratio of adjusted pretax income to interest expense for the
quarter ended March 30, 1996. Since the Company has not received
a waiver, the debt has been classified as current in the
accompanying financial statements.
On March 15, 1996 the Company amended and restated its Credit
Agreement with certain banks. At March 30, 1996, certain
accounts receivable, inventory, and equipment with a book value
of $110,000,000, $134,000,000 and $166,000,000, respectively,
served as collateral for the agreement. The agreement retains
the overall borrowing limits described in the Company's annual
report for fiscal 1995; however, the restated agreement further
limits the amount of borrowing to percentages of assets pledged
as collateral. At March 30, 1996 the borrowing limit based on
assets pledged did not further limit borrowings under the
agreement. The agreement increased restrictions on the payment
of dividends, and at March 30, 1996, absent an event of default
under the Credit Agreement, $2,555,000 could have been available
for payment of dividends. The amount available for the payment
of dividends is increased by one-half of net income, if all loan
covenants are satisfied, and reduced by the payment of dividends.
Interest rates under the amended agreement increased by
approximately 150 basis points.
NOTE C--TAXES
The estimated effective tax rate for fiscal 1996 has deceased to
21% from an estimated tax expense rate of 43% in the fiscal year
ended July 1, 1995. The decreased tax rate is a result of the
effect of permanent tax differences on pretax losses. In
addition, net losses are preventing the Company from recognizing
the tax benefits of certain net operating losses which are due to
expire this fiscal year, and has caused the Company to increase
the allowance against the tax benefits of certain other net
operating losses.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --Continued
March 30, 1996
NOTE D--OTHER
Results for the nine months ended March 30, 1996 include
$9,000,000 in credits to pretax income related to prior
litigation charges. In the first nine months of fiscal 1995, the
Company recognized certain life insurance proceeds which resulted
in a pretax gain of $2,200,000.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Net sales for the third fiscal quarter ended March 30, 1996
totaled $143,269,000, as compared to $150,894,000 in the prior
year's third quarter, a decrease of 5%. Net losses were
$8,659,000 for the quarter ended March 30, 1996, as compared to
net income of $943,000 in the quarter ended April 1, 1995. On a
per share basis, net losses were $.35 in the third quarter of
fiscal 1996, as compared to net income of $.04 per share in the
third quarter of fiscal 1995.
Through the nine months ended March 30, 1996, the Company's net
sales totaled $434,870,000 as compared to $434,689,000 for the
nine months ended April 1, 1995. Net losses for the nine months
ended March 30, 1996, were $6,965,000 as compared to net income
of $5,478,000 for the nine months ended April 1, 1995. Results
for the nine months ended March 30, 1996, include $9,000,000 in
credits to pre-tax income related to prior litigation charges. On
a per share basis, losses were equal to $.28 per share in the
nine months ended March 30, 1996, as compared to earnings per
share of $.23 for the nine months ended April 1, 1995.
Consolidated gross profit margin was 8.5% in the quarter ended
March 30, 1996, as compared to 15.7% in the quarter ended April
1, 1995.
The Company's order backlog at March 30, 1996 totaled $146.3
million, a decrease of 9% from order backlogs at April 1, 1995.
Net sales in the textile segment totaled $84.9 million in the
quarter ended March 30, 1996, down 10% from the comparable
quarter of last fiscal year. Sales of woven fabrics declined 4%
due to lower unit volume. Sales of knitted fabrics declined 26%
as a result of lower unit prices and lower unit volume. Gross
profit margins in the textile segment were 1% in the most recent
quarter as compared to 10% in the same quarter of fiscal 1995.
Gross margins for woven textiles were less than 1/2 point lower,
due principally to lower unit production volume. Gross margins
for knitted textiles were 27.5 margin points worse, due to lower
unit prices and to fixed costs not absorbed by lower production
levels. In addition, knitted textile margins were adversely
impacted in the most recent quarter by high costs of cotton
acquired in calendar 1995. Order backlogs for the textile
segment totaled $87.7 million at March 30, 1996, down 17% from
the order backlogs at April 1, 1995. At these same comparative
dates, order backlogs for woven textile were about 18% lower and
for knitted textiles about 9% lower. The Company expects that
production levels for woven textiles in the fourth quarter ending
June 29, 1996 will be lower than they were in the quarter ended
March 30, 1996, and that production levels for knitted textiles
will be higher. The knitted textile operations is still holding
high cost cotton acquired in calendar 1995 which the Company
expects to be consumed in the quarter ending June 29, 1996. In
the quarter ended March 30, 1996, the textile segment contributed
59% and 8% of the Company's consolidated net sales and gross
profits, respectively.
Net sales in the Company's apparel segment in the quarter ended
March 30, 1996, totaled $49.8 million, up 3% from apparel segment
sales for the quarter ended April 1, 1995. Sales of apparel to
distributors, screen printers, and private label customers were
up 18% on higher units offset by lower average unit prices, while
sales of Duck Head branded apparel were down 16% as a result of
lower unit volume and lower average unit selling prices. The
Company believes that the Duck Head lower unit volume in the
latest quarter reflected the relatively poor apparel activity at
retail in the last quarter of calendar 1995. Gross margins in the
apparel segment were 17% in the quarter ended March 30, 1996, as
compared to 24% in the quarter ended April 1, 1995. Gross margins
on sales to distributors, screen
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS--Continued
printers, and private label customers were down 3.8 margin points
due to lower prices for T-shirts. Gross margins on sales of Duck
Head branded apparel were down 9.5 margin points due principally
to fixed costs not absorbed by low levels of production and to
increased sales of old Duck Head inventory at relatively lower
prices. Order backlogs for the apparel segment at March 30, 1996
totaled $54.0 million, up 9% from apparel segment order backlogs
at April 1, 1995. At these same comparative dates, order backlogs
for products sold to distributors, screen printers and private
label accounts were up 18% and order backlogs for Duck Head
branded apparel were down 10%. For the quarter ended March 30,
1996, the apparel segment contributed 35% and 69% of the
Company's consolidated net sales and gross profits, respectively.
Sales in the Company's Other segment increased 13% in the quarter
ended March 30, 1996, as compared to sales in the quarter ended
April 1, 1995. Gross profit margins in the Other segment
decreased 3% in the same comparative time periods. Order backlogs
for the Other segment were 9% lower at March 30, 1996, than at
April 1, 1995. The contribution of the Company's Other segment to
consolidated net sales and gross profit was 6% and 23%,
respectively.
Selling, general, and administrative expenses were $1.4 million
higher in the quarter ended March 30, 1996 than in the quarter
ended April 1, 1995. This increase was in the apparel segment,
caused principally by costs related to opening and operating
clearance stores for old Duck Head inventory and to the opening
of Duck Head's new distribution center in Winder, GA.
The Company's consolidated inventories at March 30, 1996 totaled
$206.6 million as compared to $226.0 million at July 1, 1995.
During the quarter, the Company operated many of its
manufacturing facilities at less than capacity in an attempt to
lower inventories in the face of slow incoming orders. The
Company intends to continue this policy in the quarter to end
June 29, 1996. Although apparel inventories continued to decline
through the latest fiscal quarter, the Company is continuing to
evaluate the adequacy of its reserves for its branded apparel
inventories.
On March 15, 1996 the Company amended and restated its Credit
Agreement with certain banks. At March 30, 1996, certain
accounts receivable, inventory, and equipment with a book value
of $110,000,000, $134,000,000 and $166,000,000, respectively,
served as collateral for the agreement. The agreement retains
the overall borrowing limits described in the Company's annual
report for fiscal 1995; however, the restated agreement further
limits the amount of borrowing to percentages of assets pledged
as collateral. At March 30, 1996 the borrowing limit based on
assets pledged did not further limit borrowings under the
agreement. The agreement increased restrictions on the payment
of dividends, and at March 30, 1996, absent an event of default
under the Credit Agreement, $2,555,000 could have been available
for payment of dividends. The amount available for the payment
of dividends is increased by one-half of net income, if all loan
covenants are satisfied, and reduced by the payment of dividends.
Interest rates under the amended agreement increased by
approximately 150 basis points.
At a meeting of the Company's Board of Directors on May 9, 1996,
the decision was made to suspend the quarterly dividend until the
Company's financial results improve. Future dividend policy will
depend upon the Company's ability to produce adequate cash flows
in future quarters.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS--Continued
The Company has requested, and believes it will receive, a waiver
from its lenders under the Credit Agreement with respect to
defaults of the minimum tangible net worth requirement, and the
ratio of adjusted pretax income to interest expense for the
quarter ended March 30, 1996. Since the Company has not received
a waiver, the debt has been classified as current in the
accompanying financial statements.
The estimated effective tax rate for fiscal 1996 has decreased to
21% from an estimated tax expense rate of 43% in the fiscal year
ended July 1, 1995. The decreased tax rate is a result
of the effect of permanent tax differences on pretax losses. In
addition, net losses are preventing the Company from recognizing
the tax benefits of certain net operating losses which are due to
expire this fiscal year, and has caused the Company to increase
the allowance against the tax benefits of certain other net
operating losses.
Pending satisfaction of the loan covenants at March 30, 1996 the
Company had $17.9 million available for additional borrowing
under the credit facility. The Company believes that cash flow
generated by its operations and, upon receipt of requested
waiver from its lenders, funds available under the existing
credit facilities should be sufficient to service its bank debt
and to satisfy its day-to-day working capital needs.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings*
Item 2. Changes in Securities*
Item 3. Defaults upon Senior Securities
The Company is a party to an Amended and
Restated Credit Agreement, dated as of March 15, 1996
(the "Credit Agreement") which permits aggregate
borrowings (subject to certain conditions, such as
there being an Event of Default as defined, and
limitations) of $263,500,000. The covenants contained
in the Credit Agreement respecting minimum tangible
net worth and the ratio of adjusted pretax income to
interest expense were not satisfied as of March 31,
1996. The lenders party to the Credit Agreement have
not waived these Events of Default.
Item 4. Submission of Matters to a Vote of Security Holders*
Item 5. Other Information*
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
4.4 Amended and Restated Credit
Agreement dated as of March 15, 1996 among
Delta Woodside Industries, Inc., the Lenders
named therein, and NationsBank, N.A. , as
Agent (with exhibits and schedules omitted)
together with forms of Promissory Notes,
Subsidiary Guaranty, Borrower Security
Agreement, Subsidiaries Security Agreement
and certain other documents. The Company
agrees to furnish supplementally to the
Securities and Exchange Commission a copy of
any omitted schedule or exhibit to the Credit
Agreement upon request of the Commission.
(b) No reports were filed on Form 8-K during the
quarter ended March 30, 1996.
Items 1, 2, 4 and 5 are not applicable
SIGNATURES
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.
Delta Woodside Industries, Inc.
(Registrant)
Date May 14, 1996 /s/ E. Erwin Maddrey, II
E. Erwin Maddrey, II
President and
Chief Executive Officer
Date May 14, 1996 /s/ Douglas J. Stevens
Douglas J. Stevens
Controller and
Assistant Secretary
EXHIBIT INDEX
4.4 Credit Agreement dated as of March 15, 1996
EXHIBIT 4.4
[Execution Copy]
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 15, 1996
Among
DELTA WOODSIDE INDUSTRIES, INC., the Borrower,
the Lenders parties hereto,
NATIONSBANK, N.A.,
as the Agent,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION and
THE BANK OF NEW YORK,
as Co-Agents
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS 1
Section 1.1. Definitions. 1
Section 1.2. General 30
ARTICLE 2 Revolving Credit Facility 31
Section 2.1. Committed Loans 31
Section 2.2. Making Committed Loans 32
Section 2.3. Notice and Manner of Borrowing or
Conversion or Continuation of Committed Loan 33
Section 2.4. Duration of Interest Periods; Number of
Committed Loans 35
Section 2.5. Repayment 36
Section 2.6. Interest Rates and Payments of Interest
with respect to Committed Loans 36
Section 2.7. Committed Loan Notes 36
Section 2.8. Competitive Loan Subfacility 37
Section 2.9. Swingline Loan Subfacility 40
Section 2.10. Extension of Commitments 42
ARTICLE 3 LETTER OF CREDIT FACILITY 43
Section 3.1. Letters of Credit 43
Section 3.2. Purchase and Sale of Participations 43
Section 3.3. Unreimbursed Draws Under Letters of
Credit 44
Section 3.4. Sharing of Payments and Risk 46
Section 3.5. Administration of Letters of Credit and
Credit Documents 47
Section 3.6. Exoneration 48
Section 3.7. Cash Collateral; Supporting Letters of
Credit 49
ARTICLE 4 DEFAULT INTEREST RATE; PREPAYMENTS;
GENERAL PROVISIONS 50
Section 4.1. Default Interest Rate 50
Section 4.2. Conversion/Continuation 51
Section 4.3. Reduction of Commitments 51
Section 4.4. Prepayments. 51
Section 4.5. Changed Circumstances. 53
Section 4.6. Interest Rate Determination 55
Section 4.7. Manner of Payment 56
Section 4.8. Payments Not at End of Interest Period;
Failure to Borrow 56
Section 4.9. Computation of Interest and Fees 57
Section 4.10. Termination of Agreement 58
Section 4.11. Ratable Treatment 58
Section 4.12. Sharing of Payments, etc. 58
Section 4.13. U.S. Taxes 59
Section 4.14. Loan Account 61
Section 4.15. Fees 61
ARTICLE 5CONDITIONS PRECEDENT 63
Section 5.1. Conditions Precedent to Initial Loans 63
Section 5.2. Conditions Precedent to Each Loan 66
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE
BORROWER 67
Section 6.1.Representations and Warranties 67
Section 6.2. Survival of Representations and
Warranties, etc. 74
ARTICLE 7 AFFIRMATIVE COVENANTS 74
Section 7.1. Preservation of Corporate Existence and
Similar Matters 74
Section 7.2. Compliance with Applicable Law 74
Section 7.3. Maintenance of Property 74
Section 7.4. Conduct of Business 75
Section 7.5. Insurance 75
Section 7.6. Payment of Taxes and Claims 75
Section 7.7. Accounting Methods and Financial
Records 76
Section 7.8. Visits and Inspections 76
Section 7.9. Use of Proceeds 76
Section 7.10. New Significant Subsidiaries 76
Section 7.11. Factoring Agreements 77
Section 7.12. Further Assurances 77
ARTICLE 8 INFORMATION 78
Section 8.1. Financial Statements 78
Section 8.2. Accountants' Certificate 78
Section 8.3. Officer's Certificate 79
Section 8.4. Copies of Other Reports 79
Section 8.5. Notice of Litigation and Other Matters 80
Section 8.6. ERISA 80
Section 8.7. Other Information 81
Section 8.8. Accuracy of Information 81
Section 8.9. Information Regarding Hedging
Arrangements 81
Section 8.10. Borrowing Base Reports 81
ARTICLE 9 NEGATIVE COVENANTS
Section 9.1. Financial Ratios 82
Section 9.2. Indebtedness for Money Borrowed 82
Section 9.3. Guaranties 82
Section 9.4. Investments; Business Units 83
Section 9.5. Capital Expenditures 84
Section 9.6. Restricted Dividend Payments. 84
Section 9.7. Merger, Consolidation and Sale of
Assets 85
Section 9.8. Transactions with Affiliates 86
Section 9.9. Liens 86
Section 9.10. Plans 86
Section 9.11. Sales and Leasebacks 86
Section 9.12. Issuance of Stock by Subsidiaries 86
Section 9.13. Additional Restrictions 87
Section 9.14. Special Provisions Regarding International
Apparel Marketing Corporation 87
Section 9.15. Limitation on Foreign Operations 87
Section 9.16. Limitation on Inventory 87
ARTICLE 10 DEFAULT 87
Section 10.1. Events of Default 87
Section 10.2. Remedies 91
ARTICLE 11 AGENT AND CO-AGENTS 92
Section 11.1. Grant of Authority 92
Section 11.2. Action on Instructions 92
Section 11.3. Responsibility of the Agent 93
Section 11.4. Representations by the Lenders 94
Section 11.5. Expenses and Indemnification 94
Section 11.6. Rights of the Bank 95
Section 11.7. Right to Resign 95
Section 11.8. Co-Agents
95
ARTICLE 12 MISCELLANEOUS
95
Section 12.1. Notices
95
Section 12.2. Expenses
96
Section 12.3. Stamp and Other Taxes
97
Section 12.4. Setoff
97
Section 12.5. Litigation
97
Section 12.6. Consent to Advertising and Publicity
98
Section 12.7. Reversal of Payments
98
Section 12.8. Injunctive Relief
99
Section 12.9. Accounting Matters
99
Section 12.10. Assignment
99
Section 12.11. Amendments
104
Section 12.12. Performance of Borrower's Duties
105
Section 12.13. Indemnification
105
Section 12.14. All Powers Coupled with Interest
105
Section 12.15. Survival
105
Section 12.16. Titles and Captions
106
Section 12.17. Severability of Provisions
106
Section 12.18. Governing Law
106
Section 12.19. Counterparts
106
Section 12.20. Reproduction of Documents
106
Section 12.21. Confidentiality
106
Section 12.22 No Waivers
107
Section 12.23 Entire Agreement
107
EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B FORM OF BORROWER SECURITY
AGREEMENT
EXHIBIT C FORM OF COMMITTED LOAN NOTE
EXHIBIT D FORM OF COMPETITIVE LOAN NOTE
EXHIBIT E FORM OF SUBSIDIARY GUARANTY
EXHIBIT F FORM OF SUBSIDIARIES SECURITY
AGREEMENT
EXHIBIT G FORM OF SWINGLINE LOAN NOTE
EXHIBIT H FORM OF COMPETITIVE BID REQUEST
EXHIBIT I FORM OF CONFIRMATION OF NOTICE OF
BORROWING
EXHIBIT J FORM OF CONFIRMATION OF NOTICE OF
CONVERSION/CONTINUATION
EXHIBIT K FORM OF OPINION OF COUNSEL FOR BORROWER
AND
SUBSIDIARIES EXHIBIT L
FORM OF OPINION OF COUNSEL FOR AGENT
EXHIBIT M FORM OF OFFICER'S CERTIFICATE
EXHIBIT N FORM OF BORROWING BASE REPORT
EXHIBIT O FORM OF JOINDER AGREEMENT
Schedule 1.1 Existing Letters of Credit
Schedule 6.1(b) Subsidiaries
Schedule 6.1(d) Compliance with Laws
Schedule 6.1(e) Business
Schedule 6.1(f) Governmental Approvals
Schedule 6.1(g) Title to Properties
Schedule 6.1(h) Existing Liens
Schedule 6.1(i) Existing Indebtedness and Guaranties
Schedule 6.1(j) Litigation
Schedule 6.1(k) Patents, Trademarks and Copyrights
Schedule 6.1(p) ERISA
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 15, 1996
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 15, 1996
(the "Agreement"), amends and restates that certain Credit Agreement dated
as of September 7, 1994, as amended from time to time thereafter, by and
among the parties
hereto, and is made by and among DELTA WOODSIDE INDUSTRIES, INC.,
a South Carolina corporation (the "Borrower"), the lenders from
time to time a party hereto (the "Lenders"), NATIONSBANK, N.A.
(successor in interest to NationsBank, N.A. (Carolinas) and NationsBank of
North Carolina, N.A.), a national banking association, as agent for the
Lenders (the "Agent"), and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association, and THE BANK OF NEW YORK, a New York banking
corporation, as co-agents for the Lenders (the "Co-Agents").
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For the purposes of this
Agreement:
"Acquire" or "Acquisition", as applied to any Business Unit
or Investment, means the acquiring or acquisition of such Business Unit or
Investment by purchase, exchange, issuance of
stock or other securities, or by merger, reorganization or any
other method.
"Additional Subsidiary Guarantor" means each Person
that
becomes a Subsidiary Guarantor after the Agreement Date by execution of a
Joinder Agreement.
"Affiliate" means, with respect to a Person, any other Person that (a)
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under
common
control with, such given Person, (b) directly or indirectly beneficially
owns or holds 5% or more of any class of voting stock of such Person, or
(c) 50% or more of the voting stock of
which is directly or indirectly beneficially owned or held by
such Person or a Subsidiary of such Person. The term "control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agent" means the Bank, acting in its capacity as agent for
the Lenders pursuant to the terms of Article 11, and any successor Agent
appointed pursuant to Section 11.7.
"Agent's Office" means the office of the Agent designated
from time to time pursuant to Section 12.1(c).
"Agreement" means and includes this Agreement and all
amendments, modifications and supplements thereto.
"Agreement Date" means the date as of which this
Agreement
is dated.
"Alchem" means Alchem Capital Corporation, a Delaware corporation and
Wholly Owned Subsidiary of the Borrower, and its
successors and assigns.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all
governmental bodies and of all orders and decrees of all courts
and arbitrators, including, without being limited to, applicable
provisions of Environmental Laws.
"Applicable Lending Office" means, (i) with respect to each
Lender, such Lender's Domestic Lending Office in the case of a
Base Rate Advance or a Competitive Loan, and such Lender's Eurodollar
Lending Office in the case of a Eurodollar Advance,
and (ii) with respect to the Swingline Lender, the Swingline Lender's
Domestic Lending Office.
"Applicable Margin" means, at any time, the applicable margin
corresponding to the ratio described below in effect as of
the most recent Rate Measurement Date:
Funded Indebtedness
Coverage Ratio Applicable Margin
Equal to or greater than 6.00:1.002.50%
Less than 6:00:1.00, but equal to or
greater than 5.25:1.00 2.25%
Less than 5.25:1.00, but equal to or
greater than 4.50:1.00
2.00%
Less than 4.50:1.00, but equal to or
greater than 3.75:1.00
1.50%
Less than 3.75:1.00, but equal to or
greater than 3.00:1.00
1.25%
Less than 3.00:1.00, but equal to or
greater than 2.25:1.00
1.00%
Less than 2.25:1.00, but equal to or
greater than 1.50:1.00
0.75%
Less than 1.50:1.000.50%
The Applicable Margin as of the Effective Date and until the
first Applicable Margin Change Date is 2.25%. Thereafter, determination of
the appropriate Applicable Margin based on the
Funded Indebtedness Coverage Ratio shall be made as of each Rate
Measurement Date. The Funded Indebtedness Coverage Ratio in effect as of a
Rate Measurement Date shall establish the Applicable Margin that shall be
effective as of the date designated by the Agent as the Applicable Margin
Change Date with respect to such Rate Measurement Date. The Agent shall
determine the Applicable Margin as of each Rate Measurement Date occurring
after the Effective Date and shall promptly notify the Borrower
and the Lenders of the Applicable Margin so determined and of the
Applicable Margin Change Date. Such determinations by the Agent
of the Applicable Margin shall be conclusive absent manifest error.
"Applicable Margin Change Date" means, with respect to any
Rate Measurement Date, a date designated by the Agent that is not
more than five (5) Business Days after receipt by the Agent of
the Required Financial Information for such Rate Measurement Date.
"Application" means the Borrower's application for and reimbursement
agreement in respect of a Letter of Credit, which
may be on any form customarily used by the Issuer of such Letter
of Credit, subject to the provisions of Section 3.1.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and
accepted by the Agent, in substantially the form of Exhibit A
hereto.
"Authorized Officer" means the President, the Executive Vice
President, the Chief Financial Officer, any Vice President, or
the Treasurer of a Person or any other officer designated as an
"Authorized Officer" by the Board of Directors (or equivalent
governing body) of such Person.
"Bank" means NationsBank, N.A., and its successors and assigns.
"Base Rate" means the greater of (i) the rate ofinterest
announced from time to time by the Bank at its principal office
in Charlotte, North Carolina as its "prime" rate as in effect at
such time, and (ii) the Federal Funds Effective Rate (rounded
upwards, if necessary, to the next 1/8 of 1%) plus 1/2 of 1%, per
annum.
"Base Rate Advance" means a Committed Advance bearing
interest determined with reference to the Base Rate.
"Bond Documents" means, collectively, the South Carolina
Lease, the Indenture, the Escrow Agreement and the Bond.
"Bond" means that certain Industrial Revenue Bond, Series
1994 (Delta Mills, Inc. Project), issued pursuant to the Indenture.
"Borrower" means Delta Woodside Industries, Inc., a South
Carolina corporation, and its successors and assigns.
"Borrower Security Agreement" means the Borrower Security
Agreement to be executed and delivered by the Borrower as of the
date hereof, in substantially the form of Exhibit B hereto, and
all amendments, modifications and supplements thereto.
"Borrowing Base" means, as of any day, the sum of (a) 85% of
Eligible Receivables plus (b) 50% of Eligible Inventory plus (c)
60% of Eligible Equipment, in each case as set forth in the most
recent Borrowing Base Report delivered to the Agent and the Lenders in
accordance with the terms of Section 8.10.
"Borrowing Base Parties" means the Borrower and each of the
Subsidiary Guarantors which is a Domestic Subsidiary of the Borrower.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day other than a Saturday, Sunday or legal holiday
on which banks in Charlotte, North Carolina and New York, New York are open
for the conduct of a substantial part of their commercial banking business;
and (ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Advances, any day that is
a Business Day described in clause (i) and that is also a day for trading by and
between banks in U.S. Dollar deposits in the London interbank market.
"Business Unit" means the assets constituting the business
or a division or operating unit thereof of any Person.
"Capital Expenditures" means, with respect to any Person,
all expenditures made and liabilities incurred for the acquisition of
assets (other than assets which constitute a Business Unit or an
Investment) which are not, in accordance with
GAAP, treated as expense items for such Person in the year made
or incurred or as a prepaid expense applicable to a future year
or years.
"Capitalized Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with
GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in
accordance with GAAP.
"Cash Collateral" means collateral consisting of cash or
Permitted Investments of the types referred to in Section 3.7 in
which the Agent, for the benefit of itself as Agent, the Issuers,
as applicable, and the Lenders, has a first priority Lien.
"Change of Control" means the occurrence of any of the following
events: (i) any Person or two or more Persons acting
in concert (other than E. Erwin Maddrey, II, Bettis C. Rainsford
and/or Micco Corporation) shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their
acquisition of, control over, Voting Stock of the Borrower (or
other securities convertible into such Voting Stock) representing
35% or more of the combined voting power of all Voting Stock of
the Borrower, or (ii) during any period of up to 24 consecutive
months, commencing after the Agreement Date, individuals who at
the beginning of such 24 month period were directors of the Borrower
(together with any new director whose election by the
Borrower's Board of Directors or whose nomination for election by
the Borrower's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors of the Borrower
then in office. As used herein, "beneficial ownership" shall
have the meaning provided in Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
amended.
"Co-Agents" means a collective reference to Bank of America
National Trust and Savings Association, a national banking association and
The Bank of New York, a New York banking corporation, and their respective
successors and assigns.
"Collateral" means, collectively, the collateral which at
any time will be covered by the Collateral Documents, including,
without limitation, the respective interest of the Borrower and
Delta Mills, Inc. in all personal property and fixtures constituting any
portion of the South Carolina Bond Property.
"Collateral Documents" means, collectively, the Borrower
Security Agreement, the Subsidiaries Security Agreement, the Leasehold
Mortgage, any assignments of factoring proceeds and
such other documents executed and delivered in connection with
the attachment and perfection of the Agent's security interests
and liens, for the benefit of the Lenders, arising thereunder,
including without limitation, UCC financing statements.
"Commitment" means, as to each Lender, the amount set forth
opposite such Lender's name on the signature pages hereof under
the caption "Commitment" (or, if such Lender has entered into one
or more Assignments and Acceptances, set forth for such Lender in
the Register maintained by the Agent pursuant to Section 12.10(d)), as such
amount may be reduced pursuant to Section 4.3 or 10.2.
"Commitment Percentage" of any Lender at any time means the
product of (i) the amount of such Lender's Commitment at such
time divided by the amount of the Facility at such time, multiplied by (ii)
100.
"Committed Advance" means an advance by a Lender to the Borrower
pursuant to Sections 2.1 and 2.2 and refers to a Base
Rate Advance or a Eurodollar Advance (each a "Type" of Committed
Advance).
"Committed Loan" means a borrowing by the Borrower pursuant
to Sections 2.1 and 2.2, consisting of Committed Advances of the
same Type made on the same day by the Lenders.
"Committed Loan Note" means any of the promissory notes made
by the Borrower payable to the order of a Lender evidencing the
obligation of the Borrower to pay the aggregate unpaid principal
amount of all Committed Advances constituting part of Committed
Loans and payments pursuant to Section 3.3(c)(ii) and subject to
Section 3.3(c)(iii)(B) made to it or for its benefit by such Lender (and
any promissory note or notes that may be issued from
time to time in substitution, renewal, extension, replacement or
exchange therefor, whether payable to the same or different Lenders,
whether issued in connection with a Person becoming a
Lender after the Agreement Date or otherwise) substantially in
the form of Exhibit C hereto, with all blanks properly completed,
either as originally executed or as the same may from time to
time be supplemented, modified, amended, renewed, extended or
refinanced.
"Competitive Bid" means an offer by a Lender to make a Competitive
Loan pursuant to the terms of Section 2.8.
"Competitive Bid Rate" means, as to any Competitive Bid made
by a Lender in accordance with the provisions of Section 2.8, the
fixed rate of interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" means a request by the Borrower
for Competitive Bids in accordance with the provisions of Section
2.8.
"Competitive Loan" means a borrowing by the Borrower made by
a Lender in its discretion pursuant to Section 2.8.
"Competitive Loan Note" means any of the promissory notes
made by the Borrower payable to the order of a Lender evidencing
the obligation of the Borrower to pay the aggregate unpaid principal amount
of all Competitive Loans made to it or for its
benefit by such Lender (and any promissory note or notes that may
be issued from time to time in substitution, renewal, extension,
replacement or exchange therefor, whether payable to the same or
different Lenders, whether issued in connection with a Person
becoming a Lender after the Agreement Date or otherwise) substantially in
the form of Exhibit D hereto, with all blanks
properly completed, either as originally executed or as the same
may from time to time be supplemented, modified, amended, renewed, extended
or refinanced.
"Consolidated", when used with reference to any accounting
terms relating to a Person, shall mean the sum of all applicable
items relating to such Person and its Subsidiaries, as consolidated in
accordance with GAAP after the elimination of
intercompany items.
"Consolidated Subsidiaries", when used with reference to any
Person, means the Subsidiaries of such Person whose accounts are
at the time in question in accordance with GAAP consolidated with
those of such Person.
"Current Assets" means, with respect to any Person, (i) the
aggregate amount of assets of such Person which should properly
be classified as current assets in accordance with GAAP, after
deducting adequate reserves in each case where a reserve is appropriate in
accordance with GAAP, plus (ii) all accounts receivable of such Person
against which Indebtedness for Money
Borrowed of such Person has been offset (with the result that
neither such accounts receivable nor such Indebtedness appears on
the balance sheet of such Person) for financial reporting purposes.
"Current Liabilities" means, with respect to any Person, (i)
the aggregate amount of all Indebtedness of such Person which
should properly be classified as current liabilities on the balance sheet
of such Person in accordance with GAAP, plus (ii)
all Indebtedness for Money Borrowed (not constituting Funded Indebtedness)
which has been offset against such Person's accounts receivable, as
described in clause (ii) of the definition "Current Assets."
"Default" means any of the events specified in Section 10.1
which with the passage of time or giving of notice or both would
constitute an Event of Default.
"Depreciation and Amortization Expense" means total depreciation and
amortization expense of a Person for the period
in question, determined in accordance with GAAP.
"Dollar", "dollar", "U.S. Dollar" and "$" means freely transferrable
United States dollars.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" on the
signature pages hereof, or such other office of
such Lender as such Lender may from time to time specify in writing to the
Borrower and the Agent as its Domestic Lending
Office.
"Domestic Subsidiary" means, as to any Person, each Subsidiary of such
Person which is incorporated or organized under the laws of any State of
the United States or the District
of Columbia.
"Effective Date" means the later of:
(a) the Agreement Date, and
(b) the first date on which all of the conditions set
forth in Article 5 shall have been fulfilled.
"Eligible Assignee" means (i) a Lender, (ii) a commercial
bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of five billion dollars, or
(iii) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political
subdivision of any such country, and having total assets in excess of five
billion dollars (or the equivalent in other currencies), provided that such
bank is acting through a branch or agency located in the United States; and,
provided further, that each such entity described in the foregoing clauses (i),
(ii) and (iii) is consented to by each of the Agent and, so long
as no Event of Default has occurred and is continuing, the Borrower, such
consent not to be unreasonably withheld or delayed.
"Eligible Equipment" means, as of any date of determination
and without duplication, the aggregate book value of all machinery and
equipment owned or, in the case of the South Carolina Bond Property, leased
by any Borrowing Base Party and subject to a perfected, first priority Lien in
favor of the Agent, for the benefit of the Lenders, but excluding in any event
(i) machinery and equipment subject to any Lien, other than Liens
referred to in clauses (a), (b), (c) and (f) of the definition of
Permitted Liens, (ii) to the extent the aggregate book value thereof
exceeds $5,000,000, machinery and equipment which is no
longer used or useful in the business of the applicable Borrowing
Base Party, (iii) machinery and equipment located outside of the
United States, (iv) machinery and equipment located at a location
not owned or leased by the applicable Borrowing Base Party, (v)
machinery and equipment located at a location leased by the applicable
Borrowing Base Party with respect to which the Agent
shall not have received a landlord's waiver satisfactory to the
Agent, other than the South Carolina Bond Property, (vi) machinery and
equipment which is leased or on consignment, other
than the South Carolina Bond Property, and (vii) machinery and
equipment which fails to meet such other specifications and requirements as
may from time to time be established by the Agent
in its reasonable discretion.
"Eligible Inventory" means, as of any date of determination
and without duplication, the lower of the aggregate book value
(based on a FIFO or a moving average cost valuation, consistently
applied) or fair market value, less appropriate reserves determined in
accordance with GAAP, of all raw materials and finished goods inventory
owned by any Borrowing Base Party and subject to a perfected, first priority
Lien in favor of the Agent, for the benefit of the Lenders, but excluding in
any event(i) inventory subject to any Lien, other than Liens referred to
in clauses (a), (b), (c) and (f) of the definition of Permitted
Liens, (ii) inventory which fails to meet standards for sale or
use imposed by governmental agencies, departments or divisions
having regulatory authority over such goods, (iii) inventory which is not
useable or saleable at prices approximating
their
cost in the ordinary course of the applicable Borrowing Base Party's
business (without duplication, net of any reserves for
obsolescence, unsalability or decline in value), (iv) inventory
located outside of the United States, (v) inventory located at a
location not owned or leased by the applicable Borrowing Base
Party, (vi) inventory located at a location leased by the applicable
Borrowing Base Party with respect to which the Agent
shall not have received a landlord's waiver satisfactory to the
Agent, other than the South Carolina Bond Property, (vii) inventory which
is leased or on consignment and (viii) inventory
which fails to meet such other specifications and requirements as
may from time to time be established by the Agent in its reasonable
discretion.
"Eligible Receivables" means, as of any date of determination and
without duplication, the sum of (A) all amounts
owing to any Borrowing Base Party under all Factoring Agreements
at such time (net of any amounts (i) which the Factors are entitled to
offset against amounts owing to any Borrowing Base
Party under such Factoring Agreements and (ii) owing by account
debtors located outside of the United States or Canada (except to
the extent that (a) payment for the goods shipped is secured by
an irrevocable letter of credit in a form and from an institution
acceptable to the Agent or (b) the Factor has assumed the credit
risk of the related accounts receivable) and (B) the aggregate
book value, in U.S. Dollars, of all accounts receivable, receivables, and
obligations for payment created or arising from
the sale of inventory or the rendering of services in the ordinary course
of business (collectively, the "Receivables"),
owned by or owing to any Borrowing Base Party and subject to a
perfected, first priority Lien in favor of the Agent, for the
benefit of the Lenders, net of allowances and reserves for doubtful or
uncollectible accounts and sales adjustments consistent with such Borrowing
Base Party's internal policies and
in any event in accordance with GAAP, but excluding in any event
(i) Receivables subject to any Lien, other than Liens in favor of
the Agent, for the benefit of the Lenders, (ii) to the extent
included in this clause (B), Receivables transferred pursuant to
any Permitted Receivables Financing or otherwise (other than
pursuant to the Collateral Documents), (iii) Receivables which
are more than 60 days past due (net of reserves for bad debts in
connection with any such Receivables), (iv) Receivables evidenced
by notes, chattel paper or other instruments, unless such notes,
chattel paper or instruments have been delivered to and are in
the possession of the Agent, (v) Receivables owing by an account
debtor which is not solvent or is subject to any bankruptcy or
insolvency proceeding of any kind (net of any reserves in connection with
any such Receivables), (vi) Receivables owing by
an account debtor located outside of the United States or Canada
(unless payment for the goods shipped is secured by an irrevocable letter
of credit in a form and from an institution acceptable to the Agent), provided
that, at any time, no more than $5,000,000 in aggregate Receivables owing by
account debtors in Canada may be included as Eligible Receivables, (vii)
Receivables which are contingent or as to which the account debtor has
made a claim for offset, deduction, or counterclaim,
or is disputing, or raising other defenses to, payment, but in
each case only to the extent of such offset, deduction, counterclaim,
dispute or other defense and net of any reserves in
connection with any such Receivables, (viii) Receivables for which any
direct or indirect Subsidiary of the Borrower or any
Affiliate of the Borrower is the account debtor, (ix) Receivables, to the
extent exceeding $2,500,000 in the aggregate
at any one time, representing a sale to the government of the
United States of America or any subdivision thereof unless the
applicable Borrowing Base Party has complied (to the satisfaction
of the Agent), with respect to the granting of a security interest in such
Receivable, with the Federal Assignment of Claims Act or other similar
applicable law, in which case all such Receivables may be included as Eligible
Receivables and (x) Receivables which fail to meet such other specifications and
requirements as may from time to time be established by the Agent
in its reasonable discretion.
"Environmental Laws" means all federal, state, local and
foreign laws now or hereafter in effect relating to pollution or
protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment (including,without limitation, ambient air, surface water, ground
water, or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, removal, transport, or
handling ofpollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes, and any and
all regulations issued, entered or promulgated thereunder; such
laws and regulations include but are not limited to the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq., as amended; the
Comprehensive Environmental Response, Compensation
and Liability Act, 15 U.S.C. 2601 et seq., as amended; the Clean
Air Act, 46 U.S.C. 7401 et seq., as amended; and state and federal
environmental cleanup programs.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"Escrow Agreement" means that certain escrow agreement, dated as of
May 26, 1994, among the Escrow Agent, as named therein, Florence County,
South Carolina, Greenville County, South Carolina, Marlboro County, South
Carolina, the Borrower and
Delta Mills, Inc.
"Eurocurrency Liability" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Advance" means a Committed Advance bearing interest at a
rate determined with reference to the Eurodollar
Rate.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar
Lending Office" on the signature pages hereof (or, if no such
office is specified, its Domestic Lending Office), or such other
office of such Lender as such Lender may from time to time specify in
writing to the Borrower and the Agent as its Eurodollar Lending Office.
"Eurodollar Rate" means for the Interest Period for
each
Eurodollar Advance comprising part of the same Committed Loan, a
rate per annum equal to the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum if such average is
not such a multiple) of the rates per annum at which deposits in
U.S. Dollars are offered to each of the Reference Banks by prime
banks in the London interbank market at 11:00 a.m. (London time)
(or as soon thereafter as is practicable), in each case two Business Days
before the first day of such Interest Period in an
amount approximately equal to the principal amount of such Reference Bank's
Eurodollar Advance comprising part of such Committed Loan and for a period
approximately equal to such Interest Period. The Eurodollar Rate for the
Interest Period for each Eurodollar Advance comprising part of the same
Committed Loan shall be determined by the Agent on the basis of the applicable
rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such
Interest Period, subject, however, to the provisions of Section
4.6.
"Eurodollar Reserve Percentage" of any Lender for the Interest Period
for any Eurodollar Advance means the reserve percentage applicable during
such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for such Lender with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having
a term equal to such Interest Period.
"Event of Default" means any of the events specified in Section 10.1,
provided that any requirement for notice or lapse
of time or any other condition has been satisfied.
"Existing Guaranties" means the Guaranties outstanding on
the Agreement Date to the extent set forth on Schedule 6.1(i).
"Existing Indebtedness" means Indebtedness for Money Borrowed issued
and outstanding on the Agreement Date to the extent set forth on Schedule
6.1(i) and any renewals, extensions or refundings thereof, but not any increases
in principal amount thereof outstanding on the date of such renewal, extension
or refunding.
"Existing Letter of Credit" means each letter of credit issued by a
Lender and outstanding as of the Agreement Date and
more fully described on Schedule 1.1 hereto.
"Existing Liens" means the Liens outstanding on the Agreement Date to
the extent set forth on Schedule 6.1(h),
but
only to the extent that the same relate to Existing Indebtedness.
"Facility" means, on any date, an amount equal to the aggregate amount
of the Commitments of all Lenders on such date.
"Factor" means such term as defined in the definition of
"Factoring Agreement".
"Factoring Agreement" means each agreement between the Borrower or any
of its Subsidiaries and BNY Financial Corporation
("BNY Financial") or any other Person approved by the Majority
Lenders (each of BNY Financial and each such other Person, in
such capacity, a "Factor"), providing for credit, collection and
application services to be performed by a Factor with respect to
accounts receivable of the Borrower or any of such Subsidiaries,
as applicable, and/or for the purchase by a Factor, subject to
the terms thereof, of some or all of such accounts receivable,
and which may grant to a Factor a security interest in the factored
accounts receivable and related property of the Borrower
or any of such Subsidiaries, as applicable; provided, however,
that no such agreement shall require or permit a Factor to make
loans or advances to the Borrower or any of its Subsidiaries secured by
such accounts receivable or related property.
"Federal Funds Effective Rate" means for any day, the interest rate
per annum 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, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day
that is a Business Day, the average of the quotations for such
day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent.
"Financial Officer" of any Person means the Chief Financial
Officer, Treasurer or Controller of such Person.
"Fiscal Quarter" means each period of approximately 90 days
beginning on the Sunday following the last day of the immediately
preceding Fiscal Quarter and ending on the Saturday nearest March
31, June 30, September 30 or December 31 in each calendar year.
"Fiscal Year" means each period of approximately 365 days
beginning on the Sunday following the Saturday nearest to June 30
in one calendar year and ending on the Saturday nearest to June
30 in the next succeeding calendar year and when preceded by numbers
indicating a calendar year, means the Fiscal Year ending
during such calendar year.
"Funded Indebtedness" means Indebtedness for Money Borrowed
having a maturity of more than 12 months from the date of the
most recent Consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries or having a maturity of less than 12
months from the date of such Consolidated balance sheet but by
its terms being renewable or extendable beyond 12 months from the
date of such Consolidated balance sheet at the option of the Person liable
thereon. Notwithstanding the foregoing, Funded
Indebtedness shall include, at all times, any amounts due and
owing under this Agreement or any other Loan Documents.
"Funded Indebtedness Coverage Ratio" means, as of any
date of determination for the applicable Fiscal Quarter then ended,
the ratio of (i) Consolidated Funded Indebtedness of the Borrower
and its Consolidated Subsidiaries as of such date, to (ii) Consolidated Net
Income of the Borrower and its Consolidated Subsidiaries (before
Consolidated Interest Expense, Consolidated Income Tax Expense and Consolidated
Depreciation and Amortization Expense) for the four consecutive Fiscal Quarters
then ended.
"GAAP" means generally accepted accounting principles consistently
applied and maintained throughout the period indicated and consistent with
the prior financial practice of the Borrower as reflected on the financial
statements referred to in Section 6.1(n); provided, however, that, in the event
that changes shall be mandated by the Financial Accounting Standards
Board or any similar accounting authority of comparable standing,
or shall be recommended by the Borrower's certified public accountants,
such changes shall be included in GAAP only from and
after such date as the Borrower, the Agent and the Majority Lenders shall
have amended this Agreement to the extent necessary
to reflect any such changes in the financial covenants set forth
in Article 9.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings
with, and reports to, all governmental bodies, whether federal,
state or local, and all agencies thereof, including, without being limited
to, all such authorizations, consents, approvals,
licenses, exemptions, registrations, filings and reports related
to the environment, the production, treatment, release, storage,
handling and disposal of toxic, hazardous or other substances,
and similar matters.
"Guaranteed Obligations" means any and all of the
obligations of the Subsidiary Guarantors arising under the Subsidiary
Guaranty.
"Guaranty", "Guaranteed" or to "Guarantee" as applied
to any obligation of another Person shall mean and include
(a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course
of business), directly or indirectly, in any manner, of any
part or all of such obligation of such other Person,and
(b)an agreement, direct or indirect, contingent or
otherwise, and whether or not constituting a guaranty, the
practical effect of which is to assure to or for the benefit
of a third party the payment or performance (or payment of
damages in the event of nonperformance) of any part or all
of such obligation of such other Person whether by
(i) purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or
lessor) of property or the purchase or sale of services
primarily for the purpose of enabling the obligor with
respect to such obligation to make any payment or performance (or
payment of damages in the event of nonperformance) of or on
account of any part or all of such obligation, or to assure the owner
of such obligation against loss,
(iii) the supplying of funds to or in any other manner
investing in the obligor with respect to such obligation,
(iv) repayment of amounts drawn down by beneficiaries of
letters of credit, or
(v)the supplying of funds to or investing
in a Person on account of all or any part of such Person's
obligation under a Guaranty of any obligation or indemnifying or
holding harmless, in any way, such Person against any part or all
of such obligation.
"Income Tax Expense" means total income tax liability of a
Person to federal, state and local governments for the period in
question, determined in accordance with GAAP.
"Indebtedness" as applied to a Person means, without
duplication,
(a)all items (except items of minority interests,
excess of assigned value of net assets acquired over cost,
capital stock, additional paid-in capital or retained earnings, or of
general contingency or deferred tax reserves) which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined,
(b)all obligations (including, during the noncancellable
term of any lease (other than an Operating Lease) in the nature of a
title retention agreement,allfuture payment obligations under such lease
discounted to their present value in accordance with GAAP) secured by any
Lien (other than a Permitted Lien created by statute) to
which any property or asset owned or held by such Person is
subject, whether or not the obligation secured thereby shall
have been assumed,
(c)all obligations of other Persons which such Person
has Guaranteed (excluding, other than to the extent
described in clause (e) below, (i) Guaranties constituting
recourse obligations with respect to accounts receivable
sold or otherwise disposed of by such Person and (ii) Guaranties of
recourse obligations with respect to accounts
receivable sold or otherwise disposed of by one or more other
Persons),
(d)in the case of the Borrower (without duplication)
the Loans and unreimbursed drawings under Letters of Credit
and in the case of the Subsidiary Guarantors the Guaranteed Obligations
with respect thereto, and
(e)recourse obligations with respect to accounts
receivable sold or otherwise disposed of by such Person (solely to the
extent of actual defaulted or delinquent receivables) and any Guaranty
of any such recourse obligation.
"Indenture" means that certain indenture, dated as of May
26, 1994, among Florence County, South Carolina, Greenville County, South
Carolina and Marlboro County, South Carolina and
the Borrower, as Purchaser.
"Intercompany Indebtedness" means Indebtedness for Money
Borrowed owed by the Borrower to any Subsidiary of the Borrower
or by any Subsidiary Guarantor to the Borrower or any other Subsidiary
Guarantor.
"Interest Coverage Ratio" means, as of any date of determination for
the applicable Fiscal Quarter then ended, the ratio of (i) Consolidated Net
Income of the Borrower and its Consolidated Subsidiaries (before Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated
Depreciation and Amortization Expense) for such Fiscal Quarter to
(ii) Consolidated Interest Expense of the Borrower and its Consolidated
Subsidiaries for such Fiscal Quarter.
"Interest Expense" means total interest expense on
Indebtedness of a Person during the period in question, determined in
accordance with GAAP.
"Interest Payment Date" means, (i) with respect to any Base
Rate Advance, the first day of each January, April, July and October,
commencing on April 1, 1996 and the date when such Base
Rate Advance is due (whether on the Termination Date, by reason
of acceleration or otherwise) and (ii) with respect to any Eurodollar
Advance, Competitive Loan or Swingline Loan, the last
day of the Interest Period for such Eurodollar Advance, Competitive Loan or
Swingline Loan and the date when such Eurodollar Advance, Competitive Loan
or Swingline Loan is due (whether on the Termination Date, by reason of
acceleration or otherwise), and, in addition, where the applicable Interest
Period for any Eurodollar Advance is more than 3 months, then
also on the date 3 months from the beginning of such Interest
Period, and each 3 months thereafter.
"Interest Period" means
(a)with respect to each Eurodollar Advance, the
period commencing on the date of the making or continuation
of or conversion to such Eurodollar Advance and ending one, two,
three or six months thereafter, as the Borrower may
elect in the applicable Notice of Borrowing or
Conversion/Continuation;
(b)with respect to each Competitive Loan, a period
commencing on the date of the making of such Competitive
Loan and ending on the date specified in the applicable Competitive
Bid whereby the offer to make such Competitive
Loan was extended (such ending date in any event not to be
less than 7 nor more than 90 days from the date of
borrowing); and
(c)with respect to each Swingline Loan, a period
commencing on the date of the making of such Swingline Loan
and ending on the date agreed to by the Borrower and the
Swingline Lender in accordance with the provisions of Section 2.9(c)
(such ending date in any event to be not more
than 7 days from the date of borrowing);
provided, that:
(i)any Interest Period that would otherwise
end on a day that is not a Business Day shall,
subject to the provisions of clause (iii) below,
be extended to the next succeeding Business Day
unless, in the case of Eurodollar Advances, such
Business Day falls in the next calendar month, in
which case such Interest Period shall end on the
immediately preceding Business Day;
(ii)any Interest Period applicable to a
Eurodollar Advance that begins on the last Business Day of a
calendar month (or on a day for
which there is no numerically corresponding day in
the calendar month at the end of such Interest
Period) shall, subject to clause (iii) below,
end
on the last Business Day of a calendar month;
(iii) no Interest Period shall end after the
Termination Date; and
(iv) notwithstanding clause (iii) above, no
Interest Period applicable to a Eurodollar Advance
shall have a duration of less than one month; and
if any applicable Interest Period would be for a
shorter period, such Interest Period shall not be
available hereunder.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.
"Investment" means, with respect to any Person (an
"Investor"):
(a)any share of capital stock, evidence of Indebtedness or
other security issued by any other
Person,
(b)any loan, advance or extension of credit to, or
contribution to the capital of, any other Person,
(c)any Guaranty of the obligations of any other
Person (other than the Subsidiary Guaranty),
(d)any other investment in any other Person,
(e)any commitment to make an Investment, and
(f)any option to make an Investment, the consideration for
which exceeds $100;
provided, that if the Investor is the Borrower or any Subsidiary
of the Borrower and any of the foregoing results in any other
Person becoming a Subsidiary of the Investor or of the Borrower
or in the Acquisition by the Borrower or any of its Subsidiaries
of a Business Unit, such Investment shall be subject to the other
provisions of this Agreement applicable to Acquisitions of Business Units,
rather than the provisions of this Agreement applicable to Investments.
"Issuer" means any Lender, in its capacity as the
issuer of
a Letter of Credit.
"Joinder Agreement" means a joinder agreement in substantially the
form of Exhibit O hereto executed and delivered
by an Additional Subsidiary Guarantor in accordance with the provisions of
Section 7.10.
"Leasehold Mortgage" means that certain leasehold
mortgage
and security agreement, dated as of the Agreement Date, between
Delta Mills, Inc. and the Agent, for the benefit of the Lenders,
and encumbering the South Carolina Bond Property.
"Lender" means each of the Persons listed as a "Lender" on
the signature pages hereof, each of their respective successors
and each Eligible Assignee that shall become a party hereto pursuant to
Section 12.10.
"Letter of Credit" means (i) each letter of credit,
whether
a documentary letter of credit or a standby letter of credit issued by an
Issuer pursuant to an Application and with the prior
written consent of the Agent, which consent shall not be unreasonably
withheld, in each case for the account of the Borrower and which names the
Borrower, or at the request of the
Borrower, a Subsidiary Guarantor, as the account party, and (ii)
each Existing Letter of Credit.
"Letter of Credit Facility" means, at any time, Letters of
Credit in an aggregate Stated Amount not to exceed $25,000,000.
"Letter of Credit Obligations" means, as of any date,
the
sum of (i) the aggregate Stated Amount of all Letters of Credit
outstanding on such date, plus (ii) the aggregate amount of all
unreimbursed drawings under Letters of Credit on such date (including as
unreimbursed, any drawings reimbursed pursuant to
Section 3.3(b) or (c) and subject to the provisions of Section
3.3(c)(iii)(B)). For purposes of clause (i) of this definition,
each documentary Letter of Credit shall be deemed to be outstanding from
the date of issuance thereof until and including
the earlier of (A) the date which is 30 days after the stated
expiration date of such Letter of Credit and (B) the date on which such
Letter of Credit is fully drawn or returned to the
applicable Issuer for cancellation by the beneficiary thereof.
"Leverage Ratio" means, as of any date of determination, the
ratio of Consolidated Indebtedness (including Consolidated Indebtedness for
Money Borrowed which has been offset against
amounts owing under accounts receivable, but excluding the
aggregate Stated Amount of Letters of Credit outstanding on such
date) of the Borrower and its Consolidated Subsidiaries to Consolidated
Tangible Net Worth of the Borrower and its Consolidated Subsidiaries, in
each case as of such date.
"Lien" as applied to the property of any Person means:
(a)any mortgage, deed to secure debt, deed of trust,
lien, pledge, charge, lease constituting a Capitalized Lease
Obligation, conditional sale or other title retention agreement, or
other security interest, security title
or
encumbrance of any kind in respect of any property of
such
Person, or upon the income or profits therefrom,
(b)any arrangement, express or implied, under which
any property of such Person is transferred, sequestered or
otherwise identified for the purpose of subjecting the same
to the payment of Indebtedness or performance of any
other
obligation in priority to the payment of the general,
unsecured creditors of such Person,
(c)any Indebtedness which is unpaid more than 30 days
after the same shall have become due and payable and
which
if unpaid might by law (including but not limited to bankruptcy and
insolvency laws), or otherwise, be given
any
priority whatsoever over general unsecured creditors of such
Person, and
(d)the filing of, or any agreement to give, any
financing statement under the Uniform Commercial Code
of any
State or its equivalent in any jurisdiction, other than any
such financing statement filed by a lessor of personal property under
an Operating Lease and that states on
its
face that it is filed in respect of leased property.
"Loan" means any Committed Loan, Competitive Loan or
Swingline Loan.
"Loan Documents" means collectively this Agreement, the Notes, the
Subsidiary Guaranties, the Applications, the Collateral Documents and each
of the other documents, instruments
and agreements referred to herein or contemplated hereby.
"Majority Lenders" means, at any time, Lenders which
are
then in compliance with their material obligations hereunder (as
determined by the Agent) and holding in the aggregate more
than
50% of (i) the aggregate Commitments or (ii) if the Commitments
have been terminated, the aggregate outstanding principal amount
of the Loans and Letter of Credit Obligations.
"Materially Adverse Effect" means, with respect to any Person, a
materially adverse effect upon such Person's business,
assets, liabilities, financial condition, results of operations
or business prospects.
"Money Borrowed" means, as applied to Indebtedness,
(a)Indebtedness for money borrowed, including,
without limitation, in the case of the Borrower
(without
duplication) the Loans and unreimbursed drawings under Letters of
Credit and in the case of the Subsidiary Guarantors the Guaranteed
Obligations with respect
thereto,
(b)Indebtedness, whether or not in any such case the
same was for money borrowed (but excluding accounts
payable
incurred in the ordinary course of business), (i)represented
by notes payable, and drafts
accepted, that represent extensions of credit,
(ii) constituting obligations evidenced by bonds,
debentures, notes or similar instruments, or
(iii) upon which interest charges are customarily
paid or that was issued or assumed as full or partial
payment for property,
(c)Purchase Money Indebtedness,
(d)Indebtedness that constitutes a Capitalized Lease
Obligation,
(e)Indebtedness that is such by virtue of clause (c)
of the definition thereof, but only to the extent that the
obligations Guaranteed are obligations that would
constitute
Indebtedness for Money Borrowed, and
(f)Indebtedness for recourse obligations with respect
to accounts receivable sold or otherwise disposed of by such
Person.
"Multiemployer Plan" has the meaning set forth in
Section
4001(a)(3) of ERISA, as amended or revised from time to time.
"Net Amount" means, with respect to any Investments (a) made
by any Person, the gross amount of all such Investments minus the
aggregate amount of all cash received and the fair value, at the
time of receipt by such Person, of all property received as payments of
principal or premiums, returns of capital, liquidating dividends or
distributions, proceeds of sale or other
dispositions with respect to such investments, (b) committed to
be made by any Person, the gross amount such Person is committed
to pay in connection with the consummation thereof and (c) as to
which any Person holds an option, the gross amount paid for such
option.
"Net Disposition Proceeds" means the gross "cash
proceeds"
received by the Borrower or any of its Subsidiaries from the sale
or disposition of any of its respective assets (excluding (i)
sales of inventory in the ordinary course of business, (ii) sales
of accounts pursuant to a Factoring Agreement and (iii) sales or
dispositions of assets (not constituting a substantial part of
the assets of any Person) if, in any case covered by this clause
(iii), neither the book value of such assets nor the cash proceeds received
on the sale or other disposition of such assets
exceeds $100,000) less (a) necessary or incidental reasonable
selling expenses incurred in connection therewith, (b) taxes (if
any) estimated in good faith to be payable as a result of such
sale or disposition, and (c) any amounts thereof paid by the Borrower or
its selling Subsidiary, or set aside for such payment, as certified by the
Borrower to the Agent by an instrument in form and substance acceptable to
the Agent, to purchase property of a similar type, in replacement of the
assets
so sold or disposed of and to be used in the business of the Borrower or
such Subsidiary. For purposes of this definition,
"cash proceeds" means (without duplication) the sum of (i) cash,
(ii) an amount equal to the value of readily marketable securities and
(iii) the principal amount of any promissory note,
received at any time by the Borrower or the selling Subsidiary in
consideration of such sale. Net Disposition Proceeds shall be
deemed to be received for purposes of this Agreement (i) in the
case of cash, when paid to the recipient, (ii) in the case of
readily marketable securities, when delivered to the recipient in
form for transfer, (iii) when evidenced by a promissory note (x)
secured by a valid, perfected first priority security interest in
or first mortgage lien on the assets so sold or disposed of, when
payments of principal are received thereunder and (y) not secured
as provided in clause (x), when payments of principal would have
been received thereunder if such principal were required to be
repaid in substantially equal consecutive annual installments
over a period of three years commencing on the date of delivery
of such note or, if earlier, when payments of principal are actually
received thereunder, and (iv) in the case of any amounts
set aside pursuant to clause (c) above and not paid to purchase
property within six months of the date on which such amounts would
otherwise be deemed to be received hereunder, the last day
of such six-month period.
"Net Income" means, as applied to any Person, the net
income
(or net loss) of such Person for the period in question after
giving effect to deduction of or provision for all operating expenses, all
taxes and reserves (including reserves for deferred
taxes) and all other proper deductions, all determined in accordance with
GAAP, provided that there shall be excluded:
(a)the net income (or net loss) of any Person accrued, prior
to the date it becomes a Subsidiary of,
or is
merged into or consolidated with, the Person whose Net Income is being
determined or a Subsidiary of such
Person,
(b)the net income (or net loss) of any Person (other
than a Subsidiary) in which the Person whose Net Income is
being determined or any Subsidiary of such Person has
an
ownership interest, except, in the case of net income, to
the extent that any such income has actually been
received
by such Person or such Subsidiary in the form of cash
dividends or similar distributions,
(c)any restoration of any contingency reserve, except
to the extent that provision for such reserve was made out
of income during such or any prior period,
(d)any net gains or losses on the sale or other
disposition, not in the ordinary course of business, of Investments,
Business Units and other capital assets, provided that there shall
also be excluded any related charges for taxes thereon,
(e)any net gain arising from the
collection of the
proceeds of any insurance policy (provided that amounts received under
policies of business interruption
insurance
shall not be excluded) except to the extent that the
loss
giving rise to such proceeds generated a loss or
expense
included in Net Income in such or any prior period,
(f)any write-up of any asset, and
(g)any other extraordinary item.
"Net Worth" means, with respect to any Person, such
Person's
total shareholders' equity (including capital stock, additional
paid-in capital and retained earnings, after deducting treasury
stock) and minority interests which would appear as such on a
balance sheet of such Person prepared in accordance with GAAP.
"Note" means any Committed Loan Note, Competitive Loan Note
or Swingline Loan Note.
"Notice of Borrowing" has the meaning specified in
Section
2.3(a).
"Notice of Conversion/Continuation" has the meaning
specified in Section 2.3(e).
"Obligations" means, in each case whether now in
existence
or hereafter arising,
(a)the principal of, and interest and premium, if
any, on, the Loans,
(b)any fees payable by the Borrower with respect to
the Facility,
(c)all obligations under each Application, including,
without limitation, reimbursement of drawings and
payment of
fees and charges as provided therein, and all obligations of
the Borrower under each Letter of Credit, including,
without
limitation, all obligations to provide Cash Collateral under
Section 3.7, and
(d)all indebtedness, liabilities,
obligations,
covenants and duties of the Borrower to the Agent or
the
Lenders, of every kind, nature and description, direct or
indirect, absolute or contingent, due or not due, contractual or
tortious, liquidated or unliquidated, in respect of indemnities, and
whether or not evidenced by
any
note, and whether or not for the payment of money,
under or
in respect of this Agreement, any Note or any other
Loan
Document.
"Operating Lease" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal
property.
"PBGC" means the Pension Benefit Guaranty Corporation and
any successor agency.
"Permitted Indebtedness for Money Borrowed" means
(a)Indebtedness for Money Borrowed of the Borrower
represented by the Loans and the Notes or arising under the
Letters of Credit or the related Applications,
(b)the Guaranteed Obligations, (c) Intercompany
Indebtedness,
(d)Existing Indebtedness,
(e)Indebtedness for recourse obligations
incurred in
connection with any Permitted Receivables Financing
(solely
to the extent of actual defaulted or delinquent
receivables),
(f)Indebtedness for Money Borrowed owed by International
Apparel Marketing Corporation to the
Borrower
or any Subsidiary Guarantor the aggregate principal
amount
of which outstanding at any time does not exceed
$1,000,000,
(g)other Indebtedness for Money Borrowed of the
Borrower or any of its Subsidiaries the aggregate
principal
amount of which outstanding at any time does not exceed $10,000,000,
and
(h)Guaranties of any Indebtedness for Money Borrowed
described in any of clauses (a) through (g) above.
provided, however, that the aggregate outstanding principal
amount of all Permitted Indebtedness for Money Borrowed shall not
exceed at any time an amount equal to $263,500,000 minus the aggregate
amount of all reductions in the Commitments from time
to time pursuant to Section 4.3.
"Permitted Investments" means:
(a)Investments of the Borrower or any of its Subsidiaries
in:
(i)negotiable certificates of deposit, time
deposits and banker's acceptances issued by a Lender or
any Affiliate of a Lender or by any United States bank
or trust company having capital, surplus and undivided
profits in excess of $100,000,000,
(ii) short-term corporate obligations rated at
least Prime-1 by Moody's Investors Service or A-1 by
Standard & Poor's Ratings Services,
(iii) any direct obligation of the United States of
America or any agency or instrumentality thereof which
has a remaining maturity at the time of purchase of not
more than two years and repurchase agreements relating
to the same,
(iv) sales on credit in the ordinary course of
business, or
(v) notes, accepted in the ordinary course of
business, evidencing overdue accounts payable arising
in the ordinary course of business;
(b)Investments of the Borrower or any of its Subsidiaries,
consisting of the capital stock of or
capital
contributions to any Wholly Owned Subsidiary that is a Subsidiary
Guarantor;
(c)Guaranties permitted pursuant to Section 9.3 and
Investments constituting Intercompany Indebtedness; and
(d)any other Investment of the Borrower or any
Subsidiary consented to by the Majority Lenders.
"Permitted Liens" means:
(a)Liens securing taxes, assessments and other
governmental charges or levies (excluding any Lien
imposed
pursuant to any of the provisions of ERISA) or the
claims of
materialmen, mechanics, carriers, warehousemen or
landlords
for labor, materials, supplies or rentals incurred in
the
ordinary course of business, but in all cases only if payment shall
not at the time be required to be made in accordance with Section 7.6,
(b)Liens consisting of deposits or pledges made in
the ordinary course of business in connection with, or to
secure payment of, obligations under workers' compensation,
unemployment insurance or similar legislation or
obligations
to utilities,
(c)Liens constituting encumbrances in the nature of
zoning restrictions, easements, and rights or restrictions
of record on the use of real property, which do not materially detract
from the value of such property as
used
by the Borrower or any of its Subsidiaries, as
applicable,
or impair the use thereof in the business of the
Borrower or
any Subsidiary,
(d)Liens existing on property of any Person at the
time such Person becomes a Subsidiary of the Borrower, but
only if the obligation secured by any such Lien is not in
default and such Lien is and remains confined to the property subject
thereto at the time such Person
becomes a
Subsidiary,
(e)Liens arising in connection with a
Permitted
Receivables Financing, but (i) only to the extent of
the
applicable accounts receivable subject to such
Permitted
Receivables Financing and related property and, (ii) in the
case of a Factoring Agreement, only if the proceeds
payable
thereunder have been assigned to the Agent for the
benefit
of the Lenders in a manner reasonably acceptable to the Agent,
(f) Existing Liens,
(g) Permitted Purchase Money Liens,
(h)Liens of an Issuer on goods or documents securing
reimbursement obligations with respect to a Letter of
Credit
issued to insure the payment for such goods or
documents,
(i)Liens created solely by the filing or recording of
any judgment in public records or by an attempt to
execute
on any judgment, provided that in either such case no
Event
of Default has occurred and is continuing under Section 10.1(j) with
respect to such judgment, and
(j)Liens in favor of the Agent for the benefit of the
Lenders or the Lenders and the Issuers.
"Permitted Purchase Money Indebtedness" means Purchase Money
Indebtedness of the Borrower or any of its Subsidiaries incurred
after the Agreement Date, including any Capitalized Lease Obligation
constituting Purchase Money Indebtedness,
(a)which is secured by a Purchase Money Lien,
(b)the aggregate principal amount of which does not
exceed the lesser of
(i)the cost (including the principal amount of
such Indebtedness, whether or not assumed) of the property
subject to such Lien, and
(ii) the fair value of such property at the time
of its acquisition, and
(c)which, when the principal amount thereof is
aggregated with the principal amount of all other Indebtedness for
Money Borrowed of the Borrower and all
of
its Subsidiaries at the time outstanding, does not constitute a breach
of the provisions of Section 9.2.
"Permitted Purchase Money Lien" means a Purchase Money Lien
securing Permitted Purchase Money Indebtedness.
"Permitted Receivables Financing" means (a) any one or more
receivables financings pursuant to any Factoring Agreement and
(b) any receivables financing entered into by Nautilus International, Inc.
(or a Wholly Owned Subsidiary thereof), provided that, in the case of this
clause (b), the aggregate value of receivables transferred pursuant to such
receivables
financing shall not exceed $12,000,000, and provided further that
Nautilus International, Inc. (or such Wholly Owned Subsidiary)
shall provide to the Agent a certificate of its chief
financial
officer that describes such financing, the receivables to be sold
pursuant to such financing and the contingent liabilities of Nautilus
International, Inc. (or such Wholly Owned Subsidiary)
pertaining to such receivables under such financing and the Agent
shall be reasonably satisfied with the structure and documentation for such
transaction and the terms thereof.
"Person" means an individual, corporation, partnership, association,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Plan" means an employee benefit plan maintained for employees of the
Borrower or any Subsidiary that is covered by
Title IV of ERISA, including such plans as may be established
after the Agreement Date.
"Purchase Money Indebtedness" means the following,
other
than Indebtedness for trade payables incurred in the ordinary
course of business,
(a)Indebtedness created to secure the payment of all
or any part of the purchase price of any property,
(b)any Indebtedness incurred at the time of or within
10 days prior to or after the acquisition of any
property
for the purpose of financing all or any part of the
purchase
price thereof, and
(c)any renewals, extensions or refinancings thereof,
but not any increases in the principal amounts thereof outstanding at
the time.
"Purchase Money Lien" means a Lien securing Purchase
Money
Indebtedness but only if such Lien shall at all times be confined
solely to the property (and proceeds thereof, to the extent provided in the
security agreement creating such Lien) the purchase price of which was
financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.
"Rate Measurement Date" means the last day of each
Fiscal
Quarter occurring after the Effective Date.
"Reference Banks" means the Bank, Bank of America
National
Trust and Savings Association and The Bank of New York.
"Register" has the meaning specified in Section
12.10(d).
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to
which the provision for 30 days' notice to the PBGC is waived
under applicable regulations.
"Required Financial Information" means, with respect to the
applicable Rate Measurement Date, (i) the financial statements of
the Borrower required to be delivered pursuant to Section 8.1 for
the Fiscal Year or Fiscal Quarter ending as of such Rate Measurement Date,
and (ii) the certificate of the President or
the Financial Officer of the Borrower required by Section 8.3 to
be delivered with the financial statements described in clause
(i) above.
"Restricted Dividend Payment" means any dividend, distribution or
payment on or with respect to any shares of the
capital stock of the Borrower or any Subsidiary (other than dividends
payable solely in shares of its capital stock and other
than dividends, distributions and payments made to the Borrower
or to a Wholly Owned Subsidiary of the Borrower), including any
such payment on account of the purchase, redemption or other acquisition or
retirement of any shares of capital stock of the
Borrower or any Subsidiary.
"Revolving Credit Facility" means, on any date, an
amount
equal to the amount of the Facility on such date, less the Letter
of Credit Obligations on such date (other than any portion thereof
attributable to unreimbursed drawings which are to be
reimbursed by a Committed Loan to be made on such date).
"Significant Subsidiary" means each Subsidiary of the Borrower other
than any Subsidiary of the Borrower having total
assets of less than $1,000,000 and not designated a Significant
Subsidiary by the Borrower (which excluded Subsidiaries on the
Agreement Date include only International Apparel Marketing Corporation,
Tienda Cabeza de Pato, Sociedad Anonima, Jarden de
Ninos Patito Feliz, Sociedad Anonima and Nautilus, BV), provided
that the aggregate total assets of all Subsidiaries excluded from
the definition "Significant Subsidiary" shall not exceed $10,000,000.
"South Carolina Bond Property" means all property, both real
and personal, subject to the South Carolina Lease.
"South Carolina Lease" means that certain lease
agreement,
dated as of May 26, 1994, among Florence County, South Carolina,
Greenville County, South Carolina and Marlboro County, South Carolina and
Delta Mills, Inc., as Lessee.
"Stated Amount" means at any time, as to any Letter of Credit, the
maximum amount available to be drawn at such time
under such Letter of Credit, assuming all conditions to drawings
thereunder have been satisfied.
"Subsidiary"
(a)when used to determine the
relationship of a
Person to another Person, means a Person of which an aggregate of 50%
or more of the stock of any class or classes or 50% or more of other
ownership interests is
owned
of record or beneficially by such other Person, or by
one or
more Subsidiaries of such other Person, or by such
other
Person and one or more Subsidiaries of such Person,
(i)if the holders of such stock, or other
ownership interests, (A) are ordinarily, in the absence
of contingencies, entitled, as such holders, to vote
for the election of a majority of the directors (or
other individuals performing similar functions) of such
Person, even though the right so to vote has been suspended by
the happening of such a contingency,
or
(B) are entitled, as such holders, to vote for the election of a
majority of the directors (or
individuals
performing similar functions) of such Person, whether
or not the right so to vote exists by reason of the
happening of a contingency, or
(ii)in the case of such other ownership
interests, if such ownership interests constitute a
majority voting interest, and
(b)when used with respect to a Plan, ERISA, the PBGC
or a provision of the Internal Revenue Code pertaining to
employee benefit plans, also means any corporation,
trade or
business (whether or not incorporated) which is under
common
control with the Borrower or any Subsidiary and is
treated
as a single employer with the Borrower or any Subsidiary
under Section 414(b) or (c) of the Internal Revenue
Code and
the regulations thereunder.
(c)Unless the context otherwise requires, each
reference herein to a Subsidiary shall mean and be a
reference to a Subsidiary of the Borrower.
"Subsidiary Guarantor" means each Subsidiary of the
Borrower
which has executed and delivered the Subsidiary Guaranty and each
Additional Subsidiary Guarantor which may hereafter execute a
Joinder Agreement.
"Subsidiary Guaranty" means the Amended and Restated Subsidiary
Guaranty, in substantially the form of Exhibit E hereto, executed by the
Subsidiary Guarantors (including pursuant
to a Joinder Agreement) in favor of the Agent for its benefit and
the benefit of the Lenders.
"Subsidiaries Security Agreement" means the Subsidiary Security
Agreement to be executed and delivered by each of the
Subsidiary Guarantors as of the date hereof, in substantially the
form of Exhibit F hereto, and all amendments, modifications and
supplements thereto.
"Swingline Facility" means, at any time, Swingline Loans in
an aggregate outstanding principal amount not to exceed $15,000,000.
"Swingline Lender" means the Bank, or, if the Bank
shall no
longer be the Agent, such Lender which shall become the Agent
hereunder in accordance with the provisions of Section 11.7.
"Swingline Loan" means a borrowing by the Borrower made by
the Swingline Lender pursuant to Section 2.9.
"Swingline Loan Note" means the promissory note made by the
Borrower payable to the order of the Swingline Lender evidencing
the obligation of the Borrower to pay the aggregate unpaid principal amount
of all Swingline Loans made to it or for its
benefit (and any promissory note or notes that may be issued from
time to time in substitution, renewal, extension, replacement or
exchange therefor) substantially in the form of Exhibit G hereto,
with all banks properly completed, either as originally
executed
or as the same may from time to time be supplemented, modified,
amended, renewed, extended or refinanced.
"Tangible Net Worth" means, as applied to any Person,
the
Net Worth of such Person at the time in question, after deducting
therefrom the amount of all intangible items reflected therein,
including all unamortized debt discount and expense, unamortized
research and development expense, unamortized deferred charges,
goodwill (net of any excess of assigned value of net assets acquired over
cost), patents, trademarks, service marks, trade
names, copyrights, unamortized excess cost of investment in Subsidiaries
over equity at dates of acquisition, and all similar
items which should properly be treated as intangibles in accordance with
GAAP.
"Termination Date" means September 30, 1997 or such
later
date as may be established pursuant to Section 2.10 or such earlier date on
which the Commitments shall have been reduced to
zero in accordance with the terms hereof.
"Termination Event" means
(a)a Reportable Event, or
(b)the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a
termination
under Section 4041 of ERISA, or
(c)the institution of proceedings to terminate a Plan
by the PBGC under Section 4042 of ERISA, or the
appointment
of a trustee to administer any Plan.
"Unfunded Vested Accrued Benefits" means with respect to
any Plan at any time, the amount (if any) by which
(a)the present value of all vested
nonforfeitable
benefits under such Plan exceeds
(b)the fair market value of all Plan assets allocable
to such benefits,
all determined as of the then most recent valuation date for such
Plan.
"Variable CD Rate" means, for any day a rate per annum (rounded
upwards to the nearest whole multiple of 1/16 of 1% per
annum if such rate is not such a multiple) equal to the rate obtained (a)
by dividing (i) the rate of interest determined by
the Swingline Lender to be the rate for 30-day domestic certificates of
deposit published for the immediately preceding
business day by the Board of Governors of the Federal Reserve
System (or any successor) by (ii) a percentage equal to 100% minus the
applicable CD Reserve Percentage, and adding thereto
(b) the applicable CD Assessment Rate. As used herein, (A) "CD
Reserve Percentage" means the percentage applicable to the rate
of interest described in clause (a) above under regulations issued from
time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding $1,000,000,000
with respect to liabilities consisting of or including (among
other liabilities) U.S. dollar non-personal time deposits in the
United States with a maturity of 30 days and (B) "CD Assessment
Rate" means the annual assessment rate estimated by the Swingline
Lender to be applicable for determining the then current annual
assessment payable by the Swingline Lender to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S. dollar
deposits of the Swingline Lender in the United States.
"Voting Stock" means, with respect to any Person,
capital
stock issued by a corporation, or equivalent interests in any
other Person, the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even
though the right so to vote has been suspended by the happening
of such a contingency.
"Wholly Owned Subsidiary" when used to determine the relationship of a
Subsidiary to a Person or Persons means a Subsidiary all of the issued and
outstanding shares (other than
directors' qualifying shares) of the capital stock of which shall
at the time be owned by such Person or Persons or one or more of
such Person's Wholly Owned Subsidiaries or by such Person or Persons and
one or more of its respective Wholly Owned Subsidiaries.
Section 1.2. General. (a) All terms of an accounting
nature
not specifically defined herein shall have the meanings ascribed
thereto by GAAP.
(b) The terms accounts, chattel paper, contract rights,
documents, equipment, instruments, general intangibles and inventory, as
and when used in this Agreement, shall have the
meanings given those terms in the Uniform Commercial Code as in
effect from time to time in the State of North Carolina.
(c) Unless otherwise specified, a reference in this
Agreement to a particular section or subsection or exhibit or
schedule is a reference to that section or subsection of or exhibit or
schedule to this Agreement.
(d) Wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the
singular and plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter.
(e) Whenever a period is described herein as extending from
a day or date to or until a later day or date, "from" means "from
and including" such first day or date and "to" and "until" each
means "to but excluding" such later day or date.
ARTICLE 2
Revolving Credit Facility
Section 2.1. Committed Loans. Upon the terms and
subject
to the conditions of, and in reliance upon the representations
and warranties made under, this Agreement, each Lender severally
and not jointly agrees to make Committed Advances to the Borrower
from time to time, on any Business Day from and after the Effective Date
until the Termination Date, up to an aggregate
principal amount at any time outstanding equal to such Lender's
Commitment Percentage of the Revolving Credit Facility at such
time; provided, however, the sum of the principal amounts of Committed
Loans outstanding plus Competitive Loans outstanding
plus Swingline Loans outstanding shall not exceed at any time the
lesser of (a) the Revolving Credit Facility and (b) the Borrowing
Base. Each Committed Loan comprised of (i) Base Rate Advances
shall be in an aggregate amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and (ii) Eurodollar Advances shall
be in an aggregate amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, and shall consist of Committed Advances of
the same Type made on the same
day by the Lenders ratably according to their respective Commitments.
Within the limits of each Lender's Commitment, the
principal amount of any Committed Advance which is prepaid pursuant to
Section 4.4(b) may be reborrowed in accordance with
the terms of this Section 2.1. Each Lender is hereby authorized
to, and prior to any transfer of its Committed Loan Note each
Lender shall, endorse the date and amount of each Committed Advance made by
such Lender to the Borrower and each repayment of
principal of each Committed Advance on the schedule annexed to
and constituting a part of such Committed Loan Note, which endorsement
shall constitute prima facie evidence of the accuracy
of the information so endorsed; provided, that a Lender's failure
so to endorse any Committed Loan Note held by it shall not affect
the Borrower's Obligations hereunder.
Section 2.2. Making Committed Loans.
(a)Requests. Committed Loans shall be requested by
delivery of a Notice of Borrowing, given in the manner specified in
Section 2.3(a), by the Borrower to the
Agent
and deemed requested as provided in Section 2.3(b),
2.3(c)
and 2.3(d).
(b)Disbursement of Committed Loans. Promptly following
receipt of a Notice of Borrowing, the Agent
shall
notify each Lender by telephone (confirmed by telecopier or
telex), telecopier or telex of the date and amount of
the
Committed Loan, the Type of Committed Advances
comprising
such Committed Loan, and, in the case of Eurodollar Advances, the
applicable interest rate under Section
2.6(b)
and the Interest Period for such Committed Advances.
Not
later than 11:00 a.m. (Charlotte, North Carolina time) on
the date specified for any Committed Loan, each Lender shall
make available for the account of its Applicable
Lending
Office its ratable portion of such Committed Loan in immediately
available funds to the Agent at the Agent's Office. After the Agent's
receipt of such funds and
upon
fulfillment of the applicable conditions set forth in Article 5, the
Agent will, and the Borrower hereby
irrevocably authorizes the Agent to, disburse the
proceeds
of the Committed Advances made in respect of each such Committed Loan
requested by it pursuant to this Section
2.2,
in lawful money of the United States of America in immediately
available funds, by making such funds
available
to the Borrower at the Agent's Office or by wire
transfer to
such account of the Borrower as the Borrower may
instruct
the Agent from time to time.
(c)Assumption by Agent. Unless the Agent shall have
received notice from a Lender prior to the date of any Committed Loan
that such Lender will not make available
to
the Agent such Lender's ratable portion of such
Committed
Loan, the Agent may assume that such Lender has made
such
portion available to the Agent on the date of such
Committed
Loan in accordance with Section 2.2(b) and the Agent
may, in
reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and
to the
extent such Lender shall not have so made such ratable portion
available to the Agent, such Lender and the
Borrower
severally agree to repay to the Agent forthwith on
demand
such corresponding amount together, with interest
thereon,
for each day from the date such amount is made
available to
the Borrower until the date such amount is repaid to
the
Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to the Committed Advances
comprising
such Committed Loan and (ii) in the case of such
Lender, at
the Federal Funds Effective Rate. If such Lender shall repay to the
Agent such corresponding amount, such
amount so
repaid shall constitute such Lender's Committed Advance as
part of such Committed Loan for purposes of this
Agreement
and the Borrower's obligation under this Section 2.2(c) to
repay such Committed Advance shall terminate. The
failure
of any Lender to make the Committed Advance to be made by it
as part of any Committed Loan shall not relieve any
other
Lender of its obligation, if any, hereunder to make its Committed
Advance on the date of such Committed Loan,
or
relieve any Lender of its obligation, if any, hereunder
to
make its Committed Advance as part of any subsequent Committed Loan,
but no Lender shall be responsible for
the
failure of any other Lender to make the Committed
Advance to
be made by such other Lender as part of any Committed
Loan.
Section 2.3. Notice and Manner of Borrowing or
Conversion
or Continuation of Committed Loan.
(a)Whenever the Borrower desires to obtain a Committed Loan
hereunder pursuant to Section 2.3(a),
the
Borrower shall notify the Agent (which notice shall be irrevocable) by
telex, telegraph, telecopy or telephone
not
later than 10:00 a.m. (Charlotte, North Carolina time) on
the date one Business Day before the day on which the requested
Committed Loan is to be made as a Committed
Loan
comprised of Base Rate Advances, and not later than
10:00
a.m. (Charlotte, North Carolina time) on the date three Business Days
before the day on which the requested Committed Loan is to be made as
a Committed Loan
comprised
of Eurodollar Advances. Each such notice (a "Notice of Borrowing")
shall specify (i) the effective date (which shall be a Business Day)
and amount of each Committed
Loan
requested, (ii) the Type of Committed Advances
comprising
such Committed Loan, and (iii) if such Committed Loan
is to
be comprised of Eurodollar Advances, the duration of
the
applicable Interest Period, and shall be immediately followed by a
written confirmation thereof by the
Borrower
in substantially the form of Exhibit I hereto, provided that
if such written confirmation differs in any material
respect
from the action taken by the Agent, the records of the Agent
shall control absent manifest error.
(b)The receipt by the Agent of notification from an
Issuer pursuant to Section 3.3(c)(i) to the effect that a
drawing has been made under a Letter of Credit and that the
Borrower and, if applicable, the Subsidiary Guarantor
named
therein as the account party have failed to reimburse
the
Issuer in accordance with the terms of the related Application, either
by means of a Swingline Loan as contemplated by Section 3.3(b) or
otherwise, shall be
deemed
to be a Notice of Borrowing in respect of a Committed
Loan
consisting of Base Rate Advances, in the amount of the unreimbursed
drawing, to be made as of the date such
drawing
was paid, without regard to the times of notice and disbursement set
forth in Section 2.3(a), but subject
to the
provisions of Section 3.3(c)(ii).
(c)The failure of the Borrower to notify the Agent of
its intention to repay any Competitive Loan on the last day
of the Interest Period applicable thereto pursuant to Section 2.8(g)
prior to 12:00 noon (Charlotte, North Carolina time) on the last day
of such Interest Period
shall
be deemed to be a Notice of Borrowing in respect of a Committed Loan
consisting of Base Rate Advances, in the amount of such maturing
Competitive Loan, to be made as
of
the last day of the Interest Period for such Competitive
Loan, without regard to the times of notice and
disbursement
set forth in Section 2.3(a).
(d)A demand from the Swingline Lender for repayment
of Swingline Loans pursuant to Section 2.9(b)(iv) shall be
deemed to be a Notice of Borrowing in respect of a
Committed
Loan consisting of Base Rate Advances, in the amount of such
Swingline Loans, to be made as of the date of demand
for
repayment of such Swingline Loans by the Swingline
Lender,
without regard to the times of notice and disbursement set
forth in Section 2.3(a), but subject to the provisions of
Section 2.9(b)(iv).
(e)Whenever the Borrower desires, subject to the
provisions of Section 4.2, to convert an outstanding Committed Loan
into a Committed Loan comprised of
Committed
Advances of a different Type provided for in this
Agreement
or to continue an outstanding Committed Loan for a subsequent Interest
Period, the Borrower shall notify
the
Agent (which notice shall be irrevocable) by telex, telegraph,
telecopy or telephone not later than 10:00
a.m.
(Charlotte, North Carolina time) on the date one
Business
Day before the day on which a proposed conversion of a Committed Loan
into, or a continuation of a Committed
Loan
as, a Committed Loan comprised of Base Rate Advances is to
be effective and three Business Days before the day on
which
a proposed conversion of a Committed Loan into, or continuation of a
Committed Loan as, a Committed Loan comprised of Eurodollar Advances
is to be effective
(and if
the Committed Loan to be continued is comprised of Eurodollar
Advances, such effective date shall be the
last
day of the Interest Period for such Committed Advances).
Each such notice (a "Notice of Conversion/Continuation")
shall (i) identify the Committed Loan to be converted
or
continued, including the Type of Committed Advances comprising such
Committed Loan, the aggregate
outstanding
principal balance thereof and, in the case of a
Committed
Loan comprised of Eurodollar Advances, the last day of the
Interest Period therefor, (ii) specify the effective
date of
such conversion or continuation, (iii) specify the
principal
amount of such Committed Loan to be converted or
continued
and, if converted, the Type of Committed Advance into
which
conversion of such principal amount or specified
portions
thereof is to be made and (iv) in the case of any
conversion
into or continuation as Eurodollar Advances, the
Interest
Period to be applicable to each Type of Committed
Advance
comprising each such converted or continued Committed
Loan,
and shall be immediately followed by a written
confirmation
thereof by such Borrower substantially in the form of Exhibit J
hereto, provided that if such written
confirmation
differs in any material respect from the action taken
by the
Agent, the records of the Agent shall control absent manifest error.
The Agent shall promptly notify each
of the
Lenders of its receipt of any Notice of Conversion/Continuation
pursuant to this Section
2.3(e).
(f)Subject to the terms and conditions of this
Agreement, the Agent shall cause each Committed Loan to be
made available to the Borrower on the effective date specified
therefor in the manner provided in Section
2.2(b);
provided that if such Committed Loan is to be made on a day
on which the Borrower is to repay all or any part of an outstanding
Committed Loan, the Agent shall apply the proceeds of such new
Committed Loan to make such
repayment
and only an amount equal to the difference (if any)
between
the amount being borrowed and the amount being repaid
shall
be made available by the Agent to the Borrower.
Section 2.4. Duration of Interest Periods; Number of
Committed Loans.
(a)Subject to the provisions of the definition of
"Interest Period", the duration of each Interest Period applicable to
the Committed Advances comprising a
Committed
Loan shall be as specified in the applicable Notice of Borrowing or
Notice of Conversion/Continuation. The Borrower may elect a
subsequent Interest Period to be applicable to any Committed Loan by
giving a Notice of Conversion/Continuation with respect to such
Committed
Loan
in accordance with Section 2.3(e).
(b)If the Agent does not receive a notice of election
pursuant to Section 2.3(e) of duration of a subsequent Interest Period
for a Committed Loan comprised of
Eurodollar
Advances within the applicable time limits specified in said
Section 2.3(e), or if, when such notice must be given, a
Default or Event of Default exists, the Borrower shall be
deemed to have elected to convert such Committed Loan
in
whole into a Committed Loan comprised of Base Rate
Advances
on the last day of the then current Interest Period
therefor.
(c)Notwithstanding the foregoing, the Borrower may
not select an Interest Period (i) that would end, but
for
the provisions of the definition "Interest Period,"
after
the Termination Date, or (ii) which, when added to the number of
Interest Periods then applicable, would
result in
there being, at any one time (and treating all
Committed
Loans comprised of Base Rate Advances as a single
Committed
Loan) more than ten Committed Loans outstanding.
Section 2.5. Repayment. The principal amount of all Committed
Advances shall be repaid by the Borrower in full on the
Termination Date, together with accrued and unpaid interest thereon to such
date.
Section 2.6. Interest Rates and Payments of Interest
with
respect to Committed Loans.
(a) Each Base Rate Advance shall bear interest on the
outstanding principal amount thereof, for the period from the
date such Committed Advance is made until the principal amount
thereof is paid or converted to a Committed Advance of a different Type, at
a rate per annum equal to the Base Rate, which
rate shall change contemporaneously with any change in the Base
Rate. Such interest shall be payable on each Interest Payment
Date in respect of such Base Rate Advance outstanding from and
after the immediately preceding Interest Payment Date to such
Interest Payment Date, and upon any prepayment of the principal
amount of such Base Rate Advance or conversion of the principal
amount (or any portion thereof) into a Committed Advance of a
different Type, on the principal amount so prepaid or converted.
(b) (i) Each Eurodollar Advance shall bear interest on the
outstanding principal amount thereof, for each Interest Period
applicable thereto, at a rate per annum equal to the Eurodollar
Rate plus the Applicable Margin. Such interest shall be payable
on each Interest Payment Date in respect of such Eurodollar Advance.
(ii)Additional interest on the unpaid principal amount
of each Eurodollar Advance of each Lender shall also be payable
from the date of such Eurodollar Advance until such principal
amount is paid in full, so long as such Lender shall be required
under regulations of the Board of Governors of the Federal Reserve System
to maintain reserves with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities, at
an interest rate per annum equal at all times to the remainder
obtained by subtracting (A) the Eurodollar Rate for the Interest
Period for such Eurodollar Advance from (B) the rate obtained by
dividing such Eurodollar Rate by a percentage equal to 100% minus
the Eurodollar Reserve Percentage of such Lender for such Interest Period,
payable on each date on which interest is payable on such Eurodollar
Advance. Such additional interest
shall be determined by such Lender and notified to the Borrower
through the Agent.
Section 2.7. Committed Loan Notes. The Committed
Advances
made by each Lender to the Borrower and the obligation of the
Borrower to repay such Committed Advances shall be evidenced by,
and be repayable in accordance with the terms of, a single Committed Loan
Note, made by the Borrower payable to the order of
such Lender. Subject to the provisions of Section 12.10, each
such Committed Loan Note shall be dated the Agreement Date and be
duly and validly executed and delivered by the Borrower.
Section 2.8. Competitive Loan Subfacility.
(a)Competitive Loans. Provided that Funded Indebtedness
Coverage Ratio is less than 1.50:1.00, the Borrower may, from and
after the Effective Date until
the
Termination Date subject to satisfaction of the
conditions
to borrowing set forth in Section 5.2, request and each Lender may, in
its sole discretion, agree to make Competitive Loans to the Borrower;
provided, however,
the
sum of the principal amounts of Committed Loans
outstanding
plus Competitive Loans outstanding plus Swingline Loans outstanding
shall not at any time exceed the lesser of
(a)
the Revolving Credit Facility and (b) the Borrowing
Base.
Each Competitive Loan shall be not less than $1,000,000 in
the aggregate and in integral multiples of $500,000 in excess thereof.
(b)Competitive Bid Requests. The Borrower may
solicit Competitive Bids by delivery of a Competitive
Bid
Request substantially in the form of Exhibit H to the
Agent
by 12:00 noon (Charlotte, North Carolina time) on a
Business
Day not less than three (3) nor more than ten (10)
Business
Days prior to the date of a requested Competitive Loan. Each
Competitive Bid Request (i) shall specify (A) the effective date of
the requested Competitive Loan (which shall be a Business Day), (B)
the amount of the
requested
Competitive Loan and (C) the applicable Interest
Periods
requested, and (ii) shall be accompanied by payment to the
Agent for its own account of a fee of $1,500. The
Agent
shall notify the Lenders of its receipt of a Competitive Bid
Request and the contents thereof and invite the Lenders to
submit Competitive Bids in response thereto. No more
than
five (5) Competitive Bid Requests (e.g., the Borrower
may
request Competitive Bids for no more than five (5)
different
Interest Periods at a time) shall be submitted at any
one
time.
(c)Competitive Bid Procedure. Each Lender may, in
its sole discretion, make one or more Competitive Bids to
the Borrower in response to a Competitive Bid Request. Each
Competitive Bid must be received by the Agent not later than
10:00 a.m. (Charlotte, North Carolina time) on the
proposed
date of a Competitive Loan; provided, however, that
should
the Agent, in its capacity as a Lender, desire to
submit a
Competitive Bid it shall notify the Borrower of its Competitive Bid
and the terms thereof not later than
9:30
a.m. (Charlotte, North Carolina time) on the proposed
date
of a Competitive Loan. A Lender may offer to make all or
part of the requested Competitive Loan and may submit multiple
Competitive Bids in response to a Competitive
Bid
Request. Each Competitive Bid shall specify (i) the particular
Competitive Bid Request as to which such Competitive Bid is submitted,
(ii) the minimum (which
shall
be not less than $1,000,000 and in integral multiples
of
$500,000 in excess thereof) and maximum principal
amounts of
the requested Competitive Loan or Loans which such
Lender is
willing to make, and (iii) the applicable interest rate or
rates and Interest Period or Periods therefor. A Competitive Bid
submitted by a Lender in accordance
with the
provisions hereof shall be irrevocable. The Agent
shall
promptly notify the Borrower of all Competitive Bids
made
and the terms thereof. The Agent shall send a copy of each
of the Competitive Bids to the Borrower for its records as
soon as practicable.
(d)Acceptance of Competitive Bids. The Borrower may,
in its sole and absolute discretion, subject only to
the
provisions of this subsection (d), accept or refuse any Competitive
Bid offered to it. To accept a Competitive
Bid,
the Borrower shall give written notification of its acceptance of any
or all such Competitive Bids to the
Agent
by 11:00 a.m. (Charlotte, North Carolina time) on the
proposed date of a Competitive Loan; provided, however, (i)
the failure by the Borrower to give timely notice of
its
acceptance of a Competitive Bid shall be deemed to be a refusal
thereof, (ii) the Borrower may accept
Competitive
Bids for a particular Interest Period only in ascending order of
rates, (iii) the aggregate amount of
Competitive
Bids accepted by the Borrower shall not exceed the
principal
amount specified in the Competitive Bid Request, (iv)
if the
Borrower shall accept a Competitive Bid or Competitive Bids
made at a particular Competitive Bid Rate, but the
amount of
such Competitive Bid or Competitive Bids shall cause
the
total amount of Competitive Bids to be accepted by the Borrower to be
in excess of the amount specified in the Competitive Bid Request, then
the Borrower shall accept
a
portion of such Competitive Bid or Competitive Bids in an
amount equal to the amount specified in the Competitive Bid
Request less the amount of all other Competitive Bids accepted with
respect to such Competitive Bid Request,
which
acceptance in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in
accordance
with the amount of each such Competitive Bid at such Competitive Bid
Rate, and (v) no Competitive Bid shall
be
accepted for a Competitive Loan unless such Competitive Loan
is in a minimum principal amount of $1,000,000 and
integral
multiples of $500,000 in excess thereof, except that
where a
portion of a Competitive Bid is accepted in accordance with
the provisions of clause (iv) of this Section 2.8(d),
then
in a minimum principal amount of $100,000 and integral multiples
thereof (but not in any event less than the minimum amount specified
in the Competitive Bid), and
in
calculating the pro rata allocation of acceptances of portions of
multiple Competitive Bids at a particular Competitive Bid Rate
pursuant to clause (iv) of this
Section
2.8(d), the amounts shall be rounded to integral
multiples
of $100,000 in a manner which shall be in the discretion of
the Borrower. A notice of acceptance of a Competitive Bid
given by the Borrower in accordance with the provisions hereof shall
be irrevocable. The Agent shall, not
later
than 12:00 noon (Charlotte, North Carolina time) on the
proposed date of a Competitive Loan, notify each
bidding
Lender whether or not its Competitive Bid has been
accepted
(and if so, in what amount and at what Competitive Bid Rate), and each
successful bidder will thereupon become bound, subject to the other
applicable conditions
hereof, to
make the Competitive Loan in respect of which its Competitive Bid has
been accepted. In addition, the
Agent
shall, upon the request of any Lender, provide such
Lender
with information regarding the range of Competitive
Bids
submitted by the Lenders in connection with any
Competitive
Bid Request.
(e)Funding of Competitive Loans. Each Lender which
is to make a Competitive Loan shall make its Competitive
Loan available to the Agent by 2:00 P.M. (Charlotte,
North
Carolina time) on the date specified in the Competitive Bid
Request by deposit in dollars of immediately available funds
at the office of the Agent in Charlotte, North
Carolina, or
at such other address as the Agent may designate in
writing.
The Agent shall, by 3:00 p.m. (Charlotte, North
Carolina
time) on the same day, upon fulfillment of the
applicable
conditions set forth in Article 5, credit the amount so received to
the general deposit account of the Borrower
with
the Agent.
(f)Competitive Loan Notes. The Competitive Loans
made by each Lender to the Borrower and the obligation of
the Borrower to repay such Competitive Loans shall be evidenced by,
and be repayable in accordance with the
terms
of, a single Competitive Loan Note, made by the
Borrower
payable to the order of such Lender. Subject to the provisions of
Section 12.10, each such Competitive Loan
Note
shall be dated the Agreement Date and be duly and
validly
executed and delivered by the Borrower.
(g)Repayment of Competitive Loans. The principal
amount of each Competitive Loan shall be payable on the last
day of the Interest Period applicable thereto;
provided,
however, unless the Borrower shall give notice to the
Agent
otherwise, the Borrower, subject to the provisions of Section 5.2,
shall be deemed to have submitted a Notice
of
Borrowing as contemplated pursuant to Section 2.3(c), effective on the
last day of such Interest Period, with respect to a Committed Loan
comprised solely of Base
Rate
Advances in the amount of a maturing Competitive Loan, the
proceeds of which will be used to repay such Competitive
Loan. The Agent, in turn, shall promptly notify each
Lender
of such deemed Notice of Borrowing.
(h)Interest on Competitive Loans.
Subject to the
provisions of Section 4.1, each Competitive Loan shall bear
interest at the Competitive Bid Rate applicable
thereto.
Interest on Competitive Loans shall be payable in
arrears on
each applicable Interest Payment Date.
Section 2.9. Swingline Loan Subfacility.
(a)Swingline Commitment. The Swingline Lender, in
its individual capacity, agrees to make Swingline Loans to
the Borrower from and after the Agreement Date until
the
Termination Date (including, without limitation, in connection with
reimbursement of drawings of Letters of Credit as contemplated by
Section 3.3(b)) subject to satisfaction of the conditions to borrowing
set forth
in
Section 5.2; provided, however, (i) the aggregate
principal
amount of Swingline Loans outstanding at any time shall not
exceed the Swingline Facility and (ii) the sum of the principal
amounts of Committed Loans outstanding plus Competitive Loans
outstanding plus Swingline Loans outstanding shall not exceed at any
time the lesser of
(a)
the Revolving Credit Facility and (b) the Borrowing
Base.
Swingline Loans may be repaid and reborrowed in
accordance
with the provisions hereof.
(b)Swingline Loans.
(i)General Terms. Swingline Loans shall be provided by
the Swingline Lender to the Borrower on
terms
and in a manner mutually acceptable to the Swingline
Lender
and the Borrower. Each Swingline Loan shall bear
interest
at a rate determined pursuant to Section 2.9(c) and
shall
have such maturity date as the Swingline Lender and the Borrower shall
agree (subject to the terms of the
definition
of "Interest Period" set forth in Section 1.1 and to
the
terms of Section 2.9(b)(iv)).
(ii)Minimum Amounts. Each Swingline Loan shall
be in a minimum principal amount mutually acceptable to the
Swingline Lender and the Borrower.
(iii)Swingline Loan Note. The Swingline Loans
made by the Swingline Lender to the Borrower and the obligation of the
Borrower to repay such Swingline
Loans
shall be evidenced by, and be repayable in accordance
with
the terms of, a single Swingline Loan Note, made by the Borrower
payable to the order of the Swingline Lender.
The
Swingline Loan Note shall be dated the Agreement Date
and be
duly and validly executed and delivered by the
Borrower.
(iv)Repayment of Swingline Loans. The principal
amount of each Swingline Loan shall be payable on the earlier of (A)
the maturity date agreed to by the
Swingline
Lender and the Borrower with respect to such Swingline Loan
(which maturity date shall not be a date more than
seven (7)
Business Days from the date of advance thereof) or (B) the
Termination Date; provided, however, that the Swingline Lender may, at
any time, in its sole discretion, by
written
notice to the Borrower and the Lenders, demand
repayment of
its Swingline Loans, and such demand shall be deemed to have
been given one (1) Business Day prior to the Termination
Date and on the date of the occurrence of any Event of Default
described in Section 10.1(g) or (h) and upon acceleration of the
indebtedness hereunder and the
exercise
of remedies in accordance with the provisions of
Section
10.2. Any such demand (or deemed demand) for repayment of
the Swingline Loans shall be deemed to constitute a
Notice
of Borrowing as contemplated pursuant to Section
2.3(d),
effective on the date of such demand (or deemed
demand),
with respect to a Committed Loan comprised solely of
Base
Rate Advances in the aggregate principal amount of all outstanding
Swingline Loans. The Agent, in turn, shall promptly notify each
Lender of such deemed Notice of Borrowing. Each Lender shall pay to
the Agent, for the
account of the Swingline Lender's Domestic Lending
Office or
such other office as the Swingline Lender may instruct, an
amount equal to such Lender's Commitment Percentage (determined before
giving effect to any termination of
the
Commitments pursuant to Section 10.2) of the aggregate principal
amount of all such outstanding Swingline
Loans, in
immediately available funds, on the date demand for repayment of the
Swingline Loans is made (or deemed
made as
provided above) by the Swingline Lender if notice of
such
demand (or deemed demand) is given by the Swingline
Lender
to the Lenders at or prior to 12:00 noon (Charlotte,
North
Carolina time) or, if notice of such demand (or deemed demand) is
given by the Swingline Lender to the Lenders after 12:00 noon
(Charlotte, North Carolina time), then
not
later than 12:00 noon (Charlotte, North Carolina time) on
the next Business Day, together with interest on such
amount
at the Federal Funds Effective Rate for each day from
and
including the date of the giving of notice of such
demand
(or deemed demand) by the Swingline Lender to the
Lenders to
but excluding the date of payment by such Lender. If
the
applicable conditions to borrowing set forth in Section 5.2
are satisfied, each such payment by a Lender pursuant
to
this Section 2.9(b)(iv) shall constitute a Base Rate
Advance
by such Lender under the Revolving Credit Facility as
of the
date of demand for repayment of the Swingline Loans was made
(or deemed made as provided above) by the Swingline
Lender,
and each Lender hereby irrevocably agrees to make its Committed
Advance of each Committed Loan in connection
with
any such demand for repayment of the Swingline Loans by the
Swingline Lender in the amount, in the manner and on
the
date specified above notwithstanding (I) the amount of such
Committed Loan may not comply with the minimum amount
for
Committed Loans otherwise required hereunder or (II)
failure
of any such request or deemed request for such
Committed
Loan to be made by the time otherwise required under
Section
2.3. If the applicable conditions to borrowing set
forth in
Section 5.2 are not satisfied, each such payment by a
Lender
pursuant to this Section 2.9(b)(iv) shall constitute
the
purchase of participations by such Lender in the then outstanding
Swingline Loans; provided, however, that
all
interest payable on the Swingline Loans shall be for
the
account of the Swingline Lender until the date as of
which
any such participation is purchased. Each Lender acknowledges and
agrees that its obligation to pay an
amount
equal to its Commitment Percentage of the principal
amount
of all outstanding Swingline Loans upon demand (or
deemed
demand) for repayment thereof by the Swingline Lender
as
provided above shall at all times and in all events be absolute,
unconditional and irrevocable and in each
case
shall be made without counterclaim, deduction or set-
off by
such Lender. Without limiting the generality of the foregoing, each
Lender's obligation to pay its ratable
share
of the principal amount of all outstanding Swingline
Loans
upon any demand (or deemed demand) for repayment
thereof by
the Swingline Lender as provided above shall not be
affected
by:
(a)any failure or inability of the Borrower to
satisfy the applicable conditions to borrowing set forth in
Section 5.2,
(b) any lack of validity or enforceability of
this Agreement or any of the other Loan Documents,
(c) the occurrence of any Default or Event of
Default, or
(d)the Agent's failure to notify the Lenders of
the issuance of any Letter of Credit.
The Borrower hereby irrevocably instructs the Agent to disburse the
proceeds of any Committed Advances or any payments for participations
made as provided above in
this
Section 2.9(b)(iv) to the Swingline Lender. Proceeds
of
Committed Advances made pursuant this Section 2.9(b)(iv)
shall be applied to the repayment of the Swingline
Loans.
(c)Interest on Swingline Loans. Subject to the
provisions of Section 4.1, Swingline Loans shall bear
interest at a per annum rate equal to, at the Borrower's
election, either (i) a rate equal to the Variable CD
Rate
(which rate shall change contemporaneously with any
change
in the Variable CD Rate) plus the Applicable Margin or (ii)
such other rate as may be quoted by the Swingline
Lender to
the Borrower in the sole discretion of the Swingline
Lender
and accepted by the Borrower at or promptly following
the
time of such quote. Interest on Swingline Loans shall be
payable in arrears on each applicable Interest Payment Date.
Section 2.10. Extension of Commitments. The Borrower may
request that the Termination Date be extended for successive periods of one
year, by notice to the Agent given not later than
14 months (nor earlier than 15 months) prior to the then effective
Termination Date. The Agent will promptly notify each
Lender of any such request and, if such extension request is agreed to in
writing by all Lenders, will use reasonable efforts
to notify the Borrower that such extension has been approved not
later than 12 months prior to the then effective Termination Date.
ARTICLE 3
LETTER OF CREDIT FACILITY
Section 3.1. Letters of Credit. Any Lender in its
sole
discretion may, with the consent of the Agent, which consent shall not be
unreasonably withheld, issue, at any time after the
Effective Date until the date five Business Days prior to the
Termination Date subject to satisfaction of the conditions to
borrowing set forth in Section 5.2, a Letter of Credit for the
account of the Borrower or a Subsidiary Guarantor, naming the
Borrower or such Subsidiary Guarantor as the account party, provided that
(i) the Letter of Credit Obligations at any time
outstanding shall not exceed the Letter of Credit Facility, (ii)
the sum of the principal amounts of Committed Loans outstanding
plus Competitive Loans outstanding plus Swingline Loans outstanding shall
not exceed at any time the lesser of (a) the
Revolving Credit Facility and (b) the Borrowing Base (in each
case, after giving effect to issuance of any requested Letter of
Credit), and (iii) no Letter of Credit shall have a stated expiration date
later than the first to occur of (x) the fifth
Business Day prior to the Termination Date in effect on the date
of issuance of such Letter of Credit and (y) the first anniversary of the
date of issuance of such Letter of Credit.
Each Application shall provide for the unconditional obligation,
without regard to any defense or claim or counterclaim against
the beneficiary of the related Letter of Credit of the Borrower
or Subsidiary Guarantor the account party thereon, to reimburse
on demand the Issuer of such Letter of Credit for any amount drawn under
such Letter of Credit and, in respect of standby Letters of Credit, for
fees consistent with Section 4.15(c). The
Borrower hereby agrees with each Issuer, for its benefit and for
the benefit of the Agent and the Lenders, that the Borrower shall
be obligated to perform the reimbursement and other payment Obligations of
each Subsidiary Guarantor named as the account
party in any Letter of Credit, not as a guarantor or surety, but
as a primary obligor under the related Application to the same
extent as the Subsidiary Guarantor named therein.
Section 3.2. Purchase and Sale of Participations.
Subject
to the terms and conditions of this Agreement, effective the date
of issuance of each Letter of Credit (or, as to each Existing
Letter of Credit, effective the Effective Date), the Issuer thereof hereby
sells to each Lender, and each Lender hereby purchases from such Issuer, an
undivided participating interest
equal to its Commitment Percentage in all of such Issuer's right,
title and interest in and to such Letter of Credit and such Issuer's
obligations thereunder, together with all of such Issuer's right, title and
interest in and to the related Application (but excluding certain fees and
payments referred to
in Section 3.4). Each Lender acknowledges and agrees that its
obligation to pay an amount equal to its Commitment Percentage of
all draws under each Letter of Credit as hereinafter provided
shall at all times and in all events be absolute, unconditional
and irrevocable and in each case shall be made without counterclaim,
deduction or setoff by such Lender. Without limiting the generality of the
foregoing, each Lender's obligation to pay its ratable share of any drawing
under a Letter
of Credit to the Agent for the account of the Issuer thereof
shall not be affected by:
(a)any failure or inability of the Borrower to
satisfy the applicable conditions to borrowing set
forth in
Section 5.2,
(b)any lack of validity or enforceability of this
Agreement or any of the other Loan Documents,
(c)any draft, certificate or any other document
presented under the Letter of Credit upon which payment has
been made in good faith and according to its terms
proving
to be forged, fraudulent, invalid or insufficient in
any
respect or any statement therein being untrue or
inaccurate
in any respect,
(d)the surrender or impairment of any collateral or
any other security for the reimbursement obligation of the
Borrower under such Letter of Credit,
(e)the occurrence of any Default or Event of Default,
or
(f) the Agent's failure to notify the Lenders of the
issuance of any Letter of Credit.
Section 3.3. Unreimbursed Draws Under Letters of
Credit.
(a)Each Issuer shall promptly notify the Agent upon
the occurrence of any drawing under a Letter of Credit of
the date and amount of such drawing, the remaining
amount,
if any, available to be drawn under such Letter of
Credit,
and whether the amount of such drawing has been
reimbursed
to the Issuer by the Borrower or the Subsidiary
Guarantor
named as the account party therein.
(b)Each notice from an Issuer pursuant to subsection
(a) above to the effect that a drawing has not been reimbursed in full
shall constitute a request by the Borrower for a Swingline Loan from
the Swingline Lender
in
the unreimbursed amount of such drawing, unless the sum of
the unreimbursed amount of such drawing plus the
principal
amount of all outstanding Swingline Loans (prior to
giving
effect to a Swingline Loan relating to the unreimbursed amount of such
drawing) exceeds the Swingline Facility.
Any
Swingline Loan made in order to reimburse the Issuer
for the
unreimbursed amount of a drawing under any Letter of
Credit
as contemplated by this subsection (b) shall be on such terms as are
mutually acceptable to the Swingline
Lender and
the Borrower and shall be subject to all other terms, conditions and
limitations set forth in Section 2.9, including, without limitation,
satisfaction of the conditions to borrowing set forth in Section 5.2.
(c)(i) If the unreimbursed amount of a drawing under
any Letter of Credit is not, for any reason, reimbursed to
the Issuer with proceeds of a Swingline Loan pursuant
to
subsection (b) above, each notice pursuant to subsection (a)
above from an Issuer to the effect that a drawing has
not
been reimbursed in full shall constitute a Notice of Borrowing as
contemplated pursuant to Section 2.3(b)
with
respect to a Committed Loan comprised solely of Base
Rate
Advances in the unreimbursed amount of such drawing.
The
Agent, in turn, shall promptly notify each Lender of
its
receipt of such deemed Notice of Borrowing.
(ii)Each Lender shall pay to the Agent, for the
account of such Issuer's Domestic Lending Office or
such
other office as such Issuer may instruct, an amount
equal to
such Lender's Commitment Percentage (determined before giving effect
to any termination of the Commitments
pursuant
to Section 10.2) of such unreimbursed drawing, in immediately
available funds, on the date notice is
given by
the Agent if such notice is given at or prior to 12:00 noon
(Charlotte, North Carolina time) or, if notice is given after 12:00
noon (Charlotte, North Carolina time), then
not
later than 12:00 noon (Charlotte, North Carolina time) on
the next succeeding Business Day, together with
interest on
such amount at the Federal Funds Effective Rate for
each day
from and including the date of such drawing to but
excluding
the date of payment by such Lender.
(iii) (A) If the applicable conditions to borrowing
set forth in Section 5.2 are satisfied, each such
payment by
a Lender pursuant to Section 3.3(c)(ii) shall
constitute a
Committed Advance which is a Base Rate Advance by such Lender under
the Revolving Credit Facility as of the
date
the unreimbursed drawing was paid by the Issuer, or
(B)if the applicable conditions to borrowing set
forth in Section 5.2 are not satisfied, each such
payment
pursuant to Section 3.3(c)(ii) shall constitute
Obligations,
payable on demand by the Borrower, and shall bear
interest
at the rate set forth in Section 4.1 from the date on
which
the unreimbursed drawing was paid by the Issuer until
such
Obligations are paid in full.
(d)The Borrower hereby irrevocably
instructs the
Agent to disburse the proceeds of any Swingline Loans, Committed
Advances or payments made pursuant to
subsections
(b) or (c), as the case may be, to the applicable
Issuer, on
behalf of the Borrower, to be applied to the reimbursement
obligation under the related Letter of Credit and Application, but
only the making of Swingline Loans or Committed Advances shall be
deemed to satisfy the
Borrower's
reimbursement obligation to the Issuer under such
Letter of
Credit and Application; provided, that the Issuer's
rights
and remedies in respect of any collateral for the
Borrower's
Obligations under the Application shall remain
unaffected by
any payments under Section 3.3(c)(ii) that are subject to
Section 3.3(c)(iii)(B), subject to the requirements of Section 3.4;
and provided, further, that any amounts
paid to
the Agent for the account of the Lenders for application to
demand Obligations arising pursuant to Section 3.3(c)(iii)(B) shall
also reduce, dollar-for-dollar,
any
claim for reimbursement by the Issuer of such Letter of Credit under
the Application.
Section 3.4. Sharing of Payments and Risk.
(a)Each Issuer shall remit to the Agent, for the
ratable account of the Lenders for application to the Obligations
(and, if applicable, specifically for application to the demand
Obligations arising under
Section
3.3(c)(iii)(B)) all monies received by such Issuer as payments under
or proceeds of collateral securing any
Application or Letter of Credit, other than (x) documentation,
negotiation, cable, amendment and other similar fees and charges, if
any, customarily imposed
by
such Issuer in connection with the issuance of similar letters of
credit and (y) the portion of any standby
Letter
of Credit fee expressly provided in Section 4.15(c) to be
retained by the Issuer; provided, however, that the
Issuer
may receive and retain any amounts paid to it by or on behalf of the
Borrower or the named account party in reimbursement of drawings under
a Letter of Credit if
and to
the extent that no payments under Section 3.3(b) or
(c)(ii)
have been made by the Lenders in respect of such reimbursement
obligation prior to the receipt thereof
by the
Issuer. Such monies shall include, without limitation, but
subject to the preceding sentence, fees paid by the
Borrower
or the named account party under an Application for a standby Letter
of Credit and payments by the Borrower
or the
named account party to the Issuer in reimbursement for drafts or
drawings paid by such Issuer under a Letter
of
Credit, and shall be remitted by the Issuer in the same type
of funds received by the Issuer, on the day of the
Issuer's
receipt thereof if received on or prior to 12:00 noon (Charlotte,
North Carolina time) or, if received after
12:00
noon (Charlotte, North Carolina time), then not later
than
12:00 noon (Charlotte, North Carolina time) on the next succeeding
Business Day.
(b)Each Lender shall share ratably in
all risks
associated with any Applications and Letters of Credit (including,
without limitation, the risk that any fee associated with a Letter of
Credit is not paid when
due) to
the extent of its participation hereunder. An Issuer
shall
have no obligation to pay any Lender such Lender's
share of
any payments under or relating to an Application or
Letter
of Credit until such Issuer actually receives payment thereof. At the
time an Issuer receives any funds for application to payment of any
amounts (other than the
fees
specified above payable to the Issuer only or amounts
in
reimbursement of drawings in respect of which no
payments
under Section 3.3(b) or (c)(ii) have been made) under
or
relating to such Application or Letter of Credit,
whether
through payment by the Borrower, from any other obligor
thereunder, offset, counterclaim or otherwise (but
excluding
payments made by the Lenders), such Issuer will pay to the
Agent, for the ratable account of the Lenders, such
amount
in the same type of funds received by the Issuer. If
an
Issuer is ever required for any reason to refund any
such
payment, each Lender agrees to refund to the Agent, for the
account of such Issuer, promptly upon such Issuer's
request,
such Lender's ratable share of such payment, together
with
such Lender's ratable share of interest or penalties,
if
any, payable by the Issuer in connection with the
refund
made by the Issuer. In the event that an Issuer is not reimbursed by
the Borrower in respect of any drawing
under a
Letter of Credit issued by such Issuer and with regard to
which it has been determined by a final, unappealable decision of a
court having jurisdiction in the matter
that
the Borrower is not required to reimburse the Issuer,
then
the Issuer shall refund to each Lender any amount
previously
paid by such Lender to the Issuer with respect to such unreimbursed
drawing.
Section 3.5. Administration of Letters of Credit and
Credit
Documents. As between each Issuer, the Lenders and the Agent:
(a) (i)After the issuance of a Letter of Credit, no
Issuer will reduce any principal, interest or fees reimbursable or
payable under the related Application
or
postpone any date fixed for the payment of such
principal,
interest or fees without the prior written consent of
all of
the Lenders and no Issuer will increase the Stated
Amount of
any Letter of Credit without the consent of the Agent, which
consent shall not be unreasonably withheld, and
(ii)subject to the provisions of Section 3.5(a)(i), an
Issuer may change, modify, waive or amend the terms of any
Letter of Credit or Application so long as such Letter of
Credit or Application, as amended, complies with the requirements of
Section 3.1; provided, however, that if
any
Default or Event of Default shall have occurred and be continuing, no
Issuer will, without the prior written
consent of all of the Lenders, change, modify, waive or amend the
terms of any Letter of Credit or Application, except (A) to the extent
to which such Issuer is specifically required to do so by the terms
thereof, or
(B)
to waive immaterial nonconformity of documents
presented as
a condition to draws.
(b)An Issuer shall have no duty (i) to exercise any
right, power, remedy or privilege granted to it under
or
relating to a Letter of Credit or Application, (ii) to ascertain
whether any default under such Application
has
occurred and is continuing or otherwise to inquire into the
performance or observance on the part of the Borrower
or
named account party of any term, covenant, condition or agreement to
be performed or observed by it, or (iii)
to
take or not to take any action under or relating to a
Letter
of Credit or Application (other than as specifically
required to do so by the terms thereof).
(c)An Issuer shall not be obligated (i) to extend or
otherwise amend or modify a Letter of Credit (except to the
extent such Issuer is specifically required to do so by the
terms thereof) or any payment terms relating to any principal,
interest or fees reimbursable under an Application; or (ii) to execute
any amendment or modification of a Letter of Credit or Application to
the
extent such amendment or modification would have an
adverse
effect on the Issuer.
(d)Each Issuer will notify the Agent promptly of its
issuance of each approved Letter of Credit, including
the
named account party, Stated Amount, expiration date,
name of
the beneficiary, and type (whether standby or documentary)
of such Letter of Credit, and the Agent will notify all Lenders not
less frequently than quarterly of the
Letters of
Credit outstanding from time to time.
Section 3.6. Exoneration.
(a)It is understood and agreed that each Lender has
made and shall continue to make its own credit determinations and
analyses to enter into the
transactions
contemplated hereby based upon such information as such Lender may
deem sufficient and not based on any
statements
or representations by an Issuer or the Agent. It is understood and
agreed that the sales of participations
to
the Lenders in Letters of Credit and related Applications,
collateral and other Obligations are made without
recourse
to any Issuer and that no Issuer makes any representation or
warranty of any kind to any Lender and shall not be responsible to any
Lender for (i) the due execution, legality, validity, enforceability,
genuineness,
sufficiency
or collectability of any Application, (ii) any representation,
warranty or statement made in or in connection with any Application,
(iii) the financial condition or creditworthiness of the Borrower or
any
named
account party, (iv) the performance of or compliance
with
any of the terms or provisions of any Application on
the
part of the Borrower or any named account party or of
any
Letter of Credit on the part of the beneficiary
thereof, or
(v) inspecting any of the property, books or records of the
Borrower or any named account party.
(b)No Issuer nor any of its officers, directors,
employees, agents or attorneys shall be liable for any mistake, error
of judgment or action taken or omitted
to be
taken in connection with a Letter of Credit or an Application, except
for its or their own gross
negligence or
willful misconduct. An Issuer may consult with legal counsel
(including counsel for the Borrower, the named account party, if
different, and the beneficiary under
the
applicable Letter of Credit), independent public
accountants
and other experts selected by it and shall not be
liable for
any action taken or omitted to be taken by it (x) in accordance with
the advice of its counsel or (y) except
as
may be otherwise provided in the Letter of Credit or
related
Application, in connection with the applicable Letter
of
Credit or Application pursuant to any notice, consent, certificate or
other writing received by such Issuer
and
believed by it in good faith to be genuine. An Issuer shall
incur no liability under or in respect of an Application or
Letter of Credit or any document relating thereto, to
any
other Lender or, except as may be otherwise provided in the
Letter of Credit or related Application, to the
Borrower or
other named account party, by acting upon any notice, consent,
certificate or other instrument or writing
(which
may be by facsimile, telegram, cable or telex) believed by
it in good faith to have been delivered or made by an authorized
Person. An Issuer and its subsidiaries and affiliates may engage in
any kind of banking or trust business with any obligor under an
Application without liability or obligation to account to the Lenders
therefor,
except as set forth herein.
Section 3.7. Cash Collateral; Supporting Letters of
Credit.
If, notwithstanding the provisions of Section 3.1, any Letter of
Credit is outstanding when this Agreement is terminated (including, without
limitation, any termination of the Commitments pursuant to Section 10.2) or
when an Event of Default
shall have occurred and be continuing, then on or prior to such
Termination Date or on demand by the Agent after the occurrence
and during the continuation of such Event of Default, the Borrower shall
deposit with the Agent, for the benefit of the
Issuer and for the ratable benefit of the Lenders, with respect
to each Letter of Credit then outstanding, Cash Collateral in an
amount equal to the sum of the Stated Amount of such Letter of
Credit, plus the amount of any unreimbursed drawings thereunder,
plus the amount of any fees, charges, and other amounts which may
become payable to such Issuer under such Letter of Credit or the
related Application for application to the reimbursement and other
Obligations of the Borrower thereunder. The Borrower may,
so long as no Event of Default has occurred and is continuing, in
lieu of making such deposit of Cash Collateral with respect to
any such Letter of Credit, arrange for the issuance of a standby
letter of credit, naming the Issuer of such Letter of Credit as
the beneficiary, and otherwise in form and substance reasonably
satisfactory to such Issuer, or make such other arrangements with
such Issuer as shall, in any event, cause such Issuer to repurchase from
each Lender such Lender's participation in such
Letter of Credit and release the Agent and each Lender from any
and all obligation in respect of such Letter of Credit, by a written
instrument in form and substance reasonably satisfactory
to the Agent and each Lender, and cause such instrument to be
delivered to the Agent and each Lender, duly executed by
such
Issuer. At the Borrower's request, but subject to the Agent's
reasonable approval, the Agent shall invest any Cash Collateral
consisting of cash or any proceeds of Cash Collateral consisting
of cash in Permitted Investments of the types described in clauses (i),
(ii) and (iii) of paragraph (a) of the definition
thereof, and any commissions, reasonable expenses and penalties
reasonably incurred by the Agent in connection with any investment and
redemption of such Cash Collateral shall be Obligations and may be paid out
of the proceeds of any earnings
received by the Agent from the investment of such Cash Collateral
or out of such cash itself. The Agent makes no representation or
warranty as to, and shall not be responsible for, the rate of
return, if any, earned on any investment of any Cash Collateral.
Any earnings on such Cash Collateral shall be held as additional
Cash Collateral on the terms set forth in this Section 3.7. If,
after all Letters of Credit outstanding on the Termination Date
have expired and all reimbursement Obligations of the Borrower
thereunder and under the related Applications have been paid in
full, any other Obligations remain unpaid, any remaining Cash
Collateral may be applied to pay such Obligations in such order
as the Agent may determine, and any Cash Collateral remaining
after the indefeasible payment in full of all Obligations shall
promptly be paid to the Borrower or to whomever may be legally
entitled thereto.
ARTICLE 4
DEFAULT INTEREST RATE; PREPAYMENTS; GENERAL PROVISIONS
Section 4.1. Default Interest Rate. Any amount of principal of any
Loan which is not paid when due (whether at maturity, by reason of
acceleration or otherwise) and, to the
extent permitted by Applicable Law, overdue interest and fees or
any other amounts payable hereunder or under the Notes shall bear
interest from and including the due date thereof until paid, compounded
daily and payable on demand, at a rate per annum equal
to (i) if such due date occurs prior to the end of the Interest
Period for such Loan, 2% plus the interest rate applicable to
such Loan for such Interest Period until the expiration of such
Interest Period, and thereafter, 2% plus the Base Rate, and (ii)
in all other cases, 2% plus the rate then applicable to Base Rate
Advances.
Section 4.2. Conversion/Continuation. Provided that
no
Default or Event of Default shall have occurred and be continuing, the
Borrower may convert or continue all or any part
(subject to the restrictions applicable to Committed Loans comprised of
each Type of Committed Advance as set forth in Section 2.1 and to the
provisions of Sections 2.4 and 4.5) of any
outstanding Committed Loan comprised of Committed Advances of one
Type (a) into a Committed Loan or Committed Loans comprised of
Committed Advances of any other Type provided for in this Agreement or (b)
as a Committed Loan or Committed Loans comprised
of Committed Advances of the same Type, in the same aggregate
principal amount, on any Business Day (which, in the case of a
conversion or continuation of a Committed Loan comprised of Eurodollar
Advances, shall be the last day of the Interest Period
applicable to such Committed Advances), upon notice (which notice
shall be irrevocable) given in accordance with Section 2.3(e).
Competitive Loans and Swingline Loans may not be converted or
continued.
Section 4.3. Reduction of Commitments.
(a)Voluntary Reductions. The Borrower shall have the
right, upon at least three Business Days' notice to the Agent, to
terminate in whole or permanently reduce
ratably
in part the unused portions of the Commitments of the Lenders,
provided that each partial reduction shall be
in
the aggregate amount of $10,000,000 or an integral
multiple
of $1,000,000 in excess thereof. The Agent shall
promptly
notify each of the Lenders of its receipt of any notice pursuant to
this Section 4.3(a).
(b)Mandatory Reductions. The aggregate Commitments
of the Lenders shall be reduced as of the last day of
Fiscal
Year 1996 and each Fiscal Year thereafter by an amount equal
to $15,000,000 minus the aggregate amount of Commitment reductions
pursuant to Section 4.3(a) during the Fiscal
Year
then ended.
Section 4.4. Prepayments.
(a)Mandatory.
(i) If at any time the sum of the principal amounts
of Committed Loans outstanding plus Competitive Loans
outstanding plus Swingline Loans outstanding shall
exceed
the lesser of (a) the Revolving Credit Facility and (b) the
Borrowing Base, then the Borrower shall prepay so much of
the Loans as shall be necessary to eliminate such
excess,
together with accrued and unpaid interest on the
principal
amount prepaid to the date of prepayment.
(ii) If at any time on or after the
Agreement Date the
Borrower or any of its Subsidiaries shall receive Net Disposition
Proceeds which in the aggregate exceed $5,000,000, then the Borrower
shall promptly prepay the Loans by an amount equal to such excess,
together with accrued and unpaid interest on the principal amount
prepaid
to the date of prepayment.
(iii) Amounts prepaid pursuant to clauses (i) and (ii)
above shall be applied first to the Swingline Loans
(first
to Swingline Loans bearing interest at a rate based on the
Variable CD Rate and then to Swingline Loans bearing interest at a
fixed rate (in chronological order of the occurrence of the last days
of the Interest Periods applicable thereto)), second to the Committed
Loans
(first
to Base Rate Advances and then to Eurodollar Advances
(in
chronological order of the occurrence of the last days of
the Interest Periods applicable thereto)) and third to the
Competitive Loans (in chronological order of the
occurrence
of the last days of the Interest Periods applicable
thereto).
(b)Optional.
(i) The principal amount of each Committed Loan
comprised of Base Rate Advances may be prepaid, in
whole or
from time to time in part, together with accrued and
unpaid
interest on the principal amount prepaid to the date of prepayment, by
the Borrower, at any time, without
premium or
penalty, on not less than one Business Day's prior
notice to
the Agent specifying the Committed Loan to be prepaid,
the
date of prepayment and the principal amount to be
prepaid,
and if such notice is given, such prepayment shall be
made
on the date specified in such notice. The Agent shall promptly notify
each of the Lenders of its receipt of
any
notice pursuant to this Section 4.4(b)(i). The
principal
amount of each Committed Loan comprised of Eurodollar Advances may be
prepaid, in whole or in part by the Borrower, without premium or
penalty, on the last day
of the
Interest Period applicable to such Committed Advances, upon
not less than three Business Day's notice, to the
Agent,
specifying the Committed Loan to be prepaid, the last
day of
the Interest Period applicable to the Committed
Advances
comprising such Committed Loan and the principal amount to
be prepaid, and if such notice is given, such prepayment
shall be made on the last day of the Interest Period specified in such
notice. Amounts prepaid on the
Committed
Loans pursuant to this Section 4.4(b)(i) may be
reborrowed
in accordance with the provisions hereof.
(ii) The principal amount of each Swingline Loan
bearing interest at a rate based on the Variable CD
Rate may
be prepaid, in whole or from time to time in part,
together
with accrued and unpaid interest on the principal
amount
prepaid to the date of prepayment, by the Borrower, at any
time, without premium or penalty, on not less than one Business Day's
prior notice to the Agent specifying the Swingline Loan to be prepaid,
the date of prepayment
and the
principal amount to be prepaid, and if such notice is
given,
such prepayment shall be made on the date specified in such
notice. Except as otherwise provided in Section
2.9(b)(iv)
and Section 4.4(a), Swingline Loans bearing interest at a
fixed rate may not be prepaid. Amounts prepaid on the Swingline Loans
pursuant to this Section 4.4(b)(ii) may
be
reborrowed in accordance with the provisions hereof.
(iii) Except as otherwise provided in Section 4.4(a),
Competitive Loans may not be prepaid.
Section 4.5. Changed Circumstances.
(a)If the introduction of or any change in or in the
interpretation of (in each case, after the date hereof) any
law or regulation makes it unlawful, or any central
bank or
other governmental authority asserts, after the date
hereof,
that it is unlawful, for any Lender or its Eurodollar Lending Office
to perform its obligations hereunder to
make
Eurodollar Advances or to fund or maintain Eurodollar Advances
hereunder, the Agent shall notify the Borrower
of
such event and the right of the Borrower to select Eurodollar Advances
for any subsequent Committed Loan
or in
connection with any subsequent conversion of any
Committed
Loan shall be suspended until such Lender shall notify the
Agent that the circumstances causing such suspension no longer exist
or such Lender shall cease to be a party hereto, and the Borrower
shall forthwith prepay in full
all
Eurodollar Advances then outstanding, with interest
accrued
thereon, unless the Borrower, within three Business
Days of
such notice from the Agent, requests the conversion of all
Eurodollar Advances then outstanding into Base Rate
Advances
in accordance with Sections 2.3(e) and 4.2; provided,
that
if the date of such repayment or proposed conversion is not
the last day of the Interest Period applicable to such Eurodollar
Advances, the Borrower shall also pay any
amount
due pursuant to Section 4.8.
(b)If the Majority Lenders shall, at least one
Business Day before the date of any requested Committed Loan
or the date of any conversion or continuation of any
existing Committed Loan (each such Committed Loan
requested
to be made, or as such Committed Loan is to be
converted or
continued, a "Pending Committed Loan"), notify the
Agent
that the Eurodollar Rate for Eurodollar Advances
comprising
such Pending Committed Loan will not adequately reflect the
cost to such Majority Lenders of making or funding
their
respective Eurodollar Advances, as the case may be, for such
Pending Committed Loan, the right of the Borrower to
select
Eurodollar Advances for such Pending Committed Loan,
any
subsequent Committed Loan or in connection with any
subsequent conversion or continuation of any Committed Loan
shall be suspended until the Agent shall notify the
Borrower
and the Lenders that the circumstances causing such suspension no
longer exist, and each Committed Advance comprising each Pending
Committed Loan and each such subsequent Committed Loan requested to be
made,
continued or
converted shall be made or continued as, or converted
into,
a Base Rate Advance or, upon notice given in accordance with
Section 2.3(a) or 2.3(e), as applicable, a Committed
Advance
of the Type, if any, as to which the Majority Lenders
shall
not have given the notice provided in this subparagraph (b).
(c)If, due to either (i) the introduction of or any
change (other than any change by way of imposition or increase of
reserve requirements included in the
Eurodollar
Reserve Percentage) in or in the interpretation of, in each
case after the date hereof, any law or regulation
(except to
the extent such introduction, change or interpretation affects taxes
measured by net income) or (ii) the
compliance
with any guideline or request (except to the extent
such
guideline or request affects taxes measured by net
income)
from any central bank or other governmental authority (whether or not
having the force of law) made after the
date
hereof, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or
maintaining
Eurodollar Advances (other than as separately provided for
in Section 4.5(d)), then the Borrower shall from time
to
time, upon demand by such Lender (with a copy of such
demand
to the Agent), pay to the Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such
increased cost; provided, that no
Lender
shall be entitled to demand, nor shall the Borrower be obligated to
pay, any such amount attributable to a
period
more than 90 days prior to the date of such demand.
(d)If (x) the adoption of or change in, after the
date hereof, any law, rule, regulation or guideline regarding capital
requirements for banks or bank
holding
companies, or any change, after the date hereof, in the interpretation
or application thereof by any
governmental
authority charged with the interpretation or
administration
thereof, or (y) compliance by such Lender with any guideline, request
or directive, made or promulgated
after
the date hereof, of any such entity regarding capital adequacy
(whether or not having the force of law), has
the
effect of reducing the return on a Lender's capital as a
consequence of its Commitments hereunder, its maintaining
its Committed Advances or other Loans hereunder, or its obligations
pursuant to Article 3 in respect of Letters
of
Credit, to a level below that which such Lender could
have
achieved but for such adoption, change or compliance
(taking
into consideration such Lender's policies with respect to
capital adequacy immediately before such adoption,
change or
compliance and assuming the full utilization of such Lender's capital
immediately before such adoption,
change or
compliance) by any amount deemed by such Lender to be material, then
such Lender shall promptly after its determination of such occurrence
notify the Borrower
and the
Agent thereof. The Borrower agrees to pay to the
Agent, for
the account of such Lender, as an additional fee from
time
to time, on demand by such Lender, such amount as such Lender
certifies to be the amount that will compensate
it
for such reduction in connection with its Commitments hereunder or its
obligations pursuant to Article 3 in respect of Letters of Credit;
provided, that no Lender
shall
be entitled to demand, nor shall the Borrower be
obligated
to pay, any such amount attributable to a period more
than
90 days prior to the date of such demand.
(e)Before giving any notice pursuant to Section
4.5(a) or making any demand pursuant to Section 4.5(c) or
(d) each Lender agrees to use its best efforts
(consistent
with its internal policy and legal and regulatory restrictions) to
designate a different Applicable
Lending
Office if the making of such a designation would avoid the
need for such notice or demand, or reduce the amount of such
increased cost or reduction in return and would not, in the
reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
(f)A certificate of the Lender claiming compensation
under Section 4.5(c) or (d) shall be conclusive in the absence of
manifest error. Such certificate shall set
forth
the nature of the occurrence giving rise to such compensation, the
additional amount or amounts to be
paid to
it hereunder and the method by which such amounts were determined. In
determining such amount, a Lender may
use
any reasonable averaging and attribution methods.
Section 4.6. Interest Rate Determination.
(a)Each Reference Bank agrees to furnish to the Agent
timely information for the purpose of determining each Eurodollar
Rate, as applicable. If any one or more of
the
Reference Banks shall not furnish such timely information to
the Agent for the purpose of determining any such
interest
rate, the Agent shall determine such interest rate on
the
basis of timely information furnished by the remaining Reference
Banks; provided, however, that if fewer than
two
Reference Banks furnish timely information to the Agent for
determining the Eurodollar Rate for Eurodollar Advances comprising any
Committed Loan requested or as to which
a
Notice of Conversion/Continuation has been given, the
right
of the Borrower to select Eurodollar Advances for such Committed Loan
or for any subsequent Committed Loan or
to
request any subsequent conversion to or continuation of Eurodollar
Advances comprising any Committed Loan shall
be
suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no
longer exist, and each Eurodollar Advance comprising
any
such Committed Loan shall be or become a Base Rate
Advance.
(b)The Agent shall give prompt notice to
the Borrower
and the Lenders of the applicable interest rate
determined
by the Agent for purposes of Section 2.6, and the
applicable
rate, if any, furnished by each Reference Bank for the purpose of
determining the applicable interest rate
under
Section 2.6(b)(i).
Section 4.7. Manner of Payment.
(a)Each payment (including prepayments) by the
Borrower on account of the principal of or interest on any
Loans or of any other of the Obligations payable to the
Agent or to the Agent for the account of any or all
Lenders
under this Agreement or any Note shall be made not
later
than 10:00 a.m. (Charlotte, North Carolina time) on the date
specified for payment under this Agreement to the Agent at
the Agent's Office, in Dollars, in immediately
available
funds, and shall be made without any setoff, counterclaim or
deduction whatsoever. The Borrower shall, at the time it
makes any payment under this Agreement or any Note,
specify
to the Agent the Loans or other Obligations to which
such
payment is to be applied (and in the event it fails so to
specify, or if an Event of Default has occurred and is continuing, the
Agent may distribute such payment to
the
Lenders in such manner as the Majority Lenders or,
failing
receipt by the Agent of instructions from the Majority Lenders, the
Agent may determine to be appropriate,
subject
to the provisions of Section 4.11 hereof). Any payment received after
such time but before 2:00 p.m.
(Charlotte,
North Carolina time) on such day shall be deemed a
payment
on such date for the purposes of Section 10.1, but for all
other purposes shall be deemed to have been made on the next
succeeding Business Day.
(b)The Borrower hereby irrevocably authorizes the
Agent, each Lender and each Affiliate of each Lender to charge any
account of the Borrower maintained with the Agent, such Lender or
Affiliate with such amounts
(whether
in U.S. Dollars or the equivalent in other currencies) as
may be necessary from time to time to pay any Obligations
(whether or not owed to the Agent or such Lender) which are
not paid when due.
Section 4.8. Payments Not at End of Interest Period;
Failure to Borrow. If for any reason:
(i)any payment of principal with respect to any
Eurodollar Advance or Competitive Loan of any Lender or
any Swingline Loan bearing interest at a fixed rate is
made on any day other than the last day of the Interest
Period applicable thereto, or,
(ii) after (A) having given a Notice of Borrowing
pursuant to Section 2.3(a) with respect to any
Committed Loan to be comprised of Eurodollar Advances,
(B) having accepted a Competitive Bid pursuant to Section 2.8(d)
with respect to any Competitive
Loan or
(C) having given a notice of borrowing pursuant to Section
2.9(b)(i) with respect to any Swingline
Loan
bearing interest at a fixed rate, such Committed Loan,
Competitive Loan or Swingline Loan, as the case may be,
is not made due to the Borrower's failure to fulfill
the applicable conditions set forth in Article 5,
then the Borrower shall pay to the Agent, for the account of each
affected Lender, an amount computed pursuant to the following
formula:
L = (R - T) x P x D
360
L = amount payable to such Lender
R = interest rate for the applicable Eurodollar
Advance,
Competitive Loan or Swingline Loan
T = effective interest rate per annum at which any
readily
marketable bonds or other obligations of the United
States, selected at the Agent's reasonable discretion,
maturing on or near the last day of the then applicable
or requested Interest Period for the applicable Eurodollar
Advance, Competitive Loan or Swingline
Loan
and in approximately the same amount as the applicable
Eurodollar Advance, Competitive Loan or Swingline Loan,
can be purchased by the Agent on the day of such payment of
principal or failure to borrow
P = the amount of principal paid or the amount of the requested
Eurodollar Advance, Competitive Loan or Swingline Loan
D = the number of days remaining in the Interest
Period as
of the date of such payment or the number of days in
the requested Interest Period
The Borrower shall pay such amount upon presentation by the Agent
of a statement setting forth the amount and the Agent's calculation thereof
pursuant hereto, which statement shall be
deemed true and correct absent manifest error.
Section 4.9. Computation of Interest and Fees.
Interest
and fees payable hereunder shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed.
If any payment required by this Agreement becomes due on a day
that is not a Business Day such payment shall be made on the next
succeeding Business Day, and such extension shall be included in
computing payments of interest (at the rate applicable on such
due date) or facility fee, as the case may be, provided, that if
the due date for any payment of principal of any of the Obligations is
extended by operation of law, interest shall be
payable on such amount of principal for the period of such extension, at
the applicable rate set forth in Section 4.1, to
the extent permitted by Applicable Law, but in no event at a rate
less than the rate applicable to such Obligations on the original
due date. Interest shall accrue from and include the date of
advance, but exclude the date of payment.
Section 4.10. Termination of Agreement. The Borrower shall
have the right, at any time, to terminate this Agreement upon not
less than three Business Days' prior written notice to the Agent,
which notice shall specify the effective date of such termination. On the
date specified in such notice, such termination shall be effected,
provided, that the Borrower shall,
on or prior to such date, (a) pay to the Agent for the account of
the Lenders, in immediately available funds, an amount equal to
the outstanding principal amount of all Loans, together with (i)
accrued interest thereon, (ii) accrued fees payable pursuant to
Section 4.15(b) from the date such fees were last paid through
the effective date of termination, (iii) any amounts payable pursuant to
Section 12.2 or 12.13, (iv) any amounts payable pursuant to Section 4.5 or
4.8 and (v) any and all other amounts
owing to the Agent or any Lender under this Agreement or any Note, and (b)
satisfy its Obligations under Section 3.7.
Section 4.11. Ratable Treatment. Each Committed Loan, all
payments in respect of participations pursuant to Section 2.9(b)(iv) and
all payments pursuant to Section 3.3(c)(ii) shall
be made ratably by the Lenders on the basis of their respective
Commitments. Each repayment or prepayment of principal and each
payment of interest on each Committed Loan or any
Obligations in
which the Lenders have purchased ratable participations pursuant
to Section 2.9(b)(iv) or Section 3.3(c)(iii)(B) and each payment
of fees pursuant to Section 4.15(a) or 4.15(b) shall be made to
the Agent for the account of the Lenders, in immediately available funds,
and shall be distributed by the Agent to the
Lenders in like funds ratably (other than amounts payable pursuant to
Section 2.6(b)(ii), 4.5(c), 4.5(d) or 4.8) for the
account of their respective Applicable Lending Offices, and each
payment of any other amount payable to any Lender hereunder or
under the Notes or to any Issuer hereunder, shall be made to the
Agent in immediately available funds and shall be distributed by
the Agent, in like funds, to such Lender for the account of its
Applicable Lending Office or to such Issuer, in each case to be
applied in accordance with the terms of this Agreement. With
respect to Competitive Loans, if the Borrower fails to specify
the particular Competitive Loan or Loans as to which any payment
or other amount should be applied and it is not otherwise clear
as to the particular Competitive Loan or Loans to which such payment or
other amounts relate, or any such payment or other
amount is to be applied to Competitive Loans without regard to
any such direction by the Borrower, then each payment or prepayment of
principal on Competitive Loans and each payment of
interest or other amounts on or in respect of Competitive Loans,
shall be allocated pro rata among the relevant Lenders in accordance with
the then outstanding amounts of their respective
Competitive Loans.
Section 4.12. Sharing of Payments, etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through
the exercise of any right of setoff, receipt of payment from any
Subsidiary Guarantor under the Subsidiary Guaranty, or otherwise)
on account of the Obligations owing to it (other than pursuant to
Section 2.6(b)(ii), 4.5(c), 4.5(d), 4.8 or 12.10) in excess of
its ratable share of payments on account of the Obligations obtained by all
the Lenders, such Lender shall forthwith purchase
from the other Lenders such participations in the Obligations
owing to them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of
them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such
purchases shall be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price received by it to the
extent of its Commitment Percentage of such recovery together
with an amount equal to such other Lender's ratable share (according to the
proportion of (i) the amount of such Lender's
required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this Section 4.12
may, to the fullest extent permitted by law, exercise all its
rights of payment (including any right of set-off) with respect
to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
Nothing contained in this Section 4.12 shall or shall be deemed
(A) to prevent any Issuer from receiving monies from the Borrower
or a Subsidiary Guarantor and applying such monies to the Borrower's
outstanding reimbursement obligation under any Letter
of Credit issued by such Issuer and in respect of which no Swingline Loan
pursuant to Section 3.3(b) and no Committed Loan
or other payment by the Lenders pursuant to Section 3.3(c)(ii)
has been made or (B) to prevent the Swingline Lender from receiving monies
from the Borrower or a Subsidiary Guarantor and
applying such monies to the Borrower's outstanding Swingline Loans in
respect of which no Committed Loan or other payment by
the Lenders pursuant to Section 2.9(b)(iv) has been made.
Section 4.13. U.S. Taxes. (a) The Borrower agrees to pay
to each Lender that is not a U.S. Person (a "Foreign Lender")
such additional amounts as are necessary in order that the net
payment of any amount due to such Foreign Lender hereunder, after
deduction for or withholding in respect of any U.S. Taxes imposed
with respect to such payment (or in lieu thereof, payment of such
U.S. Taxes by such Foreign Lender), will not be less than the
amount stated herein to be then due and payable, provided that
the foregoing obligation to pay such additional amounts shall not
apply:
(i)to any payment to any Foreign Lender
hereunder unless such Foreign Lender is, on the Agreement Date
(or on the date it becomes a Lender
as
provided in Section 12.10) and on the date of any change in the
Applicable Lending Office of such
Foreign
Lender, entitled to submit either a Form 1001 (relating
to such Foreign Lender and entitling it to a complete
exemption from withholding on all interest to be received by it
hereunder in respect of the
Obligations)
or a Form 4224 (relating to all interest to be received
by such Foreign Lender hereunder in respect of the Obligations);
and any Foreign Lender that is, on
the
Agreement Date (or on the date that it becomes a Lender
as provided in Section 12.10) and on the date of any
change in its Applicable Lending Office, entitled to
submit a Form 1001 or a Form 4224 will submit such Form
in duplicate to the Borrower, with a copy to the Agent
at such time; or
(ii)to any U.S. Tax imposed solely by reason of
the failure by such Foreign Lender to comply with applicable
certification, information,
documentation or
other reporting requirements concerning the nationality,
residence, identity, or connections
with
the United States of America of such Foreign Lender if
such compliance is required by statute or
regulation of
the United States of America as a precondition to relief or
exemption from such U.S. Taxes;
and provided further that the Borrower shall have no obligation
to pay additional amounts to any Foreign Lender pursuant to this
Section 4.13 with respect to any payment to such Foreign Lender
made prior to the date that the Borrower has been notified by
such Foreign Lender that payments to such Foreign Lender hereunder are or
have become subject to deduction for or withholding in respect of any U.S.
Taxes.
For the purposes of this Section 4.13(a), (1) "Form 1001" shall
mean Form 1001 (Ownership, Exemption, or Reduced Rate
Certificate) of the Department of the Treasury of the United States of
America, (2) "Form 4224" shall mean Form 4224 (Exemption from Withholding
of Tax on Income Effectively Connected with the Conduct of a Trade or
Business in the United
States) of the Department of the Treasury of the United States of
America (or in relation to either such Form such successor and
related forms as may from time to time be adopted by the relevant
taxing authorities of the United States of America to document a
claim to which such Form relates), (3) "U.S. Person" shall mean a
citizen, national or resident of the United States of America, a
corporation, partnership or other entity created or organized in
or under any laws of the United States of America or any state
thereof or the District of Columbia, or any estate or trust that
is subject to Federal income taxation regardless of the source of
its income and (4) "U.S. Taxes" shall mean any present or future
tax, assessment or other charge or levy imposed by or on behalf
of the United States of America that is not imposed on U.S. Persons.
(b)Within thirty (30) days after paying any amount to
the Agent or any Foreign Lender from which it is
required by
law to make any deduction or withholding, and within
thirty
(30) days after it is required by law to remit such deduction or
withholding to any relevant taxing or
other
authority, the Borrower shall deliver to the Agent for delivery to
such Foreign Lender evidence reasonably satisfactory to such Foreign
Lender of such deduction, withholding or payment (as the case may be).
Section 4.14. Loan Account.
(a)Each Lender shall open and maintain on the books
of its Applicable Lending Offices a separate loan
account in
the name of the Borrower. Each such loan account shall show
as debits thereto such Lender's Loans made for the
account
of such Applicable Lending Office to the Borrower under this
Agreement, any amounts paid other than as Loans by such Lender to or
for the account of the Swingline Lender pursuant to Section 2.9(b)(iv)
or to or for the account
of
any Issuer pursuant to Section 3.3(c)(iii)(B), and, as credits
thereto, all payments received by such Lender
and
applied to principal of such Loans or such other
payments,
so that the aggregate balance of the loan accounts of
the
Borrower at all times reflects the principal amount outstanding from
such Lender to the Borrower.
(b)The Agent shall maintain on its books a control
account for the Borrower in which shall be recorded (i) the
amount of each disbursement made hereunder to or for
the
account of the Borrower, (ii) the Stated Amount of each outstanding
Letter of Credit, (iii) the amount of any principal or interest due or
to become due from the
Borrower
hereunder, (iv) the amount of any sum received by the
Agent
hereunder in respect of principal or interest from the Borrower and
each Lender's ratable share thereof, and
(v)
the amount of each payment received by any Issuer from the
Borrower or any Subsidiary Guarantor in reimbursement
of a
payment by such Issuer under any Letter of Credit
issued by
it.
(c)The entries made in the accounts pursuant to
paragraphs (a) and (b) shall be prima facie evidence,
in the
absence of manifest error, of the existence and amounts of
the Obligations of the Borrower therein recorded and in the
case of discrepancy between such accounts, in the
absence of
manifest error, the accounts maintained pursuant to
paragraph (b) shall be controlling.
Section 4.15. Fees.
(a) Amendment Fee. The Borrower shall pay to the
Agent for the account of each Lender on the Agreement
Date,
in consideration of the Commitments of the Lenders, an amendment fee
of 0.10% of each Lender's Commitment.
(b)Facility Fee. The Borrower agrees to pay a
facility fee on the average daily amount of each
Lender's
Commitment (whether used or unused) from (a) the
Effective
Date in the case of each Lender a party hereto on such date
and (b) the effective date specified in the Assignment and
Acceptance pursuant to which it becomes a Lender in the case
of each other Lender, until the Termination Date at the rate
of 0.25% per annum, such facility fee to be payable in
arrears on the first day of each January, April, July
and
October, commencing on April 1, 1996, and on the
Termination
Date.
(c)Letter of Credit Fees. The Borrower shall pay to
each Issuer, for such Issuer's own account, in
connection
with each Letter of Credit issued by such Issuer, all documentation,
negotiation, cable, amendment and other similar fees and charges
customarily imposed by such
Issuer
in connection with its issuance of similar letters of credit. If, in
connection with the issuance of any documentary Letter of Credit, the
Borrower shall be
liable
to the Issuer for any additional fees not in the nature of
reimbursement of expenses incurred or compensation for services
performed in administering such Letter of
Credit,
such fees shall be paid by the Borrower to the Agent
for the
ratable account of the Lenders. If any standby Letter of
Credit shall be issued, the Borrower shall pay to the
Issuer
thereof a per annum fee equal to the Applicable Margin plus
0.125% on the daily Stated Amount of any such standby
Letter
of Credit, payable in arrears on the first day of each January, April,
July and October, commencing on April
1,
1996, and on the Termination Date, and the Issuer shall remit to the
Agent, for the ratable account of the
Lenders
(net of such Issuer's Commitment Percentage thereof),
the
excess of such fee over 0.125% per annum on the Stated Amount of such
Letter of Credit for the applicable
period;
provided, however, the Lenders shall not be entitled to any
such fee in respect of a standby Letter of Credit which is
an Existing Letter of Credit if such fee has been
deemed to
be earned during the period prior to the Effective Date (it
being understood and agreed by each of the Lenders that any
such fee in respect of a standby Letter of Credit which is
an Existing Letter of Credit shall be deemed to be
earned
evenly throughout the period for which it is paid
regardless
of when it was paid).
(d)Agent Fee. In connection with and in consideration of
the ongoing administration of the
Facility,
the Borrower shall pay to the Agent for its account
alone, a
fee in accordance with the terms of a separate letter
agreement between the Borrower and the Agent.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1. Conditions Precedent to Initial Loans.
The
obligations of the Lenders to make the initial Loan or Loans or
any Issuer to issue the initial Letter of Credit, whichever shall
first occur, shall be subject to the conditions precedent that
(a) no action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin,
restrain, or prohibit, or to obtain substantial damages
in respect of, or which is related to or arises out of, this Agreement, or
the consummation of the transactions contemplated
hereby, or which may have a Materially Adverse Effect on the Borrower or on
the Borrower and its Subsidiaries taken as a whole
and (b) the Agent shall have received on or before the day of
such initial Loan or Loans the following, each dated the Agreement Date (or
such recent date as may be acceptable to the
Agent), in form and substance satisfactory to the Agent and, as
applicable, in sufficient copies (except for the Notes) for each
Lender:
(i) The Notes to the order of the respective Lenders.
(ii) Copies of the certificate or articles of
incorporation and by-laws of the Borrower and each Subsidiary
Guarantor as in effect on the Effective
Date,
certified by an Authorized Officer of the Borrower or
such
Subsidiary Guarantor, as the case may be.
(iii) Certified copies of all corporate action,
including stockholder approval, if necessary, taken by the
Borrower and each Subsidiary Guarantor to authorize the execution,
delivery and performance of this Agreement
and
the Loan Documents to which it is a party and the
borrowings
and guaranty of the Obligations under this Agreement
and the
Subsidiary Guaranties.
(iv) Certificates of incumbency and specimen
signatures with respect to each of the officers of the Borrower and
each Subsidiary Guarantor authorized to
execute
and deliver this Agreement and the Loan Documents on
its
behalf or any certificate or instrument to be delivered in
connection with this Agreement or to request borrowings or
Letters of Credit under this Agreement.
(v) A certificate evidencing the existence, and where
the same may be obtained, the good standing of the
Borrower
and each Subsidiary Guarantor in the jurisdiction of
its
incorporation and, if different, the jurisdiction(s) in which its
chief executive office and/or principal place
of
business is located.
(vi) The Subsidiary Guaranty, duly
executed and
delivered by each Significant Subsidiary of the
Borrower.
(vii) An original, executed copy of the Borrower
Security Agreement, duly executed and delivered by the Borrower.
(viii) An original, executed copy of the
Subsidiaries
Security Agreement, duly executed and delivered by each of
the Significant Subsidiaries that is a Domestic
Subsidiary
of the Borrower.
(ix) An original, executed copy of an assignment of
factoring proceeds, in form and substance satisfactory to
the Agent, for each Factoring Agreement existing as of the
Effective Date.
(x) The Leasehold Mortgage, duly executed and delivered
by Delta Mills, Inc.
(xi) An original, executed copy of a notice
executed by
the Borrower and Delta Mills, Inc., in form and
substance
satisfactory to the Agent, informing each of Florence County, South
Carolina, Greenville County, South
Carolina
and Marlboro County, South Carolina of the Leasehold
Mortgage and the pledge of the Bond.
(xii) In form and substance satisfactory to the Agent:
(a) searches of Uniform Commercial
Code filings in
the jurisdiction of the chief executive office of the
Borrower and of each Significant Subsidiary and in each
jurisdiction where any Collateral is located or where a
filing would need to be made in order to perfect the
Agent's security interest, for the benefit of the Lenders, in the
Collateral, copies of the
financing
statements on file in such jurisdictions and evidence
that no Liens exist other than Permitted Liens; and
(b) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Agent's sole
discretion, to perfect the Agent's security interest, for the
benefit of the Lenders,
in
the Collateral.
(xiii) Copies of all the financial statements
referred to
in Section 6.1(n) and meeting the requirements thereof.
(xiv) A Consolidated balance sheet and the related Consolidated
statements of income and cash flow of the Borrower and its
Consolidated Subsidiaries as at
December
30, 1995 for the six-month period ended on such date
and the
related consolidating balance sheets and statements of income of the
Borrower and each of its Consolidated Subsidiaries as of such date and
for the portion of the Fiscal Year ended on such date.
(xv) A favorable opinion of Wyche, Burgess, Freeman &
Parham, P.A., counsel for the Borrower and each
Subsidiary
Guarantor which is incorporated in South Carolina, substantially in
the form of Exhibit K and opining as
to
such other matters in connection with this Agreement as the
Agent or any Lender may reasonably request.
(xvi) For each jurisdiction (other than the State of South
Carolina, Costa Rica and Honduras) in which any Subsidiary Guarantor
is incorporated or any Collateral
is
located, a favorable opinion of counsel licensed to
practice
law in such state and satisfactory to the Agent and its counsel, in a
form reasonably acceptable to the Agent
and
its counsel.
(xvii) An opinion of Moore & Van Allen, PLLC, special counsel for
the Agent, substantially in the form of
Exhibit
L hereto.
(xviii) Copies of each of the other Loan Documents
duly
executed by the parties thereto, together with evidence satisfactory
to the Agent of the due authorization and binding effect of each such
Loan Document on such
party.
(xix) A certificate of the chief financial officer of the
Borrower to the effect that each of the Subsidiary Guarantors, except
as otherwise disclosed to the Agent
and
the Lenders, is, after giving effect to the incurrence of
the Subsidiary Guaranty, solvent, has assets of a fair salable value
which exceeds the amount required to pay
its
debts, is able to and anticipates that it will be able to
meet its debts as they mature and has adequate capital to
conduct the business in which it is, or proposes to be, engaged.
(xx) A certificate signed by the chief financial officer
of the Borrower stating that:
(a)the representations and warranties contained
in Article 6 hereof and in any other Loan Document are
true and correct on and as of such date;
(b)no Default or Event of Default exists; and
(c)since December 31, 1995, no event has
occurred which has had, or is likely to have, a Materially
Adverse Effect on the Borrower and its Subsidiaries, taken as a
whole.
(xxi) A certification from the principal officers of the
Borrower and any Subsidiary as to such factual matters as
shall be requested by the Agent.
(xxii) Copies of insurance policies or certificates of
insurance of the Borrower and its Subsidiaries
evidencing
liability and casualty insurance meeting the requirements of
the Loan Documents.
(xxiii) Payment, for the account of each Lender, of
the
amendment fee described in Section 4.15(a).
(xxiv) Such other documents and instruments as any Lender,
acting through the Agent, may reasonably request.
Section 5.2. Conditions Precedent to Each Loan. The
obligations of the Lenders to make, convert or extend any Loans
(including the initial Loan or Loans) or any Issuer to issue or
extend any Letter of Credit (including the initial Letter of Credit) shall
be subject to the further conditions precedent that:
(a)(i)in the case of any Committed Loan, the Agent
shall have received in accordance with the provisions
of
Section 2.3(a), 2.3(b), 2.3(c) or 2.3(d) a Notice of Borrowing with
respect to such Committed Loan; (ii) in
the
case of any Competitive Loan, (A) the Funded Indebtedness
Coverage Ratio shall be less than 1.50:1.00 and (B) the applicable
Lender or Lenders shall have received an appropriate notice of
acceptance of its related
Competitive
Bid; and (iii) in the case of any Swingline Loan, the Swingline Lender
shall have received an appropriate
notice
of borrowing in accordance with the provisions of
Section
2.9(b)(i) (any Notice of Borrowing for a Committed Loan described in
clause (i) above, any notice of acceptance
of a
Competitive Bid described in clause (ii) above and any notice of
borrowing for a Swingline Loan described in
clause
(iii) above hereinafter being referred to in this
Section
5.2 as a "Credit Request");
(b) immediately after giving effect to the making of
such Loan (and the application of proceeds thereof) or to
the issuance of such Letter of Credit, as the case may be,
(A) the sum of the principal amounts of Committed Loans outstanding
plus Competitive Loans outstanding plus Swingline Loans outstanding
shall not exceed the lesser
of
(1) the Revolving Credit Facility and (2) the Borrowing Base
and (B) the Letter of Credit Obligations shall not
exceed
the Letter of Credit Facility;
(c)each Person which has become a Significant Subsidiary
since the Effective Date, shall have duly executed and delivered a
Joinder Agreement in
substantially
the form of Exhibit O hereto, and the conditions
precedent
set forth in Section 5.1(b)(ii), (iii), (iv), (v),
(xii)(b),
(xv) and (xvi) shall have been satisfied by each
Significant
Subsidiary;
(d)on the date of such Credit Request
and of the
making of the related Loan the following statements
shall be
true and the Agent shall have received for the account of
each Lender a certificate signed by a duly authorized officer of the
Borrower, dated the date of such Loan, stating that (and each of the
giving of the applicable Credit Request and the acceptance by the
Borrower of
the
proceeds of the related Loan shall constitute a representation and
warranty by the Borrower that on the
date
of such Loan such statements are true):
(i)all of the representations and warranties
made or deemed to be made under this Agreement and in
the other Loan Documents are true and correct as of the
date of such Loan, both with and without giving effect
to the Loans to be made at such time and the application of the
proceeds thereof, and
(ii)no Default or Event of Default exists; and
(e)the Agent shall have received such other approvals,
opinions or documents as any Lender through
the
Agent may reasonably request.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 6.1. Representations and Warranties. The
Borrower
represents and warrants to the Agent and to each Lender as follows:
(a)Organization; Power; Qualification. Each of the
Borrower and each of its Subsidiaries is a corporation, duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its properties and
to
carry on its business as now being and proposed to be
conducted hereafter and is duly qualified and authorized to
do business in each jurisdiction in which the character of
its properties or the nature of its business requires
such
qualification or authorization except for jurisdictions where failure
to be so qualified or authorized will not
have
a Materially Adverse Effect on the Borrower and its
Subsidiaries, taken as a whole.
(b)Subsidiaries. Schedule 6.1(b) correctly
sets
forth as of the Agreement Date the name of each
Subsidiary
of the Borrower, its jurisdiction of incorporation, the name
of its immediate parent or parents, and the percentage of
its issued and outstanding securities owned by the
Borrower
or any other Subsidiary of the Borrower and indicating whether such
Subsidiary is a Consolidated Subsidiary. Except as set forth on
Schedule 6.1(b), as of the
Agreement
Date,
(i) no Subsidiary has issued any outstanding
securities convertible into shares of such
Subsidiary's
capital stock or any outstanding options, warrants or
other rights to acquire any shares or securities convertible into
such shares,
(ii) the outstanding stock and securities of each
such Subsidiary are owned by the Borrower or a Wholly
Owned Subsidiary of the Borrower, or by the
Borrower
and one or more of its Wholly Owned Subsidiaries, free
and clear of all Liens, warrants, options and rights of
others of any kind whatsoever, and
(iii) the Borrower has no Subsidiaries.
The outstanding stock of the Borrower and each of its
Subsidiaries has been duly and validly issued and is
fully
paid and nonassessable by the issuer.
(c)Authorization of Agreement and Loan Documents.
The Borrower and each of its Subsidiaries has the right and
power, and has taken all necessary corporate action to authorize it,
to execute, deliver and perform this
Agreement
and each of the other Loan Documents to which it is a
party
in accordance with their respective terms. This
Agreement
and each of the other Loan Documents have been, or will be,
duly executed and delivered by the duly authorized
officers
of the Borrower and each Subsidiary a party thereto and each
is, or when executed and delivered will be, a legal,
valid
and binding obligation of the Borrower and each
Subsidiary a
party thereto, enforceable in accordance with its
terms.
(d)Compliance of Agreement and Loan Documents with
Laws, etc. Except as disclosed in Schedule 6.1(d), the execution,
delivery and performance of this Agreement
and
each of the other Loan Documents in accordance with
their
respective terms and the extensions of credit hereunder do
not and will not, by the passage of time, the giving of notice or
otherwise,
(i) require any Governmental Approval or violate
any Applicable Law relating to the Borrower or any Subsidiary,
(ii) conflict with, result in a breach of or
constitute a default under the articles or
certificate
of incorporation or by-laws of the Borrower or any of
its Subsidiaries, any material indenture,
agreement or
other instrument to which any of the Borrower or any of
its Subsidiaries is a party or by which it or any of
its property may be bound or any Governmental Approval
relating to any of the Borrower or any of its Subsidiaries, or
(iii) result in or require the creation or
imposition of any Lien (other than the Liens created by
the Collateral Documents) upon or with respect to any
property now owned or hereafter acquired by any of the
Borrower or any of its Subsidiaries.
(e)Business. As of the Agreement Date, the Borrower
is a holding company and conducts no active business
other
than providing management services to its subsidiaries. The
business of each of the Subsidiaries of the Borrower as of
the Agreement Date is as described on Schedule 6.1(e).
(f)Compliance with Law; Governmental Approvals.
Except as set forth in Schedule 6.1(f), each of the
Borrower
and each of its Subsidiaries
(i) has all Governmental Approvals, including
permits relating to Environmental Laws, required
by any
Applicable Law for it to conduct its business, each of
which is in full force and effect, is final and not
subject to review on appeal and is not the subject of
any pending or threatened attack by direct or collateral
proceeding, and
(ii) is in compliance with each Governmental
Approval applicable to it and in compliance with all
other Applicable Law, including all Environmental Laws,
relating to the Borrower or such Subsidiary, as the
case may be,
except for any Governmental Approvals the absence of
which
and instances of noncompliance which would not, singly or in
the aggregate, cause a Default or Event of Default or
have a
Materially Adverse Effect on the Borrower and its Subsidiaries, taken
as a whole, and in respect of which adequate reserves where a reserve
is appropriate in accordance with GAAP have been established on the
books
of
the Borrower or such Subsidiary, as appropriate.
(g)Titles to Properties. Except as set forth in
Schedule 6.1(g), each of the Borrower and each of its
Subsidiaries has good, marketable and legal title to, or a
valid leasehold interest in, its real properties and
valid
and legal title to all of its machinery and equipment
and
material items of its other personal property and
assets,
except those which have been disposed of in the
ordinary
course of business or in a manner not in violation of
this
Agreement or which are subject to Capitalized Leases.
(h)Liens. None of the properties and assets of any
of the Borrower or any of its Subsidiaries is subject
to any
Lien, except Permitted Liens. No financing statement
under
the Uniform Commercial Code of any State constituting a Lien
and which names the Borrower or any Subsidiary as
debtor is
currently filed in any State or other jurisdiction and neither the
Borrower nor any of its Subsidiaries has
signed
any such financing statement or any security agreement authorizing any
secured party thereunder to file any
such
financing statement on or after the Agreement Date,
except
to perfect or protect Permitted Liens.
(i)Indebtedness and Guaranties. Schedule 6.1(i) is a
complete and correct listing of all (i) Indebtedness
for
Money Borrowed (other than Intercompany Indebtedness
and
other than Indebtedness owed by International Apparel
Marketing Corporation to the Borrower or any Subsidiary) and
(ii) Guaranties of Indebtedness for Money Borrowed of
each
of the Borrower and each of its Subsidiaries as of the Effective Date
and after the application of the
proceeds of
the Loans to be made on the Effective Date. Each of
the
Borrower and each such Subsidiary has performed and is in
compliance in all material respects with all of the
terms of
any such Indebtedness for Money Borrowed and Guaranties of
Indebtedness for Money Borrowed involving a principal
amount
outstanding in excess of $2,500,000, and all instruments and
agreements relating thereto, and no default or event of default, or
event or condition which with notice or
lapse of
time or both would constitute such a default or event
of
default, exists with respect to any such Indebtedness
for
Money Borrowed or Guaranty of Indebtedness for Money
Borrowed.
(j) Litigation. Except as set forth on Schedule
6.1(j), there are no actions, suits or proceedings
pending
(nor, to the knowledge of the Borrower, are there any actions, suits
or proceedings threatened, nor is there
any
basis therefor) against or in any other way relating adversely to or
affecting any of the Borrower or any of
its
Subsidiaries or any of its or their property in any
court or
before any arbitrator of any kind or before or by any governmental
body except actions, suits or proceedings
which
will not singly or in the aggregate have a Materially Adverse Effect
on the Borrower and its Subsidiaries,
taken
as a whole, and there are no strikes or walkouts in
progress
relating to any labor contracts to which the Borrower
or any
of its Subsidiaries is a party which, singly or in the aggregate, will
have a Materially Adverse Effect on the Borrower and its Subsidiaries,
taken as a whole.
(k)Intellectual Property. The Borrower and its
Subsidiaries own or possess all material patents,
patent
rights or licenses, patent applications, trademarks, trademark rights,
trade names, trade name rights,
copyrights
and rights with respect to the foregoing which are
required
to conduct the business of the Borrower and its
Subsidiaries
as now and presently planned to be conducted without conflict with the
rights of others and Schedule 6.1(k)
is a
list of certain patents, trademarks and copyrights, including all such
material patents, trademarks and copyrights used by the Borrower or
any Subsidiary in
the
conduct of its business as of the Agreement Date.
(l)Tax Returns and Payments. All material federal,
state and other tax returns of each of the Borrower and its
Subsidiaries required by law to be filed have been duly filed, and all
material federal, state and other taxes, assessments and other
governmental charges or levies
upon
the Borrower or its Subsidiaries and their property,
income,
profits and assets which are due and payable have been paid,
except any such nonpayment which is at the time
permitted
under Section 7.6. The charges, accruals and reserves on
the books of each of the Borrower and each of its Subsidiaries in
respect of federal and state taxes are
in
the judgment of the Borrower, and in accordance with
GAAP,
adequate, and the Borrower knows of no reason to
anticipate
any additional assessments which, singly or in the aggregate, might
have a Materially Adverse Effect on
the
Borrower and its Subsidiaries, taken as a whole.
(m) Burdensome Provisions. Neither the Borrower nor
any Subsidiary is a party to any indenture, agreement, lease
or other instrument, or subject to any charter or
corporate
restriction, Governmental Approval or Applicable Law, compliance with
the terms of which might have a
Materially
Adverse Effect on the Borrower and its Subsidiaries,
taken
as a whole, nor, except to the extent permitted
pursuant to
Section 9.13, is the Borrower or any Subsidiary subject to
any contractual restrictions which limit the amount of dividends
payable by any Subsidiary.
(n) Financial Statements. The Borrower has furnished
to the Lenders and the Agent copies of the Consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as at December 30,
1995 and of the related Consolidated statements of income and cash
flow for the portion of the 1996 Fiscal Year ended on such date.
Such
Consolidated financial statements are complete and
correct
in all material respects, and present fairly in
accordance
with GAAP the Consolidated financial position of the Borrower and its
Consolidated Subsidiaries as at their
date
and the results of operations of the Borrower and its Consolidated
Subsidiaries for the portion of the Fiscal
Year
ended on such date. Except as disclosed or reflected
in
such balance sheet or the notes relating thereto as at such
date, and except as disclosed in writing to the Lenders and
the Agent prior to the Agreement Date, as of the
Effective
Date the Borrower and its Consolidated Subsidiaries
have no
material liabilities, contingent or otherwise, and
there are
no material unrealized or anticipated losses of the
Borrower
or its Consolidated Subsidiaries.
(o)Adverse Change. Since the date of
the latest
annual or quarterly financial statements received by
the
Agent and the Lenders pursuant to Section 8.1 (or,
prior to
receipt by the Agent and the Lenders of the first
financial
statements pursuant to Section 8.1 since the date of
the
financial statements described in Section 6.1(n)),
(i)no material adverse change in the business,
assets, liabilities, financial condition, results of
operations or business prospects of the Borrower and
its Subsidiaries, taken as a whole, has occurred, and
(ii)no event has occurred or failed to occur
which has had, or is likely to have, a Materially Adverse Effect
on the Borrower and its
Subsidiaries,
taken as a whole.
(p) ERISA. Schedule 6.1(p) is a complete and correct
listing of all Plans of the Borrower and its Subsidiaries in
effect on the Agreement Date. Each Plan of the
Borrower and
its Subsidiaries is in compliance with ERISA in all
material
respects. No material liability to the PBGC or to a
Multi-
employer Plan has been, or is expected by the Borrower or any Subsidiary to
be, incurred by the Borrower or such Subsidiary.
(q) Absence of Defaults. Neither the Borrower nor
any Subsidiary is in default under its articles of incorporation or
certificate of incorporation or by-
laws and
no event has occurred, which has not been remedied,
cured or
waived,
(i)which constitutes a Default or an Event of
Default, or
(ii)which constitutes, or which with the passage
of time or giving of notice or both would
constitute, a
default or event of default by the Borrower or any Subsidiary
under any material agreement (other
than
this Agreement) or judgment, decree or order to which
the Borrower or any Subsidiary is a party or by which
the Borrower or any Subsidiary or any of their respective
properties may be bound, except, in the
case
only of any such agreement, for alleged defaults which
are being contested in good faith by appropriate proceedings and
with respect to which adequate
reserves
where a reserve is appropriate in accordance with GAAP
have been established on the books of the Borrower or
such Subsidiary, as the case may be, and except for
defaults that have been disclosed and consented to by
the Majority Lenders.
(r)Accuracy and Completeness of Information. All
written information, reports and other papers and data furnished by
the Borrower or any of its Subsidiaries to
the
Agent or any Lender, were or will be, at the time the
same
were or are so furnished, complete and correct in all material
respects, to the extent necessary to give the recipient a true and
accurate knowledge of the subject matter. As of the Effective Date,
no fact is known to
the
Borrower which has had, or may in the future have (so
far as
the Borrower can foresee), a Materially Adverse Effect upon
the Borrower and its Subsidiaries, taken as a whole,
which
has not been set forth in the financial statements
referred
to in Section 6.1(n) or in such information, reports or other papers
or data or otherwise disclosed in writing
to
the Agent and each Lender prior to the Agreement Date. No
document furnished or written statement made by the
Borrower
or any of its Subsidiaries to the Agent or any Lender
in
connection with the negotiation, preparation or
execution of
this Agreement or any of the other Loan Documents
contains
or will contain any untrue statement of a fact material to
the creditworthiness of the Borrower or any Subsidiary or
omits or will omit to state a material fact necessary
in
order to make the statement contained therein not
misleading.
(s)Solvency. In each case after giving effect to the
Indebtedness represented by the Loans and the Letter of Credit
Obligations outstanding and to be incurred and
the
transactions contemplated by this Agreement and each of the
Subsidiary Guaranties and assuming full utilization of the
Commitments, each of the Borrower and each Subsidiary Guarantor,
except as otherwise disclosed to the Agent
and
the Lenders, is solvent, having assets of a fair
salable
value which exceeds the amount required to pay its
debts,
and each of the Borrower and each of the Subsidiary Guarantors, except
as otherwise disclosed to the Agent
and
the Lenders, is able to and anticipates that it will be able
to meet its debts as they mature and has adequate
capital to
conduct the business in which it is, or proposes to be, engaged.
(t)Federal Regulations. Neither the Borrower nor any
Subsidiary is engaged or will engage, principally or as one
of its important activities, in the business of
extending
credit for the purpose of "purchasing" or "carrying"
any
"margin stock" (as each of the quoted terms is defined or
used in Regulations G and U of the Board of Governors
of the
Federal Reserve System). Following the application of the
proceeds of each Loan hereunder, not more than 25% of
the
value of the assets of the Borrower only, or of the
Consolidated assets of the Borrower and its Consolidated
Subsidiaries, will be margin stock.
(u)Investment Company Act. Neither the Borrower nor
any Subsidiary is an "investment company" or a company "controlled" by
an "investment company" (as each of the quoted terms is defined or
used in the Investment
Company
Act of 1940, as amended).
Section 6.2. Survival of Representations and Warranties,
etc. All representations and warranties set forth in
this
Article 6 and all statements contained in any certificate,
financial statement, opinion or other instrument
delivered by or
on behalf of the Borrower or any of its Subsidiaries
pursuant to
or in connection with this Agreement or any of the
other Loan
Documents (including but not limited to any such made
in or in
connection with any amendment thereto) shall constitute
representations and warranties made under this
Agreement. All
representations and warranties made under this
Agreement shall be
made or deemed to be made at and as of the Agreement
Date, at the
Effective Date and at and as of the date of making each Loan or
issuance of each Letter of Credit. All representations and
warranties made or deemed to be made under this
Agreement shall
survive and not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of
the Agent or
any Lender, or any borrowing hereunder.
ARTICLE 7
AFFIRMATIVE COVENANTS
Until the Commitments have been terminated and all the Obligations
have been paid in full, unless the Majority Lenders
shall otherwise consent in writing, the Borrower will, and will
cause each of its Subsidiaries to:
Section 7.1. Preservation of Corporate Existence and Similar Matters.
Except as otherwise permitted pursuant to Section 9.7, preserve and
maintain its corporate existence, rights, franchises, licenses and
privileges in the jurisdiction
of its incorporation and qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization except where the failure to maintain such
corporate
existence, rights, franchises, licenses, privileges, qualification or
authorization would not, either singly or in the
aggregate, have a Materially Adverse Effect on the Borrower and
its Subsidiaries, taken as a whole.
Section 7.2. Compliance with Applicable Law. Comply
with
all Applicable Law, the failure to comply with which would have a
Materially Adverse Effect on the Borrower and its Subsidiaries,
taken as a whole.
Section 7.3. Maintenance of Property. Protect and
preserve
all properties, including copyrights, patents, trade names and
trademarks, material to its business and maintain in good repair,
working order and condition in all material respects all tangible
properties, and from time to time make or cause to be made all
needed and appropriate repairs, renewals, replacements and additions to
such properties, necessary for the conduct of its
business, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times.
Section 7.4. Conduct of Business. At all times carry on
its business in an efficient manner and engage only in businesses
in substantially the same fields as the businesses conducted on
the Agreement Date; provided, that the Borrower and any Subsidiary may
engage in one or more businesses unrelated to those engaged in on the
Agreement Date so long as, at the time
such unrelated business is proposed to be first engaged in (including the
date of Acquisition by the Borrower or any Subsidiary of a Business Unit
engaged in such an unrelated business), the revenues or net sales (as
appropriate) of such
unrelated business and all other unrelated businesses, as projected by the
Borrower for the Borrower's next following full
Fiscal Year as certified to the Agent and the Lenders by a Financial
Officer of the Borrower, do not, in the aggregate, exceed 20% of the
Consolidated revenues of the Borrower and its
Consolidated Subsidiaries for such full Fiscal Year, as projected
by the Borrower and certified to the Agent and the Lenders by a
Financial Officer of the Borrower.
Section 7.5. Insurance. Maintain insurance with responsible
insurance companies against such risks and in such
amounts as is customarily maintained by similar businesses or as
may be required by Applicable Law, and from time to time deliver
to the Agent or any Lender upon its request a detailed list of
the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance, the dates of
the expiration thereof and the properties and risks covered thereby. The
Agent, for the benefit of the Lenders, shall be
named as loss payee and/or additional insured with respect to any
such insurance providing coverage in respect of any Collateral,
and each provider of any such insurance shall agree, by endorsement upon
the policy or policies issued by it or by independent instruments furnished
to the Agent, that it will give
the Agent thirty (30) days prior written notice before any such
policy or policies shall be materially altered or canceled (except for
nonpayment of premiums, where at least ten (10) days
prior written notice shall be given), and that no act or default
of the Borrower or any of its Subsidiaries or any other Person
shall affect the rights of the Agent or the Lenders under such
policy or policies.
Section 7.6. Payment of Taxes and Claims. Pay or
discharge
when due
(a)all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or upon
any properties belonging to it, and
(b)all lawful claims of materialmen, mechanics,
carriers, warehousemen and landlords for labor,
materials,
supplies and rentals which, if unpaid, might become a
Lien
on any of its properties;
except that this Section 7.6 shall not require the payment or
discharge of any such tax, assessment, charge, levy or claim
which is being contested in good faith by appropriate
proceedings
and for which adequate reserves where a reserve is
appropriate in
accordance with GAAP have been established on the
appropriate
books.
Section 7.7. Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and
accounts (which shall be true and complete), as may be required
by or as may be necessary to permit the preparation of financial
statements in accordance with GAAP.
Section 7.8. Visits and Inspections. Permit representatives of the
Agent and any Lender from time to time, as
often as may be reasonably requested, but only during normal business
hours, to
(a)visit and inspect its properties,
(b)inspect and make extracts from its relevant books
and records, including but not limited to management
letters
prepared by independent accountants,
(c)discuss with its principal officers, and its
independent accountants, its business, assets,
liabilities,
financial condition, results of operations and business prospects, and
(d)conduct a collateral audit and analysis of the
Borrower and its Subsidiaries' respective inventories
and
accounts receivable.
Section 7.9. Use of Proceeds.
(a) Use the proceeds of the Loans for working capital and
general business purposes of the Borrower and the Subsidiary Guarantors and
to effect Acquisitions and other Investments permitted under Section 9.4,
and
(b) not use any part of such proceeds for any purpose which
would involve a violation of Regulation G or U or T or X of the
Board of Governors of the Federal Reserve System, or for any other purpose
prohibited by Applicable Law or by the terms and
conditions of this Agreement.
Section 7.10. New Significant Subsidiaries. Cause any Person which
becomes a Significant Subsidiary after the Effective
Date forthwith to (a) execute and deliver a Joinder Agreement in
substantially the form of Exhibit O hereto, (b) comply with the
conditions precedent contained in Section 5.1(b)(ii), (iii), (iv), (v),
(xii)(b), (xv) and (xvi), and (c) deliver such other
documentation as the Agent may reasonably request in connection
with the foregoing, all in form, content and scope
reasonably
satisfactory to the Agent.
Section 7.11. Factoring Agreements.
(a)Promptly upon the Borrower or any Significant
Subsidiary entering into a Factoring Agreement, deliver or
cause such Person to deliver an assignment of factoring proceeds, in
form and substance satisfactory to the
Majority
Lenders, with respect to such Factoring Agreement.
(b)So long as an Event of Default has occurred and is
continuing, promptly upon the request of the Majority Lenders,
deliver, or cause the appropriate Subsidiary
to
deliver, sufficient notice to terminate each Factoring Agreement.
Section 7.12. Further Assurances.
(a)At its own cost and expense, cause to be promptly
and duly taken, executed, acknowledged and delivered
all
such further acts, documents and assurances (x) as may from
time to time be necessary or as the Agent may from time to
time request in order to carry out the intent and
purposes
of the Collateral Documents and the transactions contemplated thereby,
including all such actions to establish, preserve, protect and perfect
the estate,
right,
title and interest of the Lenders to the Collateral (including
Collateral acquired after the date hereof), including first priority
Liens thereon, subject only to Permitted Liens and (y) as the Agent
may from time to
time
request, to establish, preserve, protect and perfect
first
priority Liens in favor of the Lenders on any and all personal
property required by the Loan Documents to be delivered to the Agent
as Collateral, now owned or
hereafter
acquired, that is not Collateral on the date hereof.
The
Borrower shall promptly give notice to the Agent of the acquisition
after the Agreement Date by the Borrower or
any
Subsidiary Guarantor of any personal property required by
the Loan Documents to be delivered to the Agent as
Collateral.
(b)Use its reasonable best efforts to promptly cause
Florence County, South Carolina, Greenville County,
South
Carolina and Marlboro County, South Carolina to grant collateral
security interests in all personal property comprising any portion of
the South Carolina Bond
Property
in favor of the Borrower to be subsequently assigned to the
Agent, for the benefit of the Lenders, all pursuant to legal
documentation reasonably satisfactory to the Agent; the Agent shall,
upon its receipt of the aforementioned assignment of such collateral
security interests, satisfactory in all material respects to the
Agent,
promptly
release the Leasehold Mortgage, together with any
related
security interests.
ARTICLE 8
INFORMATION
Until the Commitments have been terminated and all the Obligations
have been paid in full, unless the Majority Lenders
shall otherwise consent in writing, the Borrower will furnish to
the Agent and the Lenders the following:
Section 8.1. Financial Statements.
(a) Quarterly Financial Statements. Within 45 days
after
the close of each of the first three Fiscal Quarters of each Fiscal Year,
Consolidated and consolidating balance sheets of the
Borrower and its Consolidated Subsidiaries as at the end of such
Fiscal Quarter and the related Consolidated and consolidating
statements of income and cash flow of the Borrower and its Consolidated
Subsidiaries for such Fiscal Quarter and for the
portion of the Fiscal Year through the end of such Fiscal Quarter, in each
case, reflecting the operations of the Borrower
and such Consolidated Subsidiaries and setting forth (other than
in consolidating statements of cash flow) in comparative form the
figures for the corresponding periods of the previous Fiscal Year, all of
which shall be certified by the President or a Financial Officer of the
Borrower to be, in his opinion, complete
and correct and to present fairly, in accordance with GAAP, subject to year-
end audit adjustments, the Consolidated financial
position of the Borrower and its Consolidated Subsidiaries as at
the date thereof and the results of operations for such period.
(b) Audited Year-End Statements. Within 90 days after the
end of each Fiscal Year, Consolidated and consolidating balance
sheets of the Borrower and its Consolidated Subsidiaries as at
the end of such Fiscal Year and the related Consolidated and consolidating
statements of income, retained earnings and cash
flow of the Borrower and its Consolidated Subsidiaries for such
Fiscal Year, in each case setting forth in comparative form the
figures as at the end of and for the previous Fiscal Year, certified, in
the case of such Consolidated (but not consolidating) balance sheets and
statements, by Ernst & Young,
KPMG Peat Marwick or other independent certified public accountants of
recognized national standing, whose certificates
shall be in scope and substance reasonably satisfactory to the
Majority Lenders and who shall have authorized the Borrower to
deliver such financial statements and certifications thereof to
the Lenders pursuant to this Agreement.
Section 8.2. Accountants' Certificate. Together with the
financial statements referred to in Section 8.1(b), the Borrower
shall deliver a certificate of such accountants addressed to the
Lenders
(a)stating that in making the examination necessary
for the certification of such financial statements,
nothing
has come to its attention to lead it to believe that
any
Default or Event of Default exists and, in particular, it
has no knowledge of any Default or Event of Default or, if
such is not the case, specifying such Default or Event of
Default and its nature, and
(b)having attached the calculations required to be
prepared by the Borrower pursuant to Section 8.3(a)(i), (ii)
and (iii) for the Fiscal Year covered by such financial statements and
reviewed by such accountants.
Section 8.3. Officer's Certificate. At the time the financial
statements are furnished pursuant to Section 8.1, the
Borrower shall also furnish a certificate of its President or a
Financial Officer substantially in the form of Exhibit M:
(a)setting forth as at the end of such Fiscal Quarter
or Fiscal Year, as the case may be, (i) the calculations
required to establish whether or not the Borrower was
in
compliance with the requirements of Sections 9.1, 9.5
and
9.6, and, (ii) the outstanding Net Amount of all
Investments
(other than Permitted Investments) made by the Borrower
or
any Subsidiary Guarantor since the Agreement Date and
(iii)
the aggregate purchase price of all Acquisitions of any Business Units
made by the Borrower or any Subsidiary Guarantor since the Agreement
Date; and
(b)stating that, based on an examination sufficient
to enable him to make an informed statement, no Default or
Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default and its
nature,
when it occurred, whether it is continuing and the
steps
being taken by the Borrower with respect to such event.
Section 8.4. Copies of Other Reports.
(a)Promptly upon receipt thereof, copies of all
reports, if any, submitted to any of the Borrower or
any of
its Subsidiaries or their respective Boards of
Directors by
their independent public accountants (in their capacity as
auditors), including without limitation any management report.
(b)As soon as practicable, copies of all such financial
statements and reports as the Borrower shall
send
to its stockholders and of all registration statements (other than
registration statements on Form S-8) and
all
regular or periodic reports which any of the Borrower
or any
of its Subsidiaries shall file with the Securities and Exchange
Commission or any successor commission.
(c)From time to time and promptly upon each request,
such data, certificates, reports, statements, documents or
further information regarding the business, assets, liabilities,
financial condition, results of operations
or
business prospects of the Borrower and its Subsidiaries as
any Lender through the Agent may reasonably request and that
the Borrower has or without unreasonable expense can
obtain.
The rights of the Agent and the Lenders under this
Section
8.4(c) are in addition to and not in derogation of
their
rights under any other provision of this Agreement.
(d)If requested by any Lender, the Borrower will
furnish to such Lender statements in conformity with
the
requirements of Federal Reserve Form G-3 or U-1
referred to
in Regulation G or U of the Board of Governors of the
Federal Reserve System.
Section 8.5. Notice of Litigation and Other Matters.
Prompt notice of:
(a)to the extent the Borrower is aware of the same,
the commencement of all proceedings and investigations by or
before any governmental or nongovernmental body and all actions and
proceedings in any court or before any arbitrator against or in any
other way relating
adversely to
or adversely affecting the Borrower, any of its
Subsidiaries
or any of their respective properties, assets or
businesses,
which are reasonably likely, singly or in the aggregate, to
cause a Default or an Event of Default or have a
Materially
Adverse Effect on the Borrower and its Subsidiaries,
taken
as a whole;
(b)any amendment of the articles or certificate of
incorporation or by-laws of the Borrower or any
Subsidiary;
(c)any change in the business, assets, liabilities,
financial condition, results of operations or business prospects of
the Borrower or any Subsidiary which has
had or
may have any Materially Adverse Effect on the Borrower and
its Subsidiaries, taken as a whole, and any change in
the
chief executive officers of the Borrower or any
Subsidiary
Guarantor; and
(d)any Default or Event of Default or any event which
constitutes or which with the passage of time or giving of
notice or both would constitute a default or event of default by the
Borrower or any Subsidiary under any
material
agreement other than this Agreement to which the
Borrower or
such Subsidiary is a party or by which the Borrower or such
Subsidiary or any of its respective properties may be
bound,
describing such Default or Event of Default or other
event
and the action the Borrower has taken or proposes to
take
with respect thereto.
Section 8.6. ERISA. As soon as possible and in any
event
within 30 days after the Borrower knows, or has reason to know,
that:
(a)any Termination Event with respect to a Plan has
occurred or will occur, or
(b)the aggregate present value of the
Unfunded Vested
Accrued Benefits under all Plans has increased to an
amount
in excess of $1.00, or
(c)the Borrower or any Subsidiary is in "default" (as
defined in Section 4219(c) (5) of ERISA) with respect
to
payments to a Multiemployer Plan required by reason of its
complete or partial withdrawal (as described in Section 4203
or 4205 of ERISA) from such Plan,
a certificate of the President or a Financial Officer of the Borrower or
such Subsidiary setting forth the details of such of
the events described in clauses (a) through (c) as is applicable
and the action which is proposed to be taken with respect thereto, together
with any notice or filing which may be required
by the PBGC or other agency of the United States government with
respect to such of the events described in clauses (a) through
(c) as is applicable.
Section 8.7. Other Information. In addition to the
other
notices required hereunder, the Borrower will give the Agent prompt written
notice (with sufficient copies for each Lender) of
(a) any change from the information set forth on Schedule 6.1(b),
(b) the nature of any business entered into by the Borrower or
any Subsidiary after the Agreement Date that is not in substantially the
same fields as the businesses conducted by the
Borrower and its Subsidiaries as of the Agreement Date, and (c)
the establishment of any Plan after the Agreement Date.
Section 8.8. Accuracy of Information. All written information,
reports, statements and other papers and data furnished to the Agent or any
Lender by or at the direction of
the Borrower or any Subsidiary, whether pursuant to this Article
8 or any other provision of this Agreement, or any of the other
Loan Documents, shall be, at the time the same is so furnished,
complete and correct in all material respects to the extent necessary to
give the Agent and the Lenders true and
accurate
knowledge of the subject matter.
Section 8.9. Information Regarding Hedging Arrangements.
Prompt notice of the Borrower entering into, modifying, extending
or terminating any interest rate protection agreement, foreign
exchange contract, commodity purchase or option agreement or other interest
or exchange rate or commodity price hedging agreement, setting forth in
detail the notional amount and term
of such agreement as so entered into, modified, extended or terminated.
Section 8.10. Borrowing Base Reports. Within 15 days after
the end of each calendar month, a Borrowing Base Report as of the
end of the immediately preceding month, substantially in the form
of Exhibit N hereto and certified by the chief financial officer
of the Borrower to be true and correct as of the date thereof.
ARTICLE 9
NEGATIVE COVENANTS
Until all the Commitments have been terminated and all the
Obligations have been paid in full, unless the Majority Lenders
shall otherwise consent in writing, the Borrower will not, nor
will it permit any Subsidiary to, directly or indirectly:
Section 9.1. Financial Ratios. Permit:
(a) Minimum Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth of the Borrower and its Consolidated Subsidiaries
as of the last day of any
Fiscal
Quarter to be less than $240,000,000, increased on a cumulative basis
as of the last day of each Fiscal Year (beginning with the last day of
Fiscal Year 1996) by
50% of
Consolidated Net Income (if positive) of the Borrower
and
its Consolidated Subsidiaries for the Fiscal Year then ended.
(b)Leverage Ratio. The Leverage Ratio as of the end
of any Fiscal Quarter occurring after the Agreement
Date to
be greater than 1.50 to 1.00.
(c)Consolidated Current Ratio. The ratio of the
Consolidated Current Assets of the Borrower and its Consolidated
Subsidiaries, to the Consolidated Current Liabilities (excluding any
principal amount of the
Loans and
the Letters of Credit Obligations so categorized and
the
current portion of Funded Indebtedness) of the Borrower and
its Consolidated Subsidiaries as of the end of any
Fiscal
Quarter occurring after the Agreement Date to be less
than
2.50 to 1.00.
(d) Interest Coverage Ratio. The Interest Coverage
Ratio to be less than the following proportions at the following
times:
(i) as of the last day of the third Fiscal
Quarter of Fiscal Year 1996, 1.50 to 1.00; and
(ii) as of the last day of each Fiscal Quarter
thereafter, 2.25 to 1.00.
Section 9.2. Indebtedness for Money Borrowed. On or
after
the Effective Date, create, assume, or otherwise become or remain
obligated in respect of, or permit or suffer to exist or to be
created, assumed or incurred or to be outstanding, any Indebtedness for
Money Borrowed other than Permitted Indebtedness
for Money Borrowed.
Section 9.3. Guaranties. After the Effective Date,
become
or remain liable with respect to any Guaranty of any obligation
of any other Person, except for (i) Existing Guaranties, (ii) the
Subsidiary Guaranties, (iii) Guaranties permitted by Section 9.2,
(iv) in the case of the Borrower, Guaranties in respect of obligations of
its Consolidated Subsidiaries (A) to trade or similar creditors, incurred
by such Subsidiaries in the ordinary
course of their respective businesses, (B) in connection with
contracts with their respective customers entered into in the
ordinary course of their respective businesses and (C) under leases of
property used by such Subsidiaries in their respective
businesses, (v) recourse obligations with respect to accounts
receivable sold or otherwise disposed of pursuant to a Permitted
Receivables Financing, and (vi) in the case of the Subsidiary
Guarantors, Guaranties in respect of obligations of the Borrower
under interest rate protection agreements, foreign exchange contracts,
commodity purchase or option agreements or other interest or exchange rate
or commodity price hedging agreements
with any Lender or any affiliate of a Lender; provided that
such
arrangements (A) were entered into by the Borrower in the ordinary course
of business and not for speculative purposes and
(B) involve an aggregate notional amount not in excess of $150,000,000.
Section 9.4. Investments; Business Units. Acquire,
after
the Agreement Date, any Business Unit or Investment or, after
such date, permit any Investment to be outstanding, except that
this Section 9.4 shall not apply to:
(i)Permitted Investments,
(ii) other Investments made by the Borrower or any Subsidiary
Guarantor, provided that (A) the aggregate
Net
Amount of all such Investments shall not exceed, on a Consolidated
basis, $25,000,000 at any time, and (B)
after
giving effect thereto, the unused portion of the
Revolving
Credit Facility (at the time of, and after giving
effect to,
the Acquisition of such Investment) shall be equal to
or
greater than $15,000,000, or
(iii) Acquisitions of one or more Business Units by the
Borrower or any Subsidiary Guarantor after the
Agreement
Date, the aggregate purchase price of which, on a Consolidated basis,
does not exceed $25,000,000,
provided
that, after giving effect thereto, the unused portion
of the
Revolving Credit Facility (at the time of, and after
giving
effect to, the making of such Acquisition) shall be
equal to
or greater than $15,000,000.
As used in this Section 9.4, "purchase price" for any Acquisition
means the total consideration for such Acquisition, including
(without duplication) the amount of any payment made in cash or
by delivery of a promissory note of the Borrower or any Subsidiary, the
fair market value, as determined in good faith by
the Board of Directors of the Borrower, of any property other
than cash or notes transferred by the Borrower or the acquiring
Subsidiary Guarantor in connection with such Acquisition, the
face amount of any Indebtedness assumed or guaranteed by the Borrower or
any Subsidiary in connection with such Acquisition,
and the market value of any equity security issued or transferred
by the Borrower or any Subsidiary in connection with such Acquisition (or,
if any such equity security does not have a readily determinable market
value, the fair value thereof as determined in good faith by the Board of
Directors of the Borrower).
Section 9.5. Capital Expenditures. Make or incur any Capital
Expenditure, except for Capital Expenditures of the Borrower or any
Subsidiary which, together with all other Capital
Expenditures by the Borrower and its Consolidated Subsidiaries
made or incurred during any Fiscal Year, do not exceed, in the
aggregate, the amount set forth opposite such Fiscal Year set
forth below (the date of incurrence of the expenditure determining which
Fiscal Year applies):
Fiscal Year Amount
1996 $70,000,000
1997 $34,500,000
1998 $40,000,000
1999 $28,000,000
2000 $19,000,000
Section 9.6. Restricted Dividend Payments. Declare or make
any Restricted Dividend Payment unless (a) no Default or Event of
Default has occurred and is continuing on the date of such declaration and
(b) the aggregate amount of all Restricted Dividend Payments declared or
made with respect to any Fiscal
Year does not exceed the Permitted Annual Dividend Amount for
such Fiscal Year. "Permitted Annual Dividend Amount" for any
Fiscal Year means, as to each Restricted Dividend Payment declared or made
with respect to such Fiscal Year, an amount equal to the lesser of
(i) $10,000,000, or
(ii) an amount equal to the sum of
(A)(1) for Fiscal Year 1996, 50% of the Consolidated
Net Income of the Borrower and its Consolidated
Subsidiaries
for the last two Fiscal Quarters of such Fiscal Year
(but
without taking into account any net loss for such
period),
as certified by the chief financial officer of the
Borrower
in a certificate delivered to the Agent and the
Lenders, or
(2) for Fiscal Year 1997 and each Fiscal Year
thereafter, 50% of the Consolidated Net Income of the Borrower and its
Consolidated Subsidiaries for such
Fiscal
Year (or portion thereof, but without taking into
account
any net loss for such period) as set forth in the most recent
quarterly or annual financial statements for
such
Fiscal Year (or portion thereof) required to be
delivered to
the Agent and the Lenders pursuant to Section 8.1(a) or (b),
plus
(B) $5,000,000 (as such amount may be reduced,
replenished and/or increased from time to time as hereinafter
described, the "Dividend Basket"), provided
that
the Dividend Basket shall be reduced (but not below
zero)
from time to time by the aggregate amount of the
excess, if
any, of all Restricted Dividend Payments declared or
made
after the Agreement Date and prior to the date of the
making
or declaration of such Restricted Dividend Payment over the
sum of the applicable amounts computed pursuant to
clause
(A) above for all Fiscal Years (or portions thereof) occurring after
the Agreement Date and prior to the
date of
the making or declaration of such Restricted Dividend Payment, and
provided further that the Dividend Basket
shall
be replenished and/or increased from time to time by
the
excess, if any, of the sum of the applicable amounts computed pursuant
to clause (A) above for all Fiscal
Years
(or portions thereof) occurring after the Agreement
Date and
prior to the date of the making or declaration of such Restricted
Dividend Payment over all Restricted
Dividend
Payments declared or made after the Agreement Date and prior
to the date of the making or declaration of such
Restricted
Dividend Payment.
Section 9.7. Merger, Consolidation and Sale of Assets. Merge or
consolidate with any other Person or sell, lease or transfer or otherwise
dispose of, directly or indirectly, in a
single transaction or a series of transactions, all or a substantial
portion of the assets of the Borrower or any Subsidiary Guarantor to the
extent that the cash proceeds (as
defined in the definition "Net Disposition Proceeds" in Section
1.1) of all such assets of the Borrower and all Subsidiary Guarantors
disposed of after the Agreement Date would exceed $25,000,000; provided,
however, that this Section 9.7 shall not
apply to any
(v)sales, leases, transfers or other
dispositions of
assets between the Borrower and any Subsidiary
Guarantor or
between Subsidiary Guarantors,
(w)sales, leases, transfers or other dispositions of
assets in the ordinary course of business,
(x)merger, consolidation or liquidation of any
Subsidiary with or into the Borrower or any Subsidiary Guarantor,
provided in each case, that immediately
after
giving effect thereto no Default or Event of Default
shall
have occurred and be continuing, that in the case of
any
merger to which the Borrower is a party, the Borrower
is the
surviving corporation, and that in the case of any
merger,
consolidation or liquidation to which a Subsidiary
Guarantor
and any Subsidiary not a Subsidiary Guarantor are
parties,
such Subsidiary Guarantor is the surviving corporation and
has a Net Worth immediately following consummation of
such
merger, consolidation or liquidation equal to or
greater
than its Net Worth immediately prior to such merger, consolidation or
liquidation, as certified to the Agent
by a
Financial Officer of such Subsidiary Guarantor,
(y)sale and leaseback transaction permitted under
Section 9.11, or
(z)the sale or other disposition of accounts receivable in
connection with a Permitted Receivables Financing, provided that
immediately after giving
effect
thereto no Default or Event of Default shall have
occurred
and be continuing.
Section 9.8. Transactions with Affiliates. Effect any transaction
giving rise to Intercompany Indebtedness on terms
other than ordinary business terms or any other transaction with
any Affiliate (other than with the Borrower or a Subsidiary Guarantor) on a
basis less favorable to the Borrower or such Subsidiary than would be the
case if such transaction had been
effected with a Person not an Affiliate.
Section 9.9. Liens. Create, assume or permit or
suffer to
exist or to be created or assumed any Lien, other than Permitted
Liens, on (i) any of its property or assets, real, personal or
mixed, tangible or intangible, or (ii) the South Carolina Bond
Property.
Section 9.10. Plans. Permit, or take any action which would result
in, the aggregate present value of the Unfunded Vested Accrued Benefits
under all Plans of the Borrower and any
of its Subsidiaries to exceed $2,500,000.
Section 9.11. Sales and Leasebacks. Enter into any arrangement with
any Person providing for its leasing from such
Person of real or personal property which has been or is to be
sold or transferred, directly or indirectly, by the Borrower or
any of its Subsidiaries to such Person; provided, however that
Duck Head Apparel Company, Inc. may enter into a sale and leaseback of a
distribution center located in Barrow County, Georgia provided that (i)
such transaction is consummated on or
before December 31, 1996, (ii) such transaction is on terms and
conditions reasonably satisfactory to the Agent and (iii) the
Borrower shall immediately prepay the Loans, together with accrued and
unpaid interest on the principal amount prepaid to
the date of prepayment, with the Net Disposition Proceeds of such
transaction in the manner set forth in Section 4.4(a)(iii), even
if such section does not otherwise apply.
Section 9.12. Issuance of Stock by Subsidiaries.
Except as
permitted by Section 9.7, issue, sell or otherwise dispose of any
shares of any class of its capital stock (either directly or indirectly by
issuance of rights or options for, or securities
convertible into, such shares), other than directors' qualifying
shares, to any Person other than the Borrower or any Subsidiary
of the Borrower, provided, that this Section 9.12 shall not apply
to any such issuance, sale or disposition by the Borrower, directly or
indirectly, of shares of its capital stock.
Section 9.13. Additional Restrictions. Create,
consent or
agree to or permit any Subsidiary to create any restrictions on
any such Subsidiary's ability to pay dividends or to repay Intercompany
Indebtedness other than any such restrictions (i)
applicable to a Person, or its stock, at the time such Person
becomes a Subsidiary of the Borrower and not placed thereon by or
with the consent of the Borrower in contemplation of such acquisition
directly or indirectly by the Borrower or (ii) resulting from compliance by
any Subsidiary with any
financial
covenant contained in any agreement to which it is a party evidencing
Existing Indebtedness.
Section 9.14. Special Provisions Regarding International
Apparel Marketing Corporation. Permit International Apparel Marketing
Corporation to have total assets of $1,000,000 or more.
Section 9.15. Limitation on Foreign Operations.
Permit at
any time those of its Subsidiaries which are not incorporated or
organized under the laws of any state of the United States or the
District of Columbia to have assets which in the aggregate constitute more
than 10% of the total assets of the Borrower and
its Consolidated Subsidiaries at such time, as determined in accordance
with GAAP.
Section 9.16. Limitation on Inventory. Permit at any time
the value (determined in accordance with GAAP, consistently applied) of all
raw materials and finished goods inventory owned
by the Borrower and its Subsidiaries, on a consolidated basis,
located outside of the United States or located within the United
States but not subject to a Lien in favor of the Agent for the
benefit of the Lenders, to exceed $25,000,000.
ARTICLE 10
DEFAULT
Section 10.1. Events of Default. Each of the
following
shall constitute an Event of Default, whatever the reason for
such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment or order
of any court or any order, rule or regulation of any governmental
or nongovernmental body:
(a)Default in Payment. The Borrower shall fail to
pay any principal of any Loan or any Obligation arising under Section
3.3(c)(iii)(B) when and as due (whether
at
maturity, on demand, by reason of acceleration or
otherwise)
or any interest on any Loan or any such other Obligation
within two Business Days after the same is due.
(b) Other Payment Default. The Borrower
shall fail
to pay, when and as due (whether at maturity, by reason of
acceleration or otherwise), any amount of any Obligation
(other than as described in Section 10.1(a)), and such default shall
continue for a period of five Business
Days
after written notice thereof has been given to the
Borrower
by the Agent on behalf of the Lenders.
(c)Misrepresentation. Any representation or warranty
made or deemed to be made by the Borrower under this Agreement or any
Loan Document, or by any Subsidiary Guarantor under any Loan Document
to which it is a
party, or
any amendment hereto or thereto, shall prove to have
been
incorrect or misleading in any material respect when
made.
(d)Default in Performance. The Borrower shall fail
to perform or observe any term, covenant, condition or agreement
contained in
(i)Article 9 (other than Section 9.4, 9.5 or
9.8) or Section 7.1 (insofar as it requires the preservation of
the corporate existence of the
Borrower
or any Significant Subsidiary), 7.9 or 8.6,
(ii)this Agreement or any other Loan Document
(other than a default in the performance or
observance
of which is dealt with specifically elsewhere in this
Section 10.1) and such default shall continue for a
period of 15 days after written notice thereof has been
given to the Borrower by the Agent.
(e)Indebtedness Cross-Default and CrossAcceleration.
(i)The Borrower or any Subsidiary shall fail to
pay when due and payable the principal of or interest
on any Indebtedness for Money Borrowed (other than the
Loans or any of the other Obligations or pursuant to
the Subsidiary Guaranties, as the case may be) which is
outstanding in a principal amount in excess of $2,500,000, or
(ii)the maturity of any Indebtedness for Money
Borrowed of any Subsidiary (other than the Loans or any
of the other Obligations or pursuant to the
Subsidiary
Guaranties, as the case may be) which is
outstanding in
a principal amount in excess of $2,500,000 shall have
been (A) accelerated in accordance with the
provisions
of any indenture, contract or instrument providing for
the creation of or concerning such Indebtedness or (B)
required to be prepaid prior to the stated
maturity
thereof.
(f)Other Cross-Defaults. The Borrower or any Subsidiary
shall default in the payment when due, or in
the
performance or observance, of any material obligation
or
condition of any contract or lease material to the
Borrower
and its Subsidiaries, taken as a whole (other than
under the
Loan Documents or relating to Indebtedness for Money Borrowed),
unless, but only as long as, the existence
of any
such default is being contested by the Borrower or such Subsidiary in
good faith by appropriate proceedings and adequate reserves in respect
thereof where a reserve is appropriate in accordance with GAAP have
been
established on
the books of the Borrower or such Subsidiary.
(g)Voluntary Bankruptcy Proceeding. The Borrower or
any Significant Subsidiary (or other Subsidiary,
obligations
of which are Guaranteed by the Borrower or any
Subsidiary
Guarantor) shall
(i)commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect),
(ii)file a petition seeking to take advantage of
any other laws, domestic or foreign, relating to bankruptcy,
insolvency, debt reorganization,
winding up
or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely
and appropriate manner any petition filed against it in
an involuntary case under such bankruptcy laws or other
laws,
(iv)apply for or consent to, or fail to contest
in a timely and appropriate manner, the
appointment of,
or the taking of possession by, a receiver,
custodian,
trustee, or liquidator of itself or of a
substantial
part of its property, domestic or foreign,
(v)admit in writing its inability to pay its
debts as they become due,
(vi)make a general assignment for the benefit of
creditors, or
(vii) take any formal corporate action for the
purpose of effecting any of the foregoing.
(h)Involuntary Bankruptcy Proceeding. A case or
other proceeding shall be commenced against the
Borrower or
any Significant Subsidiary (or other Subsidiary,
obligations
of which are Guaranteed by the Borrower or any
Subsidiary
Guarantor) in any court of competent jurisdiction
seeking
(i)relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, debt
reorganization, winding up or adjustment of debts, or
(ii)the appointment of a
trustee, receiver,
custodian, liquidator or the like of the Borrower or
any Subsidiary or of all or any substantial part of the
assets, domestic or foreign, of the Borrower or any
Subsidiary,
and such case or proceeding shall continue undismissed or
unstayed for a period of 30 consecutive calendar days, or an
order granting the relief requested in such case or proceeding against
the Borrower or any Subsidiary (including, but not limited to, an
order for relief
under
such federal bankruptcy laws) shall be entered.
(i)Litigation. The Borrower or any Subsidiary shall
challenge or contest in any action, suit or proceeding in
any court or before any arbitrator or governmental body the
validity or enforceability of this Agreement or any
Loan
Document.
(j)Judgment. A judgment or order for the
payment of
money shall be entered against the Borrower or any Subsidiary by any
court which, when added to all other unsatisfied judgments or orders
against the Borrower
and all
Subsidiaries, would exceed $2,500,000 in amount and
such
judgment or order shall continue undischarged and
unstayed
for 30 days.
(k)Attachment. A warrant or writ of attachment or
execution or similar process shall be issued against
any
property of the Borrower or any Subsidiary which
warrant,
writ or similar process, when added to all other
outstanding
warrants, writs or similar process against the Borrower and
all Subsidiaries, would exceed $2,500,000 in value and such
warrant, writ or similar process shall continue
undischarged
and unstayed for 30 days.
(l)ERISA.
(i) Any Termination Event with respect to a Plan
shall occur that, after taking into account the excess,
if any, of (A) the fair market value of the assets of
any other Plan with respect to which a Termination Event occurs
on the same day (but only to the
extent
that such excess is the property of the Borrower or any
Subsidiary) over (B) the present value on such day of
all vested nonforfeitable benefits under such other
Plan, results in an Unfunded Vested Accrued
Benefit in
excess of $2,500,000, or
(ii) any Plan shall incur an "accumulated funding
deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA) for which a waiver has not been
obtained in accordance with the applicable
provisions
of the Code and ERISA, or
(iii) the Borrower or any
Subsidiary is in
"default" (as defined in Section 4219(c) (5) of ERISA)
with respect to payments to a Multiemployer Plan resulting from
the Borrower's or any Subsidiary's complete or partial withdrawal
(as described in
Section
4203 or 4205 of ERISA) from such plan.
(m)Change in Management. If E. Erwin Maddrey, II
ceases to serve actively as the President and Chief Executive Officer
of the Borrower or Bettis C.
Rainsford
ceases to serve actively as the Executive Vice
President and
Chief Financial Officer of the Borrower.
(n)Failure of Agreements.
(i) Any material provision of this Agreement or
any other Loan Document after delivery thereof hereunder, shall
for any reason cease to be valid
and
binding on the Borrower or any Subsidiary a party thereto, or the
Borrower or any Subsidiary (or any Person on behalf of the
Borrower or any
Subsidiary)
shall so state in writing, including by any
written
denial or disaffirmance of any Subsidiary's
Obligations
under the Subsidiary Guaranty, or
(ii) this Agreement or any other Loan Document
after delivery thereof hereunder, shall for any reason
fail, in any material respect, to give the Agent and/or
the Lenders the liens, rights, powers and
privileges
purported to be created hereby or thereby.
(o) Ownership Change. There shall occur a Change of
Control.
(p) Material Adverse Change. Since the date of the
latest annual or quarterly financial statements
required to
be delivered to the Agent and each Lender pursuant to
Section 8.1 (or, prior to delivery of the first
financial
statements pursuant to Section 8.1, since the date of
the
financial statements described in Section 6.1(n)),
(i) there shall occur a material adverse change
in the business, assets, liabilities, financial condition,
results of operations or business
prospects
of the Borrower and its Subsidiaries, taken as a whole,
or
(ii) an event has occurred or failed to occur
which has had a Materially Adverse Effect on the Borrower and its
Subsidiaries, taken as a whole.
Section 10.2. Remedies.
(a)Automatic Acceleration and Termination of Facilities.
Upon the occurrence of an Event of Default specified in Section
10.1(g) or 10.1(h), (i) the
principal
of and the interest on the Loans at the time outstanding,
and all other Obligations owed to the Agent and the
Lenders
under this Agreement or any of the other Loan Documents,
including, without being limited to, amounts to be
deposited
as Cash Collateral pursuant to Section 3.7 upon
termination
of this Agreement, shall thereupon become due and
payable
without presentment, demand, protest, or other notice
of any
kind, all of which are expressly waived by the
Borrower,
anything in this Agreement or any of the other Loan Documents to the
contrary notwithstanding, and (ii) the Commitments and the obligation
of each Lender to make Committed Advances and of the Swingline Lender
to make Swingline Loans shall immediately terminate.
(b)Other Remedies. If any Event of Default, other
than as specified in Section 10.1(g) or 10.1(h), shall have
occurred and be continuing, the Agent shall at the
request,
or may with the consent, of the Majority Lenders (i)
declare
the principal of and interest on the Loans and the
Notes at
the time outstanding, and all other Obligations owed to the
Agent and any of the Lenders under this Agreement or
any of
the other Loan Documents, including, without being
limited
to, amounts to be deposited as Cash Collateral pursuant to
Section 3.7 upon termination of this Agreement, to be forthwith due
and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any
kind, all of
which
are expressly waived by the Borrower, anything in this Agreement or
the Loan Documents to the contrary notwithstanding, and (ii) terminate
the Commitments and
the
obligation of each Lender to make Committed Advances
and of
the Swingline Lender to make Swingline Loans, and the
same
shall thereupon be terminated.
ARTICLE 11
AGENT AND CO-AGENTS
Section 11.1. Grant of Authority. Each Lender and
each
holder of a Note by its acceptance thereof hereby appoints and
authorizes the Agent to take such action and exercise such powers
hereunder as are specifically delegated to the Agent by the terms
of this Agreement, together with such other powers as are reasonably
incidental thereto.
Section 11.2. Action on Instructions. The Agent shall in
all cases (including, without limitation, enforcement or collection of any
Notes) be fully protected in acting or refraining from acting under this
Agreement and any of the other
Loan Documents upon written instructions of the Majority Lenders,
and such instructions and any action taken or any failure to act
pursuant thereto shall be binding on all the Lenders, all holders
of the Notes and their respective successors and assigns. The
Agent shall not have any duty to any Lender to exercise any right, power or
remedy under this Agreement or any of the other
Loan Documents or to take any affirmative action hereunder or
thereunder unless directed to do so by the Majority Lenders. The
Agent shall not be required to take any action under Article 10,
nor shall any other provision of this Agreement be deemed to impose a duty
on the Agent to take any action, if the Agent has
been advised by legal counsel that such action is contrary to the
terms of this Agreement or is otherwise contrary to any Applicable Law;
provided, however, that if the Agent fails or
refuses to act in accordance with the direction of the Majority
Lenders based on such advice of counsel, such advice shall be in
writing and a copy thereof shall be delivered to each Lender.
The Agent will forward to each Lender copies or, where appropriate,
originals of the documents delivered to the Agent
pursuant to Section 5.1. The Agent agrees to give each Lender
prompt notice of each notice given to it by the Borrower or any
Subsidiary pursuant to the terms of this Agreement or any other
Loan Document, and to provide to any Lender, upon such Lender's
request therefor, a copy of any such notice.
Section 11.3. Responsibility of the Agent. Neither
the
Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken under
or in connection with this Agreement or any of the other Loan
Documents, except for its or their gross negligence or willful
misconduct. Without limiting the generality of the foregoing,
the Agent:
(a)shall not be responsible to the Borrower, any
Subsidiary Guarantor or any other Person as a result of any
failure or delay in performance by, or any breach by,
any
Issuer of its obligations in respect of any Letter of
Credit
or hereunder or any Lender of any of its obligations
under
this Agreement, the Notes or any of the other Loan
Documents,
(b)shall not be responsible to any Lender or the
holder of any Note or any Issuer as a result of any
failure
or delay in performance by, or any breach by, the
Borrower
or any Subsidiary Guarantor of any of its obligations
under
this Agreement, the Notes, the Subsidiary Guaranties or any
of the other Loan Documents,
(c)shall not be responsible to any Lender for any
statements, representations or warranties in this
Agreement
or any of the other Loan Documents or for the validity, effectiveness,
enforceability or sufficiency of this Agreement or any of the other
Loan Documents or any
document
or instrument delivered in connection with the
transactions
contemplated by this Agreement, including, without limitation, any
documents that may be delivered
pursuant to
Article 5,
(d)shall not be bound to ascertain or
inquire as to
the performance or observance of any of the terms, provisions or
conditions of this Agreement, the Notes,
the
Subsidiary Guaranties or any of the other Loan
Documents on
the part of any of the Borrower or any Subsidiary,
(e)shall be entitled to rely upon any writing,
statement or notice or any telegraphed, telexed or
teletyped
message believed by it in good faith to be genuine and to
have been signed or sent by the proper Person,
(f)may consult with counsel and shall be fully
protected in any action taken or omitted to be taken in accordance
with the advice or opinion of such counsel,
(g)may employ agents and attorneys-in-fact and shall
not be liable for the default or misconduct of any such selected by
the Agent with reasonable care, and
(h)may treat the payee of a Note as the holder
thereof until it receives written notice of the
assignment
or transfer thereof signed by such payee and in form
satisfactory to the Agent.
Section 11.4. Representations by the Lenders. Each
Lender
hereby represents and warrants to each other Lender, the Agent
and the Borrower that its decision to enter into this Agreement
and to make its Committed Advances and Competitive Loans and acquire
participations in any Letters of Credit and Swingline
Loans was made on the basis of its own credit judgment and in
making such decision it did not rely upon any representation by
the Agent or any other Lender as to the credit worthiness or financial
position of the Borrower or any Subsidiary. Each Lender also acknowledges
that it will, independently and without
reliance upon the Agent 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 any action under this Agreement.
Section 11.5. Expenses and Indemnification. To the
extent
that the Borrower fails to do so (and without limiting the Obligations of
the Borrower), each Lender and each subsequent
holder of a Note, by its acceptance thereof, agrees to reimburse
the Agent upon demand in proportion to the respective Commitment
Percentage of each Lender, or, in the case of any such subsequent
holder, in proportion that the outstanding balance of such holder's Notes
bears to the total balance outstanding under all
Notes, and to indemnify and hold the Agent harmless in such proportion
against any and all losses, liabilities or expenses
incurred by the Agent arising out of or in connection with the
administration of this Agreement, including the costs and expenses of
defending itself against any claim or liability in
connection with the exercise or performance of any of its
powers
and duties hereunder and of taking any action hereunder, provided
that neither the Lenders nor any holder of any Note shall be liable for any
portion of such losses, liabilities or expenses
incurred by the Agent as a result of the Agent's gross negligence
or willful misconduct.
Section 11.6. Rights of the Bank. The Bank and any
Affiliate of the Bank may accept deposits from, lend money to,
and generally engage in any kind of lending, banking or trust
business with, the Borrower and any of its Subsidiaries and Affiliates as
if it were not the Agent or such Affiliate.
Section 11.7. Right to Resign. The Agent may resign
at any
time by giving 30 days written notice thereof to each Lender and
the Borrower. Upon any such resignation, the Majority Lenders
shall have the right to appoint a successor Agent and if no successor Agent
shall have been so appointed by the Majority Lenders and shall have
accepted such appointment within 30 days
after any such notice of resignation, then the retiring entity
may, on behalf of the Lenders, appoint a successor Agent. Each
successor Agent shall be a Lender (acting exclusively through a
United States branch), if any Lender shall be willing to serve,
or a commercial bank organized under the laws of the United States of
America or any State thereof having a combined capital
and surplus of at least $100,000,000 and shall be acceptable to
the Borrower in its reasonable judgment. After any such resignation, the
provisions of this Article 11 shall continue in
effect for the benefit of the retiring entity with respect to any
actions taken or omitted by it while acting as Agent.
Section 11.8. Co-Agents. The Co-Agents, in their
respective capacities as such, shall have no rights, powers, duties or
obligations under this Agreement or any of the other
Loan Documents.
ARTICLE 12
MISCELLANEOUS
Section 12.1. Notices.
(a)Method of Communication. Except as otherwise
specifically provided in this Agreement, all notices
and
other communications provided for hereunder shall be in
writing. Notices in writing shall be delivered
personally
(including by courier) or sent by certified or
registered
mail postage prepaid or by telegraph or telex or
telecopier
and shall be effective in the case of personal
delivery,
when delivered against a receipt therefor, in the case of
mailing, on the third Business Day after mailing, in
the
case of telegraph, on the day after delivery to the
telegraph office, in the case of telex, upon transmittal,
answerback received and in the case of telecopy, when transmitted and
transmission is confirmed, provided
that
notices to the Agent shall be effective only when
actually
received by the Agent.
(b)Addresses for Notices. Notices to any
party shall
be sent to it at the following addresses, or any other address of
which all the other parties are notified in writing
If to the Borrower: Delta Woodside Industries, Inc. 233 N. Main Street
Suite 200
Hammond Square
Greenville, South Carolina 29601
Attention: President
With copies to: Bettis C. Rainsford
P. 0. Box 388
108-1/2 Courthouse Square
Edgefield, South Carolina 29824
Eric B. Amstutz, Esq.
Wyche, Burgess, Freeman & Parham, P.A. P.O. Box 728
44 E. Camperdown Way
Greenville, South Carolina 29602
If to the Agent: NationsBank, N.A. NationsBank Corporate Center
100 North Tryon Street
NC1-007-08-11
Charlotte, North Carolina 28255
Attn: E. Phifer Helms
If to a Lender: To such Lender at the address of
its
Domestic Lending Office on the signature
pages hereof
(c)Agent's Office. The Agent hereby designates its
office located at NationsBank Corporate Center, 100
North
Tryon Street, NC1-007-08-11, Charlotte, North Carolina 28255, Attn: E.
Phifer Helms, or any subsequent office
which
shall have been specified for such purpose by written
notice
to the parties, as the office to which payments due are to
be made and at which Loans will be disbursed.
Section 12.2. Expenses. The Borrower agrees to pay on
demand all reasonable costs and expenses incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Agreement, the
Notes, the Subsidiary Guaranties and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
expenses of counsel for and other advisors
retained by the Agent with respect thereto and with respect to
advising the Agent as to its rights and responsibilities under
this Agreement, and all costs and expenses, if any (including,
without limitation, reasonable fees and expenses of counsel, including,
without duplication, the allocated costs of staff counsel), of the Agent
and each of the Lenders in connection with
the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement, the Notes and the other documents to be
delivered hereunder.
Section 12.3. Stamp and Other Taxes. The Borrower
shall
pay any and all stamp, registration, recordation and similar taxes, fees or
charges and shall indemnify the Agent and the Lenders against any and all
liabilities with respect to or resulting from any delay in the payment or
omission to pay any
such taxes, fees or charges, which may be payable or determined
to be payable in connection with the execution, delivery, performance or
enforcement of this Agreement and any of the other
Loan Documents or the perfection of any rights thereunder.
Section 12.4. Setoff. In addition to any rights now
or
hereafter granted under Applicable Law and not by way of
limitation of any such rights, upon and after the occurrence of
any Default or Event of Default, each Lender is hereby authorized
by the Borrower at any time or from time to time, without notice
to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness
at any time held or owing by such Lender or any Affiliate of the
Lender to or for the credit or the account of the Borrower against and on
account of the Obligations irrespective or whether
or not
(a)the Agent shall have made any demand under this
Agreement or any of the other Loan Documents, or
(b)the Agent shall have declared any or all of the
Obligations to be due and payable as permitted by
Section
10.2 and although such Obligations shall be contingent or
unmatured.
Each Lender acknowledges, for the benefit of each other Lender,
that the provisions of Section 4.12 shall apply to amounts obtained by any
Lender by reason of its exercise of any rights
pursuant to this Section 12.4.
Section 12.5. Litigation. THE BORROWER, THE AGENT AND
THE
LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF
ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE COMMENCED BY OR
AGAINST THE BORROWER ARISING OUT OF THIS AGREEMENT, OR BY REASON OF ANY
OTHER CAUSE OR DISPUTE WHATSOEVER
BETWEEN THE BORROWER, THE AGENT AND ANY LENDER OF ANY KIND OR
NATURE, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. THE
BORROWER AND THE AGENT AND THE LENDERS HEREBY AGREE THAT THE FEDERAL COURT
OF THE WESTERN DISTRICT OF NORTH CAROLINA OR, AT
THE ELECTION OF THE MAJORITY LENDERS, ANY COURT IN WHICH THE AGENT SHALL,
AT THE DIRECTION OF THE MAJORITY LENDERS, INITIATE
LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION
OVER THE MATTER IN CONTROVERSY AND IS LOCATED IN A
JURISDICTION WHICH HAS A REASONABLE RELATIONSHIP TO THE TRANSACTION
SURROUNDING THE NEGOTIATION, EXECUTION,
ENFORCEMENT
OR PERFORMANCE OF THIS AGREEMENT, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
THE BORROWER, THE AGENT AND ANY LENDER, PERTAINING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING
THEREFROM. THE BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS
AND COMPLAINT, OR OTHER PROCESS OR PAPERS
ISSUED THEREIN, AND AGREEING THAT SERVICE OF SUCH SUMMONS AND
COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO THE BORROWER AT ITS
ADDRESS SET FORTH ABOVE. SHOULD THE BORROWER
FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO
SERVED WITHIN THIRTY (30) DAYS AFTER ITS RECEIPT THEREOF (OR SUCH SHORTER
PERIOD AS MAY BE PRESCRIBED BY APPLICABLE RULES OF CIVIL PROCEDURE), IT
SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED
AGAINST IT AS
DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR
PAPERS. THE EXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS SECTION
SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.
Section 12.6. Consent to Advertising and Publicity.
The
Borrower hereby agrees that the Agent may, after consulting with
the Borrower, issue and disseminate to the public information
describing the credit accommodation entered into pursuant to this
Agreement, including the names and addresses of the Borrower and
its Affiliates, the amount, interest rate, maturity, collateral,
and a general description of the Borrower's and each of its Subsidiary's
business; provided, however, that publication or
dissemination of such information other than through a "tombstone" type
advertisement shall not be made without the Borrower's prior consent.
Section 12.7. Reversal of Payments. Subject to the provisions of
Section 4.7(a), the Agent and each Lender shall
have the continuing and exclusive right to apply, reverse, and
re-apply any and all payments to any portion of the Obligations.
To the extent the Borrower or any Subsidiary Guarantor makes a
payment or payments to the Agent on behalf of the Lenders or to a
Lender or the Agent, which payment(s) or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the
extent of such payment or proceeds received, the Obligations or
part thereof intended to be satisfied shall be revived and continued in
full force and effect, as if such payment or proceeds had not been received
by the Agent or such Lender.
Section 12.8. Injunctive Relief. The Borrower recognizes
that, in the event the Borrower fails to perform, observe or discharge any
of its Obligations or liabilities under this Agreement, any remedy of law
may prove to be inadequate relief to
the Lenders; therefore, the Borrower agrees that the Agent, on
behalf of the Lenders, if the Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages.
Section 12.9. Accounting Matters. All financial and
accounting calculations, measurements and computations made for
any purpose relating to this Agreement, including without limitation all
computations utilized by the Borrower in complying
with any covenant contained herein, shall, unless there is an
express written direction by the Majority Lenders to the contrary
which is consented to by the Borrower, be performed in accordance
with GAAP.
Section 12.10. Assignment.
(a)All the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties
hereto
and their respective successors and permitted assigns, except that the
Borrower may not assign or transfer any
of
its rights under this Agreement without the prior
written
consent of all the Lenders, nor may any Lender assign
or
transfer any of its rights or obligations hereunder or under
any Note other than in accordance with the provisions
of
this Section 12.10; provided, that, notwithstanding any other
provision of this Agreement, any Lender may at
any
time assign all or any portion of its rights under this Agreement and
the Notes held by such Lender to a United States Federal Reserve Bank
as collateral in accordance
with
Regulation A of the Board of Governors of the Federal Reserve System
as in effect from time to time and the applicable operating circular
of such Federal Reserve
Bank.
(b)(i)Notwithstanding the provisions of Section
4.4(b), the Borrower may, at any time following a
notice by
a Lender pursuant to Section 4.5(a) or a demand by a
Lender
pursuant to Section 2.6(b)(ii), 4.5(c), 4.5(d) or 4.13, demand, upon
at least three Business Days' notice to
such
Lender and the Agent, that such Lender assign in
accordance
with the instructions of the Borrower and, if so
demanded,
such Lender shall assign, to one or more banks or other entities all
or a portion of its rights and obligations under this Agreement
(including, without limitation,
all or
a portion of its Commitment, and a corresponding
portion of
its rights and obligations under the Letter of Credit
Facility, the Swingline Facility, the Committed
Advances,
Competitive Loans and other Obligations owing to it and the
Notes held by it); provided, however, that (i) each
such
assignment shall be to an Eligible Assignee (and if to one
or more Lenders, ratably to all Lenders (subject to
each
Lender's consent as to the assignment to it) or on such other basis as
the Agent and the Majority Lenders
(before
giving effect to such assignment) shall agree), (ii)
each
such assignment made as a result of a demand by the
Borrower
pursuant to this Section 12.10(b)(i) shall be arranged by
the Borrower after consultation with the Agent and
shall be
either an assignment of all of the rights and obligations of
the assigning Lender under this Agreement or an
assignment
of a portion of such rights and obligations made concurrently with
another such assignment or other such assignments which together
effect an assignment of all
of
the rights and obligations of the assigning Lender
under
this Agreement, (iii) no Lender shall be obligated to
make
any such assignment as a result of a demand by the
Borrower
pursuant to this Section 12.10(b)(i) unless and until
such
Lender shall have received one or more payments from
either
the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate
outstanding
principal amount of the Obligations owing to such
Lender,
together with accrued interest thereon and accrued fees with
respect thereto to the date of payment of such
principal
amount, and (iv) the parties to each such assignment
shall
execute and deliver to the Agent, for its acceptance
and
recording in the Register, an Assignment and Acceptance,
together with the Notes subject to such assignment and a
processing and recordation fee of $3,500 (payable by
the
Borrower). Upon such execution, delivery, acceptance
and
recording, from and after the effective date specified in
each Assignment and Acceptance, which effective date
shall
be at least three Business Days after the execution
thereof,
(x) the assignee thereunder shall be a party hereto
and, to
the extent that rights and obligations hereunder have
been
assigned to it pursuant to such Assignment and
Acceptance,
have the rights and obligations of a Lender hereunder
and
(y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and,
in the case of an Assignment and
Acceptance
covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement,
such
Lender shall cease to be a party hereto).
(ii)Each Lender may, with the prior written
consent of the Borrower and the Agent, which consent
shall
not be unreasonably withheld or delayed, assign, to one or
more banks or other entities all or a portion of its
rights
and obligations under this Agreement (which shall
include a
portion of its Commitment, and a corresponding portion of
its rights and obligations under the Letter of Credit
Facility, the Swingline Facility, the Committed
Advances
owing to it and the Committed Note held by it and which may
include all or a portion of the Competitive Loans owing to
it); provided, however, that (A) each such assignment
shall
be to an Eligible Assignee, (B) the minimum amount of
any
such assignment shall be $10,000,000 (or, if less, the remaining
amount of such Lender's Commitment), and (C)
the
parties to each such assignment shall execute and
deliver to
the Agent, for its acceptance and recording in the
Register,
an Assignment and Acceptance, together with the Notes
subject to such assignment and a processing and
recordation
fee of $3,500. Upon such execution, delivery,
acceptance
and recording, from and after the effective date
specified
in each Assignment and Acceptance, which effective date shall be at
least three Business Days after the
execution
thereof, (x) the assignee thereunder shall be a party
hereto
and, to the extent that rights and obligations
hereunder
have been assigned to it pursuant to such Assignment
and
Acceptance, have the rights and obligations of a Lender hereunder and
(y) the Lender assignor thereunder shall,
to
the extent that rights and obligations hereunder have
been
assigned by it pursuant to such Assignment and
Acceptance,
relinquish its rights and be released from its
obligations
under this Agreement.
(c)By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the
assignee
thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as
provided
in such Assignment and Acceptance, 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
Agreement
or any other instrument or document furnished pursuant hereto or the
execution, legality, validity,
enforceability,
genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto; (ii)
such assigning Lender makes no representation or
warranty
and assumes no responsibility with respect to the
financial
condition of the Borrower or any Subsidiary Guarantor
or the
performance or observance by the Borrower or any
Subsidiary
Guarantor of any of its Obligations under this
Agreement,
the Subsidiary Guaranty, any Letter of Credit or
related
Application, or any other instrument or document
furnished
pursuant hereto; (iii) such assignee confirms that it
has
received a copy of this Agreement, together with copies of
the financial statements referred to in Section 6.1(n), each
of the other Loan 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
and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, 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
Agreement; (v) such assignee confirms that, subject to the acceptance
rights of the Agent and the Borrower, it is an Eligible Assignee; (vi)
such
assignee
appoints and authorizes the Agent to take such action
as
agent on its behalf and to exercise such powers under
this
Agreement as are delegated to the Agent by the terms
hereof,
together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will
perform
in accordance with their terms all of the obligations
which
by the terms of this Agreement are required to be
performed
by it as a Lender.
(d)The Agent shall maintain at the Agent's Office a
copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of
the
names and addresses of the Lenders and the Commitment
of,
and principal amount of the Loans, reimbursement
obligations
with respect to Letters of Credit, obligations with
respect
to participations in Swingline Loans and all other Obligations owing
from the Borrower to, each Lender
from
time to time (the "Register"). The entries in the
Register
shall be conclusive and binding for all purposes,
absent
manifest error, and the Borrower, the Agent and the
Lenders
may treat each Person whose name is recorded in the
Register
as a Lender hereunder for all purposes of this
Agreement.
The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from
time
to time upon reasonable prior notice.
(e)Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee
representing
that it is an Eligible Assignee, together with any
Notes
subject to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of
Exhibit A hereto and the
required
fee is tendered, (i) accept such Assignment and
Acceptance,
(ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt
of
such notice, the Borrower, at its own expense, shall
execute
and deliver to the Agent, in exchange for delivery to
it of
the surrendered Note or Notes, (A) a new Committed Loan Note
to the order of such Eligible Assignee in an amount
equal to
the Commitment assumed by it pursuant to such Assignment and
Acceptance and to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder (such new
Committed Loan Notes to be in an aggregate principal amount equal to
the principal amount of the surrendered Committed Loan Note of the
assigning
Lender) and
(B) a new Competitive Loan Note to the order of such
Eligible Assignee in an amount equal to the then
current
amount of the Facility. Each of such new Notes shall
be
dated the effective date of such Assignment and
Acceptance
and shall otherwise be in substantially the form of
Exhibit
C hereto and/or Exhibit D hereto, as applicable.
(f)Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of
its
rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment,
its
rights and obligations under the Letter of Credit
Facility,
the Swingline Facility, the Committed Advances,
Competitive
Loans and other Obligations owing to it and the Notes
held
by it); provided, however, that (i) except in connection
with the sale of a participation in the Competitive
Loans or
Competitive Loan Note of any Lender the purchaser of
each
participation shall be a United States commercial bank or a
Wholly Owned Subsidiary of such a bank or of a
corporation
of which such a bank is a Wholly Owned Subsidiary, (ii) such
Lender's obligations under this Agreement (including, without
limitation, its Commitment hereunder) shall
remain
unchanged, (iii) such Lender shall remain solely
responsible
to the other parties hereto for the performance of such obligations,
and the exercise of such Lender's rights
and
remedies hereunder, other than any such exercise which would
(x) increase the amount of its Commitment, (y) reduce
the
principal of or interest on any Note subject to such participation, or
any facility or other fee, payable to
such
Lender after the date of sale of such participation, or (z)
postpone any date fixed for the payment to such Lender of
principal of or interest on any Note subject to such participation, or
any facility or other fee, shall not
be
subject to the consent of the purchaser of such participation, (iv)
the minimum amount of principal of Committed Advances or Commitment
subject to each such participation shall be $5,000,000 (or, if less,
the remaining amount of such Lender's Commitment), (v) each purchaser
of a participation shall be prohibited from selling any interest in
such participation, (vi) such
Lender
shall remain the holder of any such Notes for all
purposes
of this Agreement, (vii) the Borrower, the Agent and
the
other Lenders shall continue to deal solely and
directly
with such Lender in connection with such Lender's
rights and
obligations under this Agreement, and (viii) such
Lender
shall provide prior written notice of such participation to
the Borrower. Notwithstanding the foregoing provisions of
this Section 12.10(f), each Lender may sell one participation in its
rights and obligations under this Agreement to a United States
commercial bank which is a Wholly Owned Subsidiary of the same Person
of which
such
Lender is a Wholly Owned Subsidiary, which participation
need not comply with the requirements of clauses (i),
(iv)
and (v) above, but shall otherwise comply with the
provisions of this Section 12.10(f).
(g)Any Lender may, in connection with any assignment
or participation or proposed assignment or participation
pursuant to this Section 12.10, disclose to the
assignee or
participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of
the Borrower; provided that,
prior
to any such disclosure, the assignee or participant or proposed
assignee or participant shall agree to
preserve the
confidentiality of any confidential information
relating to
the Borrower or any Subsidiary received by it from such Lender on
substantially the terms set forth in Section 12.21.
Section 12.11. Amendments. No amendment or waiver of
any
provision of this Agreement or any of the other Loan Documents,
nor consent to any departure by the Borrower or any Subsidiary
party hereto or thereto therefrom, shall in any event be effective unless
the same shall be in writing and, in the case of
this Agreement, the Notes and the Borrower Security Agreement,
signed by the Majority Lenders and, in the case of an amendment,
by the Borrower, or in the case of the Subsidiary Guaranty and
the Subsidiaries Security Agreement, consented to by the Majority
Lenders and signed in accordance with the terms thereof, and then
such waiver or consent shall be effective only in the specified
instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Lenders and, in the case of an amendment, by
the Borrower (or by the Subsidiary party to the
relevant Loan Document, as the case may be), do any of the following: (a)
waive any of the conditions specified in Section
5.1 or 5.2, (b) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations, (c) reduce the
principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, (d) postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or
other Obligations payable hereunder or under any of the other
Loan Documents, (e) release (1) any material portion of the Collateral or
(2) any Subsidiary Guarantor from its obligations
under the Subsidiary Guaranty, other than in accordance with the
terms thereof or as a result of a transaction permitted pursuant
to Section 9.7, (f) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans and Letter
of Credit Obligations, or the number of Lenders, which shall be
required for the Lenders or any of them to take any action hereunder, (g)
amend Section 10 (Application of Proceeds) of either the Borrower Security
Agreement or the Subsidiaries Security Agreement, (h) amend Section 4.12,
(i) amend the definitions of "Borrowing Base," "Eligible Equipment,"
"Eligible
Inventory" or "Eligible Receivables" set forth in Section 1.1, or
(j) amend this Section 12.11; and provided, further, that no amendment,
waiver or consent shall, unless in writing and signed
by the Agent in addition to the Lenders required above to take
such action, affect the rights or duties of the Agent under this
Agreement or any Note or any other Loan Document. Notwithstanding the
foregoing terms of Section 12.11, including,
without limitation, the terms of subsections (c) and (d) above,
any Lender may agree with the Borrower (i) to change the interest
rate applicable to any Competitive Loan owing to such Lender and
(ii) subject to the terms of the definition of "Interest Period"
set forth in Section 1.1 and to the limitation that none of the
Obligations shall be due and payable later than the Termination
Date, to postpone any date fixed for any payment of principal of,
or interest on, the Competitive Loans owing to such Lender.
Section 12.12. Performance of Borrower's Duties.
(a) The Borrower's Obligations under this Agreement
and
each of the Loan Documents shall be performed by the Borrower at
its sole cost and expense.
(b) If the Borrower shall fail to do any act or thing which
it has covenanted to do under this Agreement or any of the other
Loan Documents, the Agent on behalf of the Lenders may (but shall
not be obligated to) do the same or cause it to be done either in
the name of the Agent or the Lenders or in the name and on behalf
of the Borrower and the Borrower hereby irrevocably authorizes
the Agent so to act.
Section 12.13. Indemnification. The Borrower agrees
to
reimburse the Agent and each Lender for all costs and expenses
incurred (including reasonable counsel fees and disbursements)
and to indemnify and hold the Agent and each Lender harmless from
and against all losses suffered by the Agent or any Lender (except to the
extent arising out of the Agent's or such Lender's
gross negligence or willful misconduct) in connection with
(i)the exercise by the Agent or any Lender of
any right or remedy granted to it under this Agreement
or any of the other Loan Documents,
(ii)any claim, and the prosecution or defense
thereof, arising out of or in any way connected with
this Agreement or any of the other Loan Documents (except any
claim asserted only by a Lender or the Agent against a Lender or
the Agent), and
(iii) the collection or enforcement of the Obligations or
any of them.
Section 12.14. All Powers Coupled with Interest. All
authorizations granted to the Agent and the Lenders and any Persons
designated by the Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable
so long as any of the Obligations remain unpaid or unsatisfied.
Section 12.15. Survival. Notwithstanding (i) any
termination of this Agreement or (ii) any Assignment and Acceptance
covering all or the remaining portion of a Lender's
rights and obligations under this Agreement,
(a)until all Obligations have been irrevocably paid
in full or otherwise satisfied, the Agent on behalf of the
Lenders shall retain all rights under this Agreement
and
each of the Loan Documents as fully as though this
Agreement
had not been terminated, and
(b) without regard to payment of principal of and
interest on the Committed Advances, the indemnities to which
the Agent and the Lenders are entitled under the
provisions
of this Article 12 and any other provision of this
Agreement
and the Loan Documents shall continue in full force and effect and
shall protect the Agent and the Lenders
against
events arising after such termination or assignment, as well
as before.
Section 12.16. Titles and Captions. Titles and
captions of
Articles, Sections and subsections in this Agreement are included
for convenience only, and neither limit nor amplify the provisions of this
Agreement.
Section 12.17. Severability of Provisions. Any
provision
of this Agreement or any Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of such provision or the remaining
provisions hereof or thereof or affecting the validity or enforceability of
such provision in any
other jurisdiction.
Section 12.18. Governing Law. This Agreement and the Notes
shall be construed in accordance with and governed by the laws of
the State of North Carolina.
Section 12.19. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and shall be binding upon all
parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
Section 12.20. Reproduction of Documents. This
Agreement,
each of the Loan Documents and all documents relating thereto,
including, without limitation, (a) consents, waivers and modifications that
may hereafter be executed, (b) documents received by the Agent or the
Lenders and (c) financial statements, certificates and other information
previously or hereafter furnished to the Agent or the Lenders, may be
reproduced by the Agent or the Lenders by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and
such Person may destroy any original
document so produced. Each party hereto stipulates that, to the
extent permitted by Applicable Law, any such reproduction shall
be as admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original shall be in
existence and whether or not such reproduction was made by such Lender in
the regular course of
business), and any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
Section 12.21. Confidentiality. Each Lender and the
Agent
agrees (on behalf of itself and each of its Affiliates, directors,
officers, employees, and representatives) to use reasonable precautions to
keep confidential, in accordance with
its customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any Subsidiary
pursuant to this Agreement (collectively the "Confidential Information"),
provided that nothing herein shall limit disclosure of any such information
(i)
to the extent required by statute, rule, regulation, or judicial
process, (ii) to counsel for any of the Lenders or the Agent,
solely in their capacities as such, (iii) to examiners, auditors
or accountants, solely in their capacities as such, of such Lender or the
Agent, (iv) to the Agent or any other Lender, or by
any Lender to any Affiliate of such Lender, (v) filed by the Borrower with
any governmental agency, which information is available to the public or
available for inspection by the public, (vi) in accordance with the
provisions of Section 12.10(g) or (vii) where necessary in any litigation
between or
among the parties hereto arising out of this Agreement or any
other Loan Document.
Section 12.22 No Waivers. No failure or delay by the Agent
or any Lender in exercising any right, power or privilege under
any Loan Document shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege, including, without limitation, any constructive or
implied waiver or delay by the Agent or any Lender in acting hereunder with
respect to any Default resulting from possible
noncompliance with Section 9.1(d) (as disclosed by the Borrower
to the Agent and the Lenders as of the Agreement Date). The rights and
remedies herein and therein provided shall be cumulative and not exclusive
of any rights or remedies provided
by law.
Section 12.23 Entire Agreement. This Agreement and
the
other Loan Documents contain the entire agreement among the parties hereto
with respect to the transactions contemplated hereby and thereby, and
supersede all prior arrangements or
understandings with respect thereto, written or oral.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers in
several counterparts all as of the day and year first written
above.
BORROWER:
DELTA WOODSIDE INDUSTRIES, INC.
By: Bettis C. Rainsford
Title:
AGENT:
NATIONSBANK, N.A.
By: E. Phifer Helms
Title: Senior Vice President
CO-AGENTS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: Michael J. McKenney
Title: Vice President
THE BANK OF NEW YORK
By: M. Stephen Griffith
Title: Senior Vice President
LENDERS:
NATIONSBANK, N.A.
Commitment
$47,909,090.91
By: E. Phifer Helms
Title: Senior Vice President
Domestic Lending Office:
NationsBank Corporate Center
100 North Tryon Street
NC1-007-08-11
Charlotte, NC 28255
Attn: Mr. E. Phifer Helms
Telecopier: 704-386-1270
Eurodollar Lending Office:
Domestic Lending Office
Commitment BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
$38,327,272.73
By: Michael J. McKenney
Title: Vice President
Domestic Lending Office:
Bank of America National Trust
and Savings Association
1850 Gateway Boulevard
Concord, California 94520
Attn: Aaron Wilson
Telecopier: 510-675-7329
[with a copy to:
Bank of America National Trust
and Savings Association
1230 Peachtree Street, Suite 3800 Atlanta, Georgia 30309
Attn: Mr. Michael J. McKenney Telecopier: 404-249-6938]
Eurodollar Lending Office:
Domestic Lending Office
Commitment THE BANK OF NEW YORK
$28,745,454.55
By: H. Stephen Griffith
Title: Senior Vice President
Domestic Lending Office:
The Bank of New York
22nd Floor - Southern Division
One Wall Street
New York, New York 10286
Attn: Ms. Ann Marie Beeble
Telecopier: 212-635-6434
Eurodollar Lending Office:
Domestic Lending Office
Commitment FIRST UNION NATIONAL BANK
OF SOUTH CAROLINA
$28,745,454.55
By: Harry C. Farthing
Title: Vice President
Domestic Lending Office:
First Union National Bank
of South Carolina
1 Insignia Plaza
Greenville, South Carolina 29602
Attn: Mr. Harry Farthing
Telecopier: 803-255-8357
Eurodollar Lending Office:
Domestic Lending Office
Commitment WACHOVIA BANK OF SOUTH CAROLINA
$28,745,454.55
By: Suzanne Morrison
Title: Banking Officer
Domestic Lending Office:
Wachovia Bank of South Carolina
1401 Main Street, Suite 705
Columbia, South Carolina 29226
Attn: Ms. Suzanne Morrison
Telecopier: 803-765-3231
Eurodollar Lending Office:
Domestic Lending Office
Commitment THE CHASE MANHATTAN BANK, N.A.
$23,954,545.45
By: Jo Zalon Meer
Title: Vice President
Domestic Lending Office:
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
29th Floor
New York, New York 10005
Attn: Ms. Jo Meer
Telecopier: 212-768-9514
[with a copy to:
The Chase Manhattan Bank, N.A.
1411 Broadway, 4th Floor
New York, New York 10018
Attn: Ms. Jo Meer
Telecopier: 212-768-9514]
Eurodollar Lending Office:
Domestic Lending Office
With respect to the foregoing amendment and restatement of that
certain
Credit Agreement, dated as of September 7, 1994, as amended from time to
time
thereafter, by and among DELTA WOODSIDE INDUSTRIES, INC., a South Carolina
corporation, the lenders from time to time a party thereto, NATIONSBANK OF
NORTH CAROLINA, N.A., a national banking association, as agent, and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association, and THE BANK OF NEW YORK, a New York banking corporation, as
co-
agents, the undersigned hereby consents solely to the amendment of Section
12.11 as set forth therein.
Commitment THE BANK OF NOVA SCOTIA
$23,954,545.45
By: P. M. Brown
Title: Relationship Manager
Domestic Lending Office:
The Bank of Nova Scotia
600 Peachtree Street, Suite 2700
Atlanta, Georgia 30308
Attn: Mr. Bill Zarrett
Telecopier: 404-888-8998
Eurodollar Lending Office:
Domestic Lending Office
Commitment PNC BANK, NATIONAL ASSOCIATION
$23,954,545.45
By: Robert J. Mitchell
Title: Vice President
Domestic Lending Office:
PNC Bank, National Association
5th and Wood Street, 2nd Floor
Pittsburgh, Pennsylvania 15222
Attn: Mr. Bob Mitchell
Telecopier: 412-762-6484
Eurodollar Lending Office:
Domestic Lending Office
Commitment NATWEST BANK N.A.
$19,163,636.36
By: Kurt S. Pohmer
Title: Vice President
Domestic Lending Office:
NatWest Bank N.A.
350 Fifth Avenue
New York, New York 10018
Attn: Mr. Kurt Pohmer
Telecopier: 212-290-1654
Eurodollar Lending Office:
Domestic Lending Office
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's condensed consolidated financial statements for the fiscal quarter
ended March 30, 1996 and is qualified in its entirety by reference to such
financial statements
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> MAR-30-1996
<CASH> 1,766
<SECURITIES> 0
<RECEIVABLES> 118,106
<ALLOWANCES> 4,335
<INVENTORY> 206,562
<CURRENT-ASSETS> 337,747
<PP&E> 358,981
<DEPRECIATION> 119,752
<TOTAL-ASSETS> 614,536
<CURRENT-LIABILITIES> 311,762
<BONDS> 172
0
0
<COMMON> 0
<OTHER-SE> 272,928
<TOTAL-LIABILITY-AND-EQUITY> 614,536
<SALES> 434,870
<TOTAL-REVENUES> 434,870
<CGS> 386,340
<TOTAL-COSTS> 386,340
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 883
<INTEREST-EXPENSE> 13,289
<INCOME-PRETAX> (8,816)
<INCOME-TAX> (1,851)
<INCOME-CONTINUING> (6,965)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,965)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
