UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 25, 1997
DELTA WOODSIDE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 0-10095 57-0535180
(State or other jurisdiction of (Commission (I.R.S. Employer
Incorporation or organization) File Number) 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.
Item 7. Financial Statements and Exhibits
Exhibit 4.2.4 Credit Agreement dated as of August
25, 1997 among Delta Mills, Inc., as
Borrower, certain subsidiaries of the
Borrower from time to time party hereto, as
guarantors, the several Lenders from time
to time party thereto, NationsBank, N.A.,
as Administrtive Agent, and BNY
Financial Corporation, as Collateral Agent.
Exhibit 4.2.5 Credit Agreement dated as of August
25, 1997 among Delta Woodside Industries,
Inc., as Borrower, certain subsidiaries
of the Borrower from time to time party
thereto, as guarantors, the several Lenders
from time to time party thereto and NationsBank,
N. A. as Agent, together with certain related
forms of instruments, agreements and documents
(excluding scheduled). The Company agrees to furnish
supplementally to the Securities and Exchange
Commission a copy of any omitted schedules
to such agreement upon request of the Commission
Exhibit 4.2.6 Indenture dated as of August 25, 1997 with respect
to Delta Mills, Inc. 9 5/8% Senior Notes due 2007,.
with The Bank of New York, as Trustee, together
with forms of certain related instruments, agreements
and documents.
Registrant is filing this amendment to the Form 8-K filed on August
25, 1997 to include the above exhibits.
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 hereunto duly
authorized.
DELTA WOODSIDE INDUSTRIES, INC.
(Registrant)
Date September 24, 1997 /s/ Douglas J. Stevens
Douglas J. Stevens
Controller and Assistant Secretary
[EXECUTION COPY]
CREDIT AGREEMENT
Dated as of August 25, 1997
among
DELTA WOODSIDE INDUSTRIES, INC.,
as Borrower,
CERTAIN SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N.A.,
as Agent
TABLE OF CONTENTS
Page
SECTION 1 1
DEFINITIONS 1
1.1 Definitions. 1
1.2 Computation of Time Periods. 23
1.3 Accounting Terms. 23
SECTION 2 24
CREDIT FACILITIES 24
2.1 Revolving Loans. 24
2.2 Letter of Credit Subfacility. 26
SECTION 3 31
OTHER PROVISIONS RELATING TO CREDIT FACILITIES 31
3.1 Default Rate. 31
3.2 Extension and Conversion. 32
3.3 Prepayments. 32
3.4 Termination and Reduction of Revolving Committed Amount. 34
3.5 Fees. 34
3.6 Capital Adequacy. 35
3.7 Limitation on Eurodollar Loans. 36
3.8 Illegality. 36
3.9 Requirements of Law. 36
3.10 Treatment of Affected Revolving Loans. 38
3.12 Compensation. 40
3.13 Pro Rata Treatment. 41
3.14 Sharing of Payments. 42
3.15 Payments, Computations, Etc. 43
3.16 Evidence of Debt. 44
SECTION 4 45
GUARANTY 45
4.1 The Guaranty. 45
4.2 Obligations Unconditional. 46
4.3 Reinstatement. 47
4.4 Certain Additional Waivers. 47
4.5 Remedies. 47
4.6 Rights of Contribution. 48
4.7 Continuing Guarantee. 49
SECTION 5 49
CONDITIONS 49
5.1 Closing Conditions. 49
5.2 Conditions to all Extensions of Credit. 53
SECTION 6 54
REPRESENTATIONS AND WARRANTIES 54
6.1 Financial Condition. 54
6.2 No Material Change. 54
6.3 Organization and Good Standing. 55
6.4 Power; Authorization; Enforceable Obligations. 55
6.5 No Conflicts. 55
6.6 No Default. 56
6.7 Ownership. 56
6.8 Indebtedness. 56
6.9 Litigation. 56
6.10 Taxes. 56
6.11 Compliance with Law. 56
6.12 ERISA. 57
6.13 Subsidiaries. 58
6.14 Governmental Regulations, Etc. 58
6.15 Purpose of Revolving Loans and Letters of Credit. 59
6.16 Environmental Matters. 60
6.17 Intellectual Property. 61
6.18 Solvency. 61
6.19 Investments. 61
6.20 Location of Collateral. 61
6.21 Disclosure. 61
6.22 No Burdensome Restrictions. 61
6.23 Brokers' Fees. 62
6.24 Labor Matters. 62
6.25 Nature of Business. 62
SECTION 7 62
AFFIRMATIVE COVENANTS 62
7.1 Information Covenants. 62
7.2 Preservation of Existence and Franchises. 66
7.3 Books and Records. 66
7.4 Compliance with Law. 66
7.5 Payment of Taxes and Other Indebtedness. 66
7.6 Insurance. 66
7.7 Maintenance of Property. 67
7.8 Performance of Obligations. 67
7.9 Use of Proceeds. 67
7.10 Audits/Inspections. 67
7.11 Financial Covenants. 68
7.12 Additional Credit Parties. 68
7.13 Pledged Assets. 68
7.14 Maintenance of Accounts with Agent. 69
7.15 Factoring Agreements. 69
SECTION 8 69
NEGATIVE COVENANTS 69
8.1 Indebtedness. 69
8.2 Liens. 70
8.3 Nature of Business. 70
8.4 Consolidation, Merger, Dissolution, etc. 71
8.5 Asset Dispositions. 71
8.6 Investments. 72
8.7 Restricted Payments. 72
8.8 Prepayments of Indebtedness, etc. 73
8.9 Transactions with Affiliates. 73
8.10 Fiscal Year. 74
8.11 Limitation on Restricted Actions. 74
8.12 Ownership of Subsidiaries. 74
8.13 Sale Leasebacks. 74
8.14 Capital Expenditures. 75
8.15 No Further Negative Pledges. 75
8.16 Operating Lease Obligations. 75
8.17 Limitation on Foreign Operations. 75
8.18 Factoring Agreements. 75
SECTION 9 76
EVENTS OF DEFAULT76
9.1 Events of Default. 76
9.2 Acceleration; Remedies. 78
SECTION 10 79
AGENCY PROVISIONS 79
10.1 Appointment, Powers and Immunities. 79
10.2 Reliance by Agent. 80
10.3 Defaults. 80
10.4 Rights as a Lender. 81
10.5 Indemnification. 81
10.6 Non-Reliance on Agent and Other Lenders. 81
10.7 Successor Agent. 82
SECTION 11 82
MISCELLANEOUS 82
11.1 Notices. 82
11.2 Right of Set-Off; Adjustments. 83
11.3 Benefit of Agreement. 84
11.4 No Waiver; Remedies Cumulative. 86
11.5 Expenses; Indemnification. 86
11.6 Amendments, Waivers and Consents. 87
11.7 Counterparts. 88
11.8 Headings. 89
11.9 Survival. 89
11.10 Governing Law; Submission to Jurisdiction; Venue. 89
11.11 Severability. 90
11.12 Entirety. 90
11.13 Binding Effect; Termination. 90
11.14 Confidentiality. 90
11.15 Conflict. 91
SCHEDULES
Schedules Omitted
EXHIBITS
Exhibit 1.1A Form of Pledge Agreement
Exhibit 1.1B Form of Security Agreement
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 7.1(c) Form of Officer's Compliance Certificate
Exhibit 7.1(d) Form of Borrowing Base Certificate
Exhibit 7.12 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of August 25, 1997 (as
amended, modified, restated or supplemented from time to time,
the "Credit Agreement"), is by and among DELTA WOODSIDE
INDUSTRIES, INC., a South Carolina corporation (the "Borrower"),
the Guarantors (as defined herein), the Lenders (as defined
herein) and NATIONSBANK, N.A., as Agent for the Lenders (in such
capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide
a $20 million credit facility for the purposes hereinafter set
forth; and
WHEREAS, the Lenders have agreed to make the requested
credit facility available to the Borrower on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise
requires:
"Additional Credit Party" means each Person that
becomes a Guarantor after the Closing Date by execution of a
Joinder Agreement.
"Adjusted Eurodollar Rate" means the Eurodollar Rate
plus 2%.
"Affiliate" means, with respect to any Person, any
other Person (i) directly or indirectly controlling or
controlled by or under direct or indirect common control
with such Person or (ii) directly or indirectly owning or
holding ten percent (10%) or more of the Capital Stock in
such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to
direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to
the foregoing.
"Agency Services Address" means NationsBank, N.A., NC1-
001-15-04, 101 North Tryon Street, Charlotte, North Carolina
28255, Attn: Agency Services, or such other address as may
be identified by written notice from the Agent to the
Borrower.
"Agent" shall have the meaning assigned to such term in
the heading hereof, together with any successors or assigns.
"Alchem" means Alchem Capital Corporation, a Delaware
corporation wholly-owned by the Borrower.
"Applicable Lending Office" means, for each Lender, the
office of such Lender (or of an Affiliate of such Lender) as
such Lender may from time to time specify to the Agent and
the Borrower by written notice as the office by which its
Eurodollar Loans are made and maintained.
"Application Period", in respect of any Asset
Disposition, shall have the meaning assigned to such term in
Section 8.5.
"Asset Disposition" means the disposition of any or all
of the assets (including without limitation the Capital
Stock of a Subsidiary) of any Consolidated Party whether by
sale, lease, transfer or otherwise, but excluding (i) the
sale of inventory in the ordinary course of business for
fair consideration and (ii) the sale or disposition of
machinery and equipment no longer used or useful in the
conduct of such Consolidated Party's business.
"Asset Disposition Prepayment Event" means, with
respect to any Asset Disposition other than an Excluded
Asset Disposition, the failure of the Borrower to apply (or
cause to be applied) the Net Cash Proceeds of such Asset
Disposition to the purchase, acquisition or construction of
Eligible Assets during the Application Period for such Asset
Disposition.
"Bankruptcy Code" means the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded
or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person,
the occurrence of any of the following with respect to such
Person: (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order
for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part
of its Property or ordering the winding up or liquidation of
its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect,
or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or
other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty
(60) consecutive days; or (iii) such Person shall commence a
voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent
to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or make any
general assignment for the benefit of creditors; or (iv)
such Person shall be unable to, or shall admit in writing
its inability to, pay its debts generally as they become
due.
"Base Rate" means, for any day, the rate per annum
equal to the higher of (a) the Federal Funds Rate for such
day plus one-half of one percent (0.5%) and (b) the Prime
Rate for such day. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime
Rate or Federal Funds Rate.
"Base Rate Loan" means any Revolving Loan bearing
interest at a rate determined by reference to the Base Rate.
"Borrower" means the Person identified as such in the
heading hereof, together with any permitted successors and
assigns.
"Borrowing Base" means, as of any day, the sum of (a)
85% of Eligible Receivables (net of any reserves as provided
in the definition of "Eligible Receivables" set forth in
this Section 1.1) and (b) 40% of Eligible Inventory (net of
any reserves as provided in the definition of "Eligible
Inventory" set forth in this Section 1.1), in each case as
set forth in the most recent Borrowing Base Certificate
delivered to the Agent and the Lenders in accordance with
the terms of Section 7.1(d).
"Borrowing Base Parties" means the Borrower and each of
the Guarantors which is a Domestic Subsidiary of the
Borrower.
"Business Day" means a day other than a Saturday,
Sunday or other day on which commercial banks in Charlotte,
North Carolina or New York, New York are authorized or
required by law to close, except that, when used in
connection with a Eurodollar Loan, such day shall also be a
day on which dealings between banks are carried on in U.S.
dollar deposits in London, England.
"Capital Lease" means, as applied to any Person, any
lease of any Property (whether real, personal or mixed) by
that Person as lessee which, in accordance with GAAP, is or
should be accounted for as a capital lease on the balance
sheet of that Person.
"Capital Stock" means (i) in the case of a corporation,
capital stock, (ii) in the case of an association or
business entity, any and all shares, interests,
participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a
partnership, partnership interests (whether general or
limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or
participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or
directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United
States of America is pledged in support thereof) having
maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and
certificates of deposit of (i) any Lender, (ii) any domestic
commercial bank of recognized standing having capital and
surplus in excess of $100,000,000 or (iii) any bank whose
short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Moody's is at least P-1 or
the equivalent thereof (any such bank being an "Approved
Bank"), in each case with maturities of not more than 270
days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Bank (or
by the parent company thereof) or any variable rate notes
issued by, or guaranteed by, any domestic corporation rated
A-1 (or the equivalent thereof) or better by S&P or P-1 (or
the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase
agreements with a bank or trust company (including any of
the Lenders) or recognized securities dealer having capital
and surplus in excess of $100,000,000 for direct obligations
issued by or fully guaranteed by the United States of
America in which any Credit Party shall have a perfected
first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market
value of at least 100% of the amount of the repurchase
obligations and (e) Investments, classified in accordance
with GAAP as current assets, in money market investment
programs registered under the Investment Company Act of
1940, as amended, which are administered by reputable
financial institutions having capital of at least
$100,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing
subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons
acting in concert 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
Closing 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.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto, as interpreted
by the rules and regulations issued thereunder, in each case
as in effect from time to time. References to sections of
the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to the
collateral which is identified in, and at any time will be
covered by, the Collateral Documents.
"Collateral Documents" means a collective reference to
the Security Agreement, the Pledge Agreement and such other
documents executed and delivered in connection with the
attachment and perfection of the Agent's security interests
and liens arising thereunder, including without limitation
UCC financing statements and patent and trademark filings.
"Commitment" means (i) with respect to each Lender, the
Revolving Commitment of such Lender and (ii) with respect to
the Issuing Lender, the LOC Commitment.
"Consolidated Capital Expenditures" means, for any
period, all capital expenditures of the Consolidated Parties
on a consolidated basis for such period, as determined in
accordance with GAAP.
"Consolidated Cash Taxes" means, for any period, the
aggregate of all income, value added and similar taxes of
the Consolidated Parties on a consolidated basis for such
period, as determined in accordance with GAAP, to the extent
the same are paid in cash during such period.
"Consolidated Current Assets" means, as of any date,
all items which would be classified as current assets on a
consolidated balance sheet of the Borrower and its
Subsidiaries prepared as of such date in accordance with
GAAP.
"Consolidated Current Liabilities" means, as of any
date, all items which would be classified as current
liabilities on a consolidated balance sheet of the Borrower
and its Subsidiaries prepared as of such date in accordance
with GAAP.
"Consolidated EBITDA" means, for any period, the sum of
(i) Consolidated Net Income for such period, plus (ii) an
amount which, in the determination of Consolidated Net
Income for such period, has been deducted for (A)
Consolidated Interest Expense, (B) total federal, state,
local and foreign income, value added and similar taxes and
(C) depreciation and amortization expense, all as determined
in accordance with GAAP.
"Consolidated Interest Expense" means, for any period,
interest expense (including the amortization of debt
discount and premium, the interest component under Capital
Leases and the implied interest component under Synthetic
Leases) of the Consolidated Parties on a consolidated basis
for such period, as determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, net
income (excluding extraordinary items and non-operating
gains and losses (including without limitation currency
gains and losses)) after taxes for such period of the
Consolidated Parties on a consolidated basis, as determined
in accordance with GAAP.
"Consolidated Parties" means a collective reference to
the Borrower and its Subsidiaries, and "Consolidated Party"
means any one of them.
"Consolidated Scheduled Funded Debt Payments" means, as
of the end of each fiscal quarter of the Consolidated
Parties, for the Consolidated Parties on a consolidated
basis, the sum of all scheduled payments of principal on
Funded Indebtedness for the applicable period ending on such
date (including the principal component of payments due on
Capital Leases during the applicable period ending on such
date); it being understood that Scheduled Funded Debt
Payments shall not include voluntary prepayments or the
mandatory prepayments required pursuant to Section 3.3.
"Consolidated Tangible Capitalization" means, as of any
date, the sum of (i) Consolidated Tangible Net Worth as of
such date plus (ii) Funded Indebtedness of the Consolidated
Parties on a consolidated basis as of such date.
"Consolidated Tangible Net Worth" means, as of any
date, shareholders' equity or net worth of the Consolidated
Parties on a consolidated basis, as determined in accordance
with GAAP, less all assets of the Consolidated Parties as of
such date which should be classified as intangible assets
under GAAP (including without limitation good will and
investments in Delta Mills and its Subsidiaries).
"Consolidated Total Assets" means, at any time, all
items which, in accordance with GAAP, would be classified as
assets on a consolidated balance sheet of the Consolidated
Parties as of such time.
"Continue", "Continuation", and "Continued" shall refer
to the continuation pursuant to Section 3.2 hereof of a
Eurodollar Loan from one Interest Period to the next
Interest Period.
"Convert", "Conversion", and "Converted" shall refer to
a conversion pursuant to Section 3.2 or Sections 3.7 through
3.12, inclusive, of a Base Rate Loan into a Eurodollar Loan.
"Credit Documents" means a collective reference to this
Credit Agreement, the Revolving Notes, the LOC Documents,
each Joinder Agreement, the Collateral Documents and all
other related agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto (in
each case as the same may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to
time), and "Credit Document" means any one of them.
"Credit Parties" means a collective reference to the
Borrower and the Guarantors, and "Credit Party" means any
one of them.
"Credit Party Obligations" means, without duplication,
(i) all of the obligations of the Credit Parties to the
Lenders (including the Issuing Lender) and the Agent,
whenever arising, under this Credit Agreement, the Revolving
Notes, the Collateral Documents or any of the other Credit
Documents (including, but not limited to, any interest
accruing after the occurrence of a Bankruptcy Event with
respect to any Credit Party, regardless of whether such
interest is an allowed claim under the Bankruptcy Code) and
(ii) all liabilities and obligations, whenever arising,
owing from any Consolidated Party to any Lender, or any
Affiliate of a Lender, arising under any Hedging Agreement.
"Current Ratio" means, with respect to the Consolidated
Parties on a consolidated basis as of the last day of any
fiscal quarter of the Consolidated Parties, the ratio of (a)
Consolidated Current Assets as of such date to (b)
Consolidated Current Liabilities as of such date.
"Debt Issuance" means the issuance of any Indebtedness
for borrowed money by any Consolidated Party.
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event
of Default.
"Defaulting Lender" means, at any time, any Lender that
(a) has failed to make a Revolving Loan or purchase a
Participation Interest required pursuant to the term of this
Credit Agreement within one Business Day of when due, (b)
other than as set forth in (a) above, has failed to pay to
the Agent or any Lender an amount owed by such Lender
pursuant to the terms of this Credit Agreement within one
Business Day of when due, unless such amount is subject to a
good faith dispute or (c) has been deemed insolvent or has
become subject to a bankruptcy or insolvency proceeding or
with respect to which (or with respect to any of assets of
which) a receiver, trustee or similar official has been
appointed.
"Delta Mills" means Delta Mills, Inc., a Delaware
corporation indirectly wholly-owned by the Borrower.
"Delta Mills Net Income" means, for any period, net
income (excluding extraordinary items and non-operating
gains and losses (including without limitation currency
gains and losses)) after taxes for such period of Delta
Mills and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Dollars" and "$" means dollars in lawful currency of
the United States of America.
"Domestic Subsidiary" means, with respect to any
Person, any Subsidiary of such Person which is incorporated
or organized under the laws of any State of the United
States or the District of Columbia.
"Eligible Assets" means another business or any
substantial part of another business or other long-term
assets, in each case, in, or used or useful in, the same or
a similar line of business as the Consolidated Parties were
engaged in on the Closing Date or any reasonable extensions
or expansions thereof.
"Eligible Assignee" means (i) a Lender; (ii) an
Affiliate of a Lender; and (iii) any other Person approved
by the Agent and, unless an Event of Default has occurred
and is continuing at the time any assignment is effected in
accordance with Section 11.3, the Borrower (such approval
not to be unreasonably withheld or delayed by the Borrower
and such approval to be deemed given by the Borrower if no
objection is received by the assigning Lender and the Agent
from the Borrower within two Business Days after notice of
such proposed assignment has been provided by the assigning
Lender to the Borrower); provided, however, that neither the
Borrower nor an Affiliate of the Borrower shall qualify as
an Eligible Assignee.
"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 (ii), (iv), (vi) and (xii) 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
reasonably satisfactory to the Agent, (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, (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 reasonably 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 from this
clause (B) (i) Receivables subject to any Lien, other than
Liens in favor of the Agent, for the benefit of the Lenders,
(ii) Receivables which are more than 60 days past due (net
of reserves for bad debts in connection with any such
Receivables), (iii) 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, (iv) 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), (v)
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 reasonably 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, (vi) 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, (vii)
Receivables for which any direct or indirect Subsidiary of
the Borrower or any Affiliate of the Borrower is the account
debtor, (viii) 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 reasonable 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, (ix)
Receivables arising from the sale to an account debtor on a
bill-and-hold , guaranteed sale, sale or return, sale on
approval, consignment or any other repurchase or return
basis 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 any and all lawful and
applicable Federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses,
agreements or other governmental restrictions relating to
the environment or 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, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"Equity Issuance" means any issuance by any
Consolidated Party to any Person which is not a Consolidated
Party of (a) shares of its Capital Stock, (b) any shares of
its Capital Stock pursuant to the exercise of options or
warrants or (c) any shares of its Capital Stock pursuant to
the conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto,
as interpreted by the rules and regulations thereunder, all
as the same may be in effect from time to time. References
to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Consolidated Party within the meaning of
Section 4001(a)(14) of ERISA, or is a member of a group
which includes the Borrower and which is treated as a single
employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial
cessation of operations (within the meaning of Section
4062(e) of ERISA); (ii) the withdrawal by any Consolidated
Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer
(as such term is defined in Section 4001(a)(2) of ERISA), or
the termination of a Multiple Employer Plan; (iii) the
distribution of a notice of intent to terminate or the
actual termination of a Plan pursuant to Section 4041(a)(2)
or 4041A of ERISA; (iv) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC
under Section 4042 of ERISA; (v) any event or condition
which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial
withdrawal of any Consolidated Party or any ERISA Affiliate
from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist
with respect to any Plan; or (vii) the adoption of an
amendment to any Plan requiring the provision of security to
such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Revolving Loan that bears
interest at a rate based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for
any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the quotient obtained
by dividing (a) the Interbank Offered Rate for such
Eurodollar Loan for such Interest Period by (b) 1 minus the
Eurodollar Reserve Requirement for such Eurodollar Loan for
such Interest Period.
"Eurodollar Reserve Requirement" means, at any time,
the maximum rate at which reserves (including, without
limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor)
by member banks of the Federal Reserve System against
"Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the
foregoing, the Eurodollar Reserve Requirement shall reflect
any other reserves required to be maintained by such member
banks with respect to (i) any category of liabilities which
includes deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include
Eurodollar Loans. The Adjusted Eurodollar Rate shall be
adjusted automatically on and as of the effective date of
any change in the Eurodollar Reserve Requirement.
"Event of Default" means such term as defined in
Section 9.1.
"Excluded Asset Disposition" means (i) any Asset
Disposition by any Consolidated Party to any other
Consolidated Party if (a) the Credit Parties shall cause to
be executed and delivered such documents, instruments and
certificates as the Agent may request so as to cause the
Credit Parties to be in compliance with the terms of Section
7.13 after giving effect to such Asset Disposition and (b)
after giving effect to such Asset Disposition, no Default or
Event of Default exists, (ii) any Equity Issuance, (iii)
sales of accounts pursuant to a Factoring Agreement and (iv)
any Asset Disposition not constituting a substantial part of
the assets of any Person if neither the book value of such
assets nor the Net Cash Proceeds of such Asset Disposition
exceeds $100,000.
"Excluded Equity Issuance" means (i) any Asset
Disposition, (ii) any capital contribution to any
Consolidated Party by any other Consolidated Party or (iii)
any Equity Issuance by any Consolidated Party to any of its
employees, officers or directors pursuant to the exercise of
options or warrants or as part of any compensation package.
"Executive Officer" of any Person means any of the
chief executive officer, chief operating officer, president,
vice president, chief financial officer or treasurer of such
Person.
"Existing Credit Facility" means the credit facility in
favor of Delta Woodside evidenced by that certain amended
and restated credit agreement dated as of March 15, 1996, as
amended from time to time thereafter, among Delta Woodside,
the Lenders named therein, NationsBank, N.A., as Agent, and
Bank of America National Trust and Savings Association and
The Bank of New York, as Co-Agents.
"Existing Letter of Credit" means any one of the
letters of credit described by date of issuance, letter of
credit number, undrawn amount, name of beneficiary and date
of expiry on Schedule 1.1A.
"Factor" means such term as defined in the definition
of "Factoring Agreement" set forth in this Section 1.1.
"Factoring Agreement" means each agreement between the
Borrower or any of its Subsidiaries and any Person approved
by the Required Lenders (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.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the
average rate charged to the Agent (in its individual
capacity) on such day on such transactions as determined by
the Agent.
"Foreign Subsidiary" means, with respect to any Person,
any Subsidiary of such Person which is not a Domestic
Subsidiary of such Person.
"Funded Indebtedness" means, with respect to any
Person, without duplication, (a) all Indebtedness of such
Person other than Indebtedness of the types referred to in
clause (e), (f), (g), (i), (k), (l) and (m) of the
definition of "Indebtedness" set forth in this Section 1.1,
(b) all Indebtedness of another Person of the type referred
to in clause (a) above secured by (or for which the holder
of such Funded Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, Property
owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all
Guaranty Obligations of such Person with respect to
Indebtedness of the type referred to in clause (a) above of
another Person and (d) Indebtedness of the type referred to
in clause (a) above of any partnership or unincorporated
joint venture in which such Person is legally obligated or
has a reasonable expectation of being liable with respect
thereto.
"GAAP" means generally accepted accounting principles
in the United States applied on a consistent basis and
subject to the terms of Section 1.3.
"Governmental Authority" means any Federal, state,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantor" means each of the Persons identified as a
"Guarantor" on the signature pages hereto and each
Additional Credit Party which may hereafter execute a
Joinder Agreement, together with their successors and
permitted assigns, and "Guarantor" means any one of them.
"Guaranty Obligations" means, with respect to any
Person, without duplication, any obligations of such Person
(other than endorsements in the ordinary course of business
of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of
any other Person in any manner, whether direct or indirect,
and including without limitation any obligation, whether or
not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or
provide funds or other support for the payment or purchase
of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other
Person (including without limitation keep well agreements,
maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the
purpose of assuring the holder of such Indebtedness, or (iv)
to otherwise assure or hold harmless the holder of such
Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount
equal to the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect
of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between any
Consolidated Party and any Lender, or any Affiliate of a
Lender.
"Indebtedness" of any Person means (a) all obligations
of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily
made, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to
Property purchased by such Person (other than customary
reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business),
(d) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services purchased by
such Person (other than (i) trade debt incurred in the
ordinary course of business and due within six months of the
incurrence thereof and (ii) deferred compensation payable to
employees of such Person on a basis generally consistent
with past practices) which would appear as liabilities on a
balance sheet of such Person, (e) all obligations of such
Person under take-or-pay or similar arrangements or
commodities agreements not entered into in the ordinary
course of such Person's business, (f) all Indebtedness of
others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the
proceeds of production from, Property owned or acquired by
such Person, whether or not the obligations secured thereby
have been assumed, (g) all Guaranty Obligations of such
Person, (h) the principal portion of all obligations of such
Person under Capital Leases (but not under Operating
Leases), (i) all obligations of such Person under Hedging
Agreements, (j) the maximum amount of all standby letters of
credit issued or bankers' acceptances facilities created for
the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (k)
all preferred Capital Stock issued by such Person and
required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date,
(l) the principal portion of all obligations of such Person
under Synthetic Leases and (m) the Indebtedness of any
partnership or unincorporated joint venture in which such
Person is a general partner or a joint venturer.
"Interbank Offered Rate" means, for any Eurodollar Loan
for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such
rate is not available, the term "Interbank Offered Rate"
shall mean, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if
necessary, to the nearest 1/100 of 1%).
"Interest Coverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis for the one-
quarter period ending on the last day of any fiscal quarter
of the Consolidated Parties, the ratio of (a) Consolidated
EBITDA for such to (b) Consolidated Interest Expense for
such period.
"Interest Payment Date" means (a) as to Base Rate
Loans, the last day of each fiscal quarter of the Borrower
and the Maturity Date, and (b) as to Eurodollar Loans, the
last day of each applicable Interest Period and the Maturity
Date, and in addition where the applicable Interest Period
for a Eurodollar Loan is greater than three months, then
also the date three months from the beginning of the
Interest Period and each three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a
period of one, two, three or six months' duration, as the
Borrower may elect, commencing, in each case, on the date of
the borrowing (including continuations and conversions
thereof); provided, however, (a) if any Interest Period
would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business
Day falls in the next succeeding calendar month, then on the
next preceding Business Day), (b) no Interest Period shall
extend beyond the Maturity Date and (c) where an Interest
Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on
the last Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition
(whether for cash, property, services, assumption of
Indebtedness, securities or otherwise) of assets, shares of
Capital Stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of
such other Person or (b) any deposit with, or advance, loan
or other extension of credit to, such Person (other than
deposits made in connection with the purchase of equipment
or other assets in the ordinary course of business) or (c)
any other capital contribution to or investment in such
Person, including, without limitation, any Guaranty
Obligations (including any support for a letter of credit
issued on behalf of such Person) incurred for the benefit of
such Person, but excluding any Restricted Payment to such
Person.
"Issuing Lender" means NationsBank together with its
successors and permitted assigns.
"Issuing Lender Fees" shall have the meaning assigned
to such term in Section 3.5(c)(ii).
"Joinder Agreement" means a Joinder Agreement
substantially in the form of Exhibit 7.12 hereto, executed
and delivered by an Additional Credit Party in accordance
with the provisions of Section 7.12.
"Lender" means any of the Persons identified as a
"Lender" on the signature pages hereto, and any Person which
may become a Lender by way of assignment in accordance with
the terms hereof, together with their successors and
permitted assigns.
"Letter of Credit" means (i) any letter of credit
issued by the Issuing Lender for the account of the Borrower
in accordance with the terms of Section 2.2 and (ii) each
Existing Letter of Credit..
"Leverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis as of the last
day of any fiscal quarter, the ratio of (a) Funded
Indebtedness of the Consolidated Parties on a consolidated
basis as of such date to (b) Consolidated Tangible
Capitalization as of such date.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest,
encumbrance, lien (statutory or otherwise), preference,
priority or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar
statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or
other similar recording or notice statute, and any lease in
the nature thereof).
"LOC Commitment" means the commitment of the Issuing
Lender to issue Letters of Credit in an aggregate face
amount at any time outstanding (together with the amounts of
any unreimbursed drawings thereon) of up to the LOC
Committed Amount.
"LOC Committed Amount" shall have the meaning assigned
to such term in Section 2.2.
"LOC Documents" means, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or
other documents (whether general in application or
applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties
concerned or at risk or (ii) any collateral security for
such obligations.
"LOC Obligations" means, at any time, the sum of (i)
the maximum amount which is, or at any time thereafter may
become, available to be drawn under Letters of Credit then
outstanding, assuming compliance with all requirements for
drawings referred to in such Letters of Credit plus (ii) the
aggregate amount of all drawings under Letters of Credit
honored by the Issuing Lender but not theretofore reimbursed
by the Borrower.
"Material Adverse Effect" means a material adverse
effect on (i) the condition (financial or otherwise),
operations, business, assets, liabilities or prospects of
any Consolidated Party, (ii) the ability of any Credit Party
to perform any material obligation under the Credit
Documents to which it is a party or (iii) the material
rights and remedies of the Lenders under the Credit
Documents.
"Material Subsidiary" means (i) each of the Persons
identified as a "Guarantor" on the signature pages hereto
and (ii) any other direct or indirect Domestic Subsidiary of
the Borrower which at any time on or after the Closing Date
has total assets (as determined in accordance with GAAP)
equal to or greater than $1,000,000, provided that the
aggregate total assets (as determined in accordance with
GAAP) at any time of all Subsidiaries of the Borrower
excluded from this definition of "Material Subsidiary" shall
not exceed 10% of Consolidated Total Assets as of the then
most recent fiscal quarter end with respect to which the
Agent shall have received the financial statements required
to be delivered pursuant to Section 7.1(a) or (b).
"Materials of Environmental Concern" means any gasoline
or petroleum (including crude oil or any fraction thereof)
or petroleum products or any hazardous or toxic substances,
materials or wastes, defined or regulated as such in or
under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Maturity Date" means October 31, 1998.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the
business of rating securities.
"Multiemployer Plan" means a Plan which is a
multiemployer plan as defined in Sections 3(37) or
4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which any
Consolidated Party or any ERISA Affiliate and at least one
employer other than the Consolidated Parties or any ERISA
Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its
successors.
"Net Cash Proceeds" means, in respect of any Asset
Disposition, Equity Issuance or Debt Issuance, 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 Consolidated
Parties in consideration of such transaction, net of (a)
direct costs (including, without limitation, legal,
accounting and investment banking fees, and sales
commissions) and (b) taxes paid or payable as a result
thereof. Net Cash Proceeds shall be deemed to be received
for purposes of this Credit Agreement (A) in the case of
cash, when paid to the recipient, (B) in the case of readily
marketable securities, when delivered to the recipient in
form for transfer and (C) when evidenced by a promissory
note (1) 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 (2) not secured as provided in clause (1),
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.
"New Delta Mills Credit Facility" means the credit
facility in favor of Delta Mills evidenced by that certain
credit agreement dated as of the date hereof among Delta
Mills, the Guarantors named therein, the Lenders named
therein, NationsBank, N.A., as Administrative Agent, and BNY
Financial Corporation., as Collateral Agent.
"Notice of Borrowing" means a written notice of
borrowing in substantially the form of Exhibit 2.1(b)(i), as
required by Section 2.1(b)(i).
"Notice of Extension/Conversion" means the written
notice of extension or conversion in substantially the form
of Exhibit 3.2, as required by Section 3.2.
"Operating Lease" means, as applied to any Person, any
lease (including, without limitation, leases which may be
terminated by the lessee at any time) of any Property
(whether real, personal or mixed) which is not a Capital
Lease other than any such lease in which that Person is the
lessor.
"Other Taxes" means such term as is defined in Section
3.11.
"Participation Interest" means a purchase by a Lender
of a participation in Letters of Credit or LOC Obligations
as provided in Section 2.2 or in any Revolving Loans as
provided in Section 3.14.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and
any successor thereof.
"Permitted Investments" means Investments which are (i)
cash and Cash Equivalents; (ii) accounts receivable created,
acquired or made by any Consolidated Party in the ordinary
course of business and payable or dischargeable in
accordance with customary trade terms; (iii) Investments
consisting of Capital Stock, obligations, securities or
other property received by any Consolidated Party in
settlement of accounts receivable (created in the ordinary
course of business) from bankrupt obligors; (iv) Investments
existing as of the Closing Date and set forth in Schedule
1.1B; (v) transactions permitted by Section 8.9; (vi)
advances or loans to directors, officers, employees, agents,
customers or suppliers that do not exceed $2,000,000 in the
aggregate at any one time outstanding for all of the
Consolidated Parties; (vii) Investments in Delta Mills and
its Subsidiaries that do not, taken together with Restricted
Payments made pursuant to Section 8.7(d), exceed $500,000 in
the aggregate at any one time outstanding for all of the
Consolidated Parties; or (viii) Investments in any Credit
Party or, subject to the terms of Section 7.12 and 7.13, in
any Subsidiary of a Credit Party.
"Permitted Liens" means:
(i) Liens in favor of the Agent to secure the Credit Party
Obligations;
(ii) Liens (other than Liens created or imposed under ERISA)
for taxes, assessments or governmental charges or levies not
yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established
(and as to which the Property subject to any such Lien is
not yet subject to foreclosure, sale or loss on account
thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any Consolidated Party in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of
borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the
judgments secured shall, within 60 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 60 days
after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including
zoning restrictions), minor defects or irregularities in
title and other similar charges or encumbrances not, in any
material respect, impairing the use of the encumbered
Property for its intended purposes;
(vii) Liens on Property securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases)
to the extent permitted under Section 8.1(c), provided that
any such Lien attaches to such Property concurrently with or
within 90 days after the acquisition thereof;
(viii) any interest of title of a lessor under, and Liens
arising from UCC financing statements (or equivalent
filings, registrations or agreements in foreign
jurisdictions) relating to, leases permitted by this Credit
Agreement;
(ix) Liens in connection with a Factoring Agreement,
but (i) only to the extent of the applicable accounts
receivable subject to such Factoring Agreement and related
property and (ii) 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;
(x) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.6;
(xi) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions; and
(xii) Liens existing as of the Closing Date and set
forth on Schedule 1.1C; provided that no such Lien shall at
any time be extended to or cover any Property other than the
Property subject thereto on the Closing Date.
Notwithstanding anything to the contrary set forth in this
definition or in any other provision of this Credit
Agreement, the term "Permitted Liens" shall not include any
Lien on Property of any Consolidated Party securing any
Indebtedness of Delta Mills or any of its Subsidiaries
(other than pursuant to the pledge agreement executed by
Alchem Capital Corporation in connection with the New Delta
Mills Credit Facility) other than Liens securing any
Guaranty Obligation arising in connection with standby
letters of credit or surety bonds issued to satisfy workers'
compensation requirements.
"Person" means any individual, partnership, joint
venture, firm, corporation, limited liability company,
association, trust or other enterprise (whether or not
incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with
respect to which any Consolidated Party or any ERISA
Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement dated as
of the Closing Date in the form of Exhibit 1.1A to be
executed in favor of the Agent by each of the Credit
Parties, as amended, modified, restated or supplemented from
time to time.
"Prime Rate" means the per annum rate of interest
established from time to time by NationsBank as its prime
rate, which rate may not be the lowest rate of interest
charged by NationsBank to its customers.
"Principal Office" means the principal office of
NationsBank, presently located at Charlotte, North Carolina.
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Refinancing" shall have the meaning given such term in
Section 6.15.
"Register" shall have the meaning given such term in
Section 11.3(c).
"Regulation G, T, U, or X" means Regulation G, T, U or
X, respectively, of the Board of Governors of the Federal
Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the
environment (including the abandonment or discarding of
barrels, containers and other closed receptacles containing
any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to
which the notice requirement has been waived by regulation.
"Required Lenders" means, at any time, Lenders which
are then in compliance with their obligations hereunder (as
determined by the Agent) and holding in the aggregate at
least 51% of (i) the Revolving Commitments (and
Participation Interests therein) or (ii) if the Commitments
have been terminated, the outstanding Revolving Loans and
Participation Interests (including the Participation
Interests of the Issuing Lender in Letters of Credit).
"Requirement of Law" means, as to any Person, the
certificate of incorporation and by-laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its material property is subject.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares
of any class of Capital Stock of any Consolidated Party, now
or hereafter outstanding, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of
any class of Capital Stock of any Consolidated Party, now or
hereafter outstanding, (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of
Capital Stock of any Consolidated Party, now or hereafter
outstanding and (iv) any other payment, distribution or
transfer of cash or Property to Delta Mills or any of its
Subsidiaries not constituting an Investment and not
described in clause (i), (ii) or (iii) above.
"Revolving Commitment" means, with respect to each
Lender, the commitment of such Lender in an aggregate
principal amount at any time outstanding of up to such
Lender's Revolving Commitment Percentage of the Revolving
Committed Amount, (i) to make Revolving Loans in accordance
with the provisions of Section 2.1(a) and (ii) to purchase
Participation Interests in Letters of Credit in accordance
with the provisions of Section 2.2(c).
"Revolving Commitment Percentage" means, for any
Lender, the percentage identified as its Revolving
Commitment Percentage on Schedule 2.1(a), as such percentage
may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Revolving Committed Amount" shall have the meaning
assigned to such term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to
such term in Section 2.1(a) and shall include within such
meaning a portion of any Revolving Loan bearing interest at
the Base Rate or the Adjusted Eurodollar Rate.
"Revolving Note" or "Revolving Notes" means the
promissory notes of the Borrower in favor of each of the
Lenders evidencing the Revolving Loans provided pursuant to
Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended,
modified, restated, supplemented, extended, renewed or
replaced from time to time.
"S&P" means Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc., or any successor or assignee of the
business of such division in the business of rating
securities.
"Sale and Leaseback Transaction" means any direct or
indirect arrangement with any Person or to which any such
Person is a party, providing for the leasing to any
Consolidated Party of any Property, whether owned by such
Consolidated Party as of the Closing Date or later acquired,
which has been or is to be sold or transferred by such
Consolidated Party to such Person or to any other Person
from whom funds have been, or are to be, advanced by such
Person on the security of such Property.
"Security Agreement" means the security agreement dated
as of the Closing Date in the form of Exhibit 1.1B to be
executed in favor of the Agent by each of the Credit
Parties, as amended, modified, restated or supplemented from
time to time.
"Single Employer Plan" means any Plan which is covered
by Title IV of ERISA, but which is not a Multiemployer Plan
or a Multiple Employer Plan.
"Solvent" or "Solvency" means, with respect to any
Person as of a particular date, that on such date (i) such
Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business,
(ii) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature
in their ordinary course, (iii) such Person is not engaged
in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's
Property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage,
(iv) the fair value of the Property of such Person is
greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person
and (v) the present fair salable value of the assets of such
Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected
to become an actual or matured liability.
"Standby Letter of Credit Fee" shall have the meaning
assigned to such term in Section 3.5(c)(i).
"Subsidiary" means, as to any Person, (a) any
corporation more than 50% of whose Capital Stock of any
class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any
class or classes of such corporation shall have or might
have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity of which such
Person directly or indirectly through Subsidiaries has more
than 50% of the Capital Stock at any time; provided,
however, that, notwithstanding the foregoing, Delta Mills
and its direct and indirect Subsidiaries shall not be deemed
to be a direct or indirect Subsidiary of any Credit Party.
"Synthetic Lease" means any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product where such transaction
is considered borrowed money indebtedness for tax purposes
but is classified as an Operating Lease.
"Taxes" means such term as is defined in Section 3.11.
"Trade Letter of Credit Fee" shall have the meaning
assigned to such term in Section 3.5(c)(ii).
"Unused Fee" shall have the meaning assigned to such
term in Section 3.5(b).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(b).
"Unused Revolving Committed Amount" means, for any
period, the amount by which (a) the then applicable
Revolving Committed Amount exceeds (b) the daily average sum
for such period of (i) the outstanding aggregate principal
amount of all Revolving Loans plus (ii) the outstanding
aggregate principal amount of all LOC Obligations.
"Upfront Fee" shall have the meaning assigned to such
term in Section 3.5(a).
"Voting Stock" means, with respect to any Person,
Capital Stock issued by such 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" of any Person means any
Subsidiary 100% of whose Voting Stock is at the time owned
by such Person directly or indirectly through other Wholly
Owned Subsidiaries.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder,
the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial
matters required to be delivered to the Lenders hereunder shall
be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise
expressly provided herein) be made by application of GAAP applied
on a basis consistent with the most recent annual or quarterly
financial statements delivered pursuant to Section 7.1 (or, prior
to the delivery of the first financial statements pursuant to
Section 7.1, consistent with the financial statements as at June
28, 1997); provided, however, if (a) the Borrower shall object to
determining such compliance on such basis at the time of delivery
of such financial statements due to any change in GAAP or the
rules promulgated with respect thereto or (b) the Agent or the
Required Lenders shall so object in writing within 60 days after
delivery of such financial statements, then such calculations
shall be made on a basis consistent with the most recent
financial statements delivered by the Borrower to the Lenders as
to which no such objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and
agree that, for purposes of all calculations made in determining
compliance with the financial covenants set forth in Section
7.11, (i)(A) income statement items (whether positive or
negative) attributable to the Property disposed of in any Asset
Disposition as contemplated by Section 8.5, as applicable, shall
be excluded to the extent relating to any period occurring prior
to the date of such transaction and (B) Indebtedness which is
retired in connection with any such Asset Disposition shall be
excluded and deemed to have been retired as of the first day of
the applicable period and (ii) income statement items (whether
positive or negative) attributable to any Property acquired in
any Investment transaction contemplated by Section 8.6 shall be
included to the extent relating to any period applicable in such
calculations occurring after the date of such transaction (and,
notwithstanding the foregoing, during the first four fiscal
quarters following the date of such transaction, shall be
included on an annualized basis).
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations
and warranties set forth herein, each Lender severally
agrees to make available to the Borrower such Lender's
Revolving Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("Revolving Loans")
from time to time from the Closing Date until the Maturity
Date, or such earlier date as the Revolving Commitments
shall have been terminated as provided herein for the
purposes hereinafter set forth; provided, however, that the
sum of the aggregate principal amount of outstanding
Revolving Loans shall not exceed TWENTY MILLION DOLLARS
($20,000,000.00) (as such aggregate maximum amount may be
reduced from time to time as provided in Section 3.4, the
"Revolving Committed Amount"); provided, further, (A) with
respect to each individual Lender, the Lender's pro rata
share of outstanding Revolving Loans plus its pro rata share
of outstanding LOC Obligations shall not exceed such
Lender's Revolving Commitment Percentage of the Revolving
Committed Amount., and (B) the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding
shall not exceed the lesser of (1) the Revolving Committed
Amount and (2) the Borrowing Base. Revolving Loans may
consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrower may request, and may be
repaid and reborrowed in accordance with the provisions
hereof; provided, however, that no more than 5 Eurodollar
Loans shall be outstanding hereunder at any time. For
purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans,
even if they begin on the same date, although borrowings,
extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing
Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period. Revolving Loans hereunder may be
repaid and reborrowed in accordance with the provisions
hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall
request a Revolving Loan borrowing by written notice
(or telephonic notice promptly confirmed in writing) to
the Agent not later than 11:00 A.M. (Charlotte, North
Carolina time) on the Business Day prior to the date of
the requested borrowing in the case of Base Rate Loans,
and on the third Business Day prior to the date of the
requested borrowing in the case of Eurodollar Loans.
Each such request for borrowing shall be irrevocable
and shall specify (A) that a Revolving Loan is
requested, (B) the date of the requested borrowing
(which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, and (D) whether the
borrowing shall be comprised of Base Rate Loans,
Eurodollar Loans or a combination thereof, and if
Eurodollar Loans are requested, the Interest Period(s)
therefor. If the Borrower shall fail to specify in any
such Notice of Borrowing (I) an applicable Interest
Period in the case of a Eurodollar Loan, then such
notice shall be deemed to be a request for an Interest
Period of one month, or (II) the type of Revolving Loan
requested, then such notice shall be deemed to be a
request for a Base Rate Loan hereunder. The Agent
shall give notice to each affected Lender promptly upon
receipt of each Notice of Borrowing pursuant to this
Section 2.1(b)(i), the contents thereof and each such
Lender's share of any borrowing to be made pursuant
thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or
Base Rate Loan that is a Revolving Loan shall be in a
minimum aggregate principal amount of $5,000,000 and
integral multiples of $1,000,000 in excess thereof (or
the remaining amount of the Revolving Committed Amount,
if less).
(iii) Advances. Each Lender will make its
Revolving Commitment Percentage of each Revolving Loan
borrowing available to the Agent for the account of the
Borrower as specified in Section 3.15(a), or in such
other manner as the Agent may specify in writing, by
1:00 P.M. (Charlotte, North Carolina time) on the date
specified in the applicable Notice of Borrowing in
Dollars and in funds immediately available to the
Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of
the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by
the Lenders and in like funds as received by the Agent.
(c) Repayment. The principal amount of all Revolving
Loans shall be due and payable in full on the Maturity Date,
unless accelerated sooner pursuant to Section 9.2.
(d) Interest. Subject to the provisions of Section
3.1,
(i) Base Rate Loans. During such periods as
Revolving Loans shall be comprised in whole or in part
of Base Rate Loans, such Base Rate Loans shall bear
interest at a per annum rate equal to the Base Rate.
(ii) Eurodollar Loans. During such periods as
Revolving Loans shall be comprised in whole or in part
of Eurodollar Loans, such Eurodollar Loans shall bear
interest at a per annum rate equal to the Adjusted
Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on
each applicable Interest Payment Date (or at such other
times as may be specified herein).
(e) Revolving Notes. The Revolving Loans made by each
Lender shall be evidenced by a duly executed promissory note
of the Borrower to such Lender in an original principal
amount equal to such Lender's Revolving Commitment
Percentage of the Revolving Committed Amount and in
substantially the form of Exhibit 2.1(e).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions
hereof and of the LOC Documents, if any, and any other terms
and conditions which the Issuing Lender may reasonably
require and in reliance upon the representations and
warranties set forth herein, the Issuing Lender shall from
time to time upon request issue (from the Closing Date to
the Maturity Date and in a form reasonably acceptable to
such Issuing Lender), in Dollars, and the Lenders shall
participate in, letters of credit (the "Letters of Credit")
for the account of the Borrower; provided, however, that the
aggregate amount of LOC Obligations shall not at any time
exceed TEN MILLION DOLLARS ($10,000,000); provided, further,
(i) the sum of the aggregate amount of LOC Obligations
outstanding plus Revolving Loans outstanding shall not
exceed the lesser of (A) the Revolving Committed Amount and
(B) the Borrowing Base and (ii) with respect to each
individual Lender, the Lender's pro rata share of
outstanding Revolving Loans plus its pro rata share of
outstanding LOC Obligations shall not exceed such Lender's
Revolving Commitment Percentage of the Revolving Committed
Amount. The issuance and expiry date of each Letter of
Credit shall be a Business Day. Except as otherwise
expressly agreed upon by all the Lenders, no Letter of
Credit shall have an original expiry date more than one year
from the date of issuance, or as extended, shall have an
expiry date extending beyond the Maturity Date. Each Letter
of Credit shall be either (x) a standby letter of credit
issued to support the obligations (including pension or
insurance obligations), contingent or otherwise, of the
Borrower or any of its Subsidiaries, or (y) a commercial
letter of credit in respect of the purchase of goods or
services by the Borrower or any of its Subsidiaries in the
ordinary course of business. Each Letter of Credit shall
comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance
of a Letter of Credit shall be submitted to an Issuing
Lender at least three Business Days prior to the requested
date of issuance. Each Issuing Lender will, at least
quarterly and more frequently upon request, provide to the
Agent for dissemination to the Lenders a detailed report
specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may
have occurred since the date of the prior report, and
including therein, among other things, the account party,
the beneficiary, the face amount, and the expiry date as
well as any payments or expirations which may have occurred.
Each Issuing Lender will further provide to the Agent,
promptly upon request, copies of the Letters of Credit and
the other LOC Documents.
(c) Participations. Each Lender, upon issuance of
a Letter of Credit (or, in the case of each Existing
Letter of Credit, on the Closing Date), shall be deemed
to have purchased without recourse a risk participation
from the applicable Issuing Lender in such Letter of
Credit and each LOC Document related thereto and the
rights and obligations arising thereunder and any
collateral relating thereto, in each case in an amount
equal to its Revolving Commitment Percentage of the
obligations under such Letter of Credit, and shall
absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to
pay to such Issuing Lender therefor and discharge when
due, its Revolving Commitment Percentage of the
obligations arising under such Letter of Credit.
Without limiting the scope and nature of each Lender's
participation in any Letter of Credit, to the extent
that such Issuing Lender has not been reimbursed as
required hereunder or under any such Letter of Credit,
each such Lender shall pay to such Issuing Lender its
Revolving Commitment Percentage of such unreimbursed
drawing in same day funds on the day of notification by
such Issuing Lender of an unreimbursed drawing pursuant
to the provisions of subsection (d) hereof. The
obligation of each Lender to so reimburse each Issuing
Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise
impair the obligation of the Borrower or any other
Credit Party to reimburse an Issuing Lender under any
Letter of Credit, together with interest as hereinafter
provided. Each Existing Letter of Credit shall be
deemed for all purposes of this Credit Agreement and
the other Credit Documents to be a Letter of Credit.
(d) Reimbursement. In the event of any drawing under
any Letter of Credit, the applicable Issuing Lender will
promptly notify the Borrower. Unless the Borrower shall
immediately notify such Issuing Lender of its intent to
otherwise reimburse such Issuing Lender, the Borrower shall
be deemed to have requested a Revolving Loan at the Adjusted
Base Rate in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be used to
satisfy the reimbursement obligations. The Borrower shall
reimburse the applicable Issuing Lender on the day of
drawing under any Letter of Credit either with the proceeds
of a Revolving Loan obtained hereunder or otherwise in same
day funds as provided herein or in the LOC Documents. If
the Borrower shall fail to reimburse an Issuing Lender as
provided hereinabove (including, without limitation, as a
result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any other
Credit Party), the unreimbursed amount of such drawing shall
bear interest at a per annum rate equal to the Adjusted Base
Rate plus two percent (2%). The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of (but without waiver
of) any rights of set-off, counterclaim or defense to
payment the applicable account party or the Borrower may
claim or have against an Issuing Lender, the Agent, the
Lenders, the beneficiary of the Letter of Credit drawn upon
or any other Person, including without limitation, any
defense based on any failure of the applicable account
party, the Borrower or any other Credit Party to receive
consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Issuing
Lender will promptly notify the Lenders of the amount of any
unreimbursed drawing and each Lender shall promptly pay to
the Agent for the account of the Issuing Lender, in Dollars
and in immediately available funds, the amount of such
Lender's Revolving Commitment Percentage of such
unreimbursed drawing. Such payment shall be made on the day
such notice is received by such Lender from the Issuing
Lender if such notice is received at or before 2:00 p.m.
(Charlotte, North Carolina time), otherwise such payment
shall be made at or before 12:00 Noon (Charlotte, North
Carolina time) on the Business Day next succeeding the day
such notice is received. If such Lender does not pay such
amount to the Issuing Lender in full upon such request, such
Lender shall, on demand, pay to the Agent for the account of
the Issuing Lender interest on the unpaid amount during the
period from the date the Lender received the notice
regarding the unreimbursed drawing until such Lender pays
such amount to the Issuing Lender in full at a rate per
annum equal to, if paid within two Business Days of the date
of drawing, the Federal Funds Rate and thereafter at a rate
equal to the Base Rate. Each Lender's obligation to make
such payment to the Issuing Lender, and the right of the
Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the
obligations hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a
Lender to the Issuing Lender, such Lender shall,
automatically and without any further action on the part of
the Issuing Lender or such Lender, acquire a participation
in an amount equal to such payment (excluding the portion of
such payment constituting interest owing to the Issuing
Lender) in the related unreimbursed drawing portion of the
LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the
Borrower and the other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on
which the Borrower shall have requested, or been deemed to
have requested, a Revolving Loan borrowing to reimburse a
drawing under a Letter of Credit, the Agent shall give
notice to the applicable Lenders that a Revolving Loan has
been requested or deemed requested in connection with a
drawing under a Letter of Credit, in which case a Revolving
Loan borrowing comprised solely of Base Rate Loans (each
such borrowing, a "Mandatory Borrowing") shall be
immediately made from all applicable Lenders (without giving
effect to any termination of the Commitments pursuant to
Section 9.2) pro rata based on each Lender's respective
Revolving Commitment Percentage and the proceeds thereof
shall be paid directly to the Issuing Lender for application
to the respective LOC Obligations. Each such Lender hereby
irrevocably agrees to make such Revolving Loans immediately
upon any such request or deemed request on account of each
such Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such
date notwithstanding (i) the amount of Mandatory Borrowing
may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether
any conditions specified in Section 5 are then satisfied,
(iii) whether a Default or Event of Default then exists,
(iv) failure of any such request or deemed request for
Revolving Loans to be made by the time otherwise required
hereunder, (v) the date of such Mandatory Borrowing, or (vi)
any reduction in the Revolving Committed Amount or any
termination of the Commitments. In the event that any
Mandatory Borrowing cannot for any reason be made on the
date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or
any other Credit Party), then each such Lender hereby agrees
that it shall forthwith fund (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such
date and prior to such purchase) its Participation Interest
in the outstanding LOC Obligations; provided, further, that
in the event any Lender shall fail to fund its Participation
Interest on the day the Mandatory Borrowing would otherwise
have occurred, then the amount of such Lender's unfunded
Participation Interest therein shall bear interest payable
to the Issuing Lender upon demand, at the rate equal to, if
paid within two Business Days of such date, the Federal
Funds Rate, and thereafter at a rate equal to the Base Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions
to any Letter of Credit shall, for purposes hereof, be
treated in all respects the same as the issuance of a new
Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender
may have the Letters of Credit be subject to The Uniform
Customs and Practice for Documentary Credits, as published
as of the date of issue by the International Chamber of
Commerce (Publication No. 500 or the most recent
publication, the "UCP"), in which case the UCP may be
incorporated therein and deemed in all respects to be a part
thereof.
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the
obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Credit Agreement
and that the Issuing Lender shall be entitled to assume that
the conditions precedent set forth in Section 5 have been
satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section
2.2 shall be deemed to prejudice the right of any Lender to
recover from the Issuing Lender any amounts made available
by such Lender to the the Issuing Lender pursuant to this
Section 2.2 in the event that it is determined by a court of
competent jurisdiction that the payment with respect to a
Letter of Credit constituted gross negligence or willful
misconduct on the part of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any
conflict between this Credit Agreement and any LOC Document,
this Credit Agreement shall govern.
(j) Indemnification of Issuing Lender.
(i) In addition to its other obligations
under this Credit Agreement, the Borrower hereby agrees
to protect, indemnify, pay and save the Issuing Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, reasonable costs, charges
and reasonable expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or
be subject to as a consequence, direct or indirect, of
(A) the issuance of any Letter of Credit or (B) the
failure of the Issuing Lender to honor a drawing under
a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future
de jure or de facto government or governmental
authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrower and the Issuing
Lender, the Borrower shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by
the beneficiary thereof. The Issuing Lender shall not
be responsible for (except in the case of (A), (B) and
(C) below if the Issuing Lender has actual knowledge to
the contrary): (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the
application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent
or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective
for any reason; (C) failure of the beneficiary of a
Letter of Credit to comply fully with conditions
required in order to draw upon a Letter of Credit; (D)
errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not
they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (G) any consequences arising
from causes reasonably beyond the reasonable control of
the Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect,
impair, or prevent the vesting of the Issuing Lender's
rights or powers hereunder.
(iii) In furtherance and extension and
not in limitation of the specific provisions
hereinabove set forth, any action taken or omitted by
the Issuing Lender, under or in connection with any
Letter of Credit or the related certificates, if taken
or omitted in good faith, shall not put the Issuing
Lender under any resulting liability to the Borrower or
any other Credit Party. It is the intention of the
parties that this Credit Agreement shall be construed
and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of
the Letters of Credit, all of which risks are hereby
assumed by the Borrower, including, without limitation,
any and all risks of the acts or omissions, whether
rightful or wrongful, of any present or future
Government Acts. The Issuing Lender shall not, in any
way, be liable for any failure by the Issuing Lender or
anyone else to pay any drawing under any Letter of
Credit as a result of any Government Acts or any other
cause beyond the reasonable control of the Issuing
Lender.
(iv) Nothing in this subsection (j) is
intended to limit the reimbursement obligation of the
Borrower contained in this Section 2.2. The
obligations of the Borrower under this subsection (j)
shall survive the termination of this Credit Agreement.
No act or omission of any current or prior beneficiary
of a Letter of Credit shall in any way affect or impair
the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Borrower shall
have no obligation to indemnify the Issuing Lender in
respect of any liability incurred by the Issuing Lender
arising primarily out of the gross negligence or
willful misconduct of the Issuing Lender, as determined
by a court of competent jurisdiction. Nothing in this
Agreement shall relieve the Issuing Lender of any
liability to the Borrower in respect of any action
taken by the Issuing Lender which action constitutes
gross negligence or willful misconduct of the Issuing
Lender or a violation of the UCP or Uniform Commercial
Code (as applicable), as determined by a court of
competent jurisdiction.
(k) Designation of Consolidated Parties as Account
Parties. Notwithstanding anything to the contrary set forth
in this Credit Agreement, including without limitation
Section 2.2(a), a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit
is issued for the account of a Consolidated Party other than
the Borrower, provided that notwithstanding such statement,
the Borrower shall be the actual account party for all
purposes of this Credit Agreement for such Letter of Credit
and such statement shall not affect the Borrower's
reimbursement obligations hereunder with respect to such
Letter of Credit.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event
of Default, the principal of and, to the extent permitted by law,
interest on the Revolving Loans and any other amounts owing
hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate 2% greater than
the rate which would otherwise be applicable (or if no rate is
applicable, whether in respect of interest, fees or other
amounts, then the Base Rate plus 2%).
3.2 Extension and Conversion.
Subject to the terms of Section 5.2, the Borrower shall have
the option, on any Business Day, to extend existing Revolving
Loans into a subsequent permissible Interest Period or to convert
Revolving Loans into Revolving Loans of another interest rate
type; provided, however, that (i) except as provided in Section
3.8, Eurodollar Loans may be converted into Base Rate Loans only
on the last day of the Interest Period applicable thereto, (ii)
Eurodollar Loans may be extended, and Base Rate Loans may be
converted into Eurodollar Loans, only if no Default or Event of
Default is in existence on the date of extension or conversion,
(iii) Revolving Loans extended as, or converted into, Eurodollar
Loans shall be subject to the terms of the definition of
"Interest Period" set forth in Section 1.1 and shall be in such
minimum amounts as provided in, with respect to Revolving Loans,
Section 2.1(b)(ii), (iv) no more than 5 Eurodollar Loans shall be
outstanding hereunder at any time (it being understood that, for
purposes hereof, Eurodollar Loans with different Interest Periods
shall be considered as separate Eurodollar Loans, even if they
begin on the same date, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be
combined at the end of existing Interest Periods to constitute a
new Eurodollar Loan with a single Interest Period) and (v) any
request for extension or conversion of a Eurodollar Loan which
shall fail to specify an Interest Period shall be deemed to be a
request for an Interest Period of one month. Each such extension
or conversion shall be effected by the Borrower by giving a
Notice of Extension/Conversion (or telephonic notice promptly
confirmed in writing) to the office of the Agent specified in
specified in Schedule 2.1(a), or at such other office as the
Agent may designate in writing, prior to 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day prior to, in the case of
the conversion of a Eurodollar Loan into a Base Rate Loan, and on
the third Business Day prior to, in the case of the extension of
a Eurodollar Loan as, or conversion of a Base Rate Loan into, a
Eurodollar Loan, the date of the proposed extension or
conversion, specifying the date of the proposed extension or
conversion, the Revolving Loans to be so extended or converted,
the types of Revolving Loans into which such Revolving Loans are
to be converted and, if appropriate, the applicable Interest
Periods with respect thereto. Each request for extension or
conversion shall be irrevocable and shall constitute a
representation and warranty by the Borrower of the matters
specified in subsections (b), (c), (d), (e) and (f) of Section
5.2. In the event the Borrower fails to request extension or
conversion of any Eurodollar Loan in accordance with this
Section, or any such conversion or extension is not permitted or
required by this Section, then such Eurodollar Loan shall be
automatically converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. The Agent shall give each
Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Revolving Loan.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have
the right to prepay Revolving Loans in whole or in part from
time to time, but otherwise without premium or penalty.
Subject to the foregoing terms, amounts prepaid under this
Section 3.3(a) shall be applied as the Borrower may elect;
provided that if the Borrower fails to specify a voluntary
prepayment then such prepayment shall be applied first to
Revolving Loans, first to Base Rate Loans and then to
Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(a) shall
be subject to Section 3.12.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any
time, the sum of the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations
outstanding shall exceed the lesser of (A) the
Revolving Committed Amount and (B) the Borrowing Base,
the Borrower immediately shall prepay the Revolving
Loans and (after all Revolving Loans have been repaid)
cash collateralize the LOC Obligations, in an amount
sufficient to eliminate such excess.
(ii) Asset Dispositions. Immediately upon the
occurrence of any Asset Disposition Prepayment Event,
the Borrower shall prepay the Revolving Loans in an
aggregate amount equal to the Net Cash Proceeds of the
related Asset Disposition not applied (or caused to be
applied) by the Consolidated Parties during the related
Application Period to the purchase, acquisition or
construction of Eligible Assets as contemplated by the
terms of Section 8.5 (such prepayment to be applied as
set forth in clause (v) below).
(iii) Debt Issuances. Immediately upon
receipt by any Consolidated Party of proceeds from any
Debt Issuance, the Borrower shall prepay the Revolving
Loans in an aggregate amount equal to 100% of the Net
Cash Proceeds of such Debt Issuance (such prepayment to
be applied as set forth in clause (v) below).
(iv) Issuances of Equity. Immediately upon
receipt by a Consolidated Party of proceeds from any
Equity Issuance other than an Excluded Equity Issuance,
the Borrower shall prepay the Revolving Loans in an
aggregate amount equal to 100% of the Net Cash Proceeds
of such Equity Issuance (such prepayment to be applied
as set forth in clause (v) below).
(v) Application of Mandatory Prepayments.
All amounts required to be paid pursuant to this
Section 3.3(b) shall be applied as follows: (A) with
respect to all amounts prepaid pursuant to Section
3.3(b)(i), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in
respect of LOC Obligations and (B) with respect to all
amounts prepaid pursuant to Section 3.3(b)(ii), (iii)
or (iv), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in
respect of LOC Obligations (with a corresponding
reduction in the Revolving Committed Amount in an
amount equal to all amounts applied pursuant to this
clause (B)). Within the parameters of the applications
set forth above, prepayments shall be applied first to
Base Rate Loans and then to Eurodollar Loans in direct
order of Interest Period maturities. All prepayments
under this Section 3.3(b) shall be subject to Section
3.12.
3.4 Termination and Reduction of Revolving Committed
Amount.
(a) Voluntary Reductions. The Borrower may from time
to time permanently reduce or terminate the Revolving
Committed Amount in whole or in part (in minimum aggregate
amounts of $5,000,000 or in integral multiples of $1,000,000
in excess thereof (or, if less, the full remaining amount of
the then applicable Revolving Committed Amount)) upon five
Business Days' prior written notice to the Agent; provided,
however, no such termination or reduction shall be made
which would cause the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding
to exceed the lesser of (A) the Revolving Committed Amount
and (B) the Borrowing Base, unless, concurrently with such
termination or reduction, the Revolving Loans are repaid to
the extent necessary to eliminate such excess. The Agent
shall promptly notify each affected Lender of receipt by the
Agent of any notice from the Borrower pursuant to this
Section 3.4(a).
(b) Mandatory Reductions.
On any date that the Revolving Loans are
required to be prepaid pursuant to the terms of Section
3.3(b)(ii), (iii) or (iv), the Revolving Committed
Amount automatically shall be permanently reduced by
the amount of such required prepayment and/or
reduction.
(c) Maturity Date. The Revolving Commitments of the
Lenders and the LOC Commitment of the Issuing Lender shall
automatically terminate on the Maturity Date.
(d) General. The Borrower shall pay to the Agent for
the account of the Lenders in accordance with the terms of
Section 3.5(b), on the date of each termination or reduction
of the Revolving Committed Amount, the Unused Fee accrued
through the date of such termination or reduction on the
amount of the Revolving Committed Amount so terminated or
reduced.
3.5 Fees.
(a) Upfront Fees. The Borrower agrees to pay to the
Agent for the benefit of the Lenders in immediately
available funds on or before the Closing Date an upfront fee
(the "Upfront Fee") of $50,000.
(b) Unused Fee. In consideration of the Revolving
Commitments of the Lenders hereunder, the Borrower agrees to
pay to the Agent for the account of each Lender a fee (the
"Unused Fee") on the Unused Revolving Committed Amount
computed at a per annum rate for each day during the
applicable Unused Fee Calculation Period (hereinafter
defined) at the rate of 0.25%. The Unused Fee shall
commence to accrue on the Closing Date and shall be due and
payable in arrears on the last business day of each March,
June, September and December (and any date that the
Revolving Committed Amount is reduced as provided in Section
3.4(a) and the Maturity Date) for the immediately preceding
quarter (or portion thereof) (each such quarter or portion
thereof for which the Unused Fee is payable hereunder being
herein referred to as an "Unused Fee Calculation Period"),
beginning with the first of such dates to occur after the
Closing Date.
(c) Letter of Credit Fees.
(i) Standby Letter of Credit Issuance Fee.
In consideration of the issuance of standby Letters of
Credit hereunder, the Borrower promises to pay to the
Agent for the account of each Lender a fee (the
"Standby Letter of Credit Fee") on such Lender's
Revolving Commitment Percentage of the average daily
maximum amount available to be drawn under each such
standby Letter of Credit computed at a per annum rate
for each day from the date of issuance to the date of
expiration equal to the interest rate spread on
Eurodollar Loans. The Standby Letter of Credit Fee
will be payable quarterly in arrears on the last
Business Day of each March, June, September and
December for the immediately preceding quarter (or a
portion thereof).
(ii) Trade Letter of Credit Drawing Fee. In
consideration of the issuance of trade Letters of
Credit hereunder, the Borrower promises to pay to the
Agent for the account of each Lender a fee (the "Trade
Letter of Credit Fee") equal to the interest rate
spread on Eurodollar Loans on such Lender's Revolving
Commitment Percentage of the amount of each drawing
under any such trade Letter of Credit. The Trade
Letter of Credit Fee will be payable on each date of
drawing under a trade Letter of Credit.
(iii) Issuing Lender Fees. In addition
to the Standby Letter of Credit Fee payable pursuant to
clause (i) above and the Trade Letter of Credit Fee
payable pursuant to clause (ii) above, the Borrower
promises to pay to the Issuing Lender for its own
account without sharing by the other Lenders the letter
of credit fronting and negotiation fees equal to 0.125%
of the LOC Obligations and the customary charges from
time to time of the Issuing Lender with respect to the
issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under,
such Letters of Credit (collectively, the "Issuing
Lender Fees").
3.6 Capital Adequacy.
If any Lender has determined, after the date hereof, that
the adoption or the becoming effective of, or any change in, or
any change by any Governmental Authority, central bank or
comparable agency charged with the interpretation or
administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender with any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which
such Lender could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall
be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. Each
determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
3.7 Limitation on Eurodollar Loans.
If on or prior to the first day of any Interest Period for
any Eurodollar Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest
Period; or
(b) the Required Lenders determine (which
determination shall be conclusive) and notify the Agent that
the Eurodollar Rate will not adequately and fairly reflect
the cost to the Lenders of funding Eurodollar Loans for such
Interest Period;
then the Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be
under no obligation to make additional Eurodollar Loans, Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar
Loans and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Eurodollar Loans,
either prepay such Eurodollar Loans or Convert such Eurodollar
Loans into Base Rate Loans in accordance with the terms of this
Credit Agreement.
3.8 Illegality.
Notwithstanding any other provision of this Credit
Agreement, in the event that it becomes unlawful for any Lender
or its Applicable Lending Office to make, maintain, or fund
Eurodollar Loans hereunder, then such Lender shall promptly
notify the Borrower thereof and such Lender's obligation to make
or Continue Eurodollar Loans and to Convert Base Rate Loans into
Eurodollar Loans shall be suspended until such time as such
Lender may again make, maintain, and fund Eurodollar Loans (in
which case the provisions of Section 3.10 shall be applicable).
3.9 Requirements of Law.
(a) If, after the date hereof, the adoption of any
applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Lender (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with
respect to any Eurodollar Loans, its Revolving Note, or its
obligation to make Eurodollar Loans, or change the basis of
taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Credit Agreement or
its Revolving Note in respect of any Eurodollar Loans (other
than taxes imposed on the overall net income of such Lender
by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Eurodollar Reserve Requirement utilized in
the determination of the Adjusted Eurodollar Rate) relating
to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its
Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank market
any other condition affecting this Credit Agreement or its
Revolving Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to
such Lender (or its Applicable Lending Office) of making,
Converting into, Continuing, or maintaining any Eurodollar Loans
or to reduce any sum received or receivable by such Lender (or
its Applicable Lending Office) under this Credit Agreement or its
Revolving Note with respect to any Eurodollar Loans, then the
Borrower shall pay to such Lender on demand such amount or
amounts as will compensate such Lender for such increased cost or
reduction. If any Lender requests compensation by the Borrower
under this Section 3.9(a), the Borrower may, by notice to such
Lender (with a copy to the Agent), suspend the obligation of such
Lender to make or Continue Eurodollar Loans, or to Convert Base
Rate Loans into Eurodollar Loans, until the event or condition
giving rise to such request ceases to be in effect (in which case
the provisions of Section 3.10 shall be applicable); provided
that such suspension shall not affect the right of such Lender to
receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or
regulation regarding capital adequacy or any change therein or in
the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, central bank,
or comparable agency, has or would have the effect of reducing
the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such
adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy),
then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such
Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and the
Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation
pursuant to this Section 3.9 and will designate a different
Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in
the judgment of such Lender, be otherwise disadvantageous to it.
Any Lender claiming compensation under this Section 3.9 shall
furnish to the Borrower and the Agent a statement setting forth
the additional amount or amounts to be paid to it hereunder which
shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable
averaging and attribution methods.
3.10 Treatment of Affected Revolving Loans.
If the obligation of any Lender to make any Eurodollar Loan
or to Continue, or to Convert Base Rate Loans into, Eurodollar
Loans shall be suspended pursuant to Section 3.8 or 3.9 hereof,
such Lender's Eurodollar Loans shall be automatically Converted
into Base Rate Loans on the last day(s) of the then current
Interest Period(s) for such Eurodollar Loans (or, in the case of
a Conversion required by Section 3.8 hereof, on such earlier date
as such Lender may specify to the Borrower with a copy to the
Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Section 3.8 or 3.9
hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans
have been so Converted, all payments and prepayments of
principal that would otherwise be applied to such Lender's
Eurodollar Loans shall be applied instead to its Base Rate
Loans; and
(b) all Revolving Loans that would otherwise be made
or Continued by such Lender as Eurodollar Loans shall be
made or Continued instead as Base Rate Loans, and all Base
Rate Loans of such Lender that would otherwise be Converted
into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the
Agent) that the circumstances specified in Section 3.8 or 3.9
hereof that gave rise to the Conversion of such Lender's
Eurodollar Loans pursuant to this Section 3.10 no longer exist
(which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding Eurodollar
Loans, to the extent necessary so that, after giving effect
thereto, all Revolving Loans held by the Lenders holding
Eurodollar Loans and by such Lender are held pro rata (as to
principal amounts, interest rate basis, and Interest Periods) in
accordance with their respective Commitments.
3.11 Taxes.
(a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any
other Credit Document shall be made free and clear of and
without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender (or its
Applicable Lending Office) or the Agent (as the case may be)
is organized or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum
payable under this Credit Agreement or any other Credit
Document to any Lender or the Agent, (i) the sum payable
shall be increased as necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 3.11) such Lender
or the Agent receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower
shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable
law, and (iv) the Borrower shall furnish to the Agent, at
its address referred to in Section 11.1, the original or a
certified copy of a receipt evidencing payment thereof. Any
Lender or Agent receiving such increased amount shall
immediately pay to the Borrower the amount of any reduction
or refund in the respective Lender or Agent's Tax liability
resulting from a credit or deduction , as the case may be,
of any Tax against the Lender or Agent's Tax liability when
the Lender or Agent realizes such reduction or refund.
(b) In addition, the Borrower agrees to pay any and
all present or future stamp or documentary taxes and any
other excise or property taxes or charges or similar levies
which arise from any payment made under this Credit
Agreement or any other Credit Document or from the execution
or delivery of, or otherwise with respect to, this Credit
Agreement or any other Credit Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and
the Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable
under this Section 3.11) paid by such Lender or the Agent
(as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Lender organized under the laws of a
jurisdiction outside the United States, on or prior to the
date of its execution and delivery of this Credit
Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on
which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in
writing by the Borrower or the Agent (but only so long as
such Lender remains lawfully able to do so), shall provide
the Borrower and the Agent with (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under
an income tax treaty to which the United States is a party
which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant
to this Credit Agreement is effectively connected with the
conduct of a trade or business in the United States, (ii)
Internal Revenue Service Form W-8 or W-9, as appropriate,
or any successor form prescribed by the Internal Revenue
Service, and (iii) any other form or certificate required
by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal
Revenue Code), certifying that such Lender is entitled to
an exemption from or a reduced rate of tax on payments
pursuant to this Credit Agreement or any of the other
Credit Documents.
(e) For any period with respect to which a Lender has
failed to provide the Borrower and the Agent with the
appropriate form pursuant to Section 3.11(d) (unless such
failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally
was required to be provided), such Lender shall not be
entitled to indemnification under Section 3.11(a) or 3.11(b)
with respect to Taxes imposed by the United States;
provided, however, that should a Lender, which is otherwise
exempt from or subject to a reduced rate of withholding tax,
become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps
as such Lender shall reasonably request to assist such
Lender to recover such Taxes.
(f) If the Borrower is required to pay additional
amounts to or for the account of any Lender pursuant to this
Section 3.11, then such Lender will agree to use reasonable
efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to
such Lender.
(g) Within thirty (30) days after the date of any
payment of Taxes, the Borrower shall furnish to the Agent
the original or a certified copy of a receipt evidencing
such payment.
(h) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 3.11
shall survive the repayment of the Revolving Loans, LOC
Obligations and other obligations under the Credit Documents
and the termination of the Commitments hereunder.
3.12 Compensation.
Upon the request of any Lender, the Borrower shall pay to
such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss,
reasonable cost, or reasonable expense (including loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a
Eurodollar Loan for any reason (including, without
limitation, the acceleration of the Revolving Loans pursuant
to Section 9.2) on a date other than the last day of the
Interest Period for such Revolving Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any condition
precedent specified in Section 5 to be satisfied) to borrow,
Convert, Continue, or prepay a Eurodollar Loan on the date
for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may
include an amount equal to the excess, if any, of (a) the amount
of interest which would have accrued on the amount so prepaid, or
not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or,
in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such
Eurodollar Loans provided for herein over (b) the amount of
interest (as reasonably determined by such Lender) which would
have accrued to such Lender on such amount by placing such amount
on deposit for a comparable period with leading banks in the
interbank Eurodollar market. The covenants of the Borrower set
forth in this Section 3.12 shall survive the repayment of the
Revolving Loans, LOC Obligations and other obligations under the
Credit Documents and the termination of the Commitments
hereunder.
3.13 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Revolving Loans. Each Revolving Loan, each
payment or (subject to the terms of Section 3.3) prepayment
of principal of any Revolving Loan or reimbursement
obligations arising from drawings under Letters of Credit,
each payment of interest on the Revolving Loans or
reimbursement obligations arising from drawings under
Letters of Credit, each payment of Unused Fees, each payment
of the Standby Letter of Credit Fee, each payment of the
Trade Letter of Credit Fee, each reduction of the Revolving
Committed Amount and each conversion or extension of any
Revolving Loan, shall be allocated pro rata among the
Lenders in accordance with the respective principal amounts
of their outstanding Revolving Loans and Participation
Interests.
(a) Advances. No Lender shall be responsible for the
failure or delay by any other Lender in its obligation to make
its ratable share of a borrowing hereunder; provided, however,
that the failure of any Lender to fulfill its obligations
hereunder shall not relieve any other Lender of its obligations
hereunder. Unless the Agent shall have been notified by any
Lender prior to the date of any requested borrowing that such
Lender does not intend to make available to the Agent its ratable
share of such borrowing to be made on such date, the Agent may
assume that such Lender has made such amount available to the
Agent on the date of such borrowing, and the Agent in reliance
upon such assumption, may (in its sole discretion but without any
obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to
recover such corresponding amount from such Lender. If such
Lender does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent will promptly notify the
Borrower, and the Borrower shall immediately pay such
corresponding amount to the Agent. The Agent shall also be
entitled to recover from the Lender or the Borrower, as the case
may be, interest on such corresponding amount in respect of each
day from the date such corresponding amount was made available by
the Agent to the Borrower to the date such corresponding amount
is recovered by the Agent at a per annum rate equal to (i) from
the Borrower at the applicable rate for the applicable borrowing
pursuant to the Notice of Borrowing and (ii) from a Lender at the
Federal Funds Rate.
3.14 Sharing of Payments.
The Lenders agree among themselves that, in the event that
any Lender shall obtain payment in respect of any Revolving Loan,
LOC Obligations or any other obligation owing to such Lender
under this Credit Agreement (but not including any payment
received by any Lender in its capacity as a Factor under a
Factoring Agreement) through the exercise of a right of setoff,
banker's lien or counterclaim, or pursuant to a secured claim
under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other
means, in excess of its pro rata share of such payment as
provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such
Revolving Loans, LOC Obligations and other obligations in such
amounts, and make such other adjustments from time to time, as
shall be equitable to the end that all Lenders share such payment
in accordance with their respective ratable shares as provided
for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender
through the exercise of a right of setoff, banker's lien,
counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared
the benefit of such payment shall, by repurchase of a
Participation Interest theretofore sold, return its share of that
benefit (together with its share of any accrued interest payable
with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrower agrees that
any Lender so purchasing such a Participation Interest may, to
the fullest extent permitted by law, exercise all rights of
payment, including setoff, banker's lien or counterclaim, with
respect to such Participation Interest as fully as if such Lender
were a holder of such Revolving Loan, LOC Obligations or other
obligation in the amount of such Participation Interest. Except
as otherwise expressly provided in this Credit Agreement, if any
Lender or the Agent shall fail to remit to the Agent or any other
Lender an amount payable by such Lender or the Agent to the Agent
or such other Lender pursuant to this Credit Agreement on the
date when such amount is due, such payments shall be made
together with interest thereon for each date from the date such
amount is due until the date such amount is paid to the Agent or
such other Lender at a rate per annum equal to the Federal Funds
Rate. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a
setoff to which this Section 3.14 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the
Lenders under this Section 3.14 to share in the benefits of any
recovery on such secured claim.
3.15 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein,
all payments hereunder shall be made to the Agent in dollars
in immediately available funds, without offset, deduction,
counterclaim or withholding of any kind, at the Agent's
office specified in Schedule 2.1(a) not later than 2:00 P.M.
(Charlotte, North Carolina time) on the date when due.
Payments received after such time shall be deemed to have
been received on the next succeeding Business Day. The
Agent may (but shall not be obligated to) debit the amount
of any such payment which is not made by such time to any
ordinary deposit account of the Borrower maintained with the
Agent (with notice to the Borrower). The Borrower shall, at
the time it makes any payment under this Credit Agreement,
specify to the Agent the Revolving Loans, LOC Obligations,
Fees, interest or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the
event that it fails so to specify, or if such application
would be inconsistent with the terms hereof, the Agent shall
distribute such payment to the Lenders in such manner as the
Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the
terms of Section 3.13(a)). The Agent will distribute such
payments to such Lenders, if any such payment is received
prior to 12:00 Noon (Charlotte, North Carolina time) on a
Business Day in like funds as received prior to the end of
such Business Day and otherwise the Agent will distribute
such payment to such Lenders on the next succeeding Business
Day. Whenever any payment hereunder shall be stated to be
due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business
Day (subject to accrual of interest and Fees for the period
of such extension), except that in the case of Eurodollar
Loans, if the extension would cause the payment to be made
in the next following calendar month, then such payment
shall instead be made on the next preceding Business Day.
Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis
of actual number of days elapsed over a year of 360 days,
except with respect to computation of interest on Base Rate
Loans which (unless the Base Rate is determined by reference
to the Federal Funds Rate) shall be calculated based on a
year of 365 or 366 days, as appropriate. Interest shall
accrue from and include the date of borrowing, but exclude
the date of payment.
(b) Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit
Agreement to the contrary, after the occurrence and during
the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account
of the Credit Party Obligations or any other amounts
outstanding under any of the Credit Documents or in respect
of the Collateral shall be paid over or delivered as
follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees) of the Agent in connection with enforcing
the rights of the Lenders under the Credit Documents and any
protective advances made by the Agent with respect to the
Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation, reasonable
attorneys' fees) of each of the Lenders in connection with
enforcing its rights under the Credit Documents or otherwise
with respect to the Credit Party Obligations owing to such
Lender;
FOURTH, to the payment of all of the Credit Party
Obligations consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal
amount of the Credit Party Obligations (including the
payment or cash collateralization of the outstanding LOC
Obligations);
SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under
the Credit Documents or otherwise and not repaid pursuant to
clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be
applied in the numerical order provided until exhausted
prior to application to the next succeeding category; (ii)
each of the Lenders shall receive an amount equal to its pro
rata share (based on the proportion that the then
outstanding Revolving Loans and LOC Obligations held by such
Lender bears to the aggregate then outstanding Revolving
Loans and LOC Obligations) of amounts available to be
applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and
"SIXTH" above; and (iii) to the extent that any amounts
available for distribution pursuant to clause "FIFTH" above
are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by
the Agent in a cash collateral account and applied (A)
first, to reimburse the Issuing Lender from time to time for
any drawings under such Letters of Credit and (B) then,
following the expiration of all Letters of Credit, to all
other obligations of the types described in clauses "FIFTH"
and "SIXTH" above in the manner provided in this Section
3.15(b).
3.16 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts
evidencing each Revolving Loan made by such Lender to the
Borrower from time to time, including the amounts of
principal and interest payable and paid to such Lender from
time to time under this Credit Agreement. Each Lender will
make reasonable efforts to maintain the accuracy of its
account or accounts and to promptly update its account or
accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to
Section 11.3(c), and a subaccount for each Lender, in which
Register and subaccounts (taken together) shall be recorded
(i) the amount, type and Interest Period of each such
Revolving Loan hereunder, (ii) the amount of any principal
or interest due and payable or to become due and payable to
each Lender hereunder and (iii) the amount of any sum
received by the Agent hereunder from or for the account of
the Borrower and each Lender's share thereof. The Agent
will make reasonable efforts to maintain the accuracy of the
subaccounts referred to in the preceding sentence and to
promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and
subaccounts maintained pursuant to subsection (b) of this
Section 3.16 (and, if consistent with the entries of the
Agent, subsection (a)) shall be prima facie evidence of the
existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any
Lender or the Agent to maintain any such account, such
Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of
the Borrower to repay the Revolving Loans made by such
Lender in accordance with the terms hereof.
3.17 Mandatory Assignment.
In the event any Lender requests payment by the Borrower of
any additional amounts pursuant to Section 3.11, then, provided
that no Default or Event of Default has occurred and is
continuing at such time, the Borrower may, at its own expense
(such expense to include any transfer fee payable to the Agent
under Section 11.3(b)), and in its sole discretion require such
Lender to transfer and assign in whole or in part, without
recourse (in accordance with and subject to the terms and
conditions of Section 11.3(b)), all or part of its interests,
rights and obligations under the Credit Agreement to an Eligible
Assignee which shall assume such assigned obligations, provided
that (i) such assignment shall not conflict with any law, rule or
regulation or order of any court or other Governmental Authority
and (ii) the Borrower or such assignee shall have paid to the
assigning Lender in immediately available funds the principal of
and interest accrued to the date of such payment on the Revolving
Loans made by it under the Credit Agreement and all other amounts
owed to it under the Credit Agreement.
SECTION 4
GUARANTY
4.1 The Guaranty.
Each of the Guarantors hereby jointly and severally
guarantees to each Lender and the Agent as hereinafter provided
the prompt payment of the Credit Party Obligations in full when
due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors
hereby further agree that if any of the Credit Party Obligations
are not paid in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Credit Party Obligations, the
same will be promptly paid in full when due (whether at extended
maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) in accordance with
the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, the obligations
of each Guarantor hereunder shall be limited to an aggregate
amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of
the Bankruptcy Code or any comparable provisions of any
applicable state law.
4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 are
joint and several, absolute and unconditional, irrespective of
the value, genuineness, validity, regularity or enforceability of
any of the Credit Documents or any other agreement or instrument
referred to therein, or any substitution, release, impairment or
exchange of any other guarantee of or security for any of the
Credit Party Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor, it being the intent of this
Section 4.2 that the obligations of the Guarantors hereunder
shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor of the
Credit Party Obligations for amounts paid under this Section 4
until such time as the Lenders have been paid in full, all
Commitments under this Credit Agreement have been terminated and
no Person or Governmental Authority shall have any right to
request any return or reimbursement of funds from the Lenders in
connection with monies received under the Credit Documents.
Without limiting the generality of the foregoing, it is agreed
that, to the fullest extent permitted by law, the occurrence of
any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute
and unconditional as described above:
(a) at any time or from time to time, without notice
to any Guarantor, the time for any performance of or
compliance with any of the Credit Party Obligations shall be
extended, or such performance or compliance shall be waived;
(b) any of the acts mentioned in any of the provisions
of any of the Credit Documents or any other agreement or
instrument referred to in the Credit Documents shall be done
or omitted;
(c) the maturity of any of the Credit Party
Obligations shall be accelerated, or any of the Credit Party
Obligations shall be modified, supplemented or amended in
any respect, or any right under any of the Credit Documents
or any other agreement or instrument referred to in the
Credit Documents shall be waived or any other guarantee of
any of the Credit Party Obligations or any security therefor
shall be released, impaired or exchanged in whole or in part
or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Agent or
any Lender or Lenders as security for any of the Credit
Party Obligations shall fail to attach or be perfected; or
(e) any of the Credit Party Obligations shall be
determined to be void or voidable (including, without
limitation, for the benefit of any creditor of any
Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby
expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the
Agent or any Lender exhaust any right, power or remedy or proceed
against any Person under any of the Credit Documents or any other
agreement or instrument referred to in the Credit Documents or
against any other Person under any other guarantee of, or
security for, any of the Credit Party Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall
be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of
the Credit Party Obligations is rescinded or must be otherwise
restored by any holder of any of the Credit Party Obligations,
whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it
will indemnify the Agent and each Lender on demand for all
reasonable costs and expenses (including, without limitation,
fees and expenses of counsel) incurred by the Agent or such
Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this
Section 4, each Guarantor hereby specifically waives the benefits
of N.C. Gen. Stat. 26-7 through 26-9, inclusive, to the extent
applicable. Each Guarantor further agrees that such Guarantor
shall have no right of recourse to security for the Credit Party
Obligations, except through the exercise of rights of subrogation
pursuant to Section 4.2 and through the exercise of rights of
contribution pursuant to Section 4.6.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted
by law, as between the Guarantors, on the one hand, and the Agent
and the Lenders, on the other hand, the Credit Party Obligations
may be declared to be forthwith due and payable as provided in
Section 9.2 (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction
or other prohibition preventing such declaration (or preventing
the Credit Party Obligations from becoming automatically due and
payable) as against any other Person and that, in the event of
such declaration (or the Credit Party Obligations being deemed to
have become automatically due and payable), the Credit Party
Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for
purposes of Section 4.1. The Guarantors acknowledge and agree
that their obligations hereunder are secured in accordance with
the terms of the Security Agreements and the other Collateral
Documents and that the Lenders may exercise their remedies
thereunder in accordance with the terms thereof.
4.6 Rights of Contribution.
The Guarantors hereby agree as among themselves that, if any
Guarantor shall make an Excess Payment (as defined below), such
Guarantor shall have a right of contribution from each other
Guarantor in an amount equal to such other Guarantor's
Contribution Share (as defined below) of such Excess Payment.
The payment obligations of any Guarantor under this Section 4.6
shall be subordinate and subject in right of payment to the prior
payment in full to the Agent and the Lenders of the Guaranteed
Obligations, and none of the Guarantors shall exercise any right
or remedy under this Section 4.6 against any other Guarantor
until payment and satisfaction in full of all of such Guaranteed
Obligations. For purposes of this Section 4.6, (a) "Guaranteed
Obligations" shall mean any obligations arising under the other
provisions of this Section 4; (b) "Excess Payment" shall mean the
amount paid by any Guarantor in excess of its Pro Rata Share of
any Guaranteed Obligations; (c) "Pro Rata Share" shall mean, for
any Guarantor in respect of any payment of Guaranteed
Obligations, the ratio (expressed as a percentage) as of the date
of such payment of Guaranteed Obligations of (i) the amount by
which the aggregate present fair salable value of all of its
assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii)
the amount by which the aggregate present fair salable value of
all assets and other properties of the Borrower and all of the
Guarantors exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and
the Guarantors hereunder) of the Borrower and all of the
Guarantors; provided, however, that, for purposes of calculating
the Pro Rata Shares of the Guarantors in respect of any payment
of Guaranteed Obligations, any Guarantor that became a Guarantor
subsequent to the date of any such payment shall be deemed to
have been a Guarantor on the date of such payment and the
financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor
in connection with such payment; and (d) "Contribution Share"
shall mean, for any Guarantor in respect of any Excess Payment
made by any other Guarantor, the ratio (expressed as a
percentage) as of the date of such Excess Payment of (i) the
amount by which the aggregate present fair salable value of all
of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii)
the amount by which the aggregate present fair salable value of
all assets and other properties of the Borrower and all of the
Guarantors other than the maker of such Excess Payment exceeds
the amount of all of the debts and liabilities (including
contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and
the Guarantors hereunder) of the Borrower and all of the
Guarantors other than the maker of such Excess Payment; provided,
however, that, for purposes of calculating the Contribution
Shares of the Guarantors in respect of any Excess Payment, any
Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on
the date of such Excess Payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such
Excess Payment. This Section 4.6 shall not be deemed to affect
any right of subrogation, indemnity, reimbursement or
contribution that any Guarantor may have under applicable law
against the Borrower in respect of any payment of Guaranteed
Obligations. Notwithstanding the foregoing, all rights of
contribution against any Guarantor shall terminate from and after
such time, if ever, that such Guarantor shall be relieved of its
obligations pursuant to Section 8.4.
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee,
and shall apply to all Credit Party Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit
Agreement and to make the initial Revolving Loans or the Issuing
Lender to issue the initial Letters of Credit, whichever shall
occur first, shall be subject to satisfaction of the following
conditions (in form and substance acceptable to the Lenders):
(a) Executed Credit Documents. Receipt by the Agent
of duly executed copies of: (i) this Credit Agreement; (ii)
the Revolving Notes; (iii) the Collateral Documents and (iv)
all other Credit Documents, each in form and substance
acceptable to the Lenders in their sole discretion.
(b) Corporate Documents. Receipt by the Agent of the
following:
(i) Charter Documents. Copies of the
articles or certificates of incorporation or other
charter documents of each Credit Party certified to be
true and complete as of a recent date by the
appropriate Governmental Authority of the state or
other jurisdiction of its incorporation and certified
by a secretary or assistant secretary of such Credit
Party to be true and correct as of the Closing Date.
(ii) Bylaws. A copy of the bylaws of each
Credit Party certified by a secretary or assistant
secretary of such Credit Party to be true and correct
as of the Closing Date.
(iii) Resolutions. Copies of resolutions
of the Board of Directors of each Credit Party
approving and adopting the Credit Documents to which it
is a party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified
by a secretary or assistant secretary of such Credit
Party to be true and correct and in force and effect as
of the Closing Date.
(iv) Good Standing. Copies of (A)
certificates of good standing, existence or its
equivalent with respect to each Credit Party certified
as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of
incorporation and each other jurisdiction in which the
failure to so qualify and be in good standing could
have a Material Adverse Effect and (B) to the extent
available, a certificate indicating payment of all
corporate franchise taxes certified as of a recent date
by the appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate
of each Credit Party certified by a secretary or
assistant secretary to be true and correct as of the
Closing Date.
(c) Opinions of Counsel. The Agent shall have
received, in each case dated as of the Closing Date:
(i) a legal opinion of Wyche, Burgess,
Freeman & Parham, P.A., general counsel for the Credit
Parties, substantially in the form of Schedule
5.1(c)(i);
(ii) a legal opinion of special local counsel
for each Credit Party not incorporated in the State of
South Carolina or Delaware, substantially in the form
of Schedule 5.1(c)(ii); and
(iii) a legal opinion of special local
counsel for the Credit Parties for each State other
than South Carolina in which any material portion of
the Collateral (as determined by the Agent) is located,
substantially in the form of Schedule 5.1(c)(iii).
(d) Personal Property Collateral. The Agent shall
have received:
(i) searches of Uniform Commercial Code
filings in the jurisdiction of the chief executive
office of each Credit Party and each jurisdiction where
any Collateral is located or where a filing would need
to be made in order to perfect the Agent's security
interest in the Collateral, copies of the financing
statements on file in such jurisdictions and evidence
that no Liens exist other than Permitted Liens;
(ii) duly executed UCC financing statements
for each Credit Party for each appropriate jurisdiction
as is necessary, in the Agent's sole discretion, to
perfect the Agent's security interest in the
Collateral;
(iii) searches of ownership of
intellectual property in the appropriate governmental
offices and such patent/trademark/copyright filings as
requested by the Agent in order to perfect the Agent's
security interest in the Collateral; (iv) all stock
certificates evidencing the Capital Stock pledged to
the Agent pursuant to the Pledge Agreement, together
with duly executed in blank undated stock powers
attached thereto;
(v) such patent/trademark/copyright filings
as requested by the Agent in order to perfect the
Agent's security interest in the Collateral;
(vi) all instruments and chattel paper in the
possession of any of the Credit Parties, together with
allonges or assignments as may be necessary or
appropriate to perfect the Agent's security interest in
the Collateral; and
(vii) an original, executed copy of an
assignment of factoring proceeds, consented to in
writing by the applicable Factor and otherwise in form
and substance satisfactory to the Agent, for each
Factoring Agreement existing as of the Closing Date;
and
(viii) all duly executed consents as are
necessary, in the Agent's sole discretion, to perfect
the Agent's security interest in the Collateral.
(e) Priority of Liens. The Agent shall have received
satisfactory evidence that (i) the Agent, on behalf of the
Lenders, holds a perfected, first priority Lien on all
Collateral and (ii) none of the Collateral is subject to any
other Liens other than Permitted Liens.
(f) Availability. The Agent shall be satisfied that,
after giving effect to the initial Revolving Loans made and
Letters of Credit issued hereunder on the Closing Date,
there shall be at least $7,500,000 of availability existing
under the Revolving Committed Amount.
(g) Opening Borrowing Base Report. Receipt by the
Agent of a Borrowing Base Certificate as of the Closing Date
substantially in the form of Exhibit 7.1(d) and certified by
the chief financial officer of the Borrower to be true and
correct as of the Closing Date.
(h) Evidence of Insurance. Receipt by the Agent of
copies of insurance policies or certificates of insurance of
the Consolidated Parties evidencing liability and casualty
insurance meeting the requirements set forth in the Credit
Documents, including, but not limited to, naming the Agent
as sole loss payee on behalf of the Lenders.
(i) Closing of New Delta Mills Credit Facility. The
closing of the New Delta Mills Credit Facility shall have
occurred and all conditions precedent to the initial
extensions of credit thereunder shall have been satisfied.
(j) Material Adverse Change. No material adverse
change shall have occurred since June 28, 1997 in the
condition (financial or otherwise), business, management or
prospects of any Consolidated Party.
(k) Litigation. There shall not exist any pending or
threatened action, suit, investigation or proceeding against
a Consolidated Party that is reasonably likely to have a
Material Adverse Effect.
(l) Officer's Certificates. The Agent shall have
received a certificate or certificates executed by an
Executive Officer of the Borrower as of the Closing Date
stating that (A) each Consolidating Party is in compliance
with all existing financial obligations, (B) all
governmental, shareholder and third party consents and
approvals, if any, with respect to the Credit Documents and
the transactions contemplated thereby have been obtained,
(C) no action, suit, investigation or proceeding is pending
or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect any
Consolidating Party or any transaction contemplated by the
Credit Documents, if such action, suit, investigation or
proceeding could have a Material Adverse Effect and (D)
immediately after giving effect to this Credit Agreement,
the other Credit Documents and all the transactions
contemplated therein to occur on such date, (1) each of the
Credit Parties is Solvent, (2) no Default or Event of
Default exists, (3) all representations and warranties
contained herein and in the other Credit Documents are true
and correct in all material respects, and (4) the Credit
Parties are in compliance with each of the financial
covenants set forth in Section 7.11.
(m) Fees and Expenses. Payment by the Credit Parties
of all reasonable fees and expenses owed by them to the
Lenders and the Agent on or before the Closing Date.
(n) Payoff Letter. Receipt by the Agent of a payoff
letter in respect of the Existing Credit Facility in form
and substance satisfactory to the Agent.
(o) Other. Receipt by the Lenders of such other
documents, instruments, agreements or information with
respect to the Consolidated Parties as reasonably requested
by any Lender.
5.2 Conditions to all Extensions of Credit.
The obligations of each Lender to make, convert or extend
any Revolving Loan and of the Issuing Lender to issue or extend
any Letter of Credit (including the initial Revolving Loans and
the initial Letter of Credit) are subject to satisfaction of the
following conditions in addition to satisfaction on the Closing
Date of the conditions set forth in Section 5.1:
(a) The Borrower shall have delivered (i) in the case
of any Revolving Loan an appropriate Notice of Borrowing or
Notice of Extension/Conversion or (ii) in the case of any
Letter of Credit, the Issuing Lender shall have received an
appropriate request for issuance in accordance with the
provisions of Section 2.2(b);
(b) The representations and warranties set forth in
Section 6 shall, subject to the limitations set forth
therein, be true and correct in all material respects as of
such date (except for those which expressly relate to an
earlier date);
(c) There shall not have been commenced against any
Credit Party an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or for the
winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action
shall remain undismissed, undischarged or unbonded;
(d) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto;
(e) No development or event which has had or could
have a Material Adverse Effect shall have occurred since
June 28, 1997; and
(f) Immediately after giving effect to the making of
such Revolving Loan (and the application of the proceeds
thereof) or to the issuance of such Letter of Credit, as the
case may be, (i) the sum of the aggregate principal amount
of outstanding Revolving Loans plus LOC Obligations
outstanding shall not exceed the lesser of (A) the Revolving
Committed Amount and (B) the Borrowing Base, and (ii) the
LOC Obligations shall not exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing, each Notice of
Extension/Conversion and each request for a Letter of Credit
pursuant to Section 2.2(b) shall constitute a representation and
warranty by the Borrower of the correctness of the matters
specified in subsections (b), (c), (d), (e) and (f) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each
Lender that:
6.1 Financial Condition.
(a) The consolidated and consolidating balance sheet
of the Consolidated Parties as of June 28, 1997 and the
consolidated and consolidating statements of earnings and
statements of cash flows for the years ended June 24, 1995
and June 29, 1996 have heretofore been furnished to each
Lender. Such financial statements (including the notes
thereto) (i) have been reviewed by KPMG Peat Marwick, (ii)
have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby and (iii)
present fairly (on the basis disclosed in the footnotes to
such financial statements) the consolidated and
consolidating financial condition, results of operations and
cash flows of the Consolidated Parties as of such date and
for such periods. During the period from June 28, 1997 to
and including the Closing Date, there has been no sale,
transfer or other disposition by any Consolidated Party of
any material part of the business or property of the
Consolidated Parties, taken as a whole, and no purchase or
other acquisition by any of them of any business or property
(including any capital stock of any other person) material
in relation to the consolidated financial condition of the
Consolidated Parties, taken as a whole, in each case, which
is not reflected in the foregoing financial statements or in
the notes thereto and has not otherwise been disclosed in
writing to the Lenders on or prior to the Closing Date.
(b) The financial statements delivered to the Lenders
pursuant to Section 7.1(a) and (b), (i) have been prepared
in accordance with GAAP (except as may otherwise be
permitted under Section 7.1(a) and (b)) and (ii) present
fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated and consolidating
financial condition, results of operations and cash flows of
the Consolidated Parties as of such date and for such
periods.
6.2 No Material Change.
Since June 28, 1997, (a) there has been no development or
event relating to or affecting a Consolidated Party which has had
or could have a Material Adverse Effect and (b) except as
otherwise permitted under this Credit Agreement, no dividends or
other distributions have been declared, paid or made upon the
Capital Stock in a Consolidated Party nor has any of the Capital
Stock in a Consolidated Party been redeemed, retired, purchased
or otherwise acquired for value.
6.3 Organization and Good Standing.
Each of the Consolidated Parties (a) is duly organized,
validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the
corporate or other necessary power and authority, and the legal
right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is
currently engaged and (c) is duly qualified as a foreign entity
and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of
its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good
standing would not have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other
necessary power and authority, and the legal right, to make,
deliver and perform the Credit Documents to which it is a party,
and in the case of the Borrower, to obtain extensions of credit
hereunder, and has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the
terms and conditions of this Credit Agreement and to authorize
the execution, delivery and performance of the Credit Documents
to which it is a party. As of the Closing Date, no consent or
authorization of, filing with, notice to or other similar act by
or in respect of, any Governmental Authority or any other Person
is required to be obtained or made by or on behalf of any Credit
Party in connection with the borrowings or other extensions of
credit hereunder or with the execution, delivery, performance,
validity or enforceability of the Credit Documents to which such
Credit Party is a party, except for (i) consents, authorizations,
notices and filings described in Schedule 6.4, all of which have
been obtained or made or have the status described in such
Schedule 6.4 and (ii) filings to perfect the Liens created by the
Collateral Documents. This Credit Agreement has been, and each
other Credit Document to which any Credit Party is a party will
be, duly executed and delivered on behalf of the Credit Parties.
This Credit Agreement constitutes, and each other Credit Document
to which any Credit Party is a party when executed and delivered
will constitute, a legal, valid and binding obligation of such
Credit Party enforceable against such party in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and
by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents,
nor the consummation of the transactions contemplated therein,
nor performance of and compliance with the terms and provisions
thereof by such Credit Party will (a) violate or conflict with
any provision of its articles or certificate of incorporation or
bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including,
without limitation, Regulation U or Regulation X), order, writ,
judgment, injunction, decree or permit applicable to it, (c)
violate, contravene or conflict with contractual provisions of,
or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement
or instrument to which it is a party or by which it may be bound,
the violation of which could have a Material Adverse Effect, or
(d) result in or require the creation of any Lien (other than
those contemplated in or created in connection with the Credit
Documents) upon or with respect to its properties.
6.6 No Default.
Except as disclosed in Schedule 6.6, (i) no Consolidated
Party is in default in any respect under any contract, lease,
loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of
its properties is bound which default could reasonably be
expected to have a Material Adverse Effect and (ii) no Default or
Event of Default has occurred or exists.
6.7 Ownership.
Each Consolidated Party is the owner of, and has good and
marketable title to, all of its respective assets and none of
such assets is subject to any Lien other than Permitted Liens.
6.8 Indebtedness.
Except as otherwise permitted under Section 8.1, the
Consolidated Parties have no Indebtedness.
6.9 Litigation.
Except as disclosed in Schedule 6.9, there are no actions,
suits or legal, equitable, arbitration or administrative
proceedings, pending or, to the knowledge of any Credit Party,
threatened against any Consolidated Party which might have a
Material Adverse Effect.
6.10 Taxes.
Each Consolidated Party has filed, or caused to be filed,
all tax returns (federal, state, local and foreign) required to
be filed and paid (a) all amounts of taxes shown thereon to be
due (including interest and penalties) and (b) all other taxes,
fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by
proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. No Credit Party is aware as
of the Closing Date of any proposed tax assessments against it or
any other Consolidated Party.
6.11 Compliance with Law.
Each Consolidated Party is in compliance with all
Requirements of Law and all other laws, rules, regulations,
orders and decrees (including without limitation Environmental
Laws) applicable to it, or to its properties, unless such failure
to comply could not have a Material Adverse Effect. No
Requirement of Law could cause a Material Adverse Effect.
6.12 ERISA.
(a) During the five-year period prior to the date on
which this representation is made or deemed made: (i) no
ERISA Event has occurred, and, to the best knowledge of the
Credit Parties, no event or condition has occurred or exists
as a result of which any ERISA Event could reasonably be
expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or
not waived, has occurred with respect to any Plan; (iii)
each Plan has been maintained, operated, and funded in
compliance with its own terms and in material compliance
with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor
of the PBGC or a Plan has arisen or is reasonably likely to
arise on account of any Plan.
(b) The actuarial present value of all "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA),
whether or not vested, under each Single Employer Plan, as
of the last annual valuation date prior to the date on which
this representation is made or deemed made (determined, in
each case, in accordance with Financial Accounting Standards
Board Statement 87, utilizing the actuarial assumptions used
in such Plan's most recent actuarial valuation report), did
not exceed as of such valuation date the fair market value
of the assets of such Plan.
(c) Neither any Consolidated Party nor any ERISA
Affiliate has incurred, or, to the best knowledge of the
Credit Parties, could be reasonably expected to incur, any
withdrawal liability under ERISA to any Multiemployer Plan
or Multiple Employer Plan. Neither any Consolidated Party
nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if any Consolidated Party
or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made. Neither any
Consolidated Party nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of
ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be
in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach
of fiduciary responsibility has occurred with respect to a
Plan which has subjected or may subject any Consolidated
Party or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to
which any Consolidated Party or any ERISA Affiliate has
agreed or is required to indemnify any person against any
such liability.
(e) Neither any Consolidated Party nor any ERISA
Affiliates has any material liability with respect to
"expected post-retirement benefit obligations" within the
meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined
in Section 3(1) of ERISA) to which Sections 601-609 of ERISA
and Section 4980B of the Code apply has been administered in
compliance in all material respects of such sections.
6.13 Subsidiaries.
Set forth on Schedule 6.13 is a complete and accurate list
of all Subsidiaries of each Consolidated Party as of the Closing
Date. Information on Schedule 6.13 includes jurisdiction of
incorporation, the number of shares of each class of Capital
Stock outstanding, the number and percentage of outstanding
shares of each class owned (directly or indirectly) by such
Consolidated Party; and the number and effect, if exercised, of
all outstanding options, warrants, rights of conversion or
purchase and all other similar rights with respect thereto. The
outstanding Capital Stock of all such Subsidiaries is validly
issued, fully paid and non-assessable and is owned by each such
Consolidated Party, directly or indirectly, free and clear of all
Liens (other than those arising under or contemplated in
connection with the Credit Documents). Other than as set forth
in Schedule 6.13, no Consolidated Party has outstanding any
securities convertible into or exchangeable for its Capital Stock
nor does any such Person have outstanding any rights to subscribe
for or to purchase or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating
to its Capital Stock.
6.14 Governmental Regulations, Etc.
(a) No part of the Letters of Credit or proceeds of
the Revolving Loans will be used, directly or indirectly,
for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation G or Regulation U, or for
the purpose of purchasing or carrying or trading in any such
"margin stock". If requested by any Lender or the Agent,
the Borrower will furnish to the Agent and each Lender a
statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in Regulation U. No
indebtedness being reduced or retired out of the proceeds of
the Revolving Loans was or will be incurred for the purpose
of purchasing or carrying any margin stock within the
meaning of Regulation U or any "margin security" within the
meaning of Regulation T. "Margin stock" within the meaning
of Regulation U does not constitute more than 25% of the
value of the consolidated assets of the Consolidated
Parties. None of the transactions contemplated by this
Credit Agreement (including, without limitation, the direct
or indirect use of the proceeds of the Revolving Loans) will
violate or result in a violation of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, or regulations issued pursuant thereto, or
Regulation G, T, U or X.
(b) No Consolidated Party is subject to regulation
under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940,
each as amended. In addition, no Consolidated Party is (i)
an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as
amended, and is not controlled by such a company, or (ii) a
"holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal
shareholder of any Consolidated Party is a director,
executive officer or principal shareholder of any Lender.
For the purposes hereof the terms "director", "executive
officer" and "principal shareholder" (when used with
reference to any Lender) have the respective meanings
assigned thereto in Regulation O issued by the Board of
Governors of the Federal Reserve System.
(d) Each Consolidated Party has obtained, and holds in
full force and effect, all franchises, licenses, permits,
certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the ownership
of its respective Property and to the conduct of its
respective businesses as presently conducted.
(e) No Consolidated Party is in violation of any
applicable statute, regulation or ordinance of the United
States of America, or of any state, city, town,
municipality, county or any other jurisdiction, or of any
agency thereof (including without limitation, environmental
laws and regulations), which violation is reasonably likely
to have a Material Adverse Effect.
(f) Each Consolidated Party is current with all
material reports and documents, if any, required to be filed
with any state or federal securities commission or similar
agency and is in full compliance in all material respects
with all applicable rules and regulations of such
commissions.
6.15 Purpose of Revolving Loans and Letters of Credit.
The proceeds of the Revolving Loans hereunder shall be used
solely by the Borrower to refinance at Closing certain existing
indebtedness of the Borrower (the "Refinancing"); to pay at
Closing fees and expenses incurred in connection with the
Refinancing; and to provide for working capital and general
corporate purposes of the Consolidated Parties on and after
Closing Date. The Letters of Credit shall be used only for or in
connection with appeal bonds, reimbursement obligations arising
in connection with surety, reclamation and workers compensation
bonds, reinsurance, domestic or international trade transactions
and obligations not otherwise aforementioned relating to
transactions entered into by the applicable account party in the
ordinary course of business.
6.16 Environmental Matters.
Except as otherwise disclosed on Schedule 6.16:
(a) Each of the facilities and properties owned,
leased or operated by the Consolidated Parties or any
Affiliate of any Consolidated Party (the "Properties") and
all operations at the Properties are in material compliance
with all applicable Environmental Laws, and there is no
violation of any Environmental Law with respect to the
Properties or the businesses operated by the Consolidated
Parties or any Affiliate of any Consolidated Party(the
"Businesses"), and there are no conditions relating to the
Businesses or Properties that could give rise to material
liability under any applicable Environmental Laws.
(b) None of the Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or
under the Properties in amounts or concentrations that
constitute or constituted a material violation of, or could
reasonably be expected to give rise to material liability
under, Environmental Laws.
(c) Neither any Consolidated Party or any Affiliate
of any Consolidated Party has received any written or verbal
notice of, or inquiry from any Governmental Authority
regarding, any material violation, alleged violation, non-
compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Businesses, nor
does any Consolidated Party or any Affiliate of any
Consolidated Party have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties, or
generated, treated, stored or disposed of at, on or under
any of the Properties or any other location, in each case by
or on behalf of any Consolidated Party or any Affiliate of
any Consolidated Party in violation of, or in a manner that
could reasonably be expected to give rise to liability
under, any applicable Environmental Law that in any case
would have a Material Adverse Effect.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the best knowledge
of any Credit Party, threatened, under any Environmental Law
to which any Consolidated Party or any Affiliate of any
Consolidated Party is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other
administrative or judicial requirements outstanding under
any Environmental Law with respect to the Consolidated
Parties, any Affiliate of any Consolidated Party, the
Properties or the Businesses.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations
(including, without limitation, disposal) of any
Consolidated Party or any Affiliate of any Consolidated
Party in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in
amounts or in a manner that could reasonably expected to
give rise to liability under Environmental Laws that in any
case would have a Material Adverse Effect.
6.17 Intellectual Property.
Each Consolidated Party owns, or has the legal right to use,
all trademarks, tradenames, copyrights, technology, know-how and
processes (the "Intellectual Property") necessary for each of
them to conduct its business as currently conducted except for
those the failure to own or have such legal right to use could
not have a Material Adverse Effect. Set forth on Schedule 6.17
is a list of all Intellectual Property owned by each Consolidated
Party or that any Consolidated Party has the right to use.
Except as provided on Schedule 6.17, no claim has been asserted
and is pending by any Person challenging or questioning the use
by any Consolidated Party of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property,
nor does any Credit Party know of any such claim, and to the
Credit Parties' knowledge the use of such Intellectual Property
by any Consolidated Party does not infringe on the rights of any
Person, except for such claims and infringements that in the
aggregate, could not have a Material Adverse Effect.
6.18 Solvency.
Each Credit Party is Solvent.
6.19 Investments.
All Investments of each Consolidated Party are Permitted
Investments.
6.20 Location of Collateral.
Set forth on Schedule 6.20(a) is a list of all locations
where any tangible personal property of a Credit Party is located
as of the Closing Date, including county and state where located.
Set forth on Schedule 6.20(b) is the chief executive office and
principal place of business of each Credit Party as of the
Closing Date.
6.21 Disclosure.
Neither this Credit Agreement nor any financial statements
delivered to the Lenders nor any other document, certificate or
statement furnished to the Lenders by or on behalf of any
Consolidated Party in connection with the transactions
contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained therein or herein not misleading.
6.22 No Burdensome Restrictions.
No Consolidated Party is a party to any agreement or
instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law,
rule or regulation which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
6.23 Brokers' Fees.
No Consolidated Party has any obligation to any Person other
than NationsBank Securities, Inc. in respect of any finder's,
broker's, investment banking or other similar fee in connection
with any of the transactions contemplated under the Credit
Documents.
6.24 Labor Matters.
There are no collective bargaining agreements or
Multiemployer Plans covering the employees of a Consolidated
Party as of the Closing Date and none of the Consolidated Parties
has suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last five years.
6.25 Nature of Business.
As of the Closing Date, the Consolidated Parties are engaged
in the business of manufacturing and selling fabrics, apparel and
exercise equipment and related services.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long
as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain
outstanding, and until all of the Commitments hereunder shall
have terminated:
7.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the
Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as
available, and in any event within 90 days after the close
of each fiscal year of the Consolidated Parties, a
consolidated balance sheet and income statement of the
Consolidated Parties, as of the end of such fiscal year,
together with related consolidated statements of operations
and retained earnings and of cash flows for such fiscal
year, setting forth in comparative form consolidated figures
for the preceding fiscal year, all such financial
information described above to be in reasonable form and
detail and audited by independent certified public
accountants of recognized national standing reasonably
acceptable to the Agent and whose opinion shall be to the
effect that such financial statements have been prepared in
accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope
of the audit or qualified as to the status of the
Consolidated Parties as a going concern.
(b) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the close
of each fiscal quarter of the Consolidated Parties (other
than the fourth fiscal quarter, in which case 90 days after
the end thereof) a consolidated and consolidating balance
sheet and income statement of the Consolidated Parties, as
of the end of such fiscal quarter, together with related
consolidated and consolidating statements of operations and
of cash flows for such fiscal quarter, in each case setting
forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such
financial information described above to be in reasonable
form and detail and reasonably acceptable to the Agent, and
accompanied by a certificate of the chief financial officer
of the Borrower to the effect that such quarterly financial
statements fairly present in all material respects the
financial condition of the Consolidated Parties and have
been prepared in accordance with GAAP, subject to changes
resulting from audit and normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of
the financial statements provided for in Sections 7.1(a) and
7.1(b) above, a certificate of the chief financial officer
of the Borrower substantially in the form of Exhibit 7.1(c),
(i) demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof as of the
end of each such fiscal period and (ii) stating that no
Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and
extent thereof and what action the Credit Parties propose to
take with respect thereto.
(d) Borrowing Base Certificates. Within 15 days after
the end of each fiscal month, a Borrowing Base Certificate
as of the end of the immediately preceding month,
substantially in the form of Exhibit 7.1(d) and certified by
the chief financial officer of the Borrower to be true and
correct as of the date thereof.
(e) Annual Business Plan and Budgets. As soon as
available, and in any event within 30 days after the close
of each fiscal year of the Consolidated Parties beginning
with the fiscal year ending June 27, 1998, an annual
business plan and budget of the Consolidated Parties
containing, among other things, projected financial
statements for the next fiscal year.
(f) Compliance With Certain Provisions of the Credit
Agreement. Within 90 days after the end of each fiscal year
of the Borrower, a certificate containing information
regarding the amount of all Asset Dispositions, Debt
Issuances and Equity Issuances that were made during the
prior fiscal year.
(g) Accountant's Certificate. Within the period for
delivery of the annual financial statements provided in
Section 7.1(a), a certificate of the accountants conducting
the annual audit stating that they have reviewed this Credit
Agreement and stating further whether, in the course of
their audit, they have become aware of any Default or Event
of Default and, if any such Default or Event of Default
exists, specifying the nature and extent thereof.
(h) Auditor's Reports. Promptly upon receipt thereof,
a copy of any other report or "management letter" submitted
by independent accountants to any Consolidated Party in
connection with any annual, interim or special audit of the
books of such Person.
(i) Reports. Promptly upon transmission or receipt
thereof, (i) copies of any filings and registrations with,
and reports to, the Securities and Exchange Commission, or
any successor agency, and copies of all financial
statements, proxy statements, notices and reports as any
Consolidated Party shall file with the Securities and
Exchange Commission or shall send to a holder of any
Indebtedness owed by any Consolidated Party in its capacity
as such a holder and (ii) upon the request of the Agent, all
reports and written information to and from the United
States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration,
or any state or local agency responsible for health and
safety matters, or any successor agencies or authorities
concerning environmental, health or safety matters.
(j) Notices. Upon obtaining knowledge thereof, the
Borrower will give written notice to the Agent immediately
of (i) the occurrence of an event or condition consisting of
a Default or Event of Default, specifying the nature and
existence thereof and what action the Credit Parties propose
to take with respect thereto, and (ii) the occurrence of any
of the following with respect to any Consolidated Party (A)
the pendency or commencement of any litigation, arbitral or
governmental proceeding against such Person which if
adversely determined is reasonably likely to have a Material
Adverse Effect, (B) the institution of any governmental
proceedings against such Person with respect to, or the
receipt of notice by such Person of potential liability or
responsibility for, violation or alleged violation of any
federal, state or local law, rule or regulation, including
but not limited to, Environmental Laws, the violation of
which could reasonably be expected to have a Material
Adverse Effect, or (C) any notice or determination
concerning the imposition of any withdrawal liability by a
Multiemployer Plan against such Person or any ERISA
Affiliate, the determination that a Multiemployer Plan is,
or is expected to be, in reorganization within the meaning
of Title IV of ERISA or the termination of any Plan.
(k) ERISA. Upon obtaining knowledge thereof, the
Borrower will give written notice to the Agent promptly (and
in any event within five business days) of: (i) of any event
or condition, including, but not limited to, any Reportable
Event, that constitutes, or might reasonably lead to, an
ERISA Event; (ii) with respect to any Multiemployer Plan,
the receipt of notice as prescribed in ERISA or otherwise of
any withdrawal liability assessed against the Borrower or
any of its ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both
within the meaning of Title IV of ERISA); (iii) the failure
to make full payment on or before the due date (including
extensions) thereof of all amounts which any Consolidated
Party or any ERISA Affiliate is required to contribute to
each Plan pursuant to its terms and as required to meet the
minimum funding standard set forth in ERISA and the Code
with respect thereto; or (iv) any change in the funding
status of any Plan that could have a Material Adverse
Effect, together with a description of any such event or
condition or a copy of any such notice and a statement by
the chief financial officer of the Borrower briefly setting
forth the details regarding such event, condition, or
notice, and the action, if any, which has been or is being
taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the Credit Parties
shall furnish the Agent and the Lenders with such additional
information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all
schedules and attachments thereto required to be filed with
the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan
year" (within the meaning of Section 3(39) of ERISA).
(l) Environmental.
(i) Upon the reasonable written request of the
Agent, the Credit Parties will furnish or cause to be
furnished to the Agent, at the Borrower's reasonable
expense, a report of an environmental assessment of
reasonable scope, form and depth, (including, where
appropriate, invasive soil or groundwater sampling) by
a consultant reasonably acceptable to the Agent as to
the nature and extent of the presence of any Materials
of Environmental Concern on any Properties (as defined
in Section 6.16) and as to the compliance by any
Consolidated Party with Environmental Laws at such
Properties. If the Credit Parties fail to deliver such
an environmental report within seventy-five (75) days
after receipt of such reasonable written request then
the Agent may arrange for same, and the Consolidated
Parties hereby grant to the Agent and their
representatives access to the Properties to reasonably
undertake such an assessment (including, where
appropriate, invasive soil or groundwater sampling).
The reasonable cost of any assessment arranged for by
the Agent pursuant to this provision will be payable by
the Borrower on demand and added to the obligations
secured by the Collateral Documents.
(ii) The Consolidated Parties will conduct and
complete all investigations, studies, sampling, and
testing and all remedial, removal, and other actions
necessary to address all Materials of Environmental
Concern on , from or affecting any of the Properties to
the extent necessary to be in compliance with all
Environmental Laws and with the validly issued orders
and directives of all Governmental Authorities with
jurisdiction over such Properties to the extent any
failure could have a Material Adverse Effect.
(m) Additional Trademarks. At the time of delivery of
the financial statements and reports provided for in Section
7.1(a), a report signed by the chief financial officer or
treasurer of the Borrower setting forth (i) a list of
registration numbers for all material trademarks, service
marks and tradenames awarded to any Consolidated Party since
the last day of the immediately preceding fiscal year and
(ii) a list of all material trademark applications, service
mark applications and trade name applications submitted by
any Consolidated Party since the last day of the immediately
preceding fiscal year and the status of each such
application, all in such form as shall be reasonably
satisfactory to the Agent.
(n) Other Information. With reasonable promptness
upon any such request, such other information regarding the
business, properties or financial condition of any
Consolidated Party as the Agent or the Required Lenders may
reasonably request.
7.2 Preservation of Existence and Franchises.
Except as a result of or in connection with a dissolution,
merger or disposition of a Subsidiary permitted under Section 8.4
or Section 8.5, each Credit Party will, and will cause each of
its Subsidiaries to, do all things necessary to preserve and keep
in full force and effect its existence, rights, franchises and
authority.
7.3 Books and Records.
Each Credit Party will, and will cause each of its
Subsidiaries to, keep complete and accurate books and records of
its transactions in accordance with good accounting practices on
the basis of GAAP (including the establishment and maintenance of
appropriate reserves).
7.4 Compliance with Law.
Each Credit Party will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its Property if
noncompliance with any such law, rule, regulation, order or
restriction is reasonably likely to have a Material Adverse
Effect.
7.5 Payment of Taxes and Other Indebtedness.
Each Credit Party will, and will cause each of its
Subsidiaries to, pay and discharge (a) all taxes, assessments and
governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they
shall become delinquent, (b) all lawful claims (including claims
for labor, materials and supplies) which, if unpaid, might give
rise to a Lien upon any of its properties, and (c) except as
prohibited hereunder, all of its other Indebtedness as it shall
become due; provided, however, that no Consolidated Party shall
be required to pay any such tax, assessment, charge, levy, claim
or Indebtedness which is being contested in good faith by
appropriate proceedings and as to which adequate reserves
therefor have been established in accordance with GAAP, unless
the failure to make any such payment (i) is reasonably likely to
give rise to an immediate right to foreclose on a Lien securing
such amounts or (ii) is reasonably likely to have a Material
Adverse Effect.
7.6 Insurance.
Each Credit Party will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect
insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption
insurance) in such amounts, covering such risks and liabilities
and with such deductibles or self-insurance retentions as are in
accordance with normal industry practice (or as otherwise
required by the Collateral Documents). The Agent 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 canceled, and that no act or default of any
Consolidated Party or any other Person shall affect the rights of
the Agent or the Lenders under such policy or policies.
7.7 Maintenance of Property.
Each Credit Party will, and will cause each of its
Subsidiaries to, maintain and preserve its properties and
equipment material to the conduct of its business in good repair,
working order and condition, normal wear and tear and casualty
and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs,
renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent
and in the manner customary for companies in similar businesses.
7.8 Performance of Obligations.
Each Credit Party will, and will cause each of its
Subsidiaries to, perform in all material respects all of its
obligations under the terms of all material agreements,
indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound.
7.9 Use of Proceeds.
The Borrower will use the proceeds of the Revolving Loans
and will use the Letters of Credit solely for the purposes set
forth in Section 6.15.
7.10 Audits/Inspections.
Upon reasonable notice and during normal business hours (and
without any unreasonable interference with the business of the
Consolidated Parties), each Credit Party will, and will cause
each of its Subsidiaries to, permit representatives appointed by
the Agent, including, without limitation, independent
accountants, agents, attorneys, and appraisers to visit and
inspect its property, including its books and records, its
accounts receivable and inventory, its facilities and its other
business assets, and to make photocopies or photographs thereof
and to write down and record any information such representative
obtains and shall permit the Agent or its representatives to
investigate and verify the accuracy of information provided to
the Lenders and to discuss all such matters with the officers,
employees and representatives of such Person. The Credit Parties
agree that the Agent and its representatives may, at the expense
of the Credit Parties, conduct an audit of the Collateral (i)
annually and (ii) at any reasonable time and from time to time
during the continuance of any Event of Default.
7.11 Financial Covenants.
(a) Interest Coverage Ratio. The Interest Coverage
Ratio, as of the last day of each fiscal quarter of the
Consolidated Parties, shall be greater than or equal to:
(i) for the period from December 27, 1997 to
and including March 27, 1998, 2.25 to 1.00; and
(ii) for the period from March 27, 1998 and
thereafter, 3.00 to 1.00.
(b) Current Ratio. The Current Ratio, as of the last
day of each fiscal quarter of the Consolidated Parties,
shall be greater than or equal to 2.50 to 1.00
(c) Leverage Ratio. The Leverage Ratio, as of the
last day of each fiscal quarter of the Consolidated Parties,
shall be less than or equal to 0.25 to 1.00
(d) Consolidated Tangible Net Worth. At all times the
Consolidated Tangible Net Worth shall be greater than or
equal to the sum of $125 million, increased on a cumulative
basis as of the end of each fiscal quarter of the
Consolidated Parties, commencing with the fiscal quarter
ending September 27, 1997 by an amount equal to 50% of
Consolidated Net Income (to the extent positive) for the
fiscal quarter then ended.
7.12 Additional Credit Parties.
As soon as practicable and in any event within 30 days after
any Person becomes a Subsidiary of any Credit Party, the Borrower
shall provide the Agent with written notice thereof and shall (i)
if such Person is a Material Subsidiary, (A) cause such Person to
execute a Joinder Agreement in substantially the same form as
Exhibit 7.12, (B) cause certificates representing 100% (or, if
less, the full amount owned by the Consolidated Parties) of the
Capital Stock of such Person to be delivered to the Agent
(together with undated stock powers signed in blank) and pledged
to the Agent pursuant to an appropriate pledge agreement(s) in
substantially the form of the Pledge Agreement and otherwise in
form acceptable to the Agent and (ii) deliver such other
documentation as the Agent may reasonably request in connection
with the foregoing, including, without limitation, appropriate
UCC-1 financing statements, environmental reports, landlord's
waivers, certified resolutions and other organizational and
authorizing documents of such Person, favorable opinions of
counsel to such Person (which shall cover, among other things,
the legality, validity, binding effect and enforceability of the
documentation referred to above and the perfection of the Agent's
liens thereunder) and other items of the types required to be
delivered pursuant to Section 5.1(d), all in form, content and
scope reasonably satisfactory to the Agent.
7.13 Pledged Assets.
(a) Each Credit Party will, and will cause each of its
Material Subsidiaries to, (i) cause all of its personal
property assets (other than machinery and equipment) located
in the United States to be subject at all times to first
priority and perfected Liens in favor of the Agent pursuant
to the terms and conditions of the Collateral Documents and
(ii) cause 100% (or, if less, the full amount owned by the
Consolidated Parties) of the Capital Stock in each Credit
Party and each direct or indirect Material Subsidiary of the
Borrower to be subject at all times to a first priority,
perfected Lien in favor of the Agent pursuant to the terms
and conditions of the Collateral Documents or such other
security documents as the Agent shall reasonably request.
(b) Each Credit Party shall, and shall cause each of
its Subsidiaries to, take such action (including but not
limited to the actions set forth in Sections 5.1(d)) at its
own expense as requested by the Agent to ensure that the
Agent has a first priority perfected Lien to secure the
Credit Party Obligations in all personal property assets
(other than machinery and equipment) of the Credit Parties
located in the United States, subject only to Permitted
Liens. Each Credit Party shall, and shall cause each of its
Subsidiaries to, adhere to the covenants regarding the
location of Collateral as set forth in the Collateral
Documents.
7.14 Maintenance of Accounts with Agent.
Each Credit Party shall, and shall cause each of its
Subsidiaries to, maintain all of its deposit accounts with the
Agent and, except for the accounts set forth on Schedule 7.14,
shall not open, maintain or otherwise have any other account
(including any checking or savings account) where money in excess
of $5 million in the aggregate for all such accounts is or may be
deposited or maintained with such Person,
7.15 Factoring Agreements.
Promptly upon the Borrower or any Material Subsidiary
entering into a Factoring Agreement, deliver or cause such Person
to deliver an assignment of factoring proceeds, consented to in
writing by the applicable Factor and otherwise in form and
substance satisfactory to the Agent, with respect to such
Factoring Agreement.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long
as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain
outstanding, and until all of the Commitments hereunder shall
have terminated:
8.1 Indebtedness.
The Credit Parties will not permit any Consolidated Party to
contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement
and the other Credit Documents;
(b) Indebtedness of the Borrower existing as of the
Closing Date and set forth in Schedule 8.1 (and renewals,
refinancings and extensions thereof on terms and conditions
no less favorable to such Person than such existing
Indebtedness);
(c) purchase money Indebtedness (including Capital
Leases and Synthetic Leases) hereafter incurred by the
Borrower to finance the purchase of fixed assets provided
that (i) the total of all such Indebtedness shall not exceed
an aggregate principal amount of $2,500,000 at any one time
outstanding (including any such Indebtedness referred to in
subsection (b) above); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s)
financed; and (iii) no such Indebtedness shall be refinanced
for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(d) obligations of the Borrower or any of its
Subsidiaries in respect of Hedging Agreements entered into
in order to manage existing or anticipated interest rate or
exchange rate risks and not for speculative purposes;
(e) intercompany Indebtedness arising out of loans and
advances permitted under Section 8.6 and
(f) Indebtedness of Alchem arising under the pledge
agreement executed by Alchem in connection with the New
Delta Mills Credit Facility.
Notwithstanding anything to the contrary set forth in this
Section 8.1 or in any other provision of this Credit Agreement,
none of the Consolidated Parties shall be permitted to contract,
create, incur, assume or permit to exist any Guaranty Obligations
in respect of any Indebtedness of Delta Mills or any of its
Subsidiaries other than Guaranty Obligations arising in
connection with standby letters of credit or surety bonds issued
to satisfy worker's compensation requirements.
8.2 Liens.
The Credit Parties will not permit any Consolidated Party to
contract, create, incur, assume or permit to exist any Lien with
respect to any of its Property, whether now owned or after
acquired, except for Permitted Liens.
8.3 Nature of Business.
The Credit Parties will not permit any Consolidated Party to
substantively alter the character or fields of the business
conducted by such Person as of the Closing Date.
8.4 Consolidation, Merger, Dissolution, etc.
Except in connection with an Asset Disposition permitted by
the terms of Section 8.5, the Credit Parties will not permit any
Consolidated Party to enter into any transaction of merger or
consolidation or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution); provided that, notwithstanding
the foregoing provisions of this Section 8.4, (a) the Borrower
may merge or consolidate with any of its Subsidiaries provided
that (i) the Borrower shall be the continuing or surviving
corporation, (ii) the Credit Parties shall cause to be executed
and delivered such documents, instruments and certificates as the
Agent may reasonably request so as to cause the Credit Parties to
be in compliance with the terms of Section 7.13 after giving
effect to such transaction and (iii) the Borrower shall have
delivered to the Agent a certificate demonstrating that after
giving effect to such transaction no Default or Event of Default
would exist, (b) any Credit Party other than the Borrower may
merge or consolidate with any other Credit Party other than the
Borrower provided that (i) the Credit Parties shall cause to be
executed and delivered such documents, instruments and
certificates as the Agent may reasonably request so as to cause
the Credit Parties to be in compliance with the terms of Section
7.13 after giving effect to such transaction and (ii) the
Borrower shall have delivered to the Agent a certificate
demonstrating that after giving effect to such transaction no
Default or Event of Default would exist, (c) any Consolidated
Party which is not a Credit Party may be merged or consolidated
with or into any Credit Party provided that (i) such Credit Party
shall be the continuing or surviving corporation, (ii) the Credit
Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Agent may reasonably request
so as to cause the Credit Parties to be in compliance with the
terms of Section 7.13 after giving effect to such transaction and
(iii) the Borrower shall have delivered to the Agent a
certificate demonstrating that after giving effect to such
transaction no Default or Event of Default would exist, (d) any
Consolidated Party which is not a Credit Party may be merged or
consolidated with or into any other Consolidated Party which is
not a Credit Party provided the Borrower shall have delivered to
the Agent a certificate demonstrating that after giving effect to
such transaction, no Default or Event of Default would exist, and
(e) any Wholly-Owned Subsidiary of the Borrower may dissolve,
liquidate or wind up its affairs at any time.
8.5 Asset Dispositions.
The Credit Parties will not permit any Consolidated Party to
make any Asset Disposition (including, without limitation, any
Sale and Leaseback Transaction) other than Excluded Asset
Dispositions unless (a) the consideration paid in connection
therewith is cash or Cash Equivalents, (b) if such transaction is
a Sale and Leaseback Transaction, such transaction is permitted
by the terms of Section 8.13, (c) such transaction does not
involve the sale or other disposition of a minority equity
interest in any Consolidated Party, (d) the aggregate net book
value of all of the assets sold or otherwise disposed of by the
Consolidated Parties in all such transactions after the Closing
Date shall not exceed $5,000,000, (e) no Default or Event of
Default shall have occurred and be continuing or would occur as a
consequence thereof, (f) if the aggregate net book value of all
of the assets sold or otherwise disposed of in such transaction
exceeds $500,000, then the Agent and the Lenders shall have
received a certificate of an officer of the Borrower specifying
the anticipated or actual date of such Asset Disposition no later
than 30 days prior to such Asset Disposition, in each case
briefly describing the assets to be sold or otherwise disposed of
and setting forth the net book value of such assets, the
aggregate consideration and the Net Cash Proceeds to be received
for such assets in connection with such Asset Disposition and (g)
within the period of 60 days following the consummation of such
Asset Disposition (with respect to any such Asset Disposition,
the "Application Period"), the Borrower shall apply (or cause to
be applied) an amount equal to the Net Cash Proceeds of such
Asset Disposition to (i) the purchase, acquisition or, in the
case of improvements to real property, construction of Eligible
Assets or (ii) to the prepayment of the Revolving Loans in
accordance with the terms of Section 3.3(b)(ii).
Upon a sale of assets or the sale of Capital Stock of a
Consolidated Party permitted by this Section 8.5, the Agent shall
(to the extent applicable) deliver to the Borrower, upon the
Borrower's request and at the Borrower's expense, such
documentation as is reasonably necessary to evidence the release
of the Agent's security interest, if any, in such assets or
Capital Stock, including, without limitation, amendments or
terminations of UCC financing statements, if any, the return of
stock certificates, if any, and the release of such Subsidiary
from all of its obligations, if any, under the Credit Documents.
8.6 Investments.
The Credit Parties will not permit any Consolidated Party to
make Investments in or to any Person, except for Permitted
Investments.
8.7 Restricted Payments.
The Credit Parties will not permit any Consolidated Party
to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment, except (a) to make
dividends payable solely in the same class of Capital Stock of
such Person, (b) to make dividends or other distributions payable
to the Borrower (directly or indirectly through Subsidiaries),
(c) as permitted by Section 8.8 or Section 8.9, (d) Investments
in Delta Mills and its Subsidiaries that do not, taken together
with Investments made pursuant to Section 8.6 and clause (vii) of
the definition of "Permitted Investments" set forth in Section
1.1, exceed $500,000 in the aggregate at any one time outstanding
for all of the Consolidated Parties and (e) any other Restricted
Payment provided that (y) no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence
thereof and (z) such Restricted Payment, together with the
aggregate of all other Restricted Payments declared or made by
the Consolidated Parties after the Closing Date (excluding
Restricted Payments permitted by clause (a), (b), (c) or (d) of
this paragraph or clause (ii) of the next succeeding paragraph),
is less than the sum of (1) $12.5 million, plus (2) 50% of
Consolidated Net Income for the period (taken as one accounting
period) from the beginning of the fiscal quarter commencing June
29, 1997 to the last day of the most recently ended fiscal
quarter with respect to which the Agent shall have received the
financial statements required to be delivered pursuant to Section
7.1(a) or (b) (or, if Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (3) 100% of the
aggregate Net Cash Proceeds received by the Consolidated Parties
from any Excluded Equity Issuance after the Closing Date and 50%
of the aggregate Net Cash Proceeds received by the Consolidated
Parties from any Equity Issuance which is not an Excluded Equity
Issuance after the Closing Date, plus (4) the aggregate amount of
dividends and other distributions received by the Borrower on
account of any shares of any class of Capital Stock of Delta
Mills for the period (taken as one accounting period) from the
Closing Date to the date of any determination under this Section
8.7(e).
The foregoing provisions shall not prohibit the payment of any
dividend within 60 days after the date of declaration thereof, if
at said date of declaration such payment would have complied with
this Section 8.7.
The amount of any Restricted Payments (other than cash Restricted
Payments) shall be equal to the fair market value (evidenced by a
resolution of the board of directors of the applicable
Consolidated Party delivered together with the certificate
referred to below) on the date of the Restricted Payment of the
asset(s) proposed to be transferred by the Borrower or such
Subsidiary, as the case may be, pursuant to such Restricted
Payment. Not later than the date of making any Restricted
Payment, the Borrower shall deliver to the Agent a certificate
executed by an Executive Officer of the Borrower stating that
such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 8.7 were
computed, which calculations may be based upon the Borrower's
latest available financial statements.
8.8 Prepayments of Indebtedness, etc.
If any Default or Event of Default has occurred and is
continuing or would be directly or indirectly caused as a result
thereof, the Credit Parties will not permit any Consolidated
Party to (a) after the issuance thereof, amend or modify (or
permit the amendment or modification of) any of the terms of any
Indebtedness if such amendment or modification would add or
change any terms in a manner adverse to the issuer of such
Indebtedness, or shorten the final maturity or average life to
maturity or require any payment to be made sooner than originally
scheduled or increase the interest rate applicable thereto or
change any subordination provision thereof, or (b) make (or give
any notice with respect thereto) any voluntary or optional
payment or prepayment or redemption or acquisition for value of
(including without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for
the purpose of paying when due), refund, refinance or exchange of
any other Indebtedness.
8.9 Transactions with Affiliates.
The Credit Parties will not permit any Consolidated Party to
enter into or permit to exist any transaction or series of
transactions with any officer, director, shareholder, Subsidiary
or Affiliate of such Person other than (a) advances of working
capital to any Credit Party, (b) transfers of cash and assets to
any Credit Party, (c) transactions permitted by Section 8.1,
Section 8.4, Section 8.5, Section 8.6, or Section 8.7, (d) normal
compensation and reimbursement of expenses of officers and
directors, (e) the provision by the Borrower to Delta Mills and
its Subsidiaries of management services pursuant to the
Management Services Agreement dated as of August 1, 1997, as the
same may be amended from time to time, between the Borrower and
Delta Mills, (f) transactions contemplated by the Tax Sharing
Agreement dated as of August 1, 1997, as the same may be amended
from time to time, between the Borrower and Delta Mills and (g)
except as otherwise specifically limited in this Credit
Agreement, other transactions which are entered into in the
ordinary course of such Person's business on terms and conditions
substantially as favorable to such Person as would be obtainable
by it in a comparable arms-length transaction with a Person other
than an officer, director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year.
The Credit Parties will not permit any Consolidated Party to
change its fiscal year.
8.11 Limitation on Restricted Actions.
The Credit Parties will not permit any Consolidated Party
to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on
the ability of any such Person to (a) pay dividends or make any
other distributions to any Credit Party on its Capital Stock or
with respect to any other interest or participation in, or
measured by, its profits, (b) pay any Indebtedness or other
obligation owed to any Credit Party, (c) make loans or advances
to any Credit Party, (d) sell, lease or transfer any of its
properties or assets to any Credit Party, or (e) act as a
Guarantor and pledge its assets pursuant to the Credit Documents
or any renewals, refinancings, exchanges, refundings or extension
thereof, except (in respect of any of the matters referred to in
clauses (a)-(d) above) for such encumbrances or restrictions
existing under or by reason of (i) this Credit Agreement and the
other Credit Documents, (ii) the New Delta Mills Credit Facility,
(iii) applicable law or (iv) any document or instrument governing
Indebtedness incurred pursuant to Section 8.1(c), provided that
any such restriction contained therein relates only to the asset
or assets constructed or acquired in connection therewith or (v)
any Permitted Lien or any document or instrument governing any
Permitted Lien, provided that any such restriction contained
therein relates only to the asset or assets subject to such Lien.
8.12 Ownership of Subsidiaries.
The Credit Parties will not permit any Consolidated
Party to (i) permit any Person (other than the Borrower or
any Wholly-Owned Subsidiary of the Borrower) to own any
Capital Stock of any Subsidiary of the Borrower, (ii) permit
any Subsidiary of the Borrower to issue Capital Stock
(except to the Borrower or to a Wholly-Owned Subsidiary of
the Borrower), (iii) permit, create, incur, assume or suffer
to exist any Lien on any Capital Stock of any Subsidiary of
the Borrower, in each case except (A) to qualify directors
where required by applicable law or to satisfy other
requirements of applicable law with respect to the ownership
of Capital Stock of Foreign Subsidiaries, (B) as a result of
or in connection with a dissolution, merger or disposition
of a Subsidiary permitted under Section 8.4 or Section 8.5
or (C) for Permitted Liens and (iv) notwithstanding anything
to the contrary contained in clause (ii) above, permit any
Subsidiary of the Borrower to issue any shares of preferred
Capital Stock.
8.13 Sale Leasebacks.
Except for transactions entered into prior to the Closing
Date, the Credit Parties will not permit any Consolidated Party
to, directly or indirectly, become or remain liable as lessee or
as guarantor or other surety with respect to any lease, whether
an Operating Lease or a Capital Lease, of any Property (whether
real, personal or mixed), whether now owned or hereafter
acquired, (a) which such Consolidated Party has sold or
transferred or is to sell or transfer to a Person which is not a
Consolidated Party or (b) which such Consolidated Party intends
to use for substantially the same purpose as any other Property
which has been sold or is to be sold or transferred by such
Consolidated Party to another Person which is not a Consolidated
Party in connection with such lease.
8.14 Capital Expenditures.
The Credit Party will not permit Consolidated Capital
Expenditures for any fiscal year to exceed an amount equal to
150% of depreciation expense of the Borrower and its Subsidiaries
on a consolidated basis for the immediately preceding fiscal year
as determined in accordance with GAAP.
8.15 No Further Negative Pledges.
Except (a) pursuant to this Credit Agreement and the other
Credit Documents and (b) pursuant to any document or instrument
governing Indebtedness incurred pursuant to Section 8.1(c),
provided that any such restriction contained therein relates only
to the asset or assets constructed or acquired in connection
therewith, the Credit Parties will not permit any Consolidated
Party to enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption
of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for
such obligation if security is given for some other obligation.
8.16 Operating Lease Obligations.
The Credit Parties will not permit any Consolidated Party to
enter into, assume or permit to exist any obligations for the
payment of rental under Operating Leases which in the aggregate
for all such Persons would exceed $5,000,000 in any fiscal year.
8.17 Limitation on Foreign Operations.
The Credit Parties will not permit (i) the Borrower and its
Domestic Subsidiaries to own at any time less than 85% of
Consolidated Total Assets or (ii) as of as of the last day of
each fiscal quarter, the portion attributable to the Borrower and
its Domestic Subsidiaries of Consolidated Net Income for the four
quarters then ended to be less than 85% of Consolidated Net
Income for such period.
8.18 Factoring Agreements.
The Credit Parties will not permit any Consolidated Party to
incur or permit to exist any loans or advances from a Factor
(excluding charges, fees and interest accruing in the ordinary
course of business) under any Factoring Agreement.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any
of the following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any
principal of any of the Revolving Loans or of any
reimbursement obligations arising from drawings under
Letters of Credit, or
(ii) default, and such default shall continue
for three (3) or more Business Days, in the payment
when due of any interest on the Revolving Loans or on
any reimbursement obligations arising from drawings
under Letters of Credit, or of any Fees or other
amounts owing hereunder, under any of the other Credit
Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party
herein, in any of the other Credit Documents, or in any
statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in
any material respect on the date as of which it was deemed
to have been made; or
(c) Covenants.
(i) Any Credit Party shall default in the
due performance or observance of any term, covenant or
agreement contained in Sections 7.2, 7.9, 7.11, 7.12,
7.13 or 8.1 through 8.18, inclusive;
(ii) Any Credit Party shall default in the
due performance or observance of any term, covenant or
agreement contained in Sections 7.1(a), (b) (c) or (d)
and such default shall continue unremedied for a period
of at least 5 days after the earlier of a responsible
officer of a Credit Party becoming aware of such
default or notice thereof by the Agent; or
(iii) Any Credit Party shall default in
the due performance or observance by it of any term,
covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section
9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at
least 30 days after the earlier of a responsible
officer of a Credit Party becoming aware of such
default or notice thereof by the Agent; or
(d) Other Credit Documents. (i) Any Credit Party
shall default in the due performance or observance of any
term, covenant or agreement in any of the other Credit
Documents (subject to applicable grace or cure periods, if
any), or (ii) except as a result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted
under Section 8.4 or Section 8.5, any Credit Document shall
fail to be in full force and effect or to give the Agent
and/or the Lenders the Liens, rights, powers and privileges
purported to be created thereby, or any Credit Party shall
so state in writing; or
(e) Guaranties. Except as the result of or in
connection with a dissolution, merger or disposition of a
Subsidiary permitted under Section 8.4 or Section 8.5, the
guaranty given by any Guarantor hereunder (including any
Additional Credit Party) or any provision thereof shall
cease to be in full force and effect, or any Guarantor
(including any Additional Credit Party) hereunder or any
Person acting by or on behalf of such Guarantor shall deny
or disaffirm such Guarantor's obligations under such
guaranty, or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to any
guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur
with respect to any Consolidated Party; or
(g) Defaults under Other Agreements.
(i) Any Consolidated Party shall default in
the performance or observance (beyond the applicable
grace period with respect thereto, if any) of any
material obligation or condition of any contract or
lease material to the Consolidated Parties and the
other Person party to such contract or lease shall have
notified the applicable Consolidated Party that such
other Person considers such Consolidated Party to be in
default of such contract or lease; or
(ii) With respect to any Indebtedness (other
than Indebtedness outstanding under this Credit
Agreement) in excess of $250,000 in the aggregate for
the Consolidated Parties taken as a whole, (A) any
Consolidated Party shall (1) default in any payment
(beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness,
or (2) the occurrence and continuance of a default in
the observance or performance relating to such
Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or condition
exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders
of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to
whether any notice or lapse of time is required), any
such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be
declared due and payable, or required to be prepaid
other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall
be entered against one or more of the Consolidated Parties
involving a liability of $250,000 or more in the aggregate
(to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage and has
the ability to perform) and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded
pending appeal within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions,
if such event or condition could have a Material Adverse
Effect: (i) any "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, shall exist with respect to
any Plan, or any lien shall arise on the assets of any
Consolidated Party or any ERISA Affiliate in favor of the
PBGC or a Plan; (ii) an ERISA Event shall occur with respect
to a Single Employer Plan, which is, in the reasonable
opinion of the Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (iii) an ERISA
Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion
of the Agent, likely to result in (A) the termination of
such Plan for purposes of Title IV of ERISA, or (B) any
Consolidated Party or any ERISA Affiliate incurring any
liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency or (within the meaning of Section 4245
of ERISA) such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975
of the Code) or breach of fiduciary responsibility shall
occur which may subject any Consolidated Party or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i),
or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any
Consolidated Party or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability;
or
(j) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived
by the requisite Lenders (pursuant to the voting requirements of
Section 11.6) or cured to the reasonable satisfaction of the
requisite Lenders (pursuant to the voting procedures in Section
11.6), the Agent shall, upon the request and direction of the
Required Lenders, by written notice to the Credit Parties take
any of the following actions:
(a) Termination of Commitments. Declare the
Commitments terminated whereupon the Commitments shall be
immediately terminated.
(b) Acceleration. Declare the unpaid principal of and
any accrued interest in respect of all Revolving Loans, any
reimbursement obligations arising from drawings under
Letters of Credit and any and all other indebtedness or
obligations of any and every kind owing by the Borrower to
the Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
(c) Cash Collateral. Direct the Borrower to pay (and
the Borrower agrees that upon receipt of such notice, or
upon the occurrence of an Event of Default under Section
9.1(f), it will immediately pay) to the Agent additional
cash, to be held by the Agent, for the benefit of the
Lenders, in a cash collateral account as additional security
for the LOC Obligations in respect of subsequent drawings
under all then outstanding Letters of Credit in an amount
equal to the maximum aggregate amount which may be drawn
under all Letters of Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights
and interests created and existing under the Credit
Documents including, without limitation, all rights and
remedies existing under the Collateral Documents, all rights
and remedies against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default
specified in Section 9.1(f) shall occur, then the Commitments
shall automatically terminate and all Revolving Loans, all
reimbursement obligations arising from drawings under Letters of
Credit, all accrued interest in respect thereof, all accrued and
unpaid Fees and other indebtedness or obligations owing to the
Agent and/or any of the Lenders hereunder automatically shall
immediately become due and payable without the giving of any
notice or other action by the Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment, Powers and Immunities.
Each Lender hereby irrevocably appoints and authorizes the
Agent to act as its agent under this Credit Agreement and the
other Credit Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Credit
Agreement and the other Credit Documents, together with such
other powers as are reasonably incidental thereto. The Agent
(which term as used in this sentence and in Section 10.5 and the
first sentence of Section 10.6 hereof shall include its
Affiliates and its own and its Affiliates' officers, directors,
employees, and agents): (a) shall not have any duties or
responsibilities except those expressly set forth in this Credit
Agreement and shall not be a trustee or fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral)
made in or in connection with any Credit Document or any
certificate or other document referred to or provided for in, or
received by any of them under, any Credit Document, or for the
value, validity, effectiveness, genuineness, enforceability, or
sufficiency of any Credit Document, or any other document
referred to or provided for therein or for any failure by any
Credit Party or any other Person to perform any of its
obligations thereunder; (c) shall not be responsible for or have
any duty to ascertain, inquire into, or verify the performance or
observance of any covenants or agreements by any Credit Party or
the satisfaction of any condition or to inspect the property
(including the books and records) of any Credit Party or any of
its Subsidiaries or Affiliates; (d) shall not be required to
initiate or conduct any litigation or collection proceedings
under any Credit Document; and (e) shall not be responsible for
any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross
negligence or willful misconduct. The Agent may employ agents
and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
10.2 Reliance by Agent.
The Agent shall be entitled to rely upon any certification,
notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telecopy)
believed by it to be genuine and correct and to have been signed,
sent or made by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel
for any Credit Party), independent accountants, and other experts
selected by the Agent. The Agent may deem and treat the payee of
any Revolving Note as the holder thereof for all purposes hereof
unless and until the Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 11.3(b) hereof.
As to any matters not expressly provided for by this Credit
Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that the Agent shall not be required
to take any action that exposes the Agent to personal liability
or that is contrary to any Credit Document or applicable law or
unless it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be
incurred by it by reason of taking any such action.
10.3 Defaults.
The Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default or Event of Default unless the Agent
has received written notice from a Lender or the Borrower
specifying such Default or Event of Default and stating that such
notice is a "Notice of Default". In the event that the Agent
receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the
Lenders. The Agent shall (subject to Section 10.2 hereof) take
such action with respect to such Default or Event of Default as
shall reasonably be directed by the Required Lenders, provided
that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable in
the best interest of the Lenders.
10.4 Rights as a Lender.
With respect to its Commitment and the Revolving Loans made
by it, NationsBank (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as
though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include
the Agent in its individual capacity. NationsBank (and any
successor acting as Agent) and its Affiliates may (without having
to account therefor to any Lender) accept deposits from, lend
money to, make investments in, provide services to, and generally
engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it
were not acting as Agent, and NationsBank (and any successor
acting as Agent) and its Affiliates may accept fees and other
consideration from any Credit Party or any of its Subsidiaries or
Affiliates for services in connection with this Credit Agreement
or otherwise without having to account for the same to the
Lenders.
10.5 Indemnification.
The Lenders agree to indemnify the Agent (to the extent not
reimbursed under Section 11.5 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in
accordance with their respective Commitments, for any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Agent (including
by any Lender) in any way relating to or arising out of any
Credit Document or the transactions contemplated thereby or any
action taken or omitted by the Agent under any Credit Document;
provided that no Lender shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation
of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs or
expenses payable by the Borrower under Section 11.5, to the
extent that the Agent is not promptly reimbursed for such costs
and expenses by the Borrower. The agreements in this Section 10.5
shall survive the repayment of the Revolving Loans, LOC
Obligations and other obligations under the Credit Documents and
the termination of the Commitments hereunder.
10.6 Non-Reliance on Agent and Other Lenders.
Each Lender agrees that it has, independently and without
reliance on the Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its
own credit analysis of the Credit Parties and their Subsidiaries
and Affiliates and made its own decision to enter into this
Credit Agreement and 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 analysis and decisions in taking
or not taking action under the Credit Documents. Except for
notices, reports, and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder,
the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the
affairs, financial condition, or business of any Credit Party or
any of its Subsidiaries or Affiliates that may come into the
possession of the Agent or any of its Affiliates.
10.7 Successor Agent.
The Agent may resign at any time by giving notice thereof to
the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a commercial
bank organized under the laws of the United States of America
having combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges, and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions
of this Section 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while
it was acting as Agent.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be
effective (a) when delivered, (b) upon acknowledgement of
receipt, when transmitted via telecopy (or other facsimile
device) to the number set out below, (c) the Business Day
following the day on which the same has been delivered prepaid to
a reputable national overnight air courier service, or (d) the
third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to
the respective parties at the address, in the case of the
Borrower, Guarantors and the Agent, set forth below, and, in the
case of the Lenders, set forth on Schedule 2.1(a), or at such
other address as such party may specify by written notice to the
other parties hereto:
if to the Borrower or the Guarantors:
Delta Woodside Industries, Inc.
1082 Court House Square
Post Office Box 388
Edgefield, South Carolina 29824
Attn: Bettis C. Rainsford
Telephone: 803-637-5304
Telecopy: 803-637-6066)
with a copy to:
Eric B. Amstutz, Esq.
Wyche, Burgess, Freeman & Parham, P.A.
44 East Camperdown Way
Greenville, South Carolina 29601
Post Office Box 728 (29602-0728)
Greenville, South Carolina 29602
Telephone: 864-242-8201
Telecopy: 864-235-8900
if to the Agent:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-8958
Telecopy: (704) 388-9436
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center, 8th Floor
100 North Tryon Street
Charlotte, North Carolina 28255
Attn: E. Phifer Helms
Telephone: (704) 386-5358
Telecopy: (704) 386-1270
11.2 Right of Set-Off; Adjustments.
Upon the occurrence and during the continuance of any Event
of Default, each Lender (and each of its Affiliates) is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Lender (or any of its Affiliates) to or for the credit or
the account of any Credit Party against any and all of the
obligations of such Person now or hereafter existing under this
Credit Agreement, under the Revolving Notes, under any other
Credit Document or otherwise, irrespective of whether such Lender
shall have made any demand under hereunder or thereunder and
although such obligations may be unmatured. Each Lender agrees
promptly to notify any affected Credit Party after any such set-
off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under
this Section 11.2 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that
such Lender may have.
11.3 Benefit of Agreement.
(a) This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided that
none of the Credit Parties may assign or transfer any of its
interests and obligations without prior written consent of
the Lenders; provided further that the rights of each Lender
to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth
in this Section 11.3.
(b) Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations
under this Credit Agreement (including, without limitation,
all or a portion of its Revolving Loans, its Revolving Note,
and its Commitment); provided, however, that
(i) each such assignment shall be to an
Eligible Assignee;
(ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender's
rights and obligations under this Credit Agreement, any
such partial assignment shall be in an amount at least
equal to $5,000,000 (or, if less, the remaining amount
of the Commitment being assigned by such Lender) or an
integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender
shall be of a constant, and not varying, percentage of
all of its rights and obligations under this Credit
Agreement and the Revolving Notes; and
(iv) the parties to such assignment shall
execute and deliver to the Agent for its acceptance an
Assignment and Acceptance in the form of Exhibit
11.3(b) hereto, together with any Revolving Note
subject to such assignment and a processing fee of
$3,500.
Upon execution, delivery, and acceptance of such Assignment
and Acceptance, the assignee thereunder shall be a party
hereto and, to the extent of such assignment, have the
obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its
obligations under this Credit Agreement. Upon the
consummation of any assignment pursuant to this Section
11.3(b), the assignor, the Agent and the Borrower shall make
appropriate arrangements so that, if required, new Revolving
Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to
the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with
Section 3.11.
(c) The Agent shall maintain at its address referred
to in Section 11.1 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 Revolving
Loans owing 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 Credit 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.
(d) Upon its receipt of an Assignment and Acceptance
executed by the parties thereto, together with any Revolving
Note subject to such assignment and payment of the
processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the
form of Exhibit 11.3(b) hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof
to the parties thereto.
(e) Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations
under this Credit Agreement (including all or a portion of
its Commitment and its Revolving Loans); provided, however,
that (i) such Lender's obligations under this Credit
Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the yield protection
provisions contained in Sections 3.7 through 3.12,
inclusive, and the right of set-off contained in Section
11.2, and (iv) the Borrower shall continue to deal solely
and directly with such Lender in connection with such
Lender's rights and obligations under this Credit Agreement,
and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Revolving Loans
and its Revolving Note and to approve any amendment,
modification, or waiver of any provision of this Credit
Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which
interest is payable on such Revolving Loans or Revolving
Note, extending any scheduled principal payment date or date
fixed for the payment of interest on such Revolving Loans or
Revolving Note, or extending its Commitment).
(f) Notwithstanding any other provision set forth in
this Credit Agreement, any Lender may at any time assign and
pledge all or any portion of its Revolving Loans and its
Revolving Note to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment
shall release the assigning Lender from its obligations
hereunder.
(g) Any Lender may furnish any information concerning
the Borrower or any of its Subsidiaries in the possession of
such Lender from time to time to assignees and participants
(including prospective assignees and participants), subject,
however, to the provisions of Section 11.14 hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Lender
in exercising any right, power or privilege hereunder or under
any other Credit Document and no course of dealing between the
Agent or any Lender and any of the Credit Parties shall operate
as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are
cumulative and not exclusive of any rights or remedies which the
Agent or any Lender would otherwise have. No notice to or demand
on any Credit Party in any case shall entitle the Borrower or any
other Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the
rights of the Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
11.5 Expenses; Indemnification.
(a) The Borrower agrees to pay on demand all reasonable
costs and expenses of the Agent in connection with the
syndication, preparation, execution, delivery, administration,
modification, and amendment of this Credit Agreement, the other
Credit Documents, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and
expenses of counsel for the Agent (including the cost of internal
counsel) with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under the Credit
Documents. The Borrower further agrees to pay on demand all
reasonable costs and expenses of the Agent and the Lenders, if
any (including, without limitation, reasonable attorneys' fees
and expenses and the cost of internal counsel), in connection
with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Credit Documents and the other
documents to be delivered hereunder.
(b) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender and each of their Affiliates and their
respective officers, directors, employees, agents, and advisors
(each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' fees) that
may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of
defense in connection therewith) the Credit Documents, any of the
transactions contemplated herein or the actual or proposed use of
the proceeds of the Revolving Loans, except to the extent such
claim, damage, loss, liability, cost, or expense is found in a
final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the
indemnity in this Section 11.5 applies, such indemnity shall be
effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors,
shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are
consummated. The Borrower agrees not to assert any claim against
the Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and
advisers, on any theory of liability, for special, indirect,
consequential, or punitive damages arising out of or otherwise
relating to the Credit Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds
of the Revolving Loans. The Agent and the Lenders agree not to
assert any claim against any of the Credit Parties, or any of
their respective directors, officers, employees, attorneys,
agents, and advisers, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or
otherwise relating to the Credit Documents or any of the
transactions contemplated herein.
(c) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 11.5 shall
survive the repayment of the Revolving Loans, LOC Obligations and
other obligations under the Credit Documents and the termination
of the Commitments hereunder.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document
nor any of the terms hereof or thereof may be amended, changed,
waived, discharged or terminated unless such amendment, change,
waiver, discharge or termination is in writing entered into by,
or approved in writing by, the Required Lenders and the Borrower,
provided, however, that:
(a) without the consent of each Lender affected
thereby, neither this Credit Agreement nor any other Credit
Document may be amended to
(i) extend the final maturity of any
Revolving Loan or the time of payment of any
reimbursement obligation, or any portion thereof,
arising from drawings under Letters of Credit,
(ii) reduce the rate or extend the time of
payment of interest (other than as a result of waiving
the applicability of any post-default increase in
interest rates) thereon or Fees hereunder,
(iii) reduce or waive the principal
amount of any Revolving Loan or of any reimbursement
obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(iv) increase the Commitment of a Lender over
the amount thereof in effect (it being understood and
agreed that a waiver of any Default or Event of Default
or mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of
any Lender),
(v) except as the result of or in connection
with an Asset Disposition permitted by Section 8.5,
release all or substantially all of the Collateral,
(vi) except as the result of or in connection
with a dissolution, merger or disposition of a
Subsidiary permitted under Section 8.4, release the
Borrower or substantially all of the other Credit
Parties from its or their obligations under the Credit
Documents,
(vii) amend, modify or waive any
provision of this Section 11.6 or Section 3.6, 3.7,
3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 9.1(a),
11.2, 11.3, 11.5 or 11.9,
(viii) reduce any percentage specified in,
or otherwise modify, the definition of Required
Lenders, or
(ix) consent to the assignment or transfer by
the Borrower or all or substantially all of the other
Credit Parties of any of its or their rights and
obligations under (or in respect of) the Credit
Documents except as permitted thereby;
(b) without the consent of the Agent, no provision of
Section 10 may be amended;
(c) without the consent of the Issuing Lender, no
provision of Section 2.2 may be amended.
Notwithstanding the fact that the consent of all the Lenders
is required in certain circumstances as set forth above, (x)
each Lender is entitled to vote as such Lender sees fit on
any bankruptcy reorganization plan that affects the
Revolving Loans, and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code
supersedes the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit
Party to use cash collateral in the context of a bankruptcy
or insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall
be an original, but all of which shall constitute one and the
same instrument. It shall not be necessary in making proof of
this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by
facsimile by any of the parties hereto of an executed counterpart
of this Credit Agreement shall be as effective as an original
executed counterpart hereof and shall be deemed a representation
that an original executed counterpart hereof will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Credit
Agreement.
11.9 Survival.
All indemnities set forth herein, including, without
limitation, in Section 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall
survive the execution and delivery of this Credit Agreement, the
making of the Revolving Loans, the issuance of the Letters of
Credit, the repayment of the Revolving Loans, LOC Obligations and
other obligations under the Credit Documents and the termination
of the Commitments hereunder, and all representations and
warranties made by the Credit Parties herein shall survive
delivery of the Revolving Notes and the making of the Revolving
Loans hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA. Any legal action or proceeding with respect
to this Credit Agreement or any other Credit Document may be
brought in the courts of the State of North Carolina in
Mecklenburg County, or of the United States for the Western
District of North Carolina, and, by execution and delivery
of this Credit Agreement, each of the Credit Parties hereby
irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive
jurisdiction of such courts. Each of the Credit Parties
further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set
out for notices pursuant to Section 11.1, such service to
become effective three (3) days after such mailing. Nothing
herein shall affect the right of the Agent or any Lender to
serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against
any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably
waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Credit
Agreement or any other Credit Document brought in the courts
referred to in subsection (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT,
THE LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is
determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit
Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at
such time on or after the Closing Date when it shall have
been executed by the Borrower, the Guarantors and the Agent,
and the Agent shall have received copies hereof (telefaxed
or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit
Agreement shall be binding upon and inure to the benefit of
the Borrower, the Guarantors, the Agent and each Lender and
their respective successors and assigns.
(b) The term of this Credit Agreement shall be until
no Revolving Loans, LOC Obligations or any other amounts
payable hereunder or under any of the other Credit Documents
shall remain outstanding, no Letters of Credit shall be
outstanding, all of the Credit Party Obligations have been
irrevocably satisfied in full and all of the Commitments
hereunder shall have expired or been terminated.
11.14 Confidentiality.
The Agent and each Lender (each, a "Lending Party") agrees
to keep confidential any information furnished or made available
to it by the Borrower pursuant to this Credit Agreement that is
marked confidential; provided that nothing herein shall prevent
any Lending Party from disclosing such information (a) to any
other Lending Party or any Affiliate of any Lending Party, or any
officer, director, employee, agent, or advisor of any Lending
Party or Affiliate of any Lending Party, (b) to any other Person
if reasonably incidental to the administration of the credit
facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or
that is or becomes available to any Lending Party other than as a
result of a disclosure by any Lending Party prohibited by this
Credit Agreement, (g) in connection with any litigation to which
such Lending Party or any of its Affiliates may be a party, (h)
to the extent necessary in connection with the exercise of any
remedy under this Credit Agreement or any other Credit Document,
and (i) subject to provisions substantially similar to those
contained in this Section 11.14, to any actual or proposed
participant or assignee.
11.15 Conflict.
To the extent that there is a conflict or inconsistency
between any provision hereof, on the one hand, and any provision
of any Credit Document, on the other hand, this Credit Agreement
shall control.
[Signature Pages to Follow]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and
delivered as of the date first above written.
BORROWER: DELTA WOODSIDE INDUSTRIES, INC.,
a South Carolina corporation
By: /s/ Bettis C. Rainsford
Name: Bettis C. Rainsford
Title: Executive Vice President,
Treasurer and Chief Financial Officer
GUARANTORS: ALCHEM CAPITAL CORPORATION,
a Delaware corporation
By: /s/ Bettis C. Rainsford
Name: Bettis C. Rainsford
Title: Executive Vice President,
Treasurer and Chief Financial Officer
DUCK HEAD APPAREL COMPANY, INC.,
a Tennessee corporation
By: Bettis C. Rainsford
Name: Bettis C. Rainsford
Title: Executive Vice President,
Treasurer and Chief Financial Officer
NAUTILUS INTERNATIONAL, INC,
a Virginia corporation
By: /s/ Bettis C. Rainsford
Name: Bettis C. Rainsford
Title: Executive Vice President,
Treasurer and Chief Financial Officer
DELTA CONSOLIDATED CORPORATION,
a New York corporation
By: /s/ Bettis C. Rainsford
Name: Bettis C. Rainsford
Title: Executive Vice President,
Treasurer and Chief Financial Officer
DELTA MERCHANDISING, INC.,
a South Carolina corporation
By: /s/ Bettis C. Rainsford
Name: Bettis C. Rainsford
Title: Executive Vice President,
Treasurer and Chief Financial Officer
LENDER
AND AGENT: NATIONSBANK, N.A.,
in its individual capacity and
as Agent
By: /s/ E. Phifer Helms
Name: E. Phifer Helms
Title: Senior Vice President
Exhibit 1.1A
FORM OF PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered
into as of August 25, 1997 among DELTA WOODSIDE INDUSTRIES, INC.,
a South Carolina corporation (the "Borrower"), certain
Subsidiaries of the Borrower (individually a "Guarantor", and
collectively the "Guarantors"; together with the Borrower,
individually a "Pledgor", and collectively the "Pledgors") and
NATIONSBANK, N.A., in its capacity as agent (in such capacity,
the "Agent") for the lenders from time to time party to the
Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement dated as
of the date hereof (as amended, modified, extended, renewed or
replaced from time to time, the "Credit Agreement") among the
Borrower, the Guarantors, the Lenders and the Agent, the Lenders
have agreed to make Revolving Loans and issue Letters of Credit
upon the terms and subject to the conditions set forth therein;
and
WHEREAS, it is a condition precedent to the effectiveness of
the Credit Agreement and the obligations of the Lenders to make
their respective Revolving Loans and to issue Letters of Credit
under the Credit Agreement that the Pledgors shall have executed
and delivered this Pledge Agreement to the Agent for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to
such terms in the Credit Agreement. For purposes of this Pledge
Agreement, the term "Lender" shall include any Affiliate of any
Lender which has entered into a Hedging Agreement with the
Borrower or any of its Subsidiaries.
2. Pledge and Grant of Security Interest. To secure the
prompt payment and performance in full when due, whether by lapse
of time or otherwise, of the Pledgor Obligations (as defined in
Section 3 hereof), each Pledgor hereby pledges and assigns to the
Agent, for the benefit of the Lenders, and grants to the Agent,
for the benefit of the Lenders, a continuing security interest in
any and all right, title and interest of such Pledgor in and to
the following, whether now owned or existing or owned, acquired,
or arising hereafter (collectively, the "Pledged Collateral"):
(a) Pledged Shares. 100% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding
shares of capital stock owned by such Pledgor of each
Material Subsidiary set forth on Schedule 2(a) attached, in
each case together with the certificates (or other
agreements or instruments), if any, representing such
shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with
the shares of capital stock described in Section 2(b) and
2(c) below, the "Pledged Shares"), including, but not
limited to, the following:
(y) all shares or securities representing a
dividend on any of the Pledged Shares, or representing
a distribution or return of capital upon or in respect
of the Pledged Shares, or resulting from a stock split,
revision, reclassification or other exchange therefor,
and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of,
the Pledged Shares; and
(z) without affecting the obligations of
such Pledgor under any provision prohibiting such
action hereunder, in the event of any consolidation or
merger in which a Pledgor is not the surviving
corporation, all shares of each class of the capital
stock of the successor corporation formed by or
resulting from such consolidation or merger.
(b) Additional Shares. 100% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding
shares of capital stock owned by such Pledgor of any Person
which hereafter becomes a Material Subsidiary, including,
without limitation, the certificates representing such
shares.
(c) Other Equity Interests. Any and all other Capital
Stock of each Pledgor in any Material Subsidiary.
(d) Proceeds. All proceeds and products of the
foregoing, however and whenever acquired and in whatever
form.
Without limiting the generality of the foregoing, it is
hereby specifically understood and agreed that a Pledgor may from
time to time hereafter deliver additional shares of stock to the
Agent as collateral security for the Pledgor Obligations. Upon
delivery to the Agent, such additional shares of stock shall be
deemed to be part of the Pledged Collateral of such Pledgor and
shall be subject to the terms of this Pledge Agreement whether or
not Schedule 2(a) is amended to refer to such additional shares.
3. Security for Pledgor Obligations. The security
interest created hereby in the Pledged Collateral of each Pledgor
constitutes continuing collateral security for all of the
following, whether now existing or hereafter incurred (the
"Pledgor Obligations"):
(a) In the case of the Borrower, the prompt
performance and observance by the Borrower of all
obligations of the Borrower under the Credit Agreement, the
Revolving Notes, this Pledge Agreement and the other Credit
Documents to which the Borrower is a party;
(b) In the case of the Guarantors, the prompt
performance and observance by such Guarantor of all
obligations of such Guarantor under the Credit Agreement,
this Pledge Agreement and the other Credit Documents to
which such Guarantor is a party, including, without
limitation, its guaranty obligations arising under Section 4
of the Credit Agreement; and
(c) All other indebtedness, liabilities and
obligations of any kind or nature owing from any Pledgor to
any Lender or the Agent arising under the Credit Agreement,
the Credit Documents or the Hedging Agreements and all
obligations and liabilities incurred in connection with
collecting and enforcing the Pledgor Obligations.
4. Delivery of the Pledged Collateral. Each Pledgor
hereby agrees that:
(a) Each Pledgor shall deliver to the Agent (i)
simultaneously with or prior to the execution and delivery
of this Pledge Agreement, all certificates representing the
Pledged Shares of such Pledgor and (ii) promptly upon the
receipt thereof by or on behalf of a Pledgor, all other
certificates and instruments constituting Pledged Collateral
of a Pledgor. Prior to delivery to the Agent, all such
certificates and instruments constituting Pledged Collateral
of a Pledgor shall be held in trust by such Pledgor for the
benefit of the Agent pursuant hereto. All such certificates
shall be delivered in suitable form for transfer by delivery
or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form
provided in Exhibit 4(a) attached hereto.
(b) Additional Securities. If such Pledgor shall
receive by virtue of its being or having been the owner of
any Pledged Collateral, any (i) stock certificate, including
without limitation, any certificate representing a stock
dividend or distribution in connection with any increase or
reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock
splits, spin-off or split-off, promissory notes or other
instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral
or otherwise; (iii) dividends payable in securities; or
(iv) distributions of securities in connection with a
partial or total liquidation, dissolution or reduction of
capital, capital surplus or paid-in surplus, then such
Pledgor shall receive such stock certificate, instrument,
option, right or distribution in trust for the benefit of
the Agent, shall segregate it from such Pledgor's other
property and shall deliver it forthwith to the Agent in the
exact form received together with any necessary endorsement
and/or appropriate stock power duly executed in blank,
substantially in the form provided in Exhibit 4(a), to be
held by the Agent as Pledged Collateral and as further
collateral security for the Pledgor Obligations.
(c) Financing Statements. Each Pledgor shall execute
and deliver to the Agent such UCC or other applicable
financing statements as may be reasonably requested by the
Agent in order to perfect and protect the security interest
created hereby in the Pledged Collateral of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby
represents and warrants to the Agent, for the benefit of the
Lenders, that so long as any of the Pledgor Obligations remain
outstanding or any Credit Document or Hedging Agreement is in
effect or any Letter of Credit shall remain outstanding, and
until all of the Commitments shall have been terminated:
(a) Authorization of Pledged Shares. The Pledged
Shares are duly authorized and validly issued, are fully
paid and nonassessable and are not subject to the preemptive
rights of any Person. All other shares of stock
constituting Pledged Collateral will be duly authorized and
validly issued, fully paid and nonassessable and not subject
to the preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible
title to the Pledged Collateral of such Pledgor and will at
all times be the legal and beneficial owner of such Pledged
Collateral free and clear of any Lien, other than Permitted
Liens. There exists no "adverse claim" within the meaning
of Section 8-302 of the Uniform Commercial Code as in effect
in the State of North Carolina (the "UCC") with respect to
the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Agent
of its rights and remedies hereunder will not violate any
law or governmental regulation or any material contractual
restriction binding on or affecting a Pledgor or any of its
property.
(d) Pledgor's Authority. No authorization, approval
or action by, and no notice or filing with any Governmental
Authority or with the issuer of any Pledged Stock is
required either (i) for the pledge made by a Pledgor or for
the granting of the security interest by a Pledgor pursuant
to this Pledge Agreement or (ii) for the exercise by the
Agent or the Lenders of their rights and remedies hereunder
(except as may be required by laws affecting the offering
and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement
creates a valid security interest in favor of the Agent for
the benefit of the Lenders, in the Pledged Collateral. The
taking possession by the Agent of the certificates
representing the Pledged Shares and all other certificates
and instruments constituting Pledged Collateral will perfect
and establish the first priority of the Agent's security
interest in the Pledged Shares and, when properly perfected
by filing or registration, in all other Pledged Collateral
represented by such Pledged Shares and instruments securing
the Pledgor Obligations. Except as set forth in this
Section 5(e), no action is necessary to perfect or otherwise
protect such security interest.
(f) No Other Shares. No Pledgor owns any shares of
stock other than as set forth on Schedule 2(a) attached
hereto.
6. Covenants. Each Pledgor hereby covenants, that so long
as any of the Pledgor Obligations remain outstanding or any
Credit Document or Hedging Agreement is in effect or any Letter
of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records
(and shall cause the issuer of the Pledged Shares of such
Pledgor to mark its books and records) to reflect the
security interest granted to the Agent, for the benefit of
the Lenders, pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its
own expense against the claims and demands of all other
parties claiming an interest therein, keep the Pledged
Collateral free from all Liens, except for Permitted Liens,
and not sell, exchange, transfer, assign, lease or otherwise
dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit
Agreement and the other Credit Documents.
(c) Further Assurances. Promptly execute and deliver
at its expense all further instruments and documents and
take all further action that may be necessary and desirable
or that the Agent may reasonably request in order to (i)
perfect and protect the security interest created hereby in
the Pledged Collateral of such Pledgor (including without
limitation any and all action necessary to satisfy the Agent
that the Agent has obtained a first priority perfected
security interest in any capital stock); (ii) enable the
Agent to exercise and enforce its rights and remedies
hereunder in respect of the Pledged Collateral of such
Pledgor; and (iii) otherwise effect the purposes of this
Pledge Agreement, including, without limitation and if
requested by the Agent, delivering to the Agent irrevocable
proxies in respect of the Pledged Collateral of such
Pledgor.
(d) Amendments. Not make or consent to any amendment
or other modification or waiver with respect to any of the
Pledged Collateral of such Pledgor or enter into any
agreement or allow to exist any restriction with respect to
any of the Pledged Collateral of such Pledgor other than
pursuant hereto or as may be permitted under the Credit
Agreement.
(e) Compliance with Securities Laws. File all reports
and other information now or hereafter required to be filed
by such Pledgor with the United States Securities and
Exchange Commission and any other state, federal or foreign
agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
7. Advances by Lenders. On failure of any Pledgor to
perform any of the covenants and agreements contained herein, the
Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Agent may
reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any
adverse claim and all other expenditures which the Agent or the
Lenders may make for the protection of the security hereof or
which may be compelled to make by operation of law. All such
sums and amounts so expended shall be repayable by the Pledgors
on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Pledgor
Obligations and shall bear interest from the date said amounts
are expended at the default rate specified in Section 3.1 of the
Credit Agreement for Base Rate Loans. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of
any Pledgor, and no such advance or expenditure therefor, shall
relieve the Pledgors of any default under the terms of this
Pledge Agreement, the other Credit Documents or any Hedging
Agreement. The Lenders may make any payment hereby authorized in
accordance with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged
without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by a Pledgor in
appropriate proceedings and against which adequate reserves are
being maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which
under the Credit Agreement would constitute an Event of Default
shall be an Event of Default hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event
of Default and during the continuation thereof, the Agent
and the Lenders shall have, in respect of the Pledged
Collateral of any Pledgor, in addition to the rights and
remedies provided herein, in the Credit Documents, in the
Hedging Agreements or by law, the rights and remedies of a
secured party under the UCC or any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence
of an Event of Default and during the continuation thereof,
without limiting the generality of this Section and without
notice, the Agent may, in its sole discretion, sell or
otherwise dispose of or realize upon the Pledged Collateral,
or any part thereof, in one or more parcels, at public or
private sale, at any exchange or broker's board or
elsewhere, at such price or prices and on such other terms
as the Agent may deem commercially reasonable, for cash,
credit or for future delivery or otherwise in accordance
with applicable law. To the extent permitted by law, any
Lender may in such event, bid for the purchase of such
securities. Each Pledgor agrees that, to the extent notice
of sale shall be required by law and has not been waived by
such Pledgor, any requirement of reasonable notice shall be
met if notice, specifying the place of any public sale or
the time after which any private sale is to be made, is
personally served on or mailed, postage prepaid, to such
Pledgor, in accordance with the notice provisions of Section
11.1 of the Credit Agreement at least 10 days before the
time of such sale. The Agent shall not be obligated to make
any sale of Pledged Collateral of such Pledgor regardless of
notice of sale having been given. The Agent may adjourn any
public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to
which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of
Default and during the continuation thereof, the Pledgors
recognize that the Agent may deem it impracticable to effect
a public sale of all or any part of the Pledged Shares or
any of the securities constituting Pledged Collateral and
that the Agent may, therefore, determine to make one or more
private sales of any such securities to a restricted group
of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account,
for investment and not with a view to the distribution or
resale thereof. Each Pledgor acknowledges that any such
private sale may be at prices and on terms less favorable to
the seller than the prices and other terms which might have
been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to
have been made in a commercially reasonable manner and that
the Agent shall have no obligation to delay sale of any such
securities for the period of time necessary to permit the
issuer of such securities to register such securities for
public sale under the Securities Act of 1933. Each Pledgor
further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general
circulation in the financial community of New York, New York
(to the extent that such offer may be advertised without
prior registration under the Securities Act of 1933), or
(ii) made privately in the manner described above shall be
deemed to involve a "public sale" under the UCC,
notwithstanding that such sale may not constitute a "public
offering" under the Securities Act of 1933, and the Agent
may, in such event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. In addition to
the rights and remedies hereunder, upon the occurrence of an
Event of Default, the Agent may, after providing the notices
required by Section 9-505(2) of the UCC or otherwise
complying with the requirements of applicable law of the
relevant jurisdiction, retain all or any portion of the
Pledged Collateral in satisfaction of the Pledgor
Obligations. Unless and until the Agent shall have provided
such notices, however, the Agent shall not be deemed to have
retained any Pledged Collateral in satisfaction of any
Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all
amounts to which the Agent or the Lenders are legally
entitled, the Pledgors shall be jointly and severally liable
for the deficiency, together with interest thereon at the
default rate specified in Section 3.1 of the Credit
Agreement for Base Rate Loans, together with the costs of
collection and the reasonable fees of any attorneys employed
by the Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the
Pledgor Obligations shall be returned to the Pledgors or to
whomsoever a court of competent jurisdiction shall determine
to be entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Pledgor hereby designates
and appoints the Agent, on behalf of the Lenders, and each
of its designees or agents as attorney-in-fact of such
Pledgor, irrevocably and with power of substitution, with
authority to take any or all of the following actions upon
the occurrence and during the continuance of an Event of
Default:
(i) to demand, collect, settle,
compromise, adjust and give discharges and releases
concerning the Pledged Collateral of such Pledgor, all
as the Agent may reasonably determine;
(ii) to commence and prosecute any
actions at any court for the purposes of collecting any
of the Pledged Collateral of such Pledgor and enforcing
any other right in respect thereof;
(iii) to defend, settle or
compromise any action brought and, in connection
therewith, give such discharge or release as the Agent
may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens,
security interests, or other encumbrances levied or
placed on or threatened against the Pledged Collateral
of such Pledgor;
(v) to direct any parties liable for
any payment under any of the Pledged Collateral to make
payment of any and all monies due and to become due
thereunder directly to the Agent or as the Agent shall
direct;
(vi) to receive payment of and receipt
for any and all monies, claims, and other amounts due
and to become due at any time in respect of or arising
out of any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any
drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to
the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or
adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges
or releases as the Agent may deem reasonably
appropriate;
(ix) execute and deliver all
assignments, conveyances, statements, financing
statements, renewal financing statements, pledge
agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may determine
necessary in order to perfect and maintain the security
interests and liens granted in this Pledge Agreement
and in order to fully consummate all of the
transactions contemplated therein;
(x) to exchange any of the Pledged
Collateral of such Pledgor or other property upon any
merger, consolidation, reorganization, recapitalization
or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Pledged
Collateral of such Pledgor with any committee,
depository, transfer agent, registrar or other
designated agency upon such terms as the Agent may
determine;
(xi) to vote for a shareholder
resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged
Shares of such Pledgor into the name of the Agent or
one or more of the Lenders or into the name of any
transferee to whom the Pledged Shares of such Pledgor
or any part thereof may be sold pursuant to Section 10
hereof; and
(xii) to do and perform all such
other acts and things as the Agent may reasonably deem
to be necessary, proper or convenient in connection
with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest
and shall be irrevocable (i) for so long as any of the
Pledgor Obligations remain outstanding, any Credit Document
or any Hedging Agreement is in effect or any Letter of
Credit shall remain outstanding and (ii) until all of the
Commitments shall have been terminated. The Agent shall be
under no duty to exercise or withhold the exercise of any of
the rights, powers, privileges and options expressly or
implicitly granted to the Agent in this Pledge Agreement,
and shall not be liable for any failure to do so or any
delay in doing so. The Agent shall not be liable for any
act or omission or for any error of judgment or any mistake
of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct. This power of
attorney is conferred on the Agent solely to protect,
preserve and realize upon its security interest in Pledged
Collateral.
(b) Performance by the Agent of Pledgor's Obligations.
If any Pledgor fails to perform any agreement or obligation
contained herein, the Agent itself may perform, or cause
performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall
be payable by the Pledgors on a joint and several basis
pursuant to Section 13 hereof.
(c) Assignment by the Agent. The Agent may from time
to time assign the Pledgor Obligations and any portion
thereof and/or the Pledged Collateral and any portion
thereof, and the assignee shall be entitled to all of the
rights and remedies of the Agent under this Pledge Agreement
in relation thereto.
(d) The Agent's Duty of Care. Other than the exercise
of reasonable care to assure the safe custody of the Pledged
Collateral while being held by the Agent hereunder, the
Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that
Pledgors shall be responsible for preservation of all rights
in the Pledged Collateral of such Pledgor, and the Agent
shall be relieved of all responsibility for Pledged
Collateral upon surrendering it or tendering the surrender
of it to the Pledgors. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of
the Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that
which the Agent accords its own property, which shall be no
less than the treatment employed by a reasonable and prudent
agent in the industry, it being understood that the Agent
shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Agent has or is deemed to
have knowledge of such matters; or (ii) taking any necessary
steps to preserve rights against any parties with respect to
any Pledged Collateral.
(e) Voting Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default
shall have occurred and be continuing, to the extent
permitted by law, each Pledgor may exercise any and all
voting and other consensual rights pertaining to the
Pledged Collateral of such Pledgor or any part thereof
for any purpose not inconsistent with the terms of this
Pledge Agreement or the Credit Agreement; and
(ii) Upon the occurrence and during the
continuance of an Event of Default, all rights of a
Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of this Section shall cease
and all such rights shall thereupon become vested in
the Agent which shall then have the sole right to
exercise such voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default
shall have occurred and be continuing and subject to
Section 4(b) hereof, each Pledgor may receive and
retain any and all dividends (other than stock
dividends and other dividends constituting Pledged
Collateral which are addressed hereinabove) or interest
paid in respect of the Pledged Collateral to the extent
they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the
continuance of an Event of Default:
(A) all rights of a Pledgor to
receive the dividends and interest payments which
it would otherwise be authorized to receive and
retain pursuant to paragraph (i) of this Section
shall cease and all such rights shall thereupon be
vested in the Agent which shall then have the sole
right to receive and hold as Pledged Collateral
such dividends and interest payments; and
(B) all dividends and interest
payments which are received by a Pledgor contrary
to the provisions of paragraph (A) of this Section
shall be received in trust for the benefit of the
Agent, shall be segregated from other property or
funds of such Pledgor, and shall be forthwith paid
over to the Agent as Pledged Collateral in the
exact form received, to be held by the Agent as
Pledged Collateral and as further collateral
security for the Pledgor Obligations.
(g) Release of Pledged Collateral. The Agent may
release any of the Pledged Collateral from this Pledge
Agreement or may substitute any of the Pledged Collateral
for other Pledged Collateral without altering, varying or
diminishing in any way the force, effect, lien, pledge or
security interest of this Pledge Agreement as to any Pledged
Collateral not expressly released or substituted, and this
Pledge Agreement shall continue as a first priority lien on
all Pledged Collateral not expressly released or
substituted.
11. Rights of Required Lenders. All rights of the Agent
hereunder, if not exercised by the Agent, may be exercised by the
Required Lenders.
12. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any payments in
respect of the Pledgor Obligations and any proceeds of any
Pledged Collateral, when received by the Agent or any of the
Lenders in cash or its equivalent, will be applied in reduction
of the Pledgor Obligations in the order set forth in Section
3.15(b) of the Credit Agreement, and each Pledgor irrevocably
waives the right to direct the application of such payments and
proceeds and acknowledges and agrees that the Agent shall have
the continuing and exclusive right to apply and reapply any and
all such payments and proceeds in the Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books
and records.
13. Costs of Counsel. At all times hereafter, the Pledgors
agree to promptly pay upon demand any and all reasonable costs
and expenses of the Agent or the Lenders, (a) as required under
Section 11.5 of the Credit Agreement and (b) as necessary to
protect the Pledged Collateral or to exercise any rights or
remedies under this Pledge Agreement or with respect to any
Pledged Collateral. All of the foregoing costs and expenses
shall constitute Pledgor Obligations hereunder.
14. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing
agreement in every respect and shall remain in full force
and effect so long as any of the Pledgor Obligations remain
outstanding or any Credit Document or Hedging Agreement is
in effect or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the
indemnities and the representations and warranties set forth
in the Credit Documents). Upon such payment and
termination, this Pledge Agreement shall be automatically
terminated and the Agent and the Lenders shall, upon the
request and at the expense of the Pledgors, forthwith
release all of its liens and security interests hereunder
and shall executed and deliver all UCC termination
statements and/or other documents reasonably requested by
the Pledgors evidencing such termination. Notwithstanding
the foregoing all releases and indemnities provided
hereunder shall survive termination of this Pledge
Agreement.
(b) This Pledge Agreement shall continue to be
effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of
the Pledgor Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event
payment of all or any part of the Pledgor Obligations is
rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the
Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of
the Pledgor Obligations.
15. Amendments; Waivers; Modifications. This Pledge
Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth
in Section 11.6 of the Credit Agreement.
16. Successors in Interest. This Pledge Agreement shall
create a continuing security interest in the Collateral and shall
be binding upon each Pledgor, its successors and assigns and
shall inure, together with the rights and remedies of the Agent
and the Lenders hereunder, to the benefit of the Agent and the
Lenders and their successors and permitted assigns; provided,
however, that none of the Pledgors may assign its rights or
delegate its duties hereunder without the prior written consent
of each Lender or the Required Lenders, as required by the Credit
Agreement. To the fullest extent permitted by law, each Pledgor
hereby releases the Agent and each Lender, and its successors and
assigns, from any liability for any act or omission relating to
this Pledge Agreement or the Collateral, except for any liability
arising from the gross negligence or willful misconduct of the
Agent, or such Lender, or its officers, employees or agents.
17. Notices. All notices required or permitted to be given
under this Pledge Agreement shall be in conformance with
Section 11.1 of the Credit Agreement.
18. Counterparts. This Pledge Agreement may be executed in
any number of counterparts, each of which where so executed and
delivered shall be an original, but all of which shall constitute
one and the same instrument. It shall not be necessary in making
proof of this Pledge Agreement to produce or account for more
than one such counterpart.
19. Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this
Pledge Agreement.
20. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NORTH CAROLINA. Any legal action or proceeding
with respect to this Security Agreement may be brought in
the courts of the State of North Carolina, or of the United
States for the Western District of North Carolina, and, by
execution and delivery of this Security Agreement, each
Pledgor hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the
jurisdiction of such courts. Each Pledgor further
irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices
pursuant to Section 11.1 of the Credit Agreement, such
service to become effective 30 days after such mailing.
Nothing herein shall affect the right of the Agent to serve
process in any other manner permitted by law or to commence
legal proceedings or to otherwise proceed against any
Pledgor in any other jurisdiction.
(b) Each Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Pledge Agreement
brought in the courts referred to in subsection (a) hereof
and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum.
21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS PLEDGE AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
22. Severability. If any provision of any of the Pledge
Agreement is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
23. Entirety. This Pledge Agreement, the other Credit
Documents and the Hedging Agreements represent the entire
agreement of the parties hereto and thereto, and supersede all
prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to
the Credit Documents, the Hedging Agreements or the transactions
contemplated herein and therein.
24. Survival. All representations and warranties of the
Pledgors hereunder shall survive the execution and delivery of
this Pledge Agreement, the other Credit Documents and the Hedging
Agreements, the delivery of the Revolving Notes and the making of
the Revolving Loans and the issuance of the Letters of Credit
under the Credit Agreement.
25. Other Security. To the extent that any of the Pledgor
Obligations are now or hereafter secured by property other than
the Pledged Collateral (including, without limitation, real and
other personal property owned by a Pledgor), or by a guarantee,
endorsement or property of any other Person, then the Agent and
the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any
Event of Default, and the Agent and the Lenders have the right,
in their sole discretion, to determine which rights, security,
liens, security interests or remedies the Agent and the Lenders
shall at any time pursue, relinquish, subordinate, modify or take
with respect thereto, without in any way modifying or affecting
any of them or any of the Agent's and the Lenders' rights or the
Pledgor Obligations under this Pledge Agreement, under any other
of the Credit Documents or under any Hedging Agreement.
26. Limitation on Liability. Notwithstanding any provision
to the contrary contained herein or in any other of the Credit
Documents, to the extent the obligations of a Pledgor shall be
adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers)
then the obligations of each Pledgor hereunder shall be limited
to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this
Pledge Agreement to be duly executed and delivered as of the date
first above written.
BORROWER: DELTA WOODSIDE INDUSTRIES, INC.,
a South Carolina corporation
By:
Name:
Title:
GUARANTORS: _______________________________,
a _______________ corporation
By:
Name:
Title:
_______________________________,
a _______________ corporation
By:
Name:
Title:
_______________________________,
a _______________ corporation
By:
Name:
Title:
Accepted and agreed to in Charlotte, North Carolina as of
the date first above written.
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
Schedule 2(a)
to
Pledge Agreement
dated as of August 25, 1997
in favor of NationsBank, N.A.
as Agent
PLEDGED STOCK
Pledgor: DELTA WOODSIDE INDUSTRIES,INC
Certificate Percentage
Name of Subsidiary Number of Share Number Ownership
100%
Pledgor:
Name of Subsidiary Certificate Percentage
Number of Shares Number Ownership
100%
Exhibit 4(a)
to
Pledge Agreement
dated as of August 25, 1997
in favor of NationsBank, N.A.
as Agent
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers to
the following shares of capital stock of _____________________, a
____________ corporation:
No. of Shares Certificate No.
and irrevocably appoints __________________________________ its
agent and attorney-in-fact to transfer all or any part of such
capital stock and to take all necessary and appropriate action to
effect any such transfer. The agent and attorney-in-fact may
substitute and appoint one or more persons to act for him. The
effectiveness of a transfer pursuant to this stock power shall be
subject to any and all transfer restrictions referenced on the
face of the certificates evidencing such interest or in the
certificate of incorporation or bylaws of the subject
corporation, to the extent they may from time to time exist.
_______________,
a ______________ corporation
By:
Name:
Title:
Exhibit 1.1B
FORM OF SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is
entered into as of August 25, 1997 among DELTA WOODSIDE
INDUSTRIES, INC., a South Carolina corporation (the "Borrower"),
certain Subsidiaries of the Borrower (individually a "Guarantor"
and collectively the "Guarantors"; together with the Borrower,
individually an "Obligor", and collectively the "Obligors") and
NATIONSBANK, N.A., in its capacity as agent (in such capacity,
the "Agent") for the lenders from time to time party to the
Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as
of the date hereof (as amended, modified, extended, renewed or
replaced from time to time, the "Credit Agreement"), among the
Borrower, the Guarantors, the Lenders and the Agent, the Lenders
have agreed to make Revolving Loans and issue Letters of Credit
upon the terms and subject to the conditions set forth therein;
and
WHEREAS, it is a condition precedent to the effectiveness of
the Credit Agreement and the obligations of the Lenders to make
their respective Revolving Loans and to issue Letters of Credit
under the Credit Agreement that the Obligors shall have executed
and delivered this Security Agreement to the Agent for the
ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms
in the Credit Agreement, and the following terms which are
defined in the Uniform Commercial Code in effect in the
State of North Carolina on the date hereof are used herein
as so defined: Accounts, Chattel Paper, Deposit Accounts,
Documents, Farm Products, General Intangibles, Instruments,
Inventory and Proceeds. For purposes of this Security
Agreement, the term "Lender" shall include any Affiliate of
any Lender which has entered into a Hedging Agreement with
the Borrower.
(b) In addition, the following terms shall have the
following meanings:
"Secured Obligations": the collective reference to the
following:
(a) In the case of the Borrower, the prompt
performance and observance by the Borrower of all
obligations of the Borrower under the Credit Agreement,
the Revolving Notes, this Security Agreement and the
other Credit Documents to which the Borrower is a
party;
(b) In the case of the Guarantors, the
prompt performance and observance by such Guarantor of
all obligations of such Guarantor under the Credit
Agreement, this Security Agreement and the other Credit
Documents to which such Guarantor is a party,
including, without limitation, its guaranty obligations
arising under Section 4 of the Credit Agreement; and
(c) All other indebtedness, liabilities and
obligations of any kind or nature owing from any
Obligor to any Lender or the Agent arising under the
Credit Agreement, the Credit Documents or the Hedging
Agreements and all obligations and liabilities incurred
in connection with collecting and enforcing the Secured
Obligations.
"Trademark License": means any agreement, written or
oral, providing for the grant by or to an Obligor of any
right to use any Trademark, including, without limitation,
any thereof referred to in Schedule 1(b) hereto.
"Trademarks": (a) all trademarks, trade names,
corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos and other
source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all
applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof
referred to in Schedule 1(b) hereto, and (b) all renewals
thereof.
2. Grant of Security Interest in the Collateral. To
secure the prompt payment and performance in full when due,
whether by lapse of time, acceleration or otherwise, of the
Secured Obligations, each Obligor hereby grants to the Agent, for
the benefit of the Lenders, a continuing security interest in,
and a right to set off against, any and all right, title and
interest of such Obligor in and to the following, whether now
owned or existing or owned, acquired, or arising hereafter
(collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all General Intangibles;
(f) all Instruments;
(g) all Inventory;
(h) all Trademarks;
(i) all Trademark Licenses;
(j) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks,
and related data processing software (owned by
such Obligor or in which it has an interest) that
at any time evidence or contain information
relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or
realization thereupon;
(k) all contract rights under the Factoring
Agreements; and
(l) to the extent not otherwise included,
all Proceeds and products of any and all of the
foregoing.
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby
in the Collateral (i) constitutes continuing collateral security
for all of the Secured Obligations, whether now existing or
hereafter arising and (ii) is not to be construed as an
assignment of any Trademarks or Trademark Licenses.
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding,
each of the Obligors shall remain liable under each of the
Accounts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving
rise to each such Account. Neither the Agent nor any Lender
shall have any obligation or liability under any Account (or
any agreement giving rise thereto) by reason of or arising
out of this Security Agreement or the receipt by the Agent
or any Lender of any payment relating to such Account
pursuant hereto, nor shall the Agent or any Lender be
obligated in any manner to perform any of the obligations of
an Obligor under or pursuant to any Account (or any
agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take
any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(b) Once during each calendar year or at any time
after the occurrence and during the continuation of an Event
of Default, the Agent shall have the right, but not the
obligation, to make test verifications of the Accounts in
any manner and through any medium that it reasonably
considers advisable, and the Obligors shall furnish all such
assistance and information as the Agent may require in
connection with such test verifications. At any time and
from time to time, upon the Agent's request and at the
expense of the Obligors, the Obligors shall cause
independent public accountants or others satisfactory to the
Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial
balances for, the Accounts. The Agent in its own name or in
the name of others may communicate with account debtors on
the Accounts to verify with them to the Agent's satisfaction
the existence, amount and terms of any Accounts.
4. Representations and Warranties. Each Obligor hereby
represents and warrants to the Agent, for the benefit of the
Lenders, that so long as any of the Secured Obligations remain
outstanding or any Credit Document or Hedging Agreement is in
effect or any Letter of Credit shall remain outstanding, and
until all of the Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each
Obligor's chief executive office and chief place of business
is (and for the prior four months have been) located at the
locations set forth on Schedule 4(a) hereto, and each
Obligor keeps its books and records at such locations.
(b) Location of Collateral. The location of all
Collateral owned by each Obligor is as shown on Schedule
4(b) hereto.
(c) Ownership. Each Obligor is the legal and
beneficial owner of its Collateral and has the right to
pledge, sell, assign or transfer the same. Each Obligor's
legal name is as shown in this Security Agreement and no
Obligor has in the past four months changed its name, been
party to a merger, consolidation or other change in
structure or used any tradename except as set forth in
Schedule 4(c) attached hereto.
(d) Security Interest/Priority. This Security
Agreement creates a valid security interest in favor of the
Agent, for the benefit of the Lenders, in the Collateral of
such Obligor and, when properly perfected by filing, shall
constitute a valid perfected security interest in such
Collateral, to the extent such security can be perfected by
filing under the UCC, free and clear of all Liens except for
Permitted Liens.
(e) Farm Products. None of the Collateral
constitutes, or is the Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Obligors and
the papers and documents relating thereto are genuine and in
all material respects what they purport to be, (ii) each
Account arises out of (A) a bona fide sale of goods sold and
delivered by such Obligor (or is in the process of being
delivered) or (B) services theretofore actually rendered by
such Obligor to, the account debtor named therein, (iii) no
Account or other right of an Obligor to payment for goods
sold and delivered or services rendered is evidenced by any
Instrument or Chattel Paper unless such Instrument or
Chattel Paper has been theretofore endorsed over and
delivered to the Agent and (iv) no surety bond was required
or given in connection with any Account of an Obligor or the
contracts or purchase orders out of which they arose.
(g) Inventory. No Inventory is held by an Obligor
pursuant to consignment, sale or return, sale on approval or
similar arrangement.
(h) Trademarks.
(i) Schedule 1(b) hereto includes all
Trademarks and Trademark Licenses owned by the Obligors
in their own names as of the date hereof.
(ii) To the best of each Obligor's knowledge,
each Trademark of such Obligor is valid, subsisting,
unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in Schedule
1(b) hereto, none of such Trademarks is the subject of
any licensing or franchise agreement.
(iv) No holding, decision or judgment has
been rendered by any Governmental Authority which would
limit, cancel or question the validity of any
Trademark.
(v) No action or proceeding is pending
seeking to limit, cancel or question the validity of
any Trademark, or which, if adversely determined, would
have a material adverse effect on the value of any
Trademark.
(vi) All applications pertaining to the
Trademarks of each Obligor have been duly and properly
filed, and all registrations or letters pertaining to
such Trademarks have been duly and properly filed and
issued, and all of such Trademarks are valid and
enforceable.
(vii) No Obligor has made any assignment
or agreement in conflict with the security interest in
the Trademarks of each Obligor hereunder.
5. Covenants. Each Obligor covenants that, so long as any
of the Secured Obligations remain outstanding or any Credit
Document or Hedging Agreement is in effect or any Letter of
Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the
claims and demands of all other parties claiming an interest
therein, keep the Collateral free from all Liens, except for
Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of the Collateral or any interest
therein, except as permitted under the Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral
in good order, condition and repair and not use the
Collateral in violation of the provisions of this Security
Agreement or any other agreement relating to the Collateral
or any policy insuring the Collateral or any applicable
statute, law, bylaw, rule, regulation or ordinance.
(c) Instruments/Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be
or become evidenced by any Instrument or Chattel Paper,
immediately deliver such Instrument or Chattel Paper to the
Agent, duly indorsed in a manner satisfactory to the Agent,
to be held as Collateral pursuant to this Security
Agreement.
(d) Change in Location. Not, without providing 30
days prior written notice to the Agent and without filing
such amendments to any previously filed financing statements
as the Agent may require, (a) change the location of its
chief executive office and chief place of business (as well
as its books and records) from the locations set forth on
Schedule 4(a) hereto, (b) change the location of its
Collateral from the locations set forth for such Obligor on
Schedule 4(b) hereto, or (c) change its name, be party to a
merger, consolidation or other change in structure or use
any tradename other than as set forth on Schedule 4(c)
attached hereto.
(e) Inspection. Upon reasonable notice, and during
reasonable hours, at all times allow the Agent or its
representatives to visit and inspect the Collateral as set
forth in Section 7.10 of the Credit Agreement.
(f) Perfection of Security Interest. Execute and
deliver to the Agent such agreements, assignments or
instruments (including affidavits, notices, reaffirmations
and amendments and restatements of existing documents, as
the Agent may reasonably request) and do all such other
things as the Agent may reasonably deem necessary or
appropriate (i) to assure to the Agent its security
interests hereunder, including (A) such financing statements
(including renewal statements) or amendments thereof or
supplements thereto or other instruments as the Agent may
from time to time reasonably request in order to perfect and
maintain the security interests granted hereunder in
accordance with the UCC and (B) with regard to Trademarks, a
Notice of Grant of Security Interest in Trademarks for
filing with the United States Patent and Trademark Office in
the form of Schedule 5(f) attached hereto, (ii) to
consummate the transactions contemplated hereby and (iii) to
otherwise protect and assure the Agent of its rights and
interests hereunder. To that end, each Obligor agrees that
the Agent may file one or more financing statements
disclosing the Agent's security interest in any or all of
the Collateral of such Obligor without, to the extent
permitted by law, such Obligor's signature thereon, and
further each Obligor also hereby irrevocably makes,
constitutes and appoints the Agent, its nominee or any other
person whom the Agent may designate, as such Obligor's
attorney in fact with full power and for the limited purpose
to sign in the name of such Obligor any such financing
statements, or amendments and supplements to financing
statements, renewal financing statements, notices or any
similar documents which in the Agent's reasonable discretion
would be necessary, appropriate or convenient in order to
perfect and maintain perfection of the security interests
granted hereunder, such power, being coupled with an
interest, being and remaining irrevocable so long as the
Credit Agreement is in effect or any amounts payable
thereunder or under any other Credit Document, any Letter of
Credit or any Hedging Agreement shall remain outstanding,
and until all of the Commitments thereunder shall have
terminated. Each Obligor hereby agrees that a carbon,
photographic or other reproduction of this Security
Agreement or any such financing statement is sufficient for
filing as a financing statement by the Agent without notice
thereof to such Obligor wherever the Agent may in its sole
discretion desire to file the same. In the event for any
reason the law of any jurisdiction other than North Carolina
becomes or is applicable to the Collateral of any Obligor or
any part thereof, or to any of the Secured Obligations, such
Obligor agrees to execute and deliver all such instruments
and to do all such other things as the Agent in its sole
discretion reasonably deems necessary or appropriate to
preserve, protect and enforce the security interests of the
Agent under the law of such other jurisdiction (and, if an
Obligor shall fail to do so promptly upon the request of the
Agent, then the Agent may execute any and all such requested
documents on behalf of such Obligor pursuant to the power of
attorney granted hereinabove). If any Collateral is in the
possession or control of an Obligor's agents and the Agent
so requests, such Obligor agrees to notify such agents in
writing of the Agent's security interest therein and, upon
the Agent's request, instruct them to hold all such
Collateral for the Lenders' account and subject to the
Agent's instructions. Each Obligor agrees to mark its books
and records to reflect the security interest of the Agent in
the Collateral.
(g) Treatment of Accounts. Not grant or extend the
time for payment of any Account, or compromise or settle any
Account for less than the full amount thereof, or release
any person or property, in whole or in part, from payment
thereof, or allow any credit or discount thereon, other than
as normal and customary in the ordinary course of an
Obligor's business.
(h) Covenants Relating to Trademarks.
(i) (A) Continue to use each Trademark on
each and every trademark class of goods applicable to
its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such
Trademark in full force free from any claim of
abandonment for non-use, (B) maintain as in the past
the quality of products and services offered under such
Trademark, (C) employ such Trademark with the
appropriate notice of registration, (D) not adopt or
use any mark which is confusingly similar or a
colorable imitation of such Trademark unless the Agent,
for the ratable benefit of the Lenders, shall obtain a
perfected security interest in such mark pursuant to
this Security Agreement, and (E) not (and not permit
any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark may
become invalidated.
(ii) Notify the Agent and the Lenders
immediately if it knows, or has reason to know, that
any application or registration relating to any
Trademark may become abandoned or dedicated, or of any
adverse determination or development (including,
without limitation, the institution of, or any such
determination or development in, any proceeding in the
United States Patent and Trademark Office or any court
or tribunal in any country) regarding an Obligor's
ownership of any Trademark or its right to register the
same or to keep and maintain the same.
(iii) Whenever an Obligor, either by
itself or through an agent, employee, licensee or
designee, shall file an application for the
registration of any Trademark with the United States
Patent and Trademark Office or any similar office or
agency in any other country or any political
subdivision thereof, an Obligor shall report such
filing to the Agent and the Lenders within five
Business Days after the last day of the fiscal quarter
in which such filing occurs. Upon request of the
Agent, an Obligor shall execute and deliver any and all
agreements, instruments, documents and papers as the
Agent may request to evidence the Agent's and the
Lenders' security interest in any Trademark and the
goodwill and general intangibles of an Obligor relating
thereto or represented thereby.
(iv) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before
the United States Patent and Trademark Office, or any
similar office or agency in any other country or any
political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant
registration) and to maintain each registration of the
Trademarks, including, without limitation, filing of
applications for renewal, affidavits of use and
affidavits of incontestability.
(v) Promptly notify the Agent and the
Lenders after it learns that any Trademark included in
the Collateral is infringed, misappropriated or diluted
by a third party and promptly sue for infringement,
misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages
for such infringement, misappropriation or dilution, or
take such other actions as it shall reasonably deem
appropriate under the circumstances to protect such
Trademark.
(vi) Not make any assignment or agreement in
conflict with the security interest in the Trademarks
of each Obligor hereunder.
(i) New Trademarks. Promptly provide the Agent with
(i) a listing of all applications, if any, for new
Trademarks (together with a listing of the issuance of
registrations or letters on present applications), which new
applications and issued registrations or letters shall be
subject to the terms and conditions hereunder, and (ii) (A)
with respect to Trademarks, a duly executed Notice of
Security Interest in Trademarks or (B) such other duly
executed documents as the Agent may request in a form
acceptable to counsel for the Agent and suitable for
recording to evidence the security interest in the Trademark
which is the subject of such new application.
(j) Insurance. Insure, repair and replace the
Collateral of such Obligor as set forth in the Credit
Agreement. All insurance proceeds shall be subject to the
security interest of the Agent hereunder.
6. Advances by Lenders. On failure of any Obligor to
perform any of the covenants and agreements contained herein, the
Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Agent may
reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any
adverse claim and all other expenditures which the Agent or the
Lenders may make for the protection of the security hereof or
which may be compelled to make by operation of law. All such
sums and amounts so expended shall be repayable by the Obligors
on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts
are expended at the default rate specified in Section 3.1 of the
Credit Agreement for Base Rate Loans. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of
any Obligor, and no such advance or expenditure therefor, shall
relieve the Obligors of any default under the terms of this
Security Agreement, the other Credit Documents or any Hedging
Agreement. The Lenders may make any payment hereby authorized in
accordance with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged
without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by an Obligor in
appropriate proceedings and against which adequate reserves are
being maintained in accordance with GAAP.
7. Events of Default.
The occurrence of an event which under the Credit Agreement
would constitute an Event of Default shall be an Event of Default
hereunder (an "Event of Default").
8. Remedies.
(a) General Remedies. Upon the occurrence of an Event
of Default and during continuation thereof, the Lenders
shall have, in addition to the rights and remedies provided
herein, in the Credit Documents, in the Hedging Agreements
or by law (including, but not limited to, the rights and
remedies set forth in the Uniform Commercial Code of the
jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the
jurisdiction where the rights and remedies are asserted and
regardless of whether the UCC applies to the affected
Collateral), and further, the Agent may, with or without
judicial process or the aid and assistance of others, (i)
enter on any premises on which any of the Collateral may be
located and, without resistance or interference by the
Obligors, take possession of the Collateral, (ii) dispose of
any Collateral on any such premises, (iii) require the
Obligors to assemble and make available to the Agent at the
expense of the Obligors any Collateral at any place and time
designated by the Agent which is reasonably convenient to
both parties, (iv) remove any Collateral from any such
premises for the purpose of effecting sale or other
disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of
which each of the Obligors hereby waives to the fullest
extent permitted by law, at any place and time or times,
sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or
more parcels, for cash, upon credit or otherwise, at such
prices and upon such terms as the Agent deems advisable, in
its sole discretion (subject to any and all mandatory legal
requirements). In addition to all other sums due the Agent
and the Lenders with respect to the Secured Obligations, the
Obligors shall pay the Agent and each of the Lenders all
reasonable documented costs and expenses incurred by the
Agent or any such Lender, including, but not limited to,
reasonable attorneys' fees and court costs, in obtaining or
liquidating the Collateral, in enforcing payment of the
Secured Obligations, or in the prosecution or defense of any
action or proceeding by or against the Agent or the Lenders
or the Obligors concerning any matter arising out of or
connected with this Security Agreement, any Collateral or
the Secured Obligations, including, without limitation, any
of the foregoing arising in, arising under or related to a
case under the Bankruptcy Code. To the extent the rights of
notice cannot be legally waived hereunder, each Obligor
agrees that any requirement of reasonable notice shall be
met if such notice is personally served on or mailed,
postage prepaid, to the Borrower in accordance with the
notice provisions of Section 11.1 of the Credit Agreement at
least 10 days before the time of sale or other event giving
rise to the requirement of such notice. The Agent and the
Lenders shall not be obligated to make any sale or other
disposition of the Collateral regardless of notice having
been given. To the extent permitted by law, any Lender may
be a purchaser at any such sale. To the extent permitted by
applicable law, each of the Obligors hereby waives all of
its rights of redemption with respect to any such sale.
Subject to the provisions of applicable law, the Agent and
the Lenders may postpone or cause the postponement of the
sale of all or any portion of the Collateral by announcement
at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be
made at the time and place to which the sale was postponed,
or the Agent and the Lenders may further postpone such sale
by announcement made at such time and place.
(b) Remedies relating to Accounts. Subject to the
limitations set forth in any assignment of factoring
proceeds with respect to any Factoring Agreement, upon the
occurrence of an Event of Default and during the
continuation thereof, whether or not the Agent has exercised
any or all of its rights and remedies hereunder, each
Obligor will promptly upon request of the Agent instruct all
account debtors or the applicable factors to remit all
payments in respect of the Accounts or the receivables to a
mailing location selected by the Agent, provided that, in
accordance with the applicable assignment of factoring
proceeds, the Agent shall also be entitled to give such
instruction directly to the Factor. In addition, the Agent
or its designee may notify any Obligor's customers and
account debtors that the Accounts of such Obligor have been
assigned to the Agent or of the Agent's security interest
therein, and may (either in its own name or in the name of
an Obligor or both) demand, collect (including without
limitation by way of a lockbox arrangement), receive, take
receipt for, sell, sue for, compound, settle, compromise and
give acquittance for any and all amounts due or to become
due on any Account, and, in the Agent's discretion, file any
claim or take any other action or proceeding to protect and
realize upon the security interest of the Lenders in the
Accounts. Each Obligor acknowledges and agrees that the
Proceeds of its Accounts remitted to or on behalf of the
Agent in accordance with the provisions hereof shall be
solely for the Agent's own convenience and that such Obligor
shall not have any right, title or interest in such Accounts
or in any such other amounts except as expressly provided
herein. The Agent and the Lenders shall have no liability
or responsibility to any Obligor for acceptance of a check,
draft or other order for payment of money bearing the legend
"payment in full" or words of similar import or any other
restrictive legend or endorsement or be responsible for
determining the correctness of any remittance. Each Obligor
hereby agrees to indemnify the Agent and the Lenders from
and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable
attorneys' fees suffered or incurred by the Agent or the
Lenders (each, an "Indemnified Party") because of the
maintenance of the foregoing arrangements except as relating
to or arising out of the gross negligence or willful
misconduct of an Indemnified Party or its officers,
employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity
shall be effective whether or not such investigation,
litigation or proceeding is brought by an Obligor, its
directors, shareholders or creditors or an Indemnified Party
or any other Person or any other Indemnified Party is
otherwise a party thereto.
(c) Access. In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and
during the continuance thereof, the Agent shall have the
right to enter and remain upon the various premises of the
Obligors without cost or charge to the Agent, and use the
same, together with materials, supplies, books and records
of the Obligors for the purpose of collecting and
liquidating the Collateral, or for preparing for sale and
conducting the sale of the Collateral, whether by
foreclosure, auction or otherwise. In addition, the Agent
may remove Collateral, or any part thereof, from such
premises and/or any records with respect thereto, in order
to effectively collect or liquidate such Collateral.
(d) Factoring Agreements. In addition to the remedies
identified above, if any Event of Default has occurred and
is continuing, the Agent my exercise all of the rights,
powers, privileges and remedies of the Borrower permitted
under the Factoring Agreements. Anything contained herein
or in the Factoring Agreements to the contrary
notwithstanding, the Borrower shall at all times remain
liable under the Factoring Agreements to perform all of the
duties and obligations of the Borrower thereunder to the
same extent as if this Agreement had not been executed, and
the Agent and the Lenders shall not have any obligation or
liability under the Factoring Agreements by reason of or
arising out of this Agreement, nor shall the Agent or any of
the Lenders be required or obligated in any manner to
perform or fulfill any obligation of the Borrower under or
pursuant to the Factoring Agreements or to make any payment,
or to make any inquiry as to the nature or sufficiency of
any payment received by it, or to present or file any claim,
or take any action to collect or enforce the payment of any
amounts which have been assigned to it or to which it may be
entitled at any time or times.
(e) Nonexclusive Nature of Remedies. Failure by the
Agent or the Lenders to exercise any right, remedy or option
under this Security Agreement, any other Credit Document,
any Hedging Agreement or as provided by law, or any delay by
the Agent or the Lenders in exercising the same, shall not
operate as a waiver of any such right, remedy or option. No
waiver hereunder shall be effective unless it is in writing,
signed by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated,
which in the case of the Agent or the Lenders shall only be
granted as provided herein. To the extent permitted by law,
neither the Agent, the Lenders, nor any party acting as
attorney for the Agent or the Lenders, shall be liable
hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross
negligence or willful misconduct hereunder. The rights and
remedies of the Agents and the Lenders under this Security
Agreement shall be cumulative and not exclusive of any other
right or remedy which the Agent or the Lenders may have.
(f) Retention of Collateral. The Agent may, after
providing the notices required by Section 9-505(2) of the
UCC or otherwise complying with the requirements of
applicable law of the relevant jurisdiction, to the extent
the Agent is in possession of any of the Collateral, retain
the Collateral in satisfaction of the Secured Obligations.
Unless and until the Agent shall have provided such notices,
however, the Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for
any reason.
(g) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all
amounts to which the Agent or the Lenders are legally
entitled, the Obligors shall be jointly and severally liable
for the deficiency, together with interest thereon at the
default rate specified in Section 3.1 of the Credit
Agreement for Base Rate Loans, together with the costs of
collection and the reasonable fees of any attorneys employed
by the Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the
Secured Obligations shall be returned to the Obligors or to
whomsoever a court of competent jurisdiction shall determine
to be entitled thereto.
9. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Obligor hereby designates
and appoints the Agent, on behalf of the Lenders, and each
of its designees or agents, as attorney-in-fact of such
Obligor, irrevocably and with power of substitution, with
authority to take any or all of the following actions upon
the occurrence and during the continuance of an Event of
Default subject to other provisions hereof and as set forth
in any assignment of factoring proceeds with respect to any
Factoring Agreement (the taking of any such action shall be
at the direction of the Agent):
(i) to demand, collect, settle,
compromise, adjust, give discharges and releases,
all as the Agent may reasonably determine;
(ii) to commence and prosecute any
actions at any court for the purposes of
collecting any Collateral and enforcing any other
right in respect thereof;
(iii) to defend, settle or
compromise any action brought and, in connection
therewith, give such discharge or release as the
Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail
addressed to an Obligor and endorse checks, notes,
drafts, acceptances, money orders, bills of
lading, warehouse receipts or other instruments or
documents evidencing payment, shipment or storage
of the goods giving rise to the Collateral of such
Obligor on behalf of and in the name of such
Obligor, or securing, or relating to such
Collateral;
(v) sell, assign, transfer, make any
agreement in respect of, or otherwise deal with or
exercise rights in respect of, any Collateral or
the goods or services which have given rise
thereto, as fully and completely as though the
Agent were the absolute owner thereof for all
purposes;
(vi) adjust and settle claims under any
insurance policy relating thereto;
(vii) execute and deliver all
assignments, conveyances, statements, financing
statements, renewal financing statements, security
agreements, affidavits, notices and other
agreements, instruments and documents that the
Agent may determine necessary in order to perfect
and maintain the security interests and liens
granted in this Security Agreement and in order to
fully consummate all of the transactions
contemplated therein;
(viii) institute any foreclosure
proceedings that the Agent may deem appropriate;
and
(ix) do and perform all such other acts
and things as the Agent may reasonably deem to be
necessary, proper or convenient in connection with
the Collateral.
This power of attorney is a power coupled with an interest
and shall be irrevocable (i) for so long as any of the
Secured Obligations remain outstanding, any Credit Document
or any Hedging Agreement is in effect or any Letter of
Credit shall remain outstanding and (ii) until all of the
Commitments shall have been terminated. The Agent shall be
under no duty to exercise or withhold the exercise of any of
the rights, powers, privileges and options expressly or
implicitly granted to the Agent in this Security Agreement,
and shall not be liable for any failure to do so or any
delay in doing so. The Agent shall not be liable for any
act or omission or for any error of judgment or any mistake
of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct. This power of
attorney is conferred on the Agent solely to protect,
preserve and realize upon its security interest in the
Collateral.
(b) Performance by the Agent of Obligations. If any
Obligor fails to perform any agreement or obligation
contained herein, the Agent itself may perform, or cause
performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall
be payable by the Obligors on a joint and several basis
pursuant to Section 24 hereof.
(c) Assignment by the Agent. The Agent may from time
to time assign the Secured Obligations and any portion
thereof and/or the Collateral and any portion thereof, and
the assignee shall be entitled to all of the rights and
remedies of the Agent under this Security Agreement in
relation thereto.
(d) The Agent's Duty of Care. Other than the exercise
of reasonable care to assure the safe custody of the
Collateral while being held by the Agent hereunder, the
Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the
Obligors shall be responsible for preservation of all rights
in the Collateral, and the Agent shall be relieved of all
responsibility for the Collateral upon surrendering it or
tendering the surrender of it to the Obligors. The Agent
shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession
if the Collateral is accorded treatment substantially equal
to that which the Agent accords its own property, which
shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that
the Agent shall not have responsibility for taking any
necessary steps to preserve rights against any parties with
respect to any of the Collateral.
10. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any payments in
respect of the Secured Obligations and any proceeds of the
Collateral, when received by the Agent or any of the Lenders in
cash or its equivalent, will be applied in reduction of the
Secured Obligations in the order set forth in Section 3.15(b) of
the Credit Agreement, and each Obligor irrevocably waives the
right to direct the application of such payments and proceeds and
acknowledges and agrees that the Agent shall have the continuing
and exclusive right to apply and reapply any and all such
payments and proceeds in the Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books
and records.
11. Costs of Counsel. If at any time hereafter, whether
upon the occurrence of an Event of Default or not, the Agent
employs counsel to prepare or consider amendments, waivers or
consents with respect to this Security Agreement, or to take
action or make a response in or with respect to any legal or
arbitral proceeding relating to this Security Agreement or
relating to the Collateral, or to protect the Collateral or
exercise any rights or remedies under this Security Agreement or
with respect to the Collateral, then the Obligors agree to
promptly pay upon demand any and all such reasonable documented
costs and expenses of the Agent or the Lenders, all of which
costs and expenses shall constitute Secured Obligations
hereunder.
12. Continuing Agreement.
(a) This Security Agreement shall be a continuing
agreement in every respect and shall remain in full force
and effect so long as any of the Secured Obligations remain
outstanding or any Credit Document or Hedging Agreement is
in effect or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the
indemnities and the representations and warranties set forth
in the Credit Documents). Upon such payment and
termination, this Security Agreement shall be automatically
terminated and the Agent and the Lenders shall, upon the
request and at the expense of the Obligors, forthwith
release all of its liens and security interests hereunder
and shall execute and deliver all UCC termination statements
and/or other documents reasonably requested by the Obligors
evidencing such termination. Notwithstanding the foregoing
all releases and indemnities provided hereunder shall
survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be
effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of
the Secured Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event
payment of all or any part of the Secured Obligations is
rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the
Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of
the Secured Obligations.
13. Amendments; Waivers; Modifications. This Security
Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth
in Section 11.6 of the Credit Agreement.
14. Successors in Interest. This Security Agreement shall
create a continuing security interest in the Collateral and shall
be binding upon each Obligor, its successors and assigns and
shall inure, together with the rights and remedies of the Agent
and the Lenders hereunder, to the benefit of the Agent and the
Lenders and their successors and permitted assigns; provided,
however, that none of the Obligors may assign its rights or
delegate its duties hereunder without the prior written consent
of each Lender or the Required Lenders, as required by the Credit
Agreement. To the fullest extent permitted by law, each Obligor
hereby releases the Agent and each Lender, and its successors and
assigns, from any liability for any act or omission relating to
this Security Agreement or the Collateral, except for any
liability arising from the gross negligence or willful misconduct
of the Agent, or such Lender, or its officers, employees or
agents.
15. Notices. All notices required or permitted to be given
under this Security Agreement shall be in conformance with
Section 11.1 of the Credit Agreement.
16. Counterparts. This Security Agreement may be executed
in any number of counterparts, each of which where so executed
and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be
necessary in making proof of this Security Agreement to produce
or account for more than one such counterpart.
17. Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this
Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA. Any legal action
or proceeding with respect to this Security Agreement
may be brought in the courts of the State of North
Carolina, or of the United States for the Western
District of North Carolina, and, by execution and
delivery of this Security Agreement, each Obligor
hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the
jurisdiction of such courts. Each Obligor further
irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at
the address for notices pursuant to Section 11.1 of the
Credit Agreement, such service to become effective 30
days after such mailing. Nothing herein shall affect
the right of the Agent to serve process in any other
manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Obligor
in any other jurisdiction.
(b) Each Obligor hereby irrevocably waives any
objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this
Security Agreement brought in the courts referred to in
subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS SECURITY AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of any of the Security
Agreement is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement, the other Credit
Documents and the Hedging Agreements represent the entire
agreement of the parties hereto and thereto, and supersede all
prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to
the Credit Documents, the Hedging Agreements or the transactions
contemplated herein and therein.
22. Survival. All representations and warranties of the
Obligors hereunder shall survive the execution and delivery of
this Security Agreement, the other Credit Documents and the
Hedging Agreements, the delivery of the Revolving Notes and the
making of the Revolving Loans and the issuance of the Letters of
Credit under the Credit Agreement.
23. Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than
the Collateral (including, without limitation, real property and
securities owned by an Obligor), or by a guarantee, endorsement
or property of any other Person, then the Agent and the Lenders
shall have the right to proceed against such other property,
guarantee or endorsement upon the occurrence of any Event of
Default, and the Agent and the Lenders have the right, in their
sole discretion, to determine which rights, security, liens,
security interests or remedies the Agent and the Lenders shall at
any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of
them or any of the Agent's and the Lenders' rights or the Secured
Obligations under this Security Agreement, under any other of the
Credit Documents or under any Hedging Agreement.
24. Limitation on Liability. Notwithstanding any provision
to the contrary contained herein or in any other of the Credit
Documents, to the extent the obligations of a Guarantor shall be
adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers)
then the obligations of each Guarantor hereunder shall be limited
to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
25. Rights of Required Lenders. All rights of the Agent
hereunder, if not exercised by the Agent, may be exercised by the
Required Lenders.
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this
Security Agreement to be duly executed and delivered as of the
date first above written.
BORROWER: DELTA WOODSIDE INDUSTRIES, INC.
a South Carolina corporation
By:
Name:
Title:
GUARANTORS: ______________,
a _____________ corporation
By:
Name:
Title:
_______________,
a ______________ corporation
By:
Name:
Title:
Accepted and agreed to in Charlotte, North Carolina as of
the date first above written.
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
SCHEDULE 1(b)
INTELLECTUAL PROPERTY
SCHEDULE 4(a)
CHIEF EXECUTIVE OFFICE
SCHEDULE 4(b)
LOCATIONS OF COLLATERAL
SCHEDULE 4(c)
MERGERS, CONSOLIDATIONS, CHANGE IN STRUCTURE OR USE OF TRADENAMES
SCHEDULE 5(f)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement
dated as of August 25, 1997 (the "Security Agreement") by and
among the Obligors party thereto (each an "Obligor" and
collectively, the "Obligors") and NationsBank, N.A., as Agent
(the "Agent") for the lenders referenced therein (the "Lenders"),
the undersigned Obligor has granted a continuing security
interest in and continuing lien upon, the trademarks and
trademark applications shown below to the Agent for the ratable
benefit of the Lenders:
TRADEMARKS
Description of Trademark Date of
Trademark No. Item Trademark
Trademark Applications
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing
trademarks and trademark applications (i) may only be terminated
in accordance with the terms of the Security Agreement and (ii)
is not to be construed as an assignment of any trademark or
trademark application.
Very truly yours,
__________________________________
[Obligor]
By:
Name:
Title:
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
Exhibit 2.1(b)(i)
FORM OF NOTICE OF BORROWING
NationsBank, N.A.,
as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, DELTA WOODSIDE INDUSTRIES, INC. (the
"Borrower"), refers to the Credit Agreement dated as of August
25, 1997 (as amended, modified, restated or supplemented from
time to time, the "Credit Agreement"), among the Borrower, the
Guarantors, the Lenders and NationsBank, N.A., as Agent.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit
Agreement. The Borrower hereby gives notice pursuant to Section
2.1 of the Credit Agreement that it requests a Revolving Loan
advance under the Credit Agreement, and in connection therewith
sets forth below the terms on which such Revolving Loan advance
is requested to be made:
(A) Date of Borrowing (which is a Business Day)
(B) Principal Amount of Borrowing
(C) Interest rate basis
(D) Interest Period and the last day thereof
In accordance with the requirements of Section 5.2, the
Borrower hereby reaffirms the representations and warranties set
forth in the Credit Agreement as provided in subsection (b) of
such Section, and confirms that the matters referenced in
subsections (c), (d), (e) and (f) of such Section, are true and
correct.
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
Exhibit 2.1(e)
FORM OF REVOLVING NOTE
$ August 25, 1997
FOR VALUE RECEIVED, DELTA WOODSIDE INDUSTRIES, INC., a South
Carolina corporation (the "Borrower"), hereby promises to pay to
the order of __________________________, its successors and
assigns (the "Lender"), at the office of NationsBank, N.A., as
Agent (the "Agent"), at 101 North Tryon Street, Independence
Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at
such other place or places as the holder hereof may designate),
at the times set forth in the Credit Agreement dated as of the
date hereof among the Borrower, the Guarantors, the Lenders and
the Agent (as it may be as amended, modified, restated or
supplemented from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event
later than the Maturity Date, in Dollars and in immediately
available funds, the principal amount of
________________________DOLLARS ($____________) or, if less than
such principal amount, the aggregate unpaid principal amount of
all Revolving Loans made by the Lender to the Borrower pursuant
to the Credit Agreement, and to pay interest from the date hereof
on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with
Section 2.1(d) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event
of Default, the balance outstanding hereunder shall bear interest
as provided in Section 3.1 of the Credit Agreement. Further, in
the event the payment of all sums due hereunder is accelerated
under the terms of the Credit Agreement, this Revolving Note, and
all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the
Borrower.
In the event this Revolving Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in
addition to the principal and interest, all costs of collection,
including reasonable attorneys' fees.
All borrowings evidenced by this Revolving Note and all
payments and prepayments of the principal hereof and interest
hereon and the respective dates thereof shall be endorsed by the
holder hereof on Schedule A attached hereto and incorporated
herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that
any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect the
obligation of the Borrower to make payments of principal and
interest in accordance with the terms of this Revolving Note.
This Revolving Note and the Revolving Loans evidenced hereby
may be transferred in whole or in part only by registration of
such transfer on the Register maintained by or on behalf of the
Borrower as provided in Section 11.3(c) of the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Revolving
Note to be duly executed by its duly authorized officer as of the
day and year first above written.
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
SCHEDULE A TO THE
REVOLVING NOTE
OF _________________
DATED AUGUST 25, 1997
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
Exhibit 3.2
FORM OF NOTICE OF EXTENSION/CONVERSION
NationsBank, N.A.,
as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, DELTA WOODSIDE INDUSTRIES, INC. (the
"Borrower"), refers to the Credit Agreement dated as of August
25, 1997 (as amended, modified, restated or supplemented from
time to time, the "Credit Agreement"), among the Borrower, the
Guarantors, the Lenders and NationsBank, N.A., as Agent.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit
Agreement. The Borrower hereby gives notice pursuant to Section
3.2 of the Credit Agreement that it requests an extension or
conversion of a Revolving Loan outstanding under the Credit
Agreement, and in connection therewith sets forth below the terms
on which such extension or conversion is requested to be made:
(A) Date of Extension or Conversion
(which is the last day of the
the applicable Interest Period)
(B) Principal Amount of Extension or Conversion
(C) Interest rate basis
(D) Interest Period and the last day thereof
In accordance with the requirements of Section 5.2, the
Borrower hereby reaffirms the representations and warranties set
forth in the Credit Agreement as provided in subsection (b) of
such Section, and confirms that the matters referenced in
subsections (c), (d), (e) and (f) of such Section, are true and
correct.
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
Exhibit 7.1(c)
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
For the fiscal quarter ended _________________, 19___.
I, ______________________, [Title] of DELTA WOODSIDE
INDUSTRIES, INC. (the "Borrower") hereby certify that, to the
best of my knowledge and belief, with respect to that certain
Credit Agreement dated as of August 25, 1997 (as amended,
modified, restated or supplemented from time to time, the "Credit
Agreement"; all of the defined terms in the Credit Agreement are
incorporated herein by reference) among the Borrower, the
Guarantors, the Lenders and NationsBank, N.A., as Agent:
a. The company-prepared financial statements which
accompany this certificate are true and correct in all
material respects and have been prepared in accordance
with GAAP applied on a consistent basis, subject to
changes resulting from normal year-end audit
adjustments.
b. Since ___________ (the date of the last similar
certification, or, if none, the Closing Date) no
Default or Event of Default has occurred under the
Credit Agreement; and
Delivered herewith are detailed calculations demonstrating
compliance by the Credit Parties with the financial covenants
contained in Section 7.11 of the Credit Agreement as of the end
of the fiscal period referred to above.
This ______ day of ___________, 19__.
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
Attachment to Officer's Certificate
Computation of Financial Covenants
Exhibit 7.1(d)
FORM OF
BORROWING BASE CERTIFICATE
For the calendar month ended _______________, 19__.
I, ______________________, Chief Financial Officer of DELTA
WOODSIDE INDUSTRIES, INC. (the "Borrower") hereby certify that,
to the best of my knowledge and belief, with respect to that
certain Credit Agreement dated as of August 25, 1997 (as amended,
modified, restated or supplemented from time to time, the "Credit
Agreement"; all of the defined terms in the Credit Agreement are
incorporated herein by reference) among the Borrower, the
Guarantors, the Lenders and NationsBank, N.A., as Agent:
RECEIVABLES
1. Amounts owing to any Borrowing Base
Party under any 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 any Factoring Agreement
and (ii) owing by accounts debtors located
outside of the United States or Canada* $
2. Receivables (as defined in the
definition of Eligible Receivables in
Section 1.1 of the Credit Agreement)
subject to a perfected, first priority
Lien in favor of the Agent,
for the benefit of the Lenders $
3. (i) Receivables subject to any
Lien, other than Liens in favor
of the Agent, for the
benefit of the Lenders $
(ii) Receivables which are more
than 60 days past due (net of
reserves for bad debts in
connection with any such Receivables $
(iii) 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) $
(iv) 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) $
(v) 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) $
(vi) 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 $
(vii) Receivables for which any direct
or indirect Subsidiary of the Borrower
or any Affiliate of the Borrower is the
account debtor $
(viii) Receivables, to the extent exceeding
$ 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) $
(ix) Receivables which fail to meet
such other specifications and requirements
as have been established by the
Agent in its reasonable discretion $
(x) Receivables arising from the sale to
an account debtor on a bill-and-hold,
guaranteed sale, sale or return, sale
on approval, consignment or any other
repurchase or return basis $
(xi) Sum of lines (i) through (x) $
4. Eligible Receivables
(Line 1 plus Line 2 less Line 3(xi)) $
5. Eligible Receivables Borrowing
Base (85% of Eligible Receivables) $
INVENTORY
6. Inventory (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 $
7. (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 salable at prices approximating
their cost in the ordinary course of
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 $
(vii) Inventory which is leased or on
consignment $
(viii) Inventory which fails to meet
such other specifications and
requirements as have been established
by the Agent in its
reasonable discretion $
(ix) Sum of lines (i) through (viii) $
8. Eligible Inventory
(Line 6 less Line 7(ix)) $
9. Eligible Inventory Borrowing
Base (60% of Eligible Inventory) $
BORROWING BASE
10. Total Borrowing Base availability
(Line 5 plus Line 9) $
11. Aggregate Outstanding Revolving Loans
and LOC Obligations under the Credit
Agreement $
12. If Line #10 is greater than Line #11, then
the difference $ (or, if less,
the remaining amount of the Revolving
Committed Amount) is available for
extensions of credit under the Revolving
Commitments and (subject to the terms of
Section 2.2(a)) the LOC Commitment); if
Line #11 is greater than Line #10, then the
Borrower shall prepay or otherwise reduce
so much of the outstanding Revolving
Loans and LOC Obligations as shall be
necessary to eliminate such excess $ .
With reference to this Borrowing Base certificate, I hereby
certify that the above statements are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this day of , 19 .
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
Exhibit 7.12
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Agreement"), dated as of
_____________, 19__, is by and between _____________________, a
___________________ (the "Subsidiary"), and NATIONSBANK, N.A., in
its capacity as Agent under that certain Credit Agreement (as it
may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"), dated as of August 25, 1997, by
and among DELTA WOODSIDE INDUSTRIES, INC., a South Carolina
corporation (the "Borrower"), the Guarantors, the Lenders and
NationsBank, N.A., as Agent. All of the defined terms in the
Credit Agreement are incorporated herein by reference.
The Subsidiary is an Additional Credit Party, and,
consequently, the Credit Parties are required by Section 7.12 of
the Credit Agreement to cause the Subsidiary to become a
"Guarantor".
Accordingly, the Subsidiary hereby agrees as follows with
the Agent, for the benefit of the Lenders:
1. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Credit Agreement and a "Guarantor"
for all purposes of the Credit Agreement, and shall have all of
the obligations of a Guarantor thereunder as if it had executed
the Credit Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms,
provisions and conditions applicable to the Guarantors contained
in the Credit Agreement. Without limiting the generality of the
foregoing terms of this paragraph 1, the Subsidiary hereby (i)
jointly and severally together with the other Guarantors,
guarantees to each Lender and the Agent, as provided in Section 4
of the Credit Agreement, the prompt payment and performance of
the Credit Party Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or
otherwise) strictly in accordance with the terms thereof.
2. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Security Agreement, and shall have
all the obligations of an "Obligor" (as such term is defined in
the Security Agreement) thereunder as if it had executed the
Security Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Security Agreement.
Without limiting generality of the foregoing terms of this
paragraph 2, the Subsidiary hereby grants to the Agent, for the
benefit of the Lenders, a continuing security interest in, and a
right of set off against any and all right, title and interest of
the Subsidiary in and to the Collateral (as such term is defined
in Section 2 of the Security Agreement) of the Subsidiary. The
Subsidiary hereby represents and warrants to the Agent that:
(i) The Subsidiary's chief executive office and chief
place of business are (and for the prior four months have
been) located at the locations set forth on Schedule 1
attached hereto and the Subsidiary keeps its books and
records at such locations.
(ii) The type of Collateral owned by the Subsidiary and
the location of all Collateral owned by the Subsidiary is as
shown on Schedule 2 attached hereto.
(iii) The Subsidiary's legal name is as shown in
this Agreement and the Subsidiary has not in the past four
months changed its name, been party to a merger,
consolidation or other change in structure or used any
tradename except as set forth in Schedule 3 attached hereto.
(iv) The patents and trademarks listed on Schedule 4
attached hereto constitute all of the registrations and
applications for the patents and trademarks owned by the
Subsidiary.
3. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Pledge Agreement, and shall have all
the obligations of a "Pledgor" thereunder as if it had executed
the Pledge Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all the terms, provisions
and conditions contained in the Pledge Agreement. Without
limiting the generality of the foregoing terms of this paragraph
3, the Subsidiary hereby pledges and assigns to the Agent, for
the benefit of the Lenders, and grants to the Agent, for the
benefit of the Lenders, a continuing security interest in any and
all right, title and interest of the Subsidiary in and to Pledged
Shares (as such term is defined in Section 2 of the Pledge
Agreement) listed on Schedule 5 attached hereto and the other
Pledged Collateral (as such term is defined in Section 2 of the
Pledge Agreement). 4. The address of the Subsidiary for
purposes of all notices and other communications is
, , Attention of
(Facsimile No. ).
5. The Subsidiary hereby waives acceptance by the Agent
and the Lenders of the guaranty by the Subsidiary under Section 4
of the Credit Agreement upon the execution of this Agreement by
the Subsidiary.
6. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all
of which when taken together shall constitute one contract.
7. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of North
Carolina.
IN WITNESS WHEREOF, the Subsidiary has caused this Joinder
Agreement to be duly executed by its authorized officers, and the
Agent, for the benefit of the Lenders, has caused the same to be
accepted by its authorized officer, as of the day and year first
above written.
[SUBSIDIARY]
By:
Name:
Title:
Acknowledged and accepted:
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
Schedule 1
TO FORM OF JOINDER AGREEMENT
[Chief Executive Office and
Chief Place of Business of Subsidiary]
Schedule 2
TO FORM OF JOINDER AGREEMENT
[Types and Locations of Collateral]
Schedule 3
TO FORM OF JOINDER AGREEMENT
[Tradenames]
Schedule 4
TO FORM OF JOINDER AGREEMENT[Trademarks]
Schedule 5
TO FORM OF JOINDER AGREEMENT[Pledged Shares]
Exhibit 11.3(b)
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August
25, 1997, as amended and modified from time to time thereafter
(the "Credit Agreement") among DELTA WOODSIDE INDUSTRIES, INC.,
the other Credit Parties party thereto, the Lenders party thereto
and NationsBank, N.A., as Agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
The "Assignor" and the "Assignee" referred to on Schedule 1
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
without recourse and without representation or warranty except as
expressly set forth herein, and the Assignee hereby purchases and
assumes from the Assignor, an interest in and to the Assignor's
rights and obligations under the Credit Agreement and the other
Credit Documents as of the date hereof equal to the percentage
interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Credit
Documents. After giving effect to such sale and assignment, the
Assignee's Commitment and the amount of the Revolving Loans owing
to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit
Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Documents or any
other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its
obligations under the Credit Documents or any other instrument or
document furnished pursuant thereto; and (iv) attaches the
Revolving Note held by the Assignor and requests that the Agent
exchange such Revolving Note for new Revolving Notes payable to
the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and to the Assignor in an
amount equal to the Commitment retained by the Assignor, if any,
as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial
statements referred to in Section 7.1 thereof and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor
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 the
Credit Agreement; (iii) confirms that it is an Eligible Assignee;
(iv) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to the Agent by the
terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees that it will perform in
accordance with their terms all of the obligations that by the
terms of the Credit Agreement are required to be performed by it
as a Lender; and (vi) attaches any U.S. Internal Revenue Service
or other forms required under Section 3.11.
4. Following the execution of this Assignment and
Acceptance, it will be delivered to the Agent for acceptance and
recording by the Agent. The effective date for this Assignment
and Acceptance (the "Effective Date") shall be the date of
acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon such acceptance and recording by the Agent, as of
the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from
and after the Effective Date, the Agent shall make all payments
under the Credit Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the
Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the laws of the State of North
Carolina.
8. This Assignment and Acceptance 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 all of which taken together shall
constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed
counterpart of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have
caused this Assignment and Acceptance to be executed by their
officers thereunto duly authorized as of the date hereof.
, as Assignor
By:
Name:
Title:
, as Assignee
By:
Name:
Title:
Notice address of Assignee:
<<Assignee>>
Attn:
Telephone: ( )
Telecopy: ( )
CONSENTED TO:
NATIONSBANK, N.A., *
as Agent
By:
Name:
Title:
DELTA WOODSIDE INDUSTRIES, INC.*
By:
Name:
Title:
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment* :
(e) Revolving Commitment Percentage Assigned
(expressed as a percentage set forth to
at least 8 decimals) %
(f) Revolving Commitment Percentage of Assignee
after giving effect to this Assignment and
Acceptance as of the Effective
Date (set forth to at least 8 decimals) %
(g) Revolving Commitment Percentage of Assignor
after giving effect to this Assignment and
Acceptance as of the Effective
Date (set forth to at least 8 decimals) %
(h) Revolving Committed Amount as of
Effective Date $_______
(i) Dollar Amount of Assignor's Revolving
Commitment Percentage as of the Effective
Date (the amount set forth in (h) multiplied
by the percentage set forth in (g)) $_______
(j) Dollar Amount of Assignee's Revolving
Commitment Percentage as of the Effective
Date (the amount set forth in (h) multiplied
by the percentage set forth in (f)) $_______
_______________________________
* 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.
* Required if the Assignee is an Eligible Assignee solely by
reason of clause (iii) of the definition of "Eligible Assignee."
* Required if the Assignee is an Eligible Assignee solely by
reason of clause (iii) of the definition of "Eligible Assignee."
* This date should be no earlier than five Business Days after
delivery of this Assignment and Acceptance to the Agent.
[EXECUTION COPY]
CREDIT AGREEMENT
Dated as of August 25, 1997
among
DELTA MILLS, INC.,
as Borrower,
CERTAIN SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO,
NATIONSBANK, N.A.,
as Administrative Agent,
AND
BNY FINANCIAL CORPORATION,
as Collateral Agent
TABLE OF CONTENTS
SECTION 1 DEFINITIONS 1
1.1 Definitions. 1
1.2 Computation of Time Periods. 26
1.3 Accounting Terms. 26
SECTION 2 CREDIT FACILITIES 27
2.1 Revolving Loans. 27
2.2 Letter of Credit Subfacility. 29
2.3 Swingline Loan Subfacility. 34
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES 36
3.1 Default Rate. 36
3.2 Extension and Conversion. 37
3.3 Prepayments. 37
3.4 Termination and Reduction of Revolving Committed Amount.
39
3.5 Fees. 39
3.6 Capital Adequacy. 41
3.7 Limitation on Eurodollar Loans. 41
3.8 Illegality. 41
3.9 Requirements of Law. 42
3.10 Treatment of Affected Loans. 43
3.11 Taxes. 44
3.12 Compensation. 46
3.13 Pro Rata Treatment. 46
3.14 Sharing of Payments. 47
3.15 Payments, Computations, Etc. 48
3.16 Evidence of Debt. 50
3.17 Mandatory Assignment. 50
SECTION 4 GUARANTY 51
4.1 The Guaranty. 51
4.2 Obligations Unconditional. 51
4.3 Reinstatement. 53
4.4 Certain Additional Waivers. 53
4.5 Remedies. 53
4.6 Rights of Contribution. 53
4.7 Continuing Guarantee. 54
SECTION 5 CONDITIONS 55
5.1 Closing Conditions. 55
5.2 Conditions to all Extensions of Credit. 59
SECTION 6 REPRESENTATIONS AND WARRANTIES 60
6.1 Financial Condition. 60
6.2 No Material Change. 60
6.3 Organization and Good Standing. 61
6.4 Power; Authorization; Enforceable Obligations. 61
6.5 No Conflicts. 61
6.6 No Default. 62
6.7 Ownership. 62
6.8 Indebtedness. 62
6.9 Litigation. 62
6.10 Taxes. 62
6.11 Compliance with Law. 62
6.12 ERISA. 63
6.13 Subsidiaries. 64
6.14 Governmental Regulations, Etc. 64
6.15 Purpose of Loans and Letters of Credit. 65
6.16 Environmental Matters. 65
6.17 Intellectual Property. 67
6.18 Solvency. 67
6.19 Investments. 67
6.20 Location of Collateral. 67
6.21 Disclosure. 67
6.22 No Burdensome Restrictions. 67
6.23 Brokers' Fees. 68
6.24 Labor Matters. 68
6.25 Nature of Business. 68
SECTION 7 AFFIRMATIVE COVENANTS 68
7.1 Information Covenants. 68
7.2 Preservation of Existence and Franchises. 72
7.3 Books and Records. 72
7.4 Compliance with Law. 72
7.5 Payment of Taxes and Other Indebtedness. 72
7.6 Insurance. 73
7.7 Maintenance of Property. 73
7.8 Performance of Obligations. 73
7.9 Use of Proceeds. 73
7.10 Audits/Inspections. 73
7.11 Financial Covenants. 74
7.12 Additional Credit Parties. 75
7.13 Pledged Assets; Release of Collateral. 76
7.14 Factoring Agreements. 76
SECTION 8 NEGATIVE COVENANTS 77
8.1 Indebtedness. 77
8.2 Liens. 78
8.3 Nature of Business. 78
8.4 Consolidation, Merger, Dissolution, etc. 78
8.5 Asset Dispositions. 79
8.6 Investments. 79
8.7 Restricted Payments. 79
8.8 Prepayments of Indebtedness, etc. 80
8.9 Transactions with Affiliates. 81
8.10 Fiscal Year. 81
8.11 Limitation on Restricted Actions. 81
8.12 Ownership of Subsidiaries. 82
8.13 Sale Leasebacks. 82
8.14 Capital Expenditures. 82
8.15 No Further Negative Pledges. 82
8.16 Operating Lease Obligations. 83
8.17 Limitation on Foreign Operations. 83
8.18 Factoring Agreements. 83
SECTION 9 EVENTS OF DEFAULT 83
9.1 Events of Default. 83
9.2 Acceleration; Remedies. 86
SECTION 10 AGENCY PROVISIONS 87
10.1 Appointment, Powers and Immunities. 87
10.2 Reliance by Administrative Agent and the Collateral
Agent. 88
10.3 Defaults. 88
10.4 Rights as a Lender. 88
10.5 Indemnification. 89
10.6 Non-Reliance on Administrative Agent, Collateral Agent
and Other Lenders. 89
10.7 Successor Administrative Agent. 90
SECTION 11 MISCELLANEOUS 90
11.1 Notices. 90
11.2 Right of Set-Off; Adjustments. 92
11.3 Benefit of Agreement. 92
11.4 No Waiver; Remedies Cumulative. 94
11.5 Expenses; Indemnification. 94
11.6 Amendments, Waivers and Consents. 95
11.7 Counterparts. 97
11.8 Headings. 97
11.9 Survival. 97
11.10 Governing Law; Submission to Jurisdiction; Venue. 97
11.11 Severability. 98
11.12 Entirety. 98
11.13 Binding Effect; Termination. 98
11.14 Confidentiality. 99
11.15 Conflict. 99
SCHEDULES
Schedules Omitted
EXHIBITS
Exhibit 1.1A Form of Pledge Agreement
Exhibit 1.1B Form of Security Agreement
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.3(d) Form of Swingline Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 7.1(c) Form of Officer's Compliance Certificate
Exhibit 7.1(d) Form of Borrowing Base Certificate
Exhibit 7.12 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of August 25, 1997 (as
amended, modified, restated or supplemented from time to time,
the "Credit Agreement"), is by and among DELTA MILLS, INC., a
Delaware corporation (the "Borrower"), the Guarantors (as defined
herein), the Lenders (as defined herein), NATIONSBANK, N.A., as
Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent") and BNY FINANCIAL CORPORATION, as
Collateral Agent for the Lenders (in such capacity, the
"Collateral Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide
a $100 million credit facility for the purposes hereinafter set
forth; and
WHEREAS, the Lenders have agreed to make the requested
credit facility available to the Borrower on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise
requires:
"Additional Credit Party" means each Person that
becomes a Guarantor after the Closing Date by execution of a
Joinder Agreement.
"Administrative Agent" shall have the meaning assigned
to such term in the heading hereof, together with any
successors or assigns.
"Adjusted Base Rate" means the Base Rate plus the
Applicable Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate
plus the Applicable Percentage.
"Administrative Agency Services Address" means
NationsBank, N.A., NC1-001-15-04, 101 North Tryon Street,
Charlotte, North Carolina 28255, Attn: Agency Services, or
such other address as may be identified by written notice
from the Administrative Agent to the Borrower.
"Affiliate" means, with respect to any Person, any
other Person (i) directly or indirectly controlling or
controlled by or under direct or indirect common control
with such Person or (ii) directly or indirectly owning or
holding ten percent (10%) or more of the Capital Stock in
such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to
direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to
the foregoing.
"Agents' Fee Letter" means that certain letter
agreement, dated as of July 31, 1997, between the
Administrative Agent, the Collateral Agent and the Borrower,
as amended, modified, restated or supplemented from time to
time.
"Agents' Fees" shall have the meaning assigned to such
term in Section 3.5(d).
"Alchem" means Alchem Capital Corporation, a Delaware
corporation.
"Applicable Lending Office" means, for each Lender, the
office of such Lender (or of an Affiliate of such Lender) as
such Lender may from time to time specify to the
Administrative Agent and the Borrower by written notice as
the office by which its Eurodollar Loans are made and
maintained.
"Applicable Percentage" means, for purposes of
calculating the applicable interest rate for any day for any
Loan or the applicable rate of the Unused Fee for any day,
the appropriate applicable percentage corresponding to the
Leverage Ratio for the most recent Calculation Date:
Applicable Applicable Applicable
Pricing Leverage Percentage for Percentage for Percentage for
Level Ratio Eurodollar Base Rate Loans Unused Fee
I > 1.75% 1.00% 0.50%
4.00x
II < 1.50% 0.75% 0.375%
4.00x
but
>
3.00x
III < 1.25% 0.50% 0.25%
3.00x
but
>
2.00x
IV < 1.00% 0.25% 0.20%
2.00x
The Applicable Percentages shall be determined and adjusted
quarterly on the date (each a "Calculation Date") five
Business Days after the date by which the Borrower is
required to provide the officer's certificate in accordance
with the provisions of Section 7.1(c) for the most recently
ended fiscal quarter of the Consolidated Parties; provided,
however, that (i) the initial Applicable Percentages shall
be based on Pricing Level II (as shown above) and shall
remain at Pricing Level II until the Calculation Date
occurring on March 28, 1998 and, thereafter, the Pricing
Level shall be determined by the Leverage Ratio as of the
last day of the most recently ended fiscal quarter of the
Consolidated Parties preceding the applicable Calculation
Date, and (ii) if the Borrower fails to provide the
officer's certificate to the Administrative Agency Services
Address as required by Section 7.1(c) for the last day of
the most recently ended fiscal quarter of the Consolidated
Parties preceding the applicable Calculation Date, the
Applicable Percentage from such Calculation Date shall be
based on Pricing Level I until such time as an appropriate
officer's certificate is provided, whereupon the Pricing
Level shall be determined by the Leverage Ratio as of the
last day of the most recently ended fiscal quarter of the
Consolidated Parties preceding such Calculation Date. Each
Applicable Percentage shall be effective from one
Calculation Date until the next Calculation Date. Any
adjustment in the Applicable Percentages shall be applicable
to all existing Loans as well as any new Loans made or
issued.
"Application Period", in respect of any Asset
Disposition, shall have the meaning assigned to such term in
Section 8.5.
"Asset Disposition" means the disposition of any or all
of the assets (including without limitation the Capital
Stock of a Subsidiary) of any Consolidated Party whether by
sale, lease, transfer or otherwise, but excluding (i) the
sale of inventory in the ordinary course of business for
fair consideration and (ii) the sale or disposition of
machinery and equipment no longer used or useful in the
conduct of such Consolidated Party's business.
"Asset Disposition Prepayment Event" means, with respect
to any Asset Disposition other than an Excluded Asset
Disposition, the failure of the Borrower to apply (or cause
to be applied) the Net Cash Proceeds of such Asset
Disposition to the purchase, acquisition or construction of
Eligible Assets during the Application Period for such Asset
Disposition.
"Bankruptcy Code" means the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded
or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such
Person: (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order
for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part
of its Property or ordering the winding up or liquidation of
its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect,
or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or
other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty
(60) consecutive days; or (iii) such Person shall commence a
voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent
to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or make any
general assignment for the benefit of creditors; or (iv)
such Person shall be unable to, or shall admit in writing
its inability to, pay its debts generally as they become
due.
"Base Rate" means, for any day, the rate per annum equal
to the higher of (a) the Federal Funds Rate for such day
plus one-half of one percent (0.5%) and (b) the Prime Rate
for such day. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime
Rate or Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a
rate determined by reference to the Base Rate.
"BNY Financial" means BNY Financial Corporation and its
successors.
"Borrower" means the Person identified as such in the
heading hereof, together with any permitted successors and
assigns.
"Borrowing Base" means, as of any day, the sum of (a) 85%
of Eligible Receivables (net of any reserves as provided in
the definition of "Eligible Receivables" set forth in this
Section 1.1) and (b) 60% of Eligible Inventory (net of any
reserves as provided in the definition of "Eligible
Inventory" set forth in this Section 1.1), in each case as
set forth in the most recent Borrowing Base Certificate
delivered to the Agent and the Lenders in accordance with
the terms of Section 7.1(d).
"Borrowing Base Parties" means the Borrower and each of
the Guarantors which is a Domestic Subsidiary of the
Borrower.
"Business Day" means a day other than a Saturday, Sunday
or other day on which commercial banks in Charlotte, North
Carolina or New York, New York are authorized or required by
law to close, except that, when used in connection with a
Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in U.S. dollar
deposits in London, England.
"Calculation Date" has the meaning set forth in the
definition of "Applicable Percentage" set forth in this
Section 1.1.
"Capital Lease" means, as applied to any Person, any
lease of any Property (whether real, personal or mixed) by
that Person as lessee which, in accordance with GAAP, is or
should be accounted for as a capital lease on the balance
sheet of that Person.
"Capital Stock" means (i) in the case of a corporation,
capital stock, (ii) in the case of an association or
business entity, any and all shares, interests,
participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a
partnership, partnership interests (whether general or
limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or
participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or
directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United
States of America is pledged in support thereof) having
maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and
certificates of deposit of (i) any Lender, (ii) any domestic
commercial bank of recognized standing having capital and
surplus in excess of $100,000,000 or (iii) any bank whose
short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Moody's is at least P-1 or
the equivalent thereof (any such bank being an "Approved
Bank"), in each case with maturities of not more than 270
days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Bank (or
by the parent company thereof) or any variable rate notes
issued by, or guaranteed by, any domestic corporation rated
A-1 (or the equivalent thereof) or better by S&P or P-1 (or
the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase
agreements with a bank or trust company (including any of
the Lenders) or recognized securities dealer having capital
and surplus in excess of $100,000,000 for direct obligations
issued by or fully guaranteed by the United States of
America in which any Credit Party shall have a perfected
first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market
value of at least 100% of the amount of the repurchase
obligations and (e) Investments, classified in accordance
with GAAP as current assets, in money market investment
programs registered under the Investment Company Act of
1940, as amended, which are administered by reputable
financial institutions having capital of at least
$100,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing
subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the
following events: (i) Delta Woodside shall cease to own,
directly or indirectly, 100% of all of the Capital Stock of
the Borrower; or (ii) the occurrence of a "Change of
Control" under and as defined in the Senior Note Indenture.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto, as interpreted
by the rules and regulations issued thereunder, in each case
as in effect from time to time. References to sections of
the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to the
collateral which is identified in, and at any time will be
covered by, the Collateral Documents.
"Collateral Agent" shall have the meaning assigned to
such term in the heading hereof, together with any
successors or assigns.
"Collateral Documents" means a collective reference to
the Security Agreement, the Pledge Agreement and such other
documents executed and delivered in connection with the
attachment and perfection of the Collateral Agent's security
interests and liens arising thereunder, including without
limitation UCC financing statements.
"Commitment" means (i) with respect to each Lender, the
Revolving Commitment of such Lender, (ii) with respect to
the Swingline Lender, the Swingline Commitment, and (iii)
with respect to the Issuing Lenders, the LOC Commitment.
"Consolidated Capital Expenditures" means, for any
period, all capital expenditures of the Consolidated Parties
on a consolidated basis for such period, as determined in
accordance with GAAP.
"Consolidated Cash Taxes" means, for any period, the
aggregate of all income, value added and similar taxes of
the Consolidated Parties on a consolidated basis for such
period, as determined in accordance with GAAP, to the extent
the same are paid in cash during such period.
"Consolidated Current Assets" means, as of any date,
all items which would be classified as current assets on a
consolidated balance sheet of the Borrower and its
Subsidiaries prepared as of such date in accordance with
GAAP.
"Consolidated Current Liabilities" means, as of any
date, all items which would be classified as current
liabilities on a consolidated balance sheet of the Borrower
and its Subsidiaries prepared as of such date in accordance
with GAAP.
"Consolidated EBITDA" means, for any period, the sum of
(i) Consolidated Net Income for such period, plus (ii) an
amount which, in the determination of Consolidated Net
Income for such period, has been deducted for (A)
Consolidated Interest Expense, (B) total federal, state,
local and foreign income, value added and similar taxes and
(C) depreciation and amortization expense, all as determined
in accordance with GAAP.
"Consolidated Interest Expense" means, for any period,
interest expense (including the amortization of debt
discount and premium, the interest component under Capital
Leases and the implied interest component under Synthetic
Leases) of the Consolidated Parties on a consolidated basis
for such period, as determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, net
income (excluding extraordinary items and non-operating
gains and losses (including without limitation currency
gains and losses)) after taxes for such period of the
Consolidated Parties on a consolidated basis, as determined
in accordance with GAAP.
"Consolidated Parties" means a collective reference to
the Borrower and its Subsidiaries, and "Consolidated Party"
means any one of them.
"Consolidated Scheduled Funded Debt Payments" means, as
of the end of each fiscal quarter of the Consolidated
Parties, for the Consolidated Parties on a consolidated
basis, the sum of all scheduled payments of principal on
Funded Indebtedness for the applicable period ending on such
date (including the principal component of payments due on
Capital Leases during the applicable period ending on such
date); it being understood that Scheduled Funded Debt
Payments shall not include voluntary prepayments or the
mandatory prepayments required pursuant to Section 3.3.
"Consolidated Tangible Net Worth" means, as of any
date, shareholders' equity or net worth of the Consolidated
Parties on a consolidated basis, as determined in accordance
with GAAP, less all assets of the Consolidated Parties as of
such date which should be classified as intangible assets
under GAAP (including without limitation good will).
"Consolidated Total Assets" means, as of any date, all
items which would be classified as assets on a consolidated
balance of the Borrower and its Subsidiaries prepared as of
such date in accordance with GAAP.
"Continue", "Continuation", and "Continued" shall refer
to the continuation pursuant to Section 3.2 hereof of a
Eurodollar Loan from one Interest Period to the next
Interest Period.
"Convert", "Conversion", and "Converted" shall refer to
a conversion pursuant to Section 3.2 or Sections 3.7 through
3.12, inclusive, of a Base Rate Loan into a Eurodollar Loan.
"Credit Documents" means a collective reference to this
Credit Agreement, the Notes, the LOC Documents, each Joinder
Agreement, the Agents' Fee Letter, the Collateral Documents
and all other related agreements and documents issued or
delivered hereunder or thereunder or pursuant hereto or
thereto (in each case as the same may be amended, modified,
restated, supplemented, extended, renewed or replaced from
time to time), and "Credit Document" means any one of them.
"Credit Parties" means a collective reference to the
Borrower and the Guarantors, and "Credit Party" means any
one of them.
"Credit Party Obligations" means, without duplication,
all of the obligations of the Credit Parties to the Lenders
(including the Issuing Lenders) the Administrative Agent and
the Collateral Agent, whenever arising, under this Credit
Agreement, the Notes, the Collateral Documents or any of the
other Credit Documents (including, but not limited to, any
interest accruing after the occurrence of a Bankruptcy Event
with respect to any Credit Party, regardless of whether such
interest is an allowed claim under the Bankruptcy Code).
"Current Ratio" means, with respect to the Consolidated
Parties on a consolidated basis as of the last day of any
fiscal quarter of the Consolidated Parties, the ratio of (a)
Consolidated Current Assets as of such date to (b)
Consolidated Current Liabilities as of such date.
"Debt Issuance" means the issuance of any Indebtedness
for borrowed money by any Consolidated Party. The term
"Debt Issuance" shall not include the issuance of any
Indebtedness permitted pursuant to Section 8.1.
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event
of Default.
"Defaulting Lender" means, at any time, any Lender that
(a) has failed to make a Loan or purchase a Participation
Interest required pursuant to the term of this Credit
Agreement within one Business Day of when due, (b) other
than as set forth in (a) above, has failed to pay to the
Administrative Agent, the Collateral Agent or any Lender an
amount owed by such Lender pursuant to the terms of this
Credit Agreement within one Business Day of when due, unless
such amount is subject to a good faith dispute or (c) has
been deemed insolvent or has become subject to a bankruptcy
or insolvency proceeding or with respect to which (or with
respect to any of assets of which) a receiver, trustee or
similar official has been appointed.
"Delta Woodside" means Delta Woodside Industries, Inc.,
a South Carolina corporation.
"Dollars" and "$" means dollars in lawful currency of
the United States of America.
"Domestic Subsidiary" means, with respect to any
Person, any Subsidiary of such Person which is incorporated
or organized under the laws of any State of the United
States or the District of Columbia.
"Eligible Assets" means another business or any
substantial part of another business or other long-term
assets, in each case, in, or used or useful in, the same or
a similar line of business as the Consolidated Parties were
engaged in on the Closing Date or any reasonable extensions
or expansions thereof.
"Eligible Assignee" means (i) a Lender; (ii) an
Affiliate of a Lender; and (iii) any other Person approved
by the Administrative Agent and, unless an Event of Default
has occurred and is continuing at the time any assignment is
effected in accordance with Section 11.3, the Borrower (such
approval not to be unreasonably withheld or delayed by the
Administrative Agent or the Borrower and such approval to be
deemed given by the Borrower if no objection is received by
the assigning Lender and the Administrative Agent from the
Borrower within two Business Days after notice of such
proposed assignment has been provided by the assigning
Lender to the Borrower); provided, however, that neither the
Borrower nor an Affiliate of the Borrower shall qualify as
an Eligible Assignee.
"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 Collateral
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 (ii), (iv), (vi) and (xii) 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 Administrative Agent shall not have
received a landlord's waiver reasonably satisfactory to the
Administrative Agent, other than the South Carolina Bond
Property (provided, however, that, after the date 90 days
from the Closing Date, inventory located at the South
Carolina Bond Property shall not be Eligible Inventory
unless and until the Administrative Agent shall have
received a landlord's waiver satisfactory to the
Administrative Agent with respect to such inventory), (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
Administrative Agent in its reasonable discretion.
"Eligible Receivables" means, as of any date of
determination and without duplication, (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 reasonably acceptable to the
Administrative 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 Collateral 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
from this clause (B) (i) Receivables subject to any Lien,
other than Liens in favor of the Collateral Agent, for the
benefit of the Lenders, (ii) Receivables which are more than
60 days past due (net of reserves for bad debts in
connection with any such Receivables), (iii) Receivables
evidenced by notes, chattel paper or other instruments,
unless such notes, chattel paper or instruments have been
delivered to and are in the possession of the Collateral
Agent, (iv) 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), (v) 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 reasonably acceptable to the Administrative
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, (vi) 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, (vii)
Receivables for which any direct or indirect Subsidiary of
the Borrower or any Affiliate of the Borrower is the account
debtor, (viii) 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 reasonable satisfaction of the
Administrative 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, (ix) Receivables arising from the sale to an
account debtor on a bill-and-hold, guaranteed sale, sale or
return, sale on approval, consignment or any other
repurchase or return basis and (x) Receivables which fail to
meet such other specifications and requirements as may from
time to time be established by the Administrative Agent in
its reasonable discretion.
"Environmental Laws" means any and all lawful and
applicable Federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses,
agreements or other governmental restrictions relating to
the environment or 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, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"Equity Issuance" means any issuance by any Consolidated
Party to any Person which is not a Consolidated Party of (a)
shares of its Capital Stock, (b) any shares of its Capital
Stock pursuant to the exercise of options or warrants or (c)
any shares of its Capital Stock pursuant to the conversion
of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute thereto, as
interpreted by the rules and regulations thereunder, all as
the same may be in effect from time to time. References to
sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Consolidated Party within the meaning of
Section 4001(a)(14) of ERISA, or is a member of a group
which includes the Borrower and which is treated as a single
employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial
cessation of operations (within the meaning of Section
4062(e) of ERISA); (ii) the withdrawal by any Consolidated
Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer
(as such term is defined in Section 4001(a)(2) of ERISA), or
the termination of a Multiple Employer Plan; (iii) the
distribution of a notice of intent to terminate or the
actual termination of a Plan pursuant to Section 4041(a)(2)
or 4041A of ERISA; (iv) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC
under Section 4042 of ERISA; (v) any event or condition
which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial
withdrawal of any Consolidated Party or any ERISA Affiliate
from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist
with respect to any Plan; or (vii) the adoption of an
amendment to any Plan requiring the provision of security to
such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Revolving Loan that bears
interest at a rate based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Administrative Agent to be equal to the
quotient obtained by dividing (a) the Interbank Offered Rate
for such Eurodollar Loan for such Interest Period by (b) 1
minus the Eurodollar Reserve Requirement for such Eurodollar
Loan for such Interest Period.
"Eurodollar Reserve Requirement" means, at any time, the
maximum rate at which reserves (including, without
limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor)
by member banks of the Federal Reserve System against
"Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the
foregoing, the Eurodollar Reserve Requirement shall reflect
any other reserves required to be maintained by such member
banks with respect to (i) any category of liabilities which
includes deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include
Eurodollar Loans. The Adjusted Eurodollar Rate shall be
adjusted automatically on and as of the effective date of
any change in the Eurodollar Reserve Requirement.
"Event of Default" means such term as defined in Section
9.1.
"Excluded Asset Disposition" means (i) any Asset
Disposition by any Consolidated Party to any Consolidated
Party if (a) the Credit Parties shall cause to be executed
and delivered such documents, instruments and certificates
as the Administrative Agent may request so as to cause the
Credit Parties to be in compliance with the terms of Section
7.13 after giving effect to such Asset Disposition and (b)
after giving effect to such Asset Disposition, no Default or
Event of Default exists, (ii) any Equity Issuance, (iii)
sales of accounts pursuant to a Factoring Agreement, (iv)
any Asset Disposition not constituting a substantial part of
the assets of any Person if neither the book value of such
assets nor the Net Cash Proceeds of such Asset Disposition
exceeds $100,000 and (v) any other Asset Disposition not
described in clause (i), (ii), (iii) or (iv) above if and to
the extent that the aggregate Net Cash Proceeds of all such
Asset Dispositions received by the Consolidated Parties on
or after the Closing Date does not exceed $5,000,000.
"Excluded Equity Issuance" means (i) any Asset
Disposition, (ii) any capital contribution to any
Consolidated Party by Delta Woodside or Alchem or (iii) any
Equity Issuance by any Consolidated Party to any of its
employees, officers or directors pursuant of the exercise of
options or warrants or as part of any compensation package.
"Executive Officer" of any Person means any of the chief
executive officer, chief operating officer, president, vice
president, chief financial officer or treasurer of such
Person.
"Existing Credit Facility" means the credit facility in
favor of Delta Woodside evidenced by that certain amended
and restated credit agreement dated as of March 15, 1996, as
amended from time to time thereafter, among Delta Woodside,
the Lenders named therein, NationsBank, N.A., as Agent, and
Bank of America National Trust and Savings Association and
The Bank of New York, as Co-Agents.
"Existing Letter of Credit" means any one of the letters
of credit described by date of issuance, letter of credit
number, undrawn amount, name of beneficiary and date of
expiry on Schedule 1.1A.
"Factor" means such term as defined in the definition of
"Factoring Agreement" set forth in this Section 1.1.
"Factoring Agreement" means each agreement between the
Borrower or any of its Subsidiaries and BNY Financial or any
other Person approved by the Required 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.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the
average rate charged to the Administrative Agent (in its
individual capacity) on such day on such transactions as
determined by the Administrative Agent.
"Foreign Subsidiary" means, with respect to any Person,
any Subsidiary of such Person which is not a Domestic
Subsidiary of such Person.
"Funded Indebtedness" means, with respect to any Person,
without duplication, (a) all Indebtedness of such Person
other than Indebtedness of the types referred to in clause
(e), (f), (g), (i), (k), (l) and (m) of the definition of
"Indebtedness" set forth in this Section 1.1, (b) all
Indebtedness of another Person of the type referred to in
clause (a) above secured by (or for which the holder of such
Funded Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, Property owned or acquired
by such Person, whether or not the obligations secured
thereby have been assumed, (c) all Guaranty Obligations of
such Person with respect to Indebtedness of the type
referred to in clause (a) above of another Person and (d)
Indebtedness of the type referred to in clause (a) above of
any partnership or unincorporated joint venture in which
such Person is legally obligated or has a reasonable
expectation of being liable with respect thereto.
"GAAP" means generally accepted accounting principles in
the United States applied on a consistent basis and subject
to the terms of Section 1.3.
"Governmental Authority" means any Federal, state, local
or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantor" means each of the Persons identified as a
"Guarantor" on the signature pages hereto and each
Additional Credit Party which may hereafter execute a
Joinder Agreement, together with their successors and
permitted assigns, and "Guarantor" means any one of them.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of
any other Person in any manner, whether direct or indirect,
and including without limitation any obligation, whether or
not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or
provide funds or other support for the payment or purchase
of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other
Person (including without limitation keep well agreements,
maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the
purpose of assuring the holder of such Indebtedness, or (iv)
to otherwise assure or hold harmless the holder of such
Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount
equal to the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect
of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement.
"Indebtedness" of any Person means (a) all obligations of
such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily
made, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to
Property purchased by such Person (other than customary
reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business),
(d) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services purchased by
such Person (other than (i) trade debt incurred in the
ordinary course of business and due within six months of the
incurrence thereof and (ii) deferred compensation payable to
employees of such Person on a basis generally consistent
with past practices) which would appear as liabilities on a
balance sheet of such Person, (e) all obligations of such
Person under take-or-pay or similar arrangements or
commodities agreements not entered into in the ordinary
course of such Person's business, (f) all Indebtedness of
others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the
proceeds of production from, Property owned or acquired by
such Person, whether or not the obligations secured thereby
have been assumed, (g) all Guaranty Obligations of such
Person, (h) the principal portion of all obligations of such
Person under Capital Leases (but not under Operating
Leases), (i) all obligations of such Person under Hedging
Agreements, (j) the maximum amount of all standby letters of
credit issued or bankers' acceptances facilities created for
the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (k)
all preferred Capital Stock issued by such Person and
required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date,
(l) the principal portion of all obligations of such Person
under Synthetic Leases and (m) the Indebtedness of any
partnership or unincorporated joint venture in which such
Person is a general partner or a joint venturer.
"Interbank Offered Rate" means, for any Eurodollar Loan
for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such
rate is not available, the term "Interbank Offered Rate"
shall mean, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if
necessary, to the nearest 1/100 of 1%).
"Interest Coverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis for the twelve
month period ending on the last day of any fiscal quarter of
the Consolidated Parties, the ratio of (a) Consolidated
EBITDA for such period to (b) Consolidated Interest Expense
for such period.
"Interest Payment Date" means (a) as to Base Rate Loans,
the last day of each fiscal quarter of the Borrower and the
Maturity Date, and (b) as to Eurodollar Loans, the last day
of each applicable Interest Period and the Maturity Date,
and in addition where the applicable Interest Period for a
Eurodollar Loan is greater than three months, then also the
date three months from the beginning of the Interest Period
and each three months thereafter.
"Interest Period" means (i) as to Eurodollar Loans, a
period of one, two, three or six months' duration, as the
Borrower may elect, commencing, in each case, on the date of
the borrowing (including continuations and conversions
thereof) and (ii) as to any Swingline Loan, a period
commencing in each case on the date of the borrowing and
ending on the date agreed to by the Borrower and the
Swingline Lender in accordance with the provisions of
Section 2.3(b)(i) (such ending date in any event to be not
more than seven (7) Business Days from the date of
borrowing); provided, however, (a) if any Interest Period
would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business
Day falls in the next succeeding calendar month, then on the
next preceding Business Day), (b) no Interest Period shall
extend beyond the Maturity Date and (c) where an Interest
Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on
the last Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition
(whether for cash, property, services, assumption of
Indebtedness, securities or otherwise) of assets, shares of
Capital Stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of
such other Person or (b) any deposit with, or advance, loan
or other extension of credit to, such Person (other than
deposits made in connection with the purchase of equipment
or other assets in the ordinary course of business) or (c)
any other capital contribution to or investment in such
Person, including, without limitation, any Guaranty
Obligations (including any support for a letter of credit
issued on behalf of such Person) incurred for the benefit of
such Person, but excluding any Restricted Payment to such
Person.
"Issuing Lenders" means NationsBank and BNY Financial (or
its Affiliate, The Bank of New York), together with their
successors and permitted assigns, and "Issuing Lender" means
any one of them.
"Issuing Lender Fees" shall have the meaning assigned to
such term in Section 3.5(c)(ii).
"Joinder Agreement" means a Joinder Agreement
substantially in the form of Exhibit 7.12 hereto, executed
and delivered by an Additional Credit Party in accordance
with the provisions of Section 7.12.
"Lender" means any of the Persons identified as a
"Lender" on the signature pages hereto, and any Person which
may become a Lender by way of assignment in accordance with
the terms hereof, together with their successors and
permitted assigns.
"Letter of Credit" means (i) any letter of credit issued
by an Issuing Lender for the account of the Borrower in
accordance with the terms of Section 2.2 and (ii) each
Existing Letter of Credit.
"Leverage Ratio" means, with respect to the Consolidated
Parties on a consolidated basis for the twelve month period
ending on the last day of any fiscal quarter, the ratio of
(a) Funded Indebtedness of the Consolidated Parties on a
consolidated basis on the last day of such period to (b)
Consolidated EBITDA for such period.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest,
encumbrance, lien (statutory or otherwise), preference,
priority or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar
statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or
other similar recording or notice statute, and any lease in
the nature thereof).
"Loan" or "Loans" means the Revolving Loans (or a portion
of any Revolving Loan bearing interest at the Adjusted Base
Rate or the Adjusted Eurodollar Rate and referred to as a
Base Rate Loan or a Eurodollar Loan) and/or the Swingline
Loans (or any Swingline Loan bearing interest at the
Adjusted Base Rate or the Quoted Rate and referred to as a
Base Rate Loan or a Quoted Rate Swingline Loan),
individually or collectively, as appropriate.
"LOC Commitment" means the commitment of the Issuing
Lenders to issue Letters of Credit in an aggregate face
amount at any time outstanding (together with the amounts of
any unreimbursed drawings thereon) of up to the LOC
Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to
such term in Section 2.2.
"LOC Documents" means, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or
other documents (whether general in application or
applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties
concerned or at risk or (ii) any collateral security for
such obligations.
"LOC Obligations" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may
become, available to be drawn under Letters of Credit then
outstanding, assuming compliance with all requirements for
drawings referred to in such Letters of Credit plus (ii) the
aggregate amount of all drawings under Letters of Credit
honored by an Issuing Lender but not theretofore reimbursed
by the Borrower.
"Material Adverse Effect" means a material adverse effect
on (i) the condition (financial or otherwise), operations,
business, assets, liabilities or prospects of any
Consolidated Party, (ii) the ability of Alchem or any Credit
Party to perform any material obligation under the Credit
Documents to which it is a party or (iii) the material
rights and remedies of the Lenders under the Credit
Documents.
"Materials of Environmental Concern" means any gasoline
or petroleum (including crude oil or any fraction thereof)
or petroleum products or any hazardous or toxic substances,
materials or wastes, defined or regulated as such in or
under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Maturity Date" means August 25, 2002.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the
business of rating securities.
"Multiemployer Plan" means a Plan which is a
multiemployer plan as defined in Sections 3(37) or
4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which any
Consolidated Party or any ERISA Affiliate and at least one
employer other than the Consolidated Parties or any ERISA
Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
"Net Cash Proceeds" means, in respect of any Asset
Disposition, Equity Issuance or Debt Issuance, 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 Consolidated
Parties in consideration of such transaction, net of (a)
direct costs (including, without limitation, legal,
accounting and investment banking fees, and sales
commissions) and (b) taxes paid or payable as a result
thereof. Net Cash Proceeds shall be deemed to be received
for purposes of this Credit Agreement (A) in the case of
cash, when paid to the recipient, (B) in the case of readily
marketable securities, when delivered to the recipient in
form for transfer and (C) when evidenced by a promissory
note (1) 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 (2) not secured as provided in clause (1),
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.
"New Delta Woodside Credit Facility" means the credit
facility in favor of Delta Woodside evidenced by that
certain credit agreement dated as of the date hereof among
Delta Woodside, the Guarantors named therein, the Lenders
named therein and NationsBank, N.A., as Agent.
"Note" or "Notes" means the Revolving Notes and/or the
Swingline Note, individually or collectively, as
appropriate.
"Notice of Borrowing" means a written notice of borrowing
in substantially the form of Exhibit 2.1(b)(i), as required
by Section 2.1(b)(i).
"Notice of Extension/Conversion" means the written notice
of extension or conversion in substantially the form of
Exhibit 3.2, as required by Section 3.2.
"Operating Lease" means, as applied to any Person, any
lease (including, without limitation, leases which may be
terminated by the lessee at any time) of any Property
(whether real, personal or mixed) which is not a Capital
Lease other than any such lease in which that Person is the
lessor.
"Other Taxes" means such term as is defined in Section
3.11.
"Participation Interest" means a purchase by a Lender of
a participation in Letters of Credit or LOC Obligations as
provided in Section 2.2, in Swingline Loans as provided in
Section 2.3(b)(iii) or in any Loans as provided in Section
3.14.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and
any successor thereof.
"Permitted Investments" means Investments which are (i)
cash and Cash Equivalents; (ii) accounts receivable created,
acquired or made by any Consolidated Party in the ordinary
course of business and payable or dischargeable in
accordance with customary trade terms; (iii) Investments
consisting of Capital Stock, obligations, securities or
other property received by any Consolidated Party in
settlement of accounts receivable (created in the ordinary
course of business) from bankrupt obligors; (iv) Investments
existing as of the Closing Date and set forth in Schedule
1.1B; (v) transactions permitted by Section 8.9; (vi)
advances or loans to directors, officers, employees, agents,
customers or suppliers that do not exceed $2,000,000 in the
aggregate at any one time outstanding for all of the
Consolidated Parties; (vii) Investments in Delta Woodside
and its Subsidiaries that do not, taken together with
Restricted Payments made pursuant to Section 8.7(d), exceed
$500,000 in the aggregate at any one time outstanding for
all of the Consolidated Parties; or (viii) Investments in
any Credit Party.
"Permitted Liens" means:
(i) Liens in favor of the Collateral Agent and/or the
Administrative Agent to secure the Credit Party Obligations;
(ii) Liens (other than Liens created or imposed under
ERISA) for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes being contested in
good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any
such Lien is not yet subject to foreclosure, sale or loss on
account thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other
Liens imposed by law or pursuant to customary reservations
or retentions of title arising in the ordinary course of
business, provided that such Liens secure only amounts not
yet due and payable or, if due and payable, are unfiled and
no other action has been taken to enforce the same or are
being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP
have been established (and as to which the Property subject
to any such Lien is not yet subject to foreclosure, sale or
loss on account thereof);
(iv) Liens (other than Liens created or imposed under
ERISA) incurred or deposits made by any Consolidated Party
in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of
tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the
payment of borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the
judgments secured shall, within 60 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 60 days
after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including
zoning restrictions), minor defects or irregularities in
title and other similar charges or encumbrances not, in any
material respect, impairing the use of the encumbered
Property for its intended purposes;
(vii) Liens on Property securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases)
to the extent permitted under Section 8.1(c), provided that
any such Lien attaches to such Property concurrently with or
within 90 days after the acquisition thereof;
(viii) any interest of title of a lessor under, and Liens
arising from UCC financing statements (or equivalent
filings, registrations or agreements in foreign
jurisdictions) relating to, leases permitted by this Credit
Agreement;
(ix) Liens in connection with a Factoring Agreement, but
(i) only to the extent of the applicable accounts receivable
subject to such Factoring Agreement and related property and
(ii) only if the proceeds payable thereunder have been
assigned to the Collateral Agent for the benefit of the
Lenders in a manner reasonably acceptable to the
Administrative Agent;
(x) Liens deemed to exist in connection with Investments
in repurchase agreements permitted under Section 8.6;
(xi) normal and customary rights of setoff upon deposits
of cash in favor of banks or other depository institutions;
and
(xii) Liens existing as of the Closing Date and set forth
on Schedule 1.1C; provided that no such Lien shall at any
time be extended to or cover any Property other than the
Property subject thereto on the Closing Date.
Notwithstanding anything to the contrary set forth in this
definition or in any other provision of this Credit
Agreement, the term "Permitted Liens" shall not include any
Lien on Property of any Consolidated Party securing any
Indebtedness of Delta Woodside or any of its Subsidiaries
other than Liens securing any Guaranty Obligation arising in
connection with standby letters of credit or surety bonds
issued to satisfy workers' compensation requirements.
"Person" means any individual, partnership, joint
venture, firm, corporation, limited liability company,
association, trust or other enterprise (whether or not
incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with
respect to which any Consolidated Party or any ERISA
Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement dated as of
the Closing Date in the form of Exhibit 1.1A to be executed
in favor of the Collateral Agent by Alchem and each of the
Credit Parties, as amended, modified, restated or
supplemented from time to time.
"Prime Rate" means the per annum rate of interest
established from time to time by NationsBank as its prime
rate, which rate may not be the lowest rate of interest
charged by NationsBank to its customers.
"Principal Office" means the principal office of
NationsBank, presently located at Charlotte, North Carolina.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or
intangible.
"Quoted Rate" means, with respect to any Quoted Rate
Swingline Loan, the fixed percentage rate per annum offered
by the Swingline Lender and accepted by the Borrower with
respect to such Swingline Loan as provided in accordance
with the provisions of Section 2.3.
"Quoted Rate Swingline Loan" means a Swingline Loan
bearing interest at a Quoted Rate.
"Refinancing" shall have the meaning given such term in
Section 6.15.
"Register" shall have the meaning given such term in
Section 11.3(c).
"Regulation G, T, U, or X" means Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal
Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment
(including the abandonment or discarding of barrels,
containers and other closed receptacles containing any
Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to
which the notice requirement has been waived by regulation.
"Required Lenders" means, at any time, Lenders which are
then in compliance with their obligations hereunder (as
determined by the Administrative Agent) and holding in the
aggregate at least 51% of (i) the Revolving Commitments (and
Participation Interests therein) or (ii) if the Commitments
have been terminated, the outstanding Loans and
Participation Interests (including the Participation
Interests of the Issuing Lenders in Letters of Credit).
"Requirement of Law" means, as to any Person, the
certificate of incorporation and by-laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its material property is subject.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares
of any class of Capital Stock of any Consolidated Party, now
or hereafter outstanding, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of
any class of Capital Stock of any Consolidated Party, now or
hereafter outstanding, (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of
Capital Stock of any Consolidated Party, now or hereafter
outstanding and (iv) any other payment, distribution or
transfer of cash or Property to Delta Woodside or any of its
Subsidiaries not constituting an Investment and not
described in clause (i), (ii) or (iii) above.
"Revolving Commitment" means, with respect to each
Lender, the commitment of such Lender in an aggregate
principal amount at any time outstanding of up to such
Lender's Revolving Commitment Percentage of the Revolving
Committed Amount, (i) to make Revolving Loans in accordance
with the provisions of Section 2.1(a), (ii) to purchase
Participation Interests in Letters of Credit in accordance
with the provisions of Section 2.2(c) and (iii) to purchase
Participation Interests in the Swingline Loans in accordance
with the provisions of Section 2.3(b)(iii).
"Revolving Commitment Percentage" means, for any Lender,
the percentage identified as its Revolving Commitment
Percentage on Schedule 2.1(a), as such percentage may be
modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Revolving Committed Amount" shall have the meaning
assigned to such term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to such
term in Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the
promissory notes of the Borrower in favor of each of the
Lenders evidencing the Revolving Loans provided pursuant to
Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended,
modified, restated, supplemented, extended, renewed or
replaced from time to time.
"S&P" means Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc., or any successor or assignee of the
business of such division in the business of rating
securities.
"Sale and Leaseback Transaction" means any direct or
indirect arrangement with any Person or to which any such
Person is a party, providing for the leasing to any
Consolidated Party of any Property, whether owned by such
Consolidated Party as of the Closing Date or later acquired,
which has been or is to be sold or transferred by such
Consolidated Party to such Person or to any other Person
from whom funds have been, or are to be, advanced by such
Person on the security of such Property.
"Security Agreement" means the security agreement dated
as of the Closing Date in the form of Exhibit 1.1B to be
executed in favor of the Collateral Agent by each of the
Credit Parties, as amended, modified, restated or
supplemented from time to time.
"Senior Note" means any one of the 9-5/8% Notes due 2007
issued by the Borrower in favor of the Senior Noteholders
pursuant to the Senior Note Indenture (including without
limitation the exchange of Series B Notes for Series A Notes
thereunder), as such Senior Notes may be amended, modified,
restated or supplemented and in effect from time to time.
"Senior Note Indenture" means the Indenture dated as of
the Closing Date by and between the Borrower, Delta Mills
Marketing, Inc. and The Bank of New York, in its capacity as
trustee for the Senior Noteholders, as the same may be
amended, modified, restated or supplemented and in effect
from time to time.
"Senior Noteholder" means any one of the holders from
time to time of the Senior Notes.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or
a Multiple Employer Plan.
"Solvent" or "Solvency" means, with respect to any Person
as of a particular date, that on such date (i) such Person
is able to realize upon its assets and pay its debts and
other liabilities, contingent obligations and other
commitments as they mature in the normal course of business,
(ii) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature
in their ordinary course, (iii) such Person is not engaged
in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's
Property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage,
(iv) the fair value of the Property of such Person is
greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person
and (v) the present fair salable value of the assets of such
Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected
to become an actual or matured liability.
"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 the Borrower, as Lessee.
"Standby Letter of Credit Fee" shall have the meaning
assigned to such term in Section 3.5(c)(i).
"Subsidiary" means, as to any Person, (a) any corporation
more than 50% of whose Capital Stock of any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective
of whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and
(b) any partnership, association, joint venture or other
entity of which such Person directly or indirectly through
Subsidiaries has more than 50% of the Capital Stock at any
time; provided, however, that, notwithstanding the
foregoing, the Borrower and its direct and indirect
Subsidiaries shall not be deemed to be a direct or indirect
Subsidiary of Delta Woodside or of any other Subsidiaries of
Delta Woodside.
"Swingline Commitment" means the commitment of the
Swingline Lender to make Swingline Loans in an aggregate
principal amount at any time outstanding of up to the
Swingline Committed Amount.
"Swingline Committed Amount" shall have the meaning
assigned to such term in Section 2.3(a).
"Swingline Lender" means NationsBank.
"Swingline Loan" shall have the meaning assigned to such
term in Section 2.3(a).
"Swingline Note" means the promissory note of the
Borrower in favor of the Swingline Lender evidencing the
Swingline Loans provided pursuant to Section 2.3(d), as such
promissory note may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to
time.
"Synthetic Lease" means any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product where such transaction
is considered borrowed money indebtedness for tax purposes
but is classified as an Operating Lease.
"Taxes" means such term as is defined in Section 3.11.
"Trade Letter of Credit Fee" shall have the meaning
assigned to such term in Section 3.5(c)(ii).
"Trading Assets" means (i) all accounts, chattel paper,
instruments, documents and general intangibles of any Credit
Party and all other obligations of any kind owed to any
Credit party, whether long-term or short-term, now or
hereafter existing, to the extent arising out of or
resulting from the sale or lease of inventory or the
rendition of services by such Credit Party, and all rights
now or hereafter existing in and to all security agreements,
guarantees, letters of credit and other contracts securing,
guaranteeing or otherwise relating to any such accounts,
chattel paper, instruments, documents, general intangibles
or other obligations, (ii) all inventory of any Credit Party
and (iii) all proceeds of any the foregoing. As used in
this definition of "Trading Assets", the terms "accounts",
"inventory", "chattel paper", "instruments", "documents",
"general intangibles" and "proceeds" shall have the meanings
assigned to such terms in the Uniform Commercial Code in
effect in the State of North Carolina on the Closing Date.
"Unused Fee" shall have the meaning assigned to such term
in Section 3.5(b).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(b).
"Unused Revolving Committed Amount" means, for any
period, the amount by which (a) the then applicable
Revolving Committed Amount exceeds (b) the daily average sum
for such period of (i) the outstanding aggregate principal
amount of all Revolving Loans (but not including any
Swingline Loans) plus (ii) the outstanding aggregate
principal amount of all LOC Obligations.
"Upfront Fee" shall have the meaning assigned to such
term in Section 3.5(a).
"Voting Stock" means, with respect to any Person, Capital
Stock issued by such 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" of any Person means any
Subsidiary 100% of whose Voting Stock is at the time owned
by such Person directly or indirectly through other Wholly
Owned Subsidiaries.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder,
the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to
financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied
on a consistent basis. All calculations made for the
purposes of determining compliance with this Credit
Agreement shall (except as otherwise expressly provided
herein) be made by application of GAAP applied on a basis
consistent with the most recent annual or quarterly
financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements
pursuant to Section 7.1, consistent with the financial
statements as at June 28, 1997); provided, however, if (a)
the Borrower shall object to determining such compliance on
such basis at the time of delivery of such financial
statements due to any change in GAAP or the rules
promulgated with respect thereto or (b) the Administrative
Agent or the Required Lenders shall so object in writing
within 60 days after delivery of such financial statements,
then such calculations shall be made on a basis consistent
with the most recent financial statements delivered by the
Borrower to the Lenders as to which no such objection shall
have been made.
Notwithstanding the above, the parties hereto acknowledge and
agree that, for purposes of all calculations made in
determining compliance with the financial covenants set
forth in Section 7.11 (including without limitation for
purposes of the definition of "Applicable Percentage" set
forth in Section 1.1), (i)(A) income statement items
(whether positive or negative) attributable to the Property
disposed of in any Asset Disposition as contemplated by
Section 8.5, as applicable, shall be excluded to the extent
relating to any period occurring prior to the date of such
transaction and (B) Indebtedness which is retired in
connection with any such Asset Disposition shall be excluded
and deemed to have been retired as of the first day of the
applicable period and (ii) income statement items (whether
positive or negative) attributable to any Property acquired
in any Investment transaction contemplated by Section 8.6
shall be included to the extent relating to any period
applicable in such calculations occurring after the date of
such transaction (and, notwithstanding the foregoing, during
the first four fiscal quarters following the date of such
transaction, shall be included on an annualized basis).
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations
and warranties set forth herein, each Lender severally
agrees to make available to the Borrower such Lender's
Revolving Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("Revolving Loans")
from time to time from the Closing Date until the Maturity
Date, or such earlier date as the Revolving Commitments
shall have been terminated as provided herein for the
purposes hereinafter set forth; provided, however, that the
sum of the aggregate principal amount of outstanding
Revolving Loans shall not exceed ONE HUNDRED MILLION DOLLARS
($100,000,000.00) (as such aggregate maximum amount may be
reduced from time to time as provided in Section 3.4, the
"Revolving Committed Amount"); provided, further, (A) with
respect to each individual Lender, the Lender's pro rata
share of outstanding Revolving Loans plus its pro rata share
of outstanding LOC Obligations plus its pro rata share of
outstanding Swingline Loans shall not exceed such Lender's
Revolving Commitment Percentage of the Revolving Committed
Amount, and (B) the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding
plus Swingline Loans outstanding shall not exceed the lesser
of (1) the Revolving Committed Amount and (2) the Borrowing
Base. Revolving Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower
may request, and may be repaid and reborrowed in accordance
with the provisions hereof; provided, however, that no more
than 5 Eurodollar Loans shall be outstanding hereunder at
any time. For purposes hereof, Eurodollar Loans with
different Interest Periods shall be considered as separate
Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the
end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period. Revolving
Loans hereunder may be repaid and reborrowed in accordance
with the provisions hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall
request a Revolving Loan borrowing by written notice (or
telephonic notice promptly confirmed in writing) to the
Administrative Agent not later than 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day
prior to the date of the requested borrowing in the case
of Base Rate Loans, and on the third Business Day prior
to the date of the requested borrowing in the case of
Eurodollar Loans. Each such request for borrowing shall
be irrevocable and shall specify (A) that a Revolving
Loan is requested, (B) the date of the requested
borrowing (which shall be a Business Day), (C) the
aggregate principal amount to be borrowed, and (D)
whether the borrowing shall be comprised of Base Rate
Loans, Eurodollar Loans or a combination thereof, and if
Eurodollar Loans are requested, the Interest Period(s)
therefor. If the Borrower shall fail to specify in any
such Notice of Borrowing (I) an applicable Interest
Period in the case of a Eurodollar Loan, then such notice
shall be deemed to be a request for an Interest Period of
one month, or (II) the type of Revolving Loan requested,
then such notice shall be deemed to be a request for a
Base Rate Loan hereunder. The Administrative Agent shall
give notice to each affected Lender promptly upon receipt
of each Notice of Borrowing pursuant to this Section
2.1(b)(i), the contents thereof and each such Lender's
share of any borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or Base
Rate Loan that is a Revolving Loan shall be in a minimum
aggregate principal amount of $5,000,000 and integral
multiples of $1,000,000 in excess thereof (or the
remaining amount of the Revolving Committed Amount, if
less).
(iii) Advances. Each Lender will make its
Revolving Commitment Percentage of each Revolving Loan
borrowing available to the Administrative Agent for the
account of the Borrower as specified in Section 3.15(a),
or in such other manner as the Administrative Agent may
specify in writing, by 1:00 P.M. (Charlotte, North
Carolina time) on the date specified in the applicable
Notice of Borrowing in Dollars and in funds immediately
available to the Administrative Agent. Such borrowing
will then be made available to the Borrower by the
Administrative Agent by crediting the account of the
Borrower on the books of such office with the aggregate
of the amounts made available to the Administrative Agent
by the Lenders and in like funds as received by the
Administrative Agent.
(c) Repayment. The principal amount of all Revolving
Loans shall be due and payable in full on the Maturity Date,
unless accelerated sooner pursuant to Section 9.2.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as
Revolving Loans shall be comprised in whole or in part of
Base Rate Loans, such Base Rate Loans shall bear interest
at a per annum rate equal to the Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear
interest at a per annum rate equal to the Adjusted
Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on
each applicable Interest Payment Date (or at such other
times as may be specified herein).
(e) Revolving Notes. The Revolving Loans made by each
Lender shall be evidenced by a duly executed promissory note
of the Borrower to such Lender in an original principal
amount equal to such Lender's Revolving Commitment
Percentage of the Revolving Committed Amount and in
substantially the form of Exhibit 2.1(e).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof
and of the LOC Documents, if any, and any other terms and
conditions which the Issuing Lender may reasonably require
and in reliance upon the representations and warranties set
forth herein, an Issuing Lender shall from time to time upon
request issue (from the Closing Date to the Maturity Date
and in a form reasonably acceptable to such Issuing Lender),
in Dollars, and the Lenders shall participate in, letters of
credit (the "Letters of Credit") for the account of the
Borrower; provided, however, that the aggregate amount of
LOC Obligations shall not at any time exceed TWENTY-FIVE
MILLION DOLLARS ($25,000,000); provided, further, (i) the
sum of the aggregate amount of LOC Obligations outstanding
plus Revolving Loans outstanding plus Swingline Loans
outstanding shall not exceed the lesser of (A) the Revolving
Committed Amount and (B) the Borrowing Base and (ii) with
respect to each individual Lender, the Lender's pro rata
share of outstanding Revolving Loans plus its pro rata share
of outstanding LOC Obligations plus its pro rata share of
outstanding Swingline Loans shall not exceed such Lender's
Revolving Commitment Percentage of the Revolving Committed
Amount. The issuance and expiry date of each Letter of
Credit shall be a Business Day. Except as otherwise
expressly agreed upon by all the Lenders, no Letter of
Credit shall have an original expiry date more than one year
from the date of issuance, or as extended, shall have an
expiry date extending beyond the Maturity Date. Each Letter
of Credit shall be either (x) a standby letter of credit
issued to support the obligations (including pension or
insurance obligations), contingent or otherwise, of the
Borrower or any of its Subsidiaries, or (y) a commercial
letter of credit in respect of the purchase of goods or
services by the Borrower or any of its Subsidiaries in the
ordinary course of business. Each Letter of Credit shall
comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of
a Letter of Credit shall be submitted to an Issuing Lender
at least three Business Days prior to the requested date of
issuance. Each Issuing Lender will, at least quarterly and
more frequently upon request, provide to the Administrative
Agent for dissemination to the Lenders a detailed report
specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may
have occurred since the date of the prior report, and
including therein, among other things, the account party,
the beneficiary, the face amount, and the expiry date as
well as any payments or expirations which may have occurred.
Each Issuing Lender will further provide to the
Administrative Agent, promptly upon request, copies of the
Letters of Credit and the other LOC Documents.
(c) Participations. Each Lender, upon issuance of a
Letter of Credit (or, in the case of each Existing Letter of
Credit, on the Closing Date), shall be deemed to have
purchased without recourse a risk participation from the
applicable Issuing Lender in such Letter of Credit and each
LOC Document related thereto and the rights and obligations
arising thereunder and any collateral relating thereto, in
each case in an amount equal to its Revolving Commitment
Percentage of the obligations under such Letter of Credit,
and shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and be
obligated to pay to such Issuing Lender therefor and
discharge when due, its Revolving Commitment Percentage of
the obligations arising under such Letter of Credit.
Without limiting the scope and nature of each Lender's
participation in any Letter of Credit, to the extent that
such Issuing Lender has not been reimbursed as required
hereunder or under any such Letter of Credit, each such
Lender shall pay to such Issuing Lender its Revolving
Commitment Percentage of such unreimbursed drawing in same
day funds on the day of notification by such Issuing Lender
of an unreimbursed drawing pursuant to the provisions of
subsection (d) hereof. The obligation of each Lender to so
reimburse each Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of
a Default, an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrower or any other
Credit Party to reimburse an Issuing Lender under any Letter
of Credit, together with interest as hereinafter provided.
Each Existing Letter of Credit shall be deemed for all
purposes of this Credit Agreement and the other Credit
Documents to be a Letter of Credit.
(d) Reimbursement. In the event of any drawing under
any Letter of Credit, the applicable Issuing Lender will
promptly notify the Borrower. Unless the Borrower shall
immediately notify such Issuing Lender of its intent to
otherwise reimburse such Issuing Lender, the Borrower shall
be deemed to have requested a Revolving Loan at the Adjusted
Base Rate in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be used to
satisfy the reimbursement obligations. The Borrower shall
reimburse the applicable Issuing Lender on the day of
drawing under any Letter of Credit either with the proceeds
of a Revolving Loan obtained hereunder or otherwise in same
day funds as provided herein or in the LOC Documents. If
the Borrower shall fail to reimburse an Issuing Lender as
provided hereinabove (including, without limitation, as a
result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any other
Credit Party), the unreimbursed amount of such drawing shall
bear interest at a per annum rate equal to the Adjusted Base
Rate plus two percent (2%). The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of (but without waiver
of) any rights of set-off, counterclaim or defense to
payment the applicable account party or the Borrower may
claim or have against an Issuing Lender, the Administrative
Agent, the Collateral Agent, the Lenders, the beneficiary of
the Letter of Credit drawn upon or any other Person,
including without limitation, any defense based on any
failure of the applicable account party, the Borrower or any
other Credit Party to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of
Credit. Each Issuing Lender will promptly notify the
Lenders of the amount of any unreimbursed drawing and each
Lender shall promptly pay to the Administrative Agent for
the account of an Issuing Lender, in Dollars and in
immediately available funds, the amount of such Lender's
Revolving Commitment Percentage of such unreimbursed
drawing. Such payment shall be made on the day such notice
is received by such Lender from an Issuing Lender if such
notice is received at or before 2:00 p.m. (Charlotte, North
Carolina time), otherwise such payment shall be made at or
before 12:00 Noon (Charlotte, North Carolina time) on the
Business Day next succeeding the day such notice is
received. If such Lender does not pay such amount to an
Issuing Lender in full upon such request, such Lender shall,
on demand, pay to the Administrative Agent for the account
of such Issuing Lender interest on the unpaid amount during
the period from the date the Lender received the notice
regarding the unreimbursed drawing until such Lender pays
such amount to such Issuing Lender in full at a rate per
annum equal to, if paid within two Business Days of the date
of drawing, the Federal Funds Rate and thereafter at a rate
equal to the Base Rate. Each Lender's obligation to make
such payment to an Issuing Lender, and the right of an
Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the
obligations hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a
Lender to an Issuing Lender, such Lender shall,
automatically and without any further action on the part of
an Issuing Lender or such Lender, acquire a participation in
an amount equal to such payment (excluding the portion of
such payment constituting interest owing to an Issuing
Lender) in the related unreimbursed drawing portion of the
LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the
Borrower and the other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on which
the Borrower shall have requested, or been deemed to have
requested, a Revolving Loan borrowing to reimburse a drawing
under a Letter of Credit, the Administrative Agent shall
give notice to the applicable Lenders that a Revolving Loan
has been requested or deemed requested in connection with a
drawing under a Letter of Credit, in which case a Revolving
Loan borrowing comprised solely of Base Rate Loans (each
such borrowing, a "Mandatory Borrowing") shall be
immediately made from all applicable Lenders (without giving
effect to any termination of the Commitments pursuant to
Section 9.2) pro rata based on each Lender's respective
Revolving Commitment Percentage and the proceeds thereof
shall be paid directly to the applicable Issuing Lender for
application to the respective LOC Obligations. Each such
Lender hereby irrevocably agrees to make such Revolving
Loans immediately upon any such request or deemed request on
account of each such Mandatory Borrowing in the amount and
in the manner specified in the preceding sentence and on the
same such date notwithstanding (i) the amount of Mandatory
Borrowing may not comply with the minimum amount for
borrowings of Revolving Loans otherwise required hereunder,
(ii) whether any conditions specified in Section 5 are then
satisfied, (iii) whether a Default or Event of Default then
exists, (iv) failure of any such request or deemed request
for Revolving Loans to be made by the time otherwise
required hereunder, (v) the date of such Mandatory
Borrowing, or (vi) any reduction in the Revolving Committed
Amount or any termination of the Commitments. In the event
that any Mandatory Borrowing cannot for any reason be made
on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or
any other Credit Party), then each such Lender hereby agrees
that it shall forthwith fund (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such
date and prior to such purchase) its Participation Interest
in the outstanding LOC Obligations; provided, further, that
in the event any Lender shall fail to fund its Participation
Interest on the day the Mandatory Borrowing would otherwise
have occurred, then the amount of such Lender's unfunded
Participation Interest therein shall bear interest payable
to the applicable Issuing Lender upon demand, at the rate
equal to, if paid within two Business Days of such date, the
Federal Funds Rate, and thereafter at a rate equal to the
Base Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions
to any Letter of Credit shall, for purposes hereof, be
treated in all respects the same as the issuance of a new
Letter of Credit hereunder.
(g) Uniform Customs and Practices. An Issuing Lender
may have the Letters of Credit be subject to The Uniform
Customs and Practice for Documentary Credits, as published
as of the date of issue by the International Chamber of
Commerce (Publication No. 500 or the most recent
publication, the "UCP"), in which case the UCP may be
incorporated therein and deemed in all respects to be a part
thereof.
(h) Responsibility of Issuing Lenders. It is expressly
understood and agreed as between the Lenders that the
obligations of the Issuing Lenders hereunder to the Lenders
are only those expressly set forth in this Credit Agreement
and that the Issuing Lenders shall be entitled to assume
that the conditions precedent set forth in Section 5 have
been satisfied unless it shall have acquired actual
knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this
Section 2.2 shall be deemed to prejudice the right of any
Lender to recover from an Issuing Lender any amounts made
available by such Lender to the an Issuing Lender pursuant
to this Section 2.2 in the event that it is determined by a
court of competent jurisdiction that the payment with
respect to a Letter of Credit constituted gross negligence
or willful misconduct on the part of such Issuing Lender.
(i) Conflict with LOC Documents. In the event of any
conflict between this Credit Agreement and any LOC Document,
this Credit Agreement shall govern.
(j) Indemnification of Issuing Lenders.
(i) In addition to its other obligations under
this Credit Agreement, the Borrower hereby agrees to
protect, indemnify, pay and save the Issuing Lenders
harmless from and against any and all claims, demands,
liabilities, damages, losses, reasonable costs, charges
and reasonable expenses (including reasonable attorneys'
fees) that the Issuing Lenders may incur or be subject to
as a consequence, direct or indirect, of (A) the issuance
of any Letter of Credit or (B) the failure of an Issuing
Lender to honor a drawing under a Letter of Credit as a
result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or
omissions, herein called "Government Acts").
(ii) As between the Borrower and an Issuing
Lender, the Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the
beneficiary thereof. An Issuing Lender shall not be
responsible for (except in the case of (A), (B) and (C)
below if such Issuing Lender has actual knowledge to the
contrary): (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application
for and issuance of any Letter of Credit, even if it
should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged;
(B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that
may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of a Letter of Credit to
comply fully with conditions required in order to draw
upon a Letter of Credit; (D) errors, omissions,
interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors
in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document
required in order to make a drawing under a Letter of
Credit or of the proceeds thereof; and (G) any
consequences arising from causes reasonably beyond the
reasonable control of an Issuing Lender, including,
without limitation, any Government Acts. None of the
above shall affect, impair, or prevent the vesting of an
Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not
in limitation of the specific provisions hereinabove set
forth, any action taken or omitted by an Issuing Lender,
under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith,
shall not put an Issuing Lender under any resulting
liability to the Borrower or any other Credit Party. It
is the intention of the parties that this Credit
Agreement shall be construed and applied to protect and
indemnify the Issuing Lenders against any and all risks
involved in the issuance of the Letters of Credit, all of
which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the
acts or omissions, whether rightful or wrongful, of any
present or future Government Acts. An Issuing Lender
shall not, in any way, be liable for any failure by such
Issuing Lender or anyone else to pay any drawing under
any Letter of Credit as a result of any Government Acts
or any other cause beyond the reasonable control of such
Issuing Lender.
(iv) Nothing in this subsection (j) is intended
to limit the reimbursement obligation of the Borrower
contained in this Section 2.2. The obligations of the
Borrower under this subsection (j) shall survive the
termination of this Credit Agreement. No act or omission
of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of an
Issuing Lender to enforce any right, power or benefit
under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Borrower shall have
no obligation to indemnify the Issuing Lenders in respect
of any liability incurred by an Issuing Lender arising
primarily out of the gross negligence or willful
misconduct of an Issuing Lender, as determined by a court
of competent jurisdiction. Nothing in this Agreement
shall relieve an Issuing Lender of any liability to the
Borrower in respect of any action taken by such Issuing
Lender which action constitutes gross negligence or
willful misconduct of such Issuing Lender or a violation
of the UCP or Uniform Commercial Code (as applicable), as
determined by a court of competent jurisdiction.
(k) Designation of Consolidated Parties as Account
Parties. Notwithstanding anything to the contrary set forth
in this Credit Agreement, including without limitation
Section 2.2(a), a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit
is issued for the account of a Consolidated Party other than
the Borrower, provided that notwithstanding such statement,
the Borrower shall be the actual account party for all
purposes of this Credit Agreement for such Letter of Credit
and such statement shall not affect the Borrower's
reimbursement obligations hereunder with respect to such
Letter of Credit.
2.3 Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations
and warranties set forth herein, the Swingline Lender, in
its individual capacity, agrees to make certain revolving
credit loans requested by the Borrower in Dollars to the
Borrower (each a "Swingline Loan" and, collectively, the
"Swingline Loans") from time to time from the Closing Date
until the Maturity Date for the purposes hereinafter set
forth; provided, however, the aggregate principal amount of
Swingline Loans outstanding at any time shall not exceed TEN
MILLION DOLLARS ($10,000,000) (the "Swingline Committed
Amount"); provided, further, the aggregate principal amount
of outstanding Revolving Loans plus the aggregate principal
amount of outstanding Swingline Loans plus LOC Obligations
outstanding shall not exceed the lesser of (i) the Revolving
Committed Amount and (ii) the Borrowing Base. Swingline
Loans hereunder shall be made as Base Rate Loans or Quoted
Rate Swingline Loans as the Borrower may request in
accordance with the provisions of this Section 2.3, and may
be repaid and reborrowed in accordance with the provisions
hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the
Borrower desires a Swingline Loan advance hereunder it
shall give written notice (or telephonic notice promptly
confirmed in writing) to the Swingline Lender not later
than 11:00 A.M. (Charlotte, North Carolina time) on the
Business Day of the requested Swingline Loan advance.
Each such notice shall be irrevocable and shall specify
(A) that a Swingline Loan advance is requested, (B) the
date of the requested Swingline Loan advance (which shall
be a Business Day) and (C) the principal amount of the
Swingline Loan advance requested. Each Swingline Loan
shall be made as a Base Rate Loan or a Quoted Rate
Swingline Loan and shall have such maturity date as the
Swingline Lender and the Borrower shall agree upon
receipt by the Swingline Lender of any such notice from
the Borrower. The Swingline Lender shall initiate the
transfer of funds representing the Swingline Loan advance
to the Borrower by 3:00 P.M. (Charlotte, North Carolina
time) on the Business Day of the requested borrowing.
(ii) Minimum Amounts. Each Swingline Loan shall
be in a minimum principal amount mutually acceptable to
the Swingline Lender and the Borrower.
(iii) Repayment of Swingline Loans. The
principal amount of all Swingline Loans shall be due and
payable on the earlier of (A) the maturity date agreed to
by the Swingline Lender and the Borrower with respect to
such Loan (which maturity date shall not be a date more
than seven (7) Business Days from the date of advance
thereof) or (B) the Maturity Date. 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 by way of a Revolving Loan
advance, in which case the Borrower shall be deemed to
have requested a Revolving Loan advance comprised solely
of Base Rate Loans in the amount of such Swingline Loans;
provided, however, that any such demand shall be deemed
to have been given one Business Day prior to the Maturity
Date and on the date of the occurrence of any Event of
Default described in Section 9.1 and upon acceleration of
the indebtedness hereunder and the exercise of remedies
in accordance with the provisions of Section 9.2. Each
Lender hereby irrevocably agrees to make its pro rata
share of each such Revolving Loan in the amount, in the
manner and on the date specified in the preceding
sentence notwithstanding (I) the amount of such borrowing
may not comply with the minimum amount for advances of
Revolving Loans otherwise required hereunder, (II)
whether any conditions specified in Section 5.2 are then
satisfied, (III) whether a Default or an Event of Default
then exists, (IV) failure of any such request or deemed
request for Revolving Loan to be made by the time
otherwise required hereunder, (V) whether the date of
such borrowing is a date on which Revolving Loans are
otherwise permitted to be made hereunder or (VI) any
termination of the Commitments relating thereto
immediately prior to or contemporaneously with such
borrowing. In the event that any Revolving Loan cannot
for any reason be made on the date otherwise required
above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code
with respect to the Borrower or any other Credit Party),
then each Lender hereby agrees that it shall forthwith
purchase (as of the date such borrowing would otherwise
have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such
purchase) from the Swingline Lender such Participations
Interest in the outstanding Swingline Loans as shall be
necessary to cause each such Lender to share in such
Swingline Loans ratably based upon its Commitment
Percentage of the Revolving Committed Amount (determined
before giving effect to any termination of the
Commitments pursuant to Section 3.4).
(c) Interest on Swingline Loans.
(i) Subject to the provisions of Section 3.1,
each Swingline Loan shall bear interest at a per annum
rate equal to such 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 as follows:
(A) Base Rate Loans. If such
Swingline Loan is a Base Rate Loan, at a per annum
rate (computed on the basis of the actual number of
days elapsed over a year of 365 days) equal to the
Adjusted Base Rate.
(B) Quoted Rate Swingline Loans. If
such Swingline Loan is a Quoted Rate Swingline Loan,
at a per annum rate (computed on the basis of the
actual number of days elapsed over a year of 360
days) equal to the Quoted Rate applicable thereto.
Notwithstanding any other provision to the contrary
set forth in this Credit Agreement, in the event that the
principal amount of any Quoted Rate Swingline Loan is not
repaid on the last day of the Interest Period for such
Loan, then such Loan shall be automatically converted
into a Base Rate Loan at the end of such Interest Period.
(ii) Payment of Interest. Interest on
Swingline Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times
as may be specified herein), unless accelerated sooner
pursuant to Section 9.2.
(d) Swingline Note. The Swingline Loans shall be
evidenced by a duly executed promissory note of the Borrower
to the Swingline Lender in an original principal amount
equal to the Swingline Committed Amount substantially in the
form of Exhibit 2.3(d).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event
of Default, the principal of and, to the extent permitted by
law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate 2% greater
than the rate which would otherwise be applicable (or if no
rate is applicable, whether in respect of interest, fees or
other amounts, then the Adjusted Base Rate plus 2%).
3.2 Extension and Conversion.
Subject to the terms of Section 5.2, the Borrower shall have
the option, on any Business Day, to extend existing
Revolving Loans into a subsequent permissible Interest
Period or to convert Revolving Loans into Revolving Loans of
another interest rate type; provided, however, that (i)
except as provided in Section 3.8, Eurodollar Loans may be
converted into Base Rate Loans only on the last day of the
Interest Period applicable thereto, (ii) Eurodollar Loans
may be extended, and Base Rate Loans may be converted into
Eurodollar Loans, only if no Default or Event of Default is
in existence on the date of extension or conversion, (iii)
Revolving Loans extended as, or converted into, Eurodollar
Loans shall be subject to the terms of the definition of
"Interest Period" set forth in Section 1.1 and shall be in
such minimum amounts as provided in, with respect to
Revolving Loans, Section 2.1(b)(ii), (iv) no more than 5
Eurodollar Loans shall be outstanding hereunder at any time
(it being understood that, for purposes hereof, Eurodollar
Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same
date, although borrowings, extensions and conversions may,
in accordance with the provisions hereof, be combined at the
end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period), (v) any
request for extension or conversion of a Eurodollar Loan
which shall fail to specify an Interest Period shall be
deemed to be a request for an Interest Period of one month
and (vi) Swingline Loans may not be extended or converted
pursuant to this Section 3.2. Each such extension or
conversion shall be effected by the Borrower by giving a
Notice of Extension/Conversion (or telephonic notice
promptly confirmed in writing) to the office of the
Administrative Agent specified in specified in Schedule
2.1(a), or at such other office as the Administrative Agent
may designate in writing, prior to 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day prior to, in the
case of the conversion of a Eurodollar Loan into a Base Rate
Loan, and on the third Business Day prior to, in the case of
the extension of a Eurodollar Loan as, or conversion of a
Base Rate Loan into, a Eurodollar Loan, the date of the
proposed extension or conversion, specifying the date of the
proposed extension or conversion, the Revolving Loans to be
so extended or converted, the types of Loans into which such
Revolving Loans are to be converted and, if appropriate, the
applicable Interest Periods with respect thereto. Each
request for extension or conversion shall be irrevocable and
shall constitute a representation and warranty by the
Borrower of the matters specified in subsections (b), (c),
(d), (e) and (f) of Section 5.2. In the event the Borrower
fails to request extension or conversion of any Eurodollar
Loan in accordance with this Section, or any such conversion
or extension is not permitted or required by this Section,
then such Eurodollar Loan shall be automatically converted
into a Base Rate Loan at the end of the Interest Period
applicable thereto. The Administrative Agent shall give
each Lender notice as promptly as practicable of any such
proposed extension or conversion affecting any Revolving
Loan.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the
right to prepay Loans in whole or in part from time to time,
but otherwise without premium or penalty. Subject to the
foregoing terms, amounts prepaid under this Section 3.3(a)
shall be applied as the Borrower may elect; provided that if
the Borrower fails to specify a voluntary prepayment then
such prepayment shall be applied first to Swingline Loans
(first to Base Rate Loans and then to Quoted Rate Swingline
Loans in direct order of Interest Period maturities) and
then to Revolving Loans (first to Base Rate Loans and then
to Eurodollar Loans in direct order of Interest Period
maturities).
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any
time, the sum of the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations
outstanding plus Swingline Loans outstanding shall exceed
the lesser of (A) the Revolving Committed Amount and (B)
the Borrowing Base, the Borrower immediately shall prepay
the Loans and (after all Revolving Loans and Swingline
Loans have been repaid) cash collateralize the LOC
Obligations, in an amount sufficient to eliminate such
excess.
(ii) Asset Dispositions. Immediately upon the
occurrence of any Asset Disposition Prepayment Event, the
Borrower shall prepay the Loans in an aggregate amount
equal to the Net Cash Proceeds of the related Asset
Disposition not applied (or caused to be applied) by the
Consolidated Parties during the related Application
Period to the purchase, acquisition or construction of
Eligible Assets as contemplated by the terms of Section
8.5 (such prepayment to be applied as set forth in clause
(v) below).
(iii) Debt Issuances. Immediately upon receipt
by any Consolidated Party of proceeds from any Debt
Issuance, the Borrower shall prepay the Loans in an
aggregate amount equal to 100% of the Net Cash Proceeds
of such Debt Issuance (such prepayment to be applied as
set forth in clause (v) below).
(iv) Issuances of Equity. Immediately upon
receipt by a Consolidated Party of proceeds from any
Equity Issuance other than an Excluded Equity Issuance,
the Borrower shall prepay the Revolving Loans in an
aggregate amount equal to 50% of the Net Cash Proceeds of
such Equity Issuance (such prepayment to be applied as
set forth in clause (v) below).
(v) Application of Mandatory Prepayments. All
amounts required to be paid pursuant to this Section
3.3(b) shall be applied first to Swingline Loans (first
to Base Rate Loans and then to Quoted Rate Swingline
Loans in direct order of Interest Period maturities) and
then to Revolving Loans (first to Base Rate Loans and
then to Eurodollar Loans in direct order of Interest
Period maturities) and (after all Loans have been repaid)
to a cash collateral account in respect of LOC
Obligations. All prepayments under this Section 3.3(b)
shall be subject to Section 3.12.
3.4 Termination and Reduction of Revolving Committed
Amount.
(a) Voluntary Reductions. The Borrower may from time to
time permanently reduce or terminate the Revolving Committed
Amount in whole or in part (in minimum aggregate amounts of
$5,000,000 or in integral multiples of $1,000,000 in excess
thereof (or, if less, the full remaining amount of the then
applicable Revolving Committed Amount)) upon five Business
Days' prior written notice to the Administrative Agent;
provided, however, no such termination or reduction shall be
made which would cause the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding
plus outstanding Swingline Loans to exceed the lesser of (A)
the Revolving Committed Amount and (B) the Borrowing Base,
unless, concurrently with such termination or reduction, the
Loans are repaid to the extent necessary to eliminate such
excess. The Administrative Agent shall promptly notify each
affected Lender of receipt by the Administrative Agent of
any notice from the Borrower pursuant to this Section
3.4(a).
(b) Mandatory Reductions. On any date that the Loans
are required to be prepaid pursuant to the terms of Section
3.3(b)(ii), (iii) or (iv), the Revolving Committed Amount
automatically shall be permanently reduced by the amount of
such required prepayment and/or reduction.
(c) Maturity Date. The Revolving Commitments of the
Lenders, the LOC Commitment of the Issuing Lenders and the
Swingline Commitment of the Swingline Lender shall
automatically terminate on the Maturity Date.
(d) General. The Borrower shall pay to the
Administrative Agent for the account of the Lenders in
accordance with the terms of Section 3.5(b), on the date of
each termination or reduction of the Revolving Committed
Amount, the Unused Fee accrued through the date of such
termination or reduction on the amount of the Revolving
Committed Amount so terminated or reduced.
3.5 Fees.
(a) Upfront Fees. The Borrower agrees to pay to the
Administrative Agent for the benefit of the Lenders in
immediately available funds on or before the Closing Date an
upfront fee (the "Upfront Fee") in the amount provided in
the Administrative Agents' Fee Letter.
(b) Unused Fee. In consideration of the Revolving
Commitments of the Lenders hereunder, the Borrower agrees to
pay to the Administrative Agent for the account of each
Lender a fee (the "Unused Fee") on the Unused Revolving
Committed Amount computed at a per annum rate for each day
during the applicable Unused Fee Calculation Period
(hereinafter defined) at a rate equal to the Applicable
Percentage for the Unused Fee in effect from time to time.
The Unused Fee shall commence to accrue on the Closing Date
and shall be due and payable in arrears on the last business
day of each March, June, September and December (and any
date that the Revolving Committed Amount is reduced as
provided in Section 3.4(a) and the Maturity Date) for the
immediately preceding quarter (or portion thereof) (each
such quarter or portion thereof for which the Unused Fee is
payable hereunder being herein referred to as an "Unused Fee
Calculation Period"), beginning with the first of such dates
to occur after the Closing Date.
(c) Letter of Credit Fees.
(i) Standby Letter of Credit Issuance Fee. In
consideration of the issuance of standby Letters of
Credit hereunder, the Borrower promises to pay to the
Administrative Agent for the account of each Lender a fee
(the "Standby Letter of Credit Fee") on such Lender's
Revolving Commitment Percentage of the average daily
maximum amount available to be drawn under each such
standby Letter of Credit computed at a per annum rate for
each day from the date of issuance to the date of
expiration equal to the Applicable Percentage for
Eurodollar Loans. The Standby Letter of Credit Fee will
be payable quarterly in arrears on the last Business Day
of each March, June, September and December for the
immediately preceding quarter (or a portion thereof).
(ii) Trade Letter of Credit Drawing Fee. In
consideration of the issuance of trade Letters of Credit
hereunder, the Borrower promises to pay to the
Administrative Agent for the account of each Lender a fee
(the "Trade Letter of Credit Fee") equal to the
Applicable Percentage for Eurodollar Loans on such
Lender's Revolving Commitment Percentage of the amount of
each drawing under any such trade Letter of Credit. The
Trade Letter of Credit Fee will be payable on each date
of drawing under a trade Letter of Credit.
(iii) Issuing Lender Fees. In addition to
the Standby Letter of Credit Fee payable pursuant to
clause (i) above and the Trade Letter of Credit Fee
payable pursuant to clause (ii) above, the Borrower
promises to pay to the applicable Issuing Lender for its
own account without sharing by the other Lenders the
letter of credit fronting and negotiation fees equal to
0.125% of such Issuing Lender's LOC Obligations and the
customary charges from time to time of such Issuing
Lender with respect to the issuance, amendment, transfer,
administration, cancellation and conversion of, and
drawings under, Letters of Credit issued by such Issuing
Lender (collectively, the "Issuing Lender Fees").
(d) Administrative Fees. The Borrower agrees to pay to
the Administrative Agent, for its own account (and for the
account of NationsBanc Capital Markets, Inc., as
applicable), to the Collateral Agent, for its own account
(and for the account of The Bank of New York, as
applicable), the fees referred to in the Agents' Fee Letter
(collectively, the "Agents' Fees").
3.6 Capital Adequacy.
If any Lender has determined, after the date hereof, that
the adoption or the becoming effective of, or any change in,
or any change by any Governmental Authority, central bank or
comparable agency charged with the interpretation or
administration thereof in the interpretation or
administration of, any applicable law, rule or regulation
regarding capital adequacy, or compliance by such Lender
with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such
Lender's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that
which such Lender could have achieved but for such adoption,
effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital
adequacy), then, upon notice from such Lender to the
Borrower, the Borrower shall be obligated to pay to such
Lender such additional amount or amounts as will compensate
such Lender for such reduction. Each determination by any
such Lender of amounts owing under this Section shall,
absent manifest error, be conclusive and binding on the
parties hereto.
3.7 Limitation on Eurodollar Loans.
If on or prior to the first day of any Interest Period for
any Eurodollar Loan:
(a) the Administrative Agent determines (which
determination shall be conclusive) that by reason of
circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination
shall be conclusive) and notify the Administrative Agent
that the Eurodollar Rate will not adequately and fairly
reflect the cost to the Lenders of funding Eurodollar Loans
for such Interest Period;
then the Administrative Agent shall give the Borrower prompt
notice thereof, and so long as such condition remains in
effect, the Lenders shall be under no obligation to make
additional Eurodollar Loans, Continue Eurodollar Loans, or
to Convert Base Rate Loans into Eurodollar Loans and the
Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans,
either prepay such Eurodollar Loans or Convert such
Eurodollar Loans into Base Rate Loans in accordance with the
terms of this Credit Agreement.
3.8 Illegality.
Notwithstanding any other provision of this Credit
Agreement, in the event that it becomes unlawful for any
Lender or its Applicable Lending Office to make, maintain,
or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's
obligation to make or Continue Eurodollar Loans and to
Convert Base Rate Loans into Eurodollar Loans shall be
suspended until such time as such Lender may again make,
maintain, and fund Eurodollar Loans (in which case the
provisions of Section 3.10 shall be applicable).
3.9 Requirements of Law.
(a) If, after the date hereof, the adoption of any
applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with
the interpretation or administration thereof, or compliance
by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of
law) of any such Governmental Authority, central bank, or
comparable agency:
(i)shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with
respect to any Eurodollar Loans, its Notes, or its
obligation to make Eurodollar Loans, or change the basis
of taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Credit Agreement or
its Notes in respect of any Eurodollar Loans (other than
taxes imposed on the overall net income of such Lender by
the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
(ii)shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar
requirement (other than the Eurodollar Reserve
Requirement utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or
other assets of, or any deposits with or other
liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its
Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank
market any other condition affecting this Credit
Agreement or its Notes or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the
cost to such Lender (or its Applicable Lending Office) of
making, Converting into, Continuing, or maintaining any
Eurodollar Loans or to reduce any sum received or receivable
by such Lender (or its Applicable Lending Office) under this
Credit Agreement or its Notes with respect to any Eurodollar
Loans, then the Borrower shall pay to such Lender on demand
such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests
compensation by the Borrower under this Section 3.9(a), the
Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender
to make or Continue Eurodollar Loans, or to Convert Base
Rate Loans into Eurodollar Loans, until the event or
condition giving rise to such request ceases to be in effect
(in which case the provisions of Section 3.10 shall be
applicable); provided that such suspension shall not affect
the right of such Lender to receive the compensation so
requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or
regulation regarding capital adequacy or any change therein
or in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency
charged with the interpretation or administration thereof,
or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency,
has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling
such Lender as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its
policies with respect to capital adequacy), then from time
to time upon demand the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such
Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and
the Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section
3.9 and will designate a different Applicable Lending Office
if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment
of such Lender, be otherwise disadvantageous to it. Any
Lender claiming compensation under this Section 3.9 shall
furnish to the Borrower and the Administrative Agent a
statement setting forth the additional amount or amounts to
be paid to it hereunder which shall be conclusive in the
absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution
methods.
3.10 Treatment of Affected Loans.
If the obligation of any Lender to make any Eurodollar Loan
or to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Section 3.8
or 3.9 hereof, such Lender's Eurodollar Loans shall be
automatically Converted into Base Rate Loans on the last
day(s) of the then current Interest Period(s) for such
Eurodollar Loans (or, in the case of a Conversion required
by Section 3.8 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the
Administrative Agent) and, unless and until such Lender
gives notice as provided below that the circumstances
specified in Section 3.8 or 3.9 hereof that gave rise to
such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans
have been so Converted, all payments and prepayments of
principal that would otherwise be applied to such Lender's
Eurodollar Loans shall be applied instead to its Base Rate
Loans; and
(b) all Loans that would otherwise be made or Continued
by such Lender as Eurodollar Loans shall be made or
Continued instead as Base Rate Loans, and all Base Rate
Loans of such Lender that would otherwise be Converted into
Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to
the Administrative Agent) that the circumstances specified
in Section 3.8 or 3.9 hereof that gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to
this Section 3.10 no longer exist (which such Lender agrees
to do promptly upon such circumstances ceasing to exist) at
a time when Eurodollar Loans made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after
giving effect thereto, all Loans held by the Lenders holding
Eurodollar Loans and by such Lender are held pro rata (as to
principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Commitments.
3.11 Taxes.
(a) Any and all payments by the Borrower to or for the
account of any Lender or the Administrative Agent hereunder
or under any other Credit Document shall be made free and
clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Administrative
Agent, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which
such Lender (or its Applicable Lending Office) or the
Administrative Agent (as the case may be) is organized or
any political subdivision thereof (all such non-excluded
taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable under
this Credit Agreement or any other Credit Document to any
Lender or the Administrative Agent, (i) the sum payable
shall be increased as necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 3.11) such Lender
or the Administrative Agent receives an amount equal to the
sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with
applicable law, and (iv) the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section
11.1, the original or a certified copy of a receipt
evidencing payment thereof. Any Lender or Agent receiving
such increased amount shall immediately pay to the Borrower
the amount of any reduction or refund in the respective
Lender or Agent's Tax liability resulting from a credit or
deduction, as the case may be, of any Tax against the Lender
or Agent's Tax liability when the Lender or Agent realizes
such reduction or refund.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other
excise or property taxes or charges or similar levies which
arise from any payment made under this Credit Agreement or
any other Credit Document or from the execution or delivery
of, or otherwise with respect to, this Credit Agreement or
any other Credit Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower agrees to indemnify each Lender, the
Administrative Agent and the Collateral Agent for the full
amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 3.11)
paid by such Lender or the Administrative Agent (as the case
may be) and any liability (including penalties, interest,
and expenses) arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a
jurisdiction outside the United States, on or prior to the
date of its execution and delivery of this Credit
Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on
which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in
writing by the Borrower or the Administrative Agent (but
only so long as such Lender remains lawfully able to do
so), shall provide the Borrower and the Administrative
Agent with (i) Internal Revenue Service Form 1001 or 4224,
as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is
entitled to benefits under an income tax treaty to which
the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that
the income receivable pursuant to this Credit Agreement is
effectively connected with the conduct of a trade or
business in the United States, (ii) Internal Revenue
Service Form W-8 or W-9, as appropriate, or any successor
form prescribed by the Internal Revenue Service, and (iii)
any other form or certificate required by any taxing
authority (including any certificate required by Sections
871(h) and 881(c) of the Internal Revenue Code),
certifying that such Lender is entitled to an exemption
from or a reduced rate of tax on payments pursuant to this
Credit Agreement or any of the other Credit Documents.
(e) For any period with respect to which a Lender has
failed to provide the Borrower and the Administrative Agent
with the appropriate form pursuant to Section 3.11(d)
(unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form
originally was required to be provided), such Lender shall
not be entitled to indemnification under Section 3.11(a) or
3.11(b) with respect to Taxes imposed by the United States;
provided, however, that should a Lender, which is otherwise
exempt from or subject to a reduced rate of withholding tax,
become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps
as such Lender shall reasonably request to assist such
Lender to recover such Taxes.
(f) If the Borrower is required to pay additional
amounts to or for the account of any Lender pursuant to this
Section 3.11, then such Lender will agree to use reasonable
efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to
such Lender.
(g) Within thirty (30) days after the date of any
payment of Taxes, the Borrower shall furnish to the
Administrative Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 3.11
shall survive the repayment of the Loans, LOC Obligations
and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
3.12 Compensation.
Upon the request of any Lender, the Borrower shall pay to
such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss,
reasonable cost, or reasonable expense (including loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a
Eurodollar Loan or Quoted Rate Swingline Loan for any reason
(including, without limitation, the acceleration of the
Loans pursuant to Section 9.2) on a date other than the last
day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any condition
precedent specified in Section 5 to be satisfied) to borrow,
Convert, Continue, or prepay a Eurodollar Loan or Quoted
Rate Swingline Loan on the date for such borrowing,
Conversion, Continuation, or prepayment specified in the
relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may
include an amount equal to the excess, if any, of (a) the amount
of interest which would have accrued on the amount so prepaid, or
not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or,
in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such
Eurodollar Loans provided for herein (excluding, however, the
Applicable Percentage included therein, if any) over (b) the
amount of interest (as reasonably determined by such Lender)
which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks
in the interbank Eurodollar market. The covenants of the
Borrower set forth in this Section 3.12 shall survive the
repayment of the Loans, LOC Obligations and other obligations
under the Credit Documents and the termination of the Commitments
hereunder.
3.13 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or (subject to the
terms of Section 3.3) prepayment of principal of any Loan or
reimbursement obligations arising from drawings under
Letters of Credit, each payment of interest on the Loans or
reimbursement obligations arising from drawings under
Letters of Credit, each payment of Unused Fees, each payment
of the Standby Letter of Credit Fee, each payment of the
Trade Letter of Credit Fee, each reduction of the Revolving
Committed Amount and each conversion or extension of any
Loan, shall be allocated pro rata among the Lenders in
accordance with the respective principal amounts of their
outstanding Loans and Participation Interests.
Advances. No Lender shall be responsible for the
failure or delay by any other Lender in its obligation to
make its ratable share of a borrowing hereunder; provided,
however, that the failure of any Lender to fulfill its
obligations hereunder shall not relieve any other Lender of
its obligations hereunder. Unless the Administrative Agent
shall have been notified by any Lender prior to the date of
any requested borrowing that such Lender does not intend to
make available to the Administrative Agent its ratable share
of such borrowing to be made on such date, the
Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent on the
date of such borrowing, and the Administrative Agent in
reliance upon such assumption, may (in its sole discretion
but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Administrative
Agent, the Administrative Agent shall be able to recover
such corresponding amount from such Lender. If such Lender
does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative
Agent will promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also
be entitled to recover from the Lender or the Borrower, as
the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount
was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered
by the Administrative Agent at a per annum rate equal to (i)
from the Borrower at the applicable rate for the applicable
borrowing pursuant to the Notice of Borrowing and (ii) from
a Lender at the Federal Funds Rate.
3.14 Sharing of Payments.
The Lenders agree among themselves that, in the event that
any Lender shall obtain payment in respect of any Loan, LOC
Obligations or any other obligation owing to such Lender under
this Credit Agreement (but not including any payment received by
any Lender in its capacity as a Factor under a Factoring
Agreement) through the exercise of a right of setoff, banker's
lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other
means, in excess of its pro rata share of such payment as
provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such
Loans, LOC Obligations and other obligations in such amounts, and
make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for
in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender
through the exercise of a right of setoff, banker's lien,
counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared
the benefit of such payment shall, by repurchase of a
Participation Interest theretofore sold, return its share of that
benefit (together with its share of any accrued interest payable
with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrower agrees that
any Lender so purchasing such a Participation Interest may, to
the fullest extent permitted by law, exercise all rights of
payment, including setoff, banker's lien or counterclaim, with
respect to such Participation Interest as fully as if such Lender
were a holder of such Loan, LOC Obligations or other obligation
in the amount of such Participation Interest. Except as
otherwise expressly provided in this Credit Agreement, if any
Lender or the Administrative Agent shall fail to remit to the
Administrative Agent or any other Lender an amount payable by
such Lender or the Administrative Agent to the Administrative
Agent or such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made
together with interest thereon for each date from the date such
amount is due until the date such amount is paid to the
Administrative Agent or such other Lender at a rate per annum
equal to the Federal Funds Rate. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this Section 3.14
applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.14
to share in the benefits of any recovery on such secured claim.
3.15 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein,
all payments hereunder shall be made to the Administrative
Agent in dollars in immediately available funds, without
offset, deduction, counterclaim or withholding of any kind,
at the Administrative Agent's office specified in Schedule
2.1(a) not later than 2:00 P.M. (Charlotte, North Carolina
time) on the date when due. Payments received after such
time shall be deemed to have been received on the next
succeeding Business Day. The Administrative Agent may (but
shall not be obligated to) debit the amount of any such
payment which is not made by such time to any ordinary
deposit account of the Borrower maintained with the
Administrative Agent or the Collateral Agent (with notice to
the Borrower). The Borrower shall, at the time it makes any
payment under this Credit Agreement, specify to the
Administrative Agent the Loans, LOC Obligations, Fees,
interest or other amounts payable by the Borrower hereunder
to which such payment is to be applied (and in the event
that it fails so to specify, or if such application would be
inconsistent with the terms hereof, the Administrative Agent
shall distribute such payment to the Lenders in such manner
as the Administrative Agent may determine to be appropriate
in respect of obligations owing by the Borrower hereunder,
subject to the terms of Section 3.13(a)). The
Administrative Agent will distribute such payments to such
Lenders, if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time) on a Business Day in like
funds as received prior to the end of such Business Day and
otherwise the Administrative Agent will distribute such
payment to such Lenders on the next succeeding Business Day.
Whenever any payment hereunder shall be stated to be due on
a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day
(subject to accrual of interest and Fees for the period of
such extension), except that in the case of Eurodollar
Loans, if the extension would cause the payment to be made
in the next following calendar month, then such payment
shall instead be made on the next preceding Business Day.
Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis
of actual number of days elapsed over a year of 360 days,
except with respect to computation of interest on Base Rate
Loans which (unless the Base Rate is determined by reference
to the Federal Funds Rate) shall be calculated based on a
year of 365 or 366 days, as appropriate. Interest shall
accrue from and include the date of borrowing, but exclude
the date of payment.
(b) Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit
Agreement to the contrary, after the occurrence and during
the continuance of an Event of Default, all amounts
collected or received by the Administrative Agent, the
Collateral Agent or any Lender on account of the Credit
Party Obligations or any other amounts outstanding under any
of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees) of the Administrative Agent and the
Collateral Agent in connection with enforcing the rights of
the Lenders under the Credit Documents and any protective
advances made by the Administrative Agent or the Collateral
Agent with respect to the Collateral under or pursuant to
the terms of the Collateral Documents;
SECOND, to payment of any fees owed to the
Administrative Agent or the Collateral Agent;
THIRD, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation, reasonable
attorneys' fees) of each of the Lenders in connection with
enforcing its rights under the Credit Documents or otherwise
with respect to the Credit Party Obligations owing to such
Lender;
FOURTH, to the payment of all of the Credit Party
Obligations consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal
amount of the Credit Party Obligations (including the
payment or cash collateralization of the outstanding LOC
Obligations);
SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under
the Credit Documents or otherwise and not repaid pursuant to
clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be
applied in the numerical order provided until exhausted
prior to application to the next succeeding category; (ii)
each of the Lenders shall receive an amount equal to its pro
rata share (based on the proportion that the then
outstanding Loans and LOC Obligations held by such Lender
bears to the aggregate then outstanding Loans and LOC
Obligations) of amounts available to be applied pursuant to
clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and
(iii) to the extent that any amounts available for
distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the
Administrative Agent or the Collateral Agent (as determined
by the Administrative Agent) in a cash collateral account
and applied (A) first, to reimburse the Issuing Lenders from
time to time on a pro rata basis for any drawings under such
Letters of Credit and (B) then, following the expiration of
all Letters of Credit, to all other obligations of the types
described in clauses "FIFTH" and "SIXTH" above in the manner
provided in this Section 3.15(b).
3.16 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to the Borrower
from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time
under this Credit Agreement. Each Lender will make
reasonable efforts to maintain the accuracy of its account
or accounts and to promptly update its account or accounts
from time to time, as necessary.
(b) The Administrative Agent shall maintain the
Register pursuant to Section 11.3(c), and a subaccount for
each Lender, in which Register and subaccounts (taken
together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount
of any principal or interest due and payable or to become
due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent
hereunder from or for the account of the Borrower and each
Lender's share thereof. The Administrative Agent will make
reasonable efforts to maintain the accuracy of the
subaccounts referred to in the preceding sentence and to
promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and
subaccounts maintained pursuant to subsection (b) of this
Section 3.16 (and, if consistent with the entries of the
Administrative Agent, subsection (a)) shall be prima facie
evidence of the existence and amounts of the obligations of
the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to
maintain any such account, such Register or such subaccount,
as applicable, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay the Loans
made by such Lender in accordance with the terms hereof.
3.17 Mandatory Assignment.
In the event any Lender requests payment by the Borrower of
any additional amounts pursuant to Section 3.11, then, provided
that no Default or Event of Default has occurred and is
continuing at such time, the Borrower may, at its own expense
(such expense to include any transfer fee payable to the
Administrative Agent under Section 11.3(b)), and in its sole
discretion require such Lender to transfer and assign in whole or
in part, without recourse (in accordance with and subject to the
terms and conditions of Section 11.3(b)), all or part of its
interests, rights and obligations under the Credit Agreement to
an Eligible Assignee which shall assume such assigned
obligations, provided that (i) such assignment shall not conflict
with any law, rule or regulation or order of any court or other
Governmental Authority and (ii) the Borrower or such assignee
shall have paid to the assigning Lender in immediately available
funds the principal of and interest accrued to the date of such
payment on the Loans made by it under the Credit Agreement and
all other amounts owed to it under the Credit Agreement.
SECTION 4
GUARANTY
4.1 The Guaranty.
Each of the Guarantors hereby jointly and severally
guarantees to each Lender, the Administrative Agent and the
Collateral Agent as hereinafter provided the prompt payment of
the Credit Party Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) strictly in
accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Credit Party Obligations are not paid in
full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Credit Party Obligations, the
same will be promptly paid in full when due (whether at extended
maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) in accordance with
the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, the obligations
of each Guarantor hereunder shall be limited to an aggregate
amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of
the Bankruptcy Code or any comparable provisions of any
applicable state law.
4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 are
joint and several, absolute and unconditional, irrespective of
the value, genuineness, validity, regularity or enforceability of
any of the Credit Documents, or any other agreement or instrument
referred to therein, or any substitution, release, impairment or
exchange of any other guarantee of or security for any of the
Credit Party Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor, it being the intent of this
Section 4.2 that the obligations of the Guarantors hereunder
shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor of the
Credit Party Obligations for amounts paid under this Section 4
until such time as the Lenders have been paid in full, all
Commitments under this Credit Agreement have been terminated and
no Person or Governmental Authority shall have any right to
request any return or reimbursement of funds from the Lenders in
connection with monies received under the Credit Documents.
Without limiting the generality of the foregoing, it is agreed
that, to the fullest extent permitted by law, the occurrence of
any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute
and unconditional as described above:
(a) at any time or from time to time, without notice
to any Guarantor, the time for any performance of or
compliance with any of the Credit Party Obligations shall be
extended, or such performance or compliance shall be waived;
(b) any of the acts mentioned in any of the provisions
of any of the Credit Documents or any other agreement or
instrument referred to in the Credit Documents shall be done
or omitted;
(c) the maturity of any of the Credit Party
Obligations shall be accelerated, or any of the Credit Party
Obligations shall be modified, supplemented or amended in
any respect, or any right under any of the Credit Documents
or any other agreement or instrument referred to in the
Credit Documents shall be waived or any other guarantee of
any of the Credit Party Obligations or any security therefor
shall be released, impaired or exchanged in whole or in part
or otherwise dealt with;
(d) any Lien granted to, or in favor of, the
Administrative Agent, the Collateral Agent or any Lender or
Lenders as security for any of the Credit Party Obligations
shall fail to attach or be perfected; or
(e) any of the Credit Party Obligations shall be
determined to be void or voidable (including, without
limitation, for the benefit of any creditor of any
Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby
expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the
Administrative Agent, the Collateral Agent or any Lender exhaust
any right, power or remedy or proceed against any Person under
any of the Credit Documents or any other agreement or instrument
referred to in the Credit Documents, or against any other Person
under any other guarantee of, or security for, any of the Credit
Party Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall
be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of
the Credit Party Obligations is rescinded or must be otherwise
restored by any holder of any of the Credit Party Obligations,
whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it
will indemnify the Administrative Agent, the Collateral Agent and
each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel)
incurred by the Administrative Agent, the Collateral Agent or
such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this
Section 4, each Guarantor hereby specifically waives the benefits
of N.C. Gen. Stat. 26-7 through 26-9, inclusive, to the extent
applicable. Each Guarantor further agrees that such Guarantor
shall have no right of recourse to security for the Credit Party
Obligations, except through the exercise of rights of subrogation
pursuant to Section 4.2 and through the exercise of rights of
contribution pursuant to Section 4.6.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted
by law, as between the Guarantors, on the one hand, and the
Administrative Agent, the Collateral Agent and the Lenders, on
the other hand, the Credit Party Obligations may be declared to
be forthwith due and payable as provided in Section 9.2 (and
shall be deemed to have become automatically due and payable in
the circumstances provided in said Section 9.2) for purposes of
Section 4.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Credit
Party Obligations from becoming automatically due and payable) as
against any other Person and that, in the event of such
declaration (or the Credit Party Obligations being deemed to have
become automatically due and payable), the Credit Party
Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for
purposes of Section 4.1. The Guarantors acknowledge and agree
that their obligations hereunder are secured in accordance with
the terms of the Security Agreements and the other Collateral
Documents and that the Lenders may exercise their remedies
thereunder in accordance with the terms thereof.
4.6 Rights of Contribution.
The Guarantors hereby agree as among themselves that, if any
Guarantor shall make an Excess Payment (as defined below), such
Guarantor shall have a right of contribution from each other
Guarantor in an amount equal to such other Guarantor's
Contribution Share (as defined below) of such Excess Payment.
The payment obligations of any Guarantor under this Section 4.6
shall be subordinate and subject in right of payment to the prior
payment in full to the Administrative Agent, the Collateral Agent
and the Lenders of the Guaranteed Obligations, and none of the
Guarantors shall exercise any right or remedy under this Section
4.6 against any other Guarantor until payment and satisfaction in
full of all of such Guaranteed Obligations. For purposes of this
Section 4.6, (a) "Guaranteed Obligations" shall mean any
obligations arising under the other provisions of this Section 4;
(b) "Excess Payment" shall mean the amount paid by any Guarantor
in excess of its Pro Rata Share of any Guaranteed Obligations;
(c) "Pro Rata Share" shall mean, for any Guarantor in respect of
any payment of Guaranteed Obligations, the ratio (expressed as a
percentage) as of the date of such payment of Guaranteed
Obligations of (i) the amount by which the aggregate present fair
salable value of all of its assets and properties exceeds the
amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Borrower
and all of the Guarantors exceeds the amount of all of the debts
and liabilities (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of
the Borrower and the Guarantors hereunder) of the Borrower and
all of the Guarantors; provided, however, that, for purposes of
calculating the Pro Rata Shares of the Guarantors in respect of
any payment of Guaranteed Obligations, any Guarantor that became
a Guarantor subsequent to the date of any such payment shall be
deemed to have been a Guarantor on the date of such payment and
the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor
in connection with such payment; and (d) "Contribution Share"
shall mean, for any Guarantor in respect of any Excess Payment
made by any other Guarantor, the ratio (expressed as a
percentage) as of the date of such Excess Payment of (i) the
amount by which the aggregate present fair salable value of all
of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii)
the amount by which the aggregate present fair salable value of
all assets and other properties of the Borrower and all of the
Guarantors other than the maker of such Excess Payment exceeds
the amount of all of the debts and liabilities (including
contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and
the Guarantors hereunder) of the Borrower and all of the
Guarantors other than the maker of such Excess Payment; provided,
however, that, for purposes of calculating the Contribution
Shares of the Guarantors in respect of any Excess Payment, any
Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on
the date of such Excess Payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such
Excess Payment. This Section 4.6 shall not be deemed to affect
any right of subrogation, indemnity, reimbursement or
contribution that any Guarantor may have under applicable law
against the Borrower in respect of any payment of Guaranteed
Obligations. Notwithstanding the foregoing, all rights of
contribution against any Guarantor shall terminate from and after
such time, if ever, that such Guarantor shall be relieved of its
obligations pursuant to Section 8.4.
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee,
and shall apply to all Credit Party Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Closing Conditions.
The obligation of the Lenders (including the Swingline
Lender) to enter into this Credit Agreement and to make the
initial Loans or an Issuing Lender to issue the initial Letters
of Credit, whichever shall occur first, shall be subject to
satisfaction of the following conditions (in form and substance
acceptable to the Lenders):
(a) Executed Credit Documents. Receipt by the
Administrative Agent of duly executed copies of: (i) this
Credit Agreement; (ii) the Notes; (iii) the Collateral
Documents and (iv) all other Credit Documents, each in form
and substance acceptable to the Lenders in their sole
discretion.
(b) Corporate Documents. Receipt by the
Administrative Agent of the following:
(i) Charter Documents. Copies of the
articles or certificates of incorporation or other
charter documents of Alchem and each Credit Party
certified to be true and complete as of a recent date
by the appropriate Governmental Authority of the state
or other jurisdiction of its incorporation and
certified by a secretary or assistant secretary of such
Person to be true and correct as of the Closing Date.
(ii) Bylaws. A copy of the bylaws of Alchem
and each Credit Party certified by a secretary or
assistant secretary of such Person to be true and
correct as of the Closing Date.
(iii) Resolutions. Copies of resolutions
of the Board of Directors of Alchem and each Credit
Party approving and adopting the Credit Documents to
which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof,
certified by a secretary or assistant secretary of such
Person to be true and correct and in force and effect
as of the Closing Date.
(iv) Good Standing. Copies of (A)
certificates of good standing, existence or its
equivalent with respect to Alchem and each Credit Party
certified as of a recent date by the appropriate
Governmental Authorities of the state or other
jurisdiction of incorporation and each other
jurisdiction in which the failure to so qualify and be
in good standing could have a Material Adverse Effect
and (B) to the extent available, a certificate
indicating payment of all corporate franchise taxes
certified as of a recent date by the appropriate
governmental taxing authorities.
(v) Incumbency. An incumbency certificate
of Alchem and each Credit Party certified by a
secretary or assistant secretary to be true and correct
as of the Closing Date.
(c) Opinions of Counsel. The Administrative Agent
shall have received, in each case dated as of the Closing
Date:
(i) a legal opinion of Wyche, Burgess,
Freeman & Parham, P.A., general counsel for Alchem and
the Credit Parties, substantially in the form of
Schedule 5.1(c)(i);
(ii) a legal opinion of special local counsel
for each Credit Party not incorporated in the State of
South Carolina or Delaware, substantially in the form
of Schedule 5.1(c)(ii);
(iii) a legal opinion of special local
counsel for the Credit Parties for each State other
than South Carolina in which any material portion of
the Collateral (as determined by the Agent) is located,
substantially in the form of Schedule 5.1(c)(iii); and
(iv) a legal opinion of special foreign
counsel for the Credit Parties for each country in
which any Foreign Subsidiary whose Capital Stock is to
be pledged pursuant to the Pledge Agreement is
incorporated, substantially in the form of Schedule
5.1(c)(iv).
(d) Collateral. The Administrative Agent shall have
received:
(i) searches of Uniform Commercial Code
filings in the jurisdiction of the chief executive
office of each Credit Party and each jurisdiction where
any Collateral is located or where a filing would need
to be made in order to perfect the Collateral Agent's
security interest in the Collateral, copies of the
financing statements on file in such jurisdictions and
evidence that no Liens exist other than Permitted
Liens;
(ii) duly executed UCC financing statements
for each Credit Party for each appropriate jurisdiction
as is necessary, in the Administrative Agent's sole
discretion, to perfect the Collateral Agent's security
interest in the Collateral;
(iii) all stock certificates evidencing
the Capital Stock pledged to the Collateral Agent
pursuant to the Pledge Agreement, together with duly
executed in blank undated stock powers attached thereto
(unless, with respect to the pledged Capital Stock of
any Foreign Subsidiary, such stock powers are deemed
unnecessary by the Administrative Agent in its
reasonable discretion under the law of the jurisdiction
of incorporation of such Person);
(iv) in the case of any Collateral located at
a premises leased by a Credit Party, such estoppel
letters, consents and waivers from the landlords on
such real property as may be required by the
Administrative Agent;
(v) all instruments and chattel paper in the
possession of any of the Credit Parties, together with
allonges or assignments as may be necessary or
appropriate to perfect the Collateral Agent's security
interest in the Collateral;
(vi) an original, executed copy of an
assignment of factoring proceeds, consented to in
writing by the applicable Factor and otherwise in form
and substance satisfactory to the Administrative Agent,
for each Factoring Agreement existing as of the Closing
Date; and
(vii) all duly executed consents as are
necessary, in the Administrative Agent's sole
discretion, to perfect the Collateral Agent's security
interest in the Collateral.
(e) Priority of Liens. The Administrative Agent shall
have received satisfactory evidence that (i) the Collateral
Agent, on behalf of the Lenders, holds a perfected, first
priority Lien on all Collateral and (ii) none of the
Collateral is subject to any other Liens other than
Permitted Liens.
(f) Availability. The Administrative Agent shall be
satisfied that, after giving effect to the initial Loans
made and Letters of Credit issued hereunder on the Closing
Date, there shall be at least $25,000,000 of availability
existing under the Revolving Committed Amount.
(g) Opening Borrowing Base Report. Receipt by the
Administrative Agent of a Borrowing Base Certificate as of
the Closing Date substantially in the form of Exhibit 7.1(d)
and certified by the chief financial officer of the Borrower
to be true and correct as of the Closing Date.
(h) Evidence of Insurance. Receipt by the
Administrative Agent of copies of insurance policies or
certificates of insurance of the Consolidated Parties
evidencing liability and casualty insurance meeting the
requirements set forth in the Credit Documents, including,
but not limited to, naming the Collateral Agent as sole loss
payee on behalf of the Lenders.
(i) Senior Debt. (i) The Borrower shall have entered
into the Senior Note Indenture, (ii) the Borrower shall have
executed the Senior Notes, (iii) the Administrative Agent
shall have received a copy, certified by an officer of the
Borrower as true and complete, of the Senior Note Indenture
and each of the Senior Notes as originally executed and
delivered, and no amendment or modification thereof shall
have been entered into on or prior to the Closing Date which
shall not have been approved by each of the Lenders and (iv)
the Borrower shall have received proceeds from the sale of
Senior Notes in an aggregate principal amount of
$150,000,000.00.
(j) Closing of New Delta Woodside Credit Facility.
The closing of the New Delta Woodside Credit Facility shall
have occurred and all conditions precedent to the initial
extensions of credit thereunder shall have been satisfied.
(k) Material Adverse Change. No material adverse
change shall have occurred since June 28, 1997 in the
condition (financial or otherwise), business, management or
prospects of any Consolidated Party.
(l) Litigation. There shall not exist any pending or
threatened action, suit, investigation or proceeding against
a Consolidated Party that is reasonably likely to have a
Material Adverse Effect.
(m) Officer's Certificates. The Administrative Agent
shall have received a certificate or certificates executed
by an Executive Officer of the Borrower as of the Closing
Date stating that (A) each Consolidating Party is in
compliance with all existing financial obligations, (B) all
governmental, shareholder and third party consents and
approvals, if any, with respect to the Credit Documents and
the transactions contemplated thereby have been obtained,
(C) no action, suit, investigation or proceeding is pending
or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect any
Consolidating Party or any transaction contemplated by the
Credit Documents, if such action, suit, investigation or
proceeding could have a Material Adverse Effect and (D)
immediately after giving effect to this Credit Agreement,
the other Credit Documents and all the transactions
contemplated therein to occur on such date, (1) each of the
Credit Parties is Solvent, (2) no Default or Event of
Default exists, (3) all representations and warranties
contained herein and in the other Credit Documents are true
and correct in all material respects, and (4) the Credit
Parties are in compliance with each of the financial
covenants set forth in Section 7.11.
(n) Fees and Expenses. Payment by the Credit Parties
of all reasonable fees and expenses owed by them to the
Lenders, the Administrative Agent and the Collateral Agent,
including, without limitation, payment to the Administrative
Agent and the Collateral Agent of the fees set forth in the
Agents' Fee Letter.
(o) Payoff Letter. Receipt by the Administrative
Agent of a payoff letter in respect of the Existing Credit
Facility in form and substance satisfactory to the
Administrative Agent.
(p) Other. Receipt by the Lenders of such other
documents, instruments, agreements or information with
respect to the Consolidated Parties as reasonably requested
by any Lender.
5.2 Conditions to all Extensions of Credit.
The obligations of each Lender (including the Swingline
Lender) to make, convert or extend any Loan and of an Issuing
Lender to issue or extend any Letter of Credit (including the
initial Loans and the initial Letter of Credit) are subject to
satisfaction of the following conditions in addition to
satisfaction on the Closing Date of the conditions set forth in
Section 5.1:
(a) The Borrower shall have delivered (i) in the case
of any Revolving Loan an appropriate Notice of Borrowing or
Notice of Extension/Conversion or (ii) in the case of any
Letter of Credit, the applicable Issuing Lender shall have
received an appropriate request for issuance in accordance
with the provisions of Section 2.2(b);
(b) The representations and warranties set forth in
Section 6 shall, subject to the limitations set forth
therein, be true and correct in all material respects as of
such date (except for those which expressly relate to an
earlier date);
(c) There shall not have been commenced against Alchem
or any Credit Party an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or for the
winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action
shall remain undismissed, undischarged or unbonded;
(d) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto;
(e) No development or event which has had or could
have a Material Adverse Effect shall have occurred since
June 28, 1997; and
(f) Immediately after giving effect to the making of
such Loan (and the application of the proceeds thereof) or
to the issuance of such Letter of Credit, as the case may
be, (i) the sum of the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding
plus outstanding Swingline Loans shall not exceed the lesser
of (A) the Revolving Committed Amount and (B) the Borrowing
Base, and (ii) the LOC Obligations shall not exceed the LOC
Committed Amount.
The delivery of each Notice of Borrowing, each Notice of
Extension/Conversion and each request for a Letter of Credit
pursuant to Section 2.2(b) shall constitute a representation and
warranty by the Borrower of the correctness of the matters
specified in subsections (b), (c), (d), (e) and (f) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Administrative
Agent, the Collateral Agent and each Lender that:
6.1 Financial Condition.
(a) The consolidated and consolidating balance sheet
of the Consolidated Parties as of June 28, 1997 and the
consolidated and consolidating statements of earnings and
statements of cash flows for the years ended June 24, 1995
and June 29, 1996 have heretofore been furnished to each
Lender. Such financial statements (including the notes
thereto) (i) have been reviewed by KPMG Peat Marwick, (ii)
have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby and (iii)
present fairly (on the basis disclosed in the footnotes to
such financial statements) the consolidated and
consolidating financial condition, results of operations and
cash flows of the Consolidated Parties as of such date and
for such periods. During the period from June 28, 1997 to
and including the Closing Date, there has been no sale,
transfer or other disposition by any Consolidated Party of
any material part of the business or property of the
Consolidated Parties, taken as a whole, and no purchase or
other acquisition by any of them of any business or property
(including any capital stock of any other person) material
in relation to the consolidated financial condition of the
Consolidated Parties, taken as a whole, in each case, which
is not reflected in the foregoing financial statements or in
the notes thereto and has not otherwise been disclosed in
writing to the Lenders on or prior to the Closing Date.
(b) The financial statements delivered to the Lenders
pursuant to Section 7.1(a) and (b), (i) have been prepared
in accordance with GAAP (except as may otherwise be
permitted under Section 7.1(a) and (b)) and (ii) present
fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated and consolidating
financial condition, results of operations and cash flows of
the Consolidated Parties as of such date and for such
periods.
6.2 No Material Change.
Since June 28, 1997, (a) there has been no development or
event relating to or affecting a Consolidated Party which has had
or could have a Material Adverse Effect and (b) except as
otherwise permitted under this Credit Agreement, no dividends or
other distributions have been declared, paid or made upon the
Capital Stock in a Consolidated Party nor has any of the Capital
Stock in a Consolidated Party been redeemed, retired, purchased
or otherwise acquired for value.
6.3 Organization and Good Standing.
Each of the Consolidated Parties (a) is duly organized,
validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the
corporate or other necessary power and authority, and the legal
right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is
currently engaged and (c) is duly qualified as a foreign entity
and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of
its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good
standing would not have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of Alchem and the Credit Parties has the corporate or
other necessary power and authority, and the legal right, to
make, deliver and perform the Credit Documents to which it is a
party, and in the case of the Borrower, to obtain extensions of
credit hereunder, and has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the
terms and conditions of this Credit Agreement and to authorize
the execution, delivery and performance of the Credit Documents
to which it is a party. As of the Closing Date, no consent or
authorization of, filing with, notice to or other similar act by
or in respect of, any Governmental Authority or any other Person
is required to be obtained or made by or on behalf of Alchem or
any Credit Party in connection with the borrowings or other
extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents
to which such Person is a party, except for (i) consents,
authorizations, notices and filings described in Schedule 6.4,
all of which have been obtained or made or have the status
described in such Schedule 6.4 and (ii) filings to perfect the
Liens created by the Collateral Documents. This Credit Agreement
has been, and each other Credit Document to which Alchem or any
Credit Party is a party will be, duly executed and delivered on
behalf of Alchem or the Credit Parties, as applicable. This
Credit Agreement constitutes, and each other Credit Document to
which Alchem or any Credit Party is a party when executed and
delivered will constitute, a legal, valid and binding obligation
of such Person enforceable against such party in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and
by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents,
nor the consummation of the transactions contemplated therein,
nor performance of and compliance with the terms and provisions
thereof by Alchem or any Credit Party will (a) violate or
conflict with any provision of its articles or certificate of
incorporation or bylaws or other organizational or governing
documents of such Person, (b) violate, contravene or materially
conflict with any Requirement of Law or any other law, regulation
(including, without limitation, Regulation U or Regulation X),
order, writ, judgment, injunction, decree or permit applicable to
it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which it may
be bound, the violation of which could have a Material Adverse
Effect, or (d) result in or require the creation of any Lien
(other than those contemplated in or created in connection with
the Credit Documents) upon or with respect to its properties.
6.6 No Default.
Except as disclosed in Schedule 6.6, (i) no Consolidated
Party is in default in any respect under any contract, lease,
loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of
its properties is bound which default could reasonably be
expected to have a Material Adverse Effect and (ii) no Default or
Event of Default has occurred or exists.
6.7 Ownership.
Each Consolidated Party is the owner of, and has good and
marketable title to, all of its respective assets and none of
such assets is subject to any Lien other than Permitted Liens.
6.8 Indebtedness.
Except as otherwise permitted under Section 8.1, the
Consolidated Parties have no Indebtedness.
6.9 Litigation.
Except as disclosed in Schedule 6.9, there are no actions,
suits or legal, equitable, arbitration or administrative
proceedings, pending or, to the knowledge of any Credit Party,
threatened against Alchem or any Consolidated Party which might
have a Material Adverse Effect.
6.10 Taxes.
Each Consolidated Party has filed, or caused to be filed,
all tax returns (federal, state, local and foreign) required to
be filed and paid (a) all amounts of taxes shown thereon to be
due (including interest and penalties) and (b) all other taxes,
fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by
proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. No Credit Party is aware as
of the Closing Date of any proposed tax assessments against it or
any other Consolidated Party.
6.11 Compliance with Law.
Each Consolidated Party is in compliance with all
Requirements of Law and all other laws, rules, regulations,
orders and decrees (including without limitation Environmental
Laws) applicable to it, or to its properties, unless such failure
to comply could not have a Material Adverse Effect. No
Requirement of Law could cause a Material Adverse Effect.
6.12 ERISA.
(a) During the five-year period prior to the date on
which this representation is made or deemed made: (i) no
ERISA Event has occurred, and, to the best knowledge of the
Credit Parties, no event or condition has occurred or exists
as a result of which any ERISA Event could reasonably be
expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or
not waived, has occurred with respect to any Plan; (iii)
each Plan has been maintained, operated, and funded in
compliance with its own terms and in material compliance
with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor
of the PBGC or a Plan has arisen or is reasonably likely to
arise on account of any Plan.
(b) The actuarial present value of all "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA),
whether or not vested, under each Single Employer Plan, as
of the last annual valuation date prior to the date on which
this representation is made or deemed made (determined, in
each case, in accordance with Financial Accounting Standards
Board Statement 87, utilizing the actuarial assumptions used
in such Plan's most recent actuarial valuation report), did
not exceed as of such valuation date the fair market value
of the assets of such Plan.
(c) Neither any Consolidated Party nor any ERISA
Affiliate has incurred, or, to the best knowledge of the
Credit Parties, could be reasonably expected to incur, any
withdrawal liability under ERISA to any Multiemployer Plan
or Multiple Employer Plan. Neither any Consolidated Party
nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if any Consolidated Party
or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made. Neither any
Consolidated Party nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of
ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be
in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach
of fiduciary responsibility has occurred with respect to a
Plan which has subjected or may subject any Consolidated
Party or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to
which any Consolidated Party or any ERISA Affiliate has
agreed or is required to indemnify any person against any
such liability.
(e) Neither any Consolidated Party nor any ERISA
Affiliates has any material liability with respect to
"expected post-retirement benefit obligations" within the
meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as
defined in Section 3(1) of ERISA) to which Sections 601-609
of ERISA and Section 4980B of the Code apply has been
administered in compliance in all material respects of such
sections.
6.13 Subsidiaries.
Set forth on Schedule 6.13 is a complete and accurate list
of all Subsidiaries of each Consolidated Party as of the Closing
Date. Information on Schedule 6.13 includes jurisdiction of
incorporation, the number of shares of each class of Capital
Stock outstanding, the number and percentage of outstanding
shares of each class owned (directly or indirectly) by such
Consolidated Party; and the number and effect, if exercised, of
all outstanding options, warrants, rights of conversion or
purchase and all other similar rights with respect thereto. The
outstanding Capital Stock of all such Subsidiaries is validly
issued, fully paid and non-assessable and is owned by each such
Consolidated Party, directly or indirectly, free and clear of all
Liens (other than those arising under or contemplated in
connection with the Credit Documents). Other than as set forth
in Schedule 6.13, no Consolidated Party has outstanding any
securities convertible into or exchangeable for its Capital Stock
nor does any such Person have outstanding any rights to subscribe
for or to purchase or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating
to its Capital Stock.
6.14 Governmental Regulations, Etc.
(a) No part of the Letters of Credit or proceeds of
the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation G or Regulation U, or for the
purpose of purchasing or carrying or trading in any such
"margin stock". If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR
Form U-1 referred to in Regulation U. No indebtedness being
reduced or retired out of the proceeds of the Loans was or
will be incurred for the purpose of purchasing or carrying
any margin stock within the meaning of Regulation U or any
"margin security" within the meaning of Regulation T.
"Margin stock" within the meaning of Regulation U does not
constitute more than 25% of the value of the consolidated
assets of the Consolidated Parties. None of the
transactions contemplated by this Credit Agreement
(including, without limitation, the direct or indirect use
of the proceeds of the Loans) will violate or result in a
violation of the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or regulations
issued pursuant thereto, or Regulation G, T, U or X.
(b) No Consolidated Party is subject to regulation
under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940,
each as amended. In addition, no Consolidated Party is (i)
an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as
amended, and is not controlled by such a company, or (ii) a
"holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal
shareholder of any Consolidated Party is a director,
executive officer or principal shareholder of any Lender.
For the purposes hereof the terms "director", "executive
officer" and "principal shareholder" (when used with
reference to any Lender) have the respective meanings
assigned thereto in Regulation O issued by the Board of
Governors of the Federal Reserve System.
(d) Each Consolidated Party has obtained, and holds in
full force and effect, all franchises, licenses, permits,
certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the ownership
of its respective Property and to the conduct of its
respective businesses as presently conducted.
(e) No Consolidated Party is in violation of any
applicable statute, regulation or ordinance of the United
States of America, or of any state, city, town,
municipality, county or any other jurisdiction, or of any
agency thereof (including without limitation, environmental
laws and regulations), which violation is reasonably likely
to have a Material Adverse Effect.
(f) Each Consolidated Party is current with all
material reports and documents, if any, required to be filed
with any state or federal securities commission or similar
agency and is in full compliance in all material respects
with all applicable rules and regulations of such
commissions.
6.15 Purpose of Loans and Letters of Credit.
The proceeds of the Loans hereunder shall be used solely by
the Borrower to refinance at Closing certain existing
indebtedness of the Borrower (the "Refinancing"); to pay at
Closing fees and expenses incurred in connection with the
Refinancing; and to provide for working capital and general
corporate purposes of the Consolidated Parties on and after
Closing Date. The Letters of Credit shall be used only for or in
connection with appeal bonds, reimbursement obligations arising
in connection with surety, reclamation and workers compensation
bonds, reinsurance, domestic or international trade transactions
and obligations not otherwise aforementioned relating to
transactions entered into by the applicable account party in the
ordinary course of business.
6.16 Environmental Matters.
Except as otherwise disclosed on Schedule 6.16:
(a) Each of the facilities and properties owned,
leased or operated by the Consolidated Parties or any
Affiliate of any Consolidated Party (the "Properties") and
all operations at the Properties are in material compliance
with all applicable Environmental Laws, and there is no
violation of any Environmental Law with respect to the
Properties or the businesses operated by the Consolidated
Parties or any Affiliate of any Consolidated Party(the
"Businesses"), and there are no conditions relating to the
Businesses or Properties that could give rise to material
liability under any applicable Environmental Laws.
(b) None of the Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or
under the Properties in amounts or concentrations that
constitute or constituted a material violation of, or could
reasonably be expected to give rise to material liability
under, Environmental Laws.
(c) Neither any Consolidated Party or any Affiliate
of any Consolidated Party has received any written or verbal
notice of, or inquiry from any Governmental Authority
regarding, any material violation, alleged violation, non-
compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Businesses, nor
does any Consolidated Party or any Affiliate of any
Consolidated Party have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties, or
generated, treated, stored or disposed of at, on or under
any of the Properties or any other location, in each case by
or on behalf of any Consolidated Party or any Affiliate of
any Consolidated Party in violation of, or in a manner that
could reasonably be expected to give rise to liability
under, any applicable Environmental Law that in any case
would have a Material Adverse Effect.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the best knowledge
of any Credit Party, threatened, under any Environmental Law
to which any Consolidated Party or any Affiliate of any
Consolidated Party is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other
administrative or judicial requirements outstanding under
any Environmental Law with respect to the Consolidated
Parties, any Affiliate of any Consolidated Party, the
Properties or the Businesses.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations
(including, without limitation, disposal) of any
Consolidated Party or any Affiliate of any Consolidated
Party in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in
amounts or in a manner that could reasonably expected to
give rise to liability under Environmental Laws that in any
case would have a Material Adverse Effect.
6.17 Intellectual Property.
Each Consolidated Party owns, or has the legal right to use,
all trademarks, tradenames, copyrights, technology, know-how and
processes (the "Intellectual Property") necessary for each of
them to conduct its business as currently conducted except for
those the failure to own or have such legal right to use could
not have a Material Adverse Effect. No claim has been asserted
and is pending by any Person challenging or questioning the use
by any Consolidated Party of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property,
nor does any Credit Party know of any such claim, and to the
Credit Parties' knowledge the use of such Intellectual Property
by any Consolidated Party does not infringe on the rights of any
Person, except for such claims and infringements that in the
aggregate, could not have a Material Adverse Effect.
6.18 Solvency.
Each Credit Party is Solvent.
6.19 Investments.
All Investments of each Consolidated Party are Permitted
Investments.
6.20 Location of Collateral.
Set forth on Schedule 6.20(a) is a list of all locations
where any tangible personal property of a Consolidated Party is
located as of the Closing Date, including county and state where
located. Set forth on Schedule 6.20(b) is the chief executive
office and principal place of business of each Consolidated Party
as of the Closing Date.
6.21 Disclosure.
Neither this Credit Agreement nor any financial statements
delivered to the Lenders nor any other document, certificate or
statement furnished to the Lenders by or on behalf of any
Consolidated Party in connection with the transactions
contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained therein or herein not misleading.
6.22 No Burdensome Restrictions.
No Consolidated Party is a party to any agreement or
instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law,
rule or regulation which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
6.23 Brokers' Fees.
No Consolidated Party has any obligation to any Person other
than NationsBank Securities, Inc. in respect of any finder's,
broker's, investment banking or other similar fee in connection
with any of the transactions contemplated under the Credit
Documents.
6.24 Labor Matters.
There are no collective bargaining agreements or
Multiemployer Plans covering the employees of a Consolidated
Party as of the Closing Date and none of the Consolidated Parties
has suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last five years.
6.25 Nature of Business.
As of the Closing Date, the Consolidated Parties are engaged
in the business of manufacturing and marketing woven and knitted
finished and unfinished cotton, synthetic and blended fabrics and
related services.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long
as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain
outstanding, and until all of the Commitments hereunder shall
have terminated:
7.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as
available, and in any event within 90 days after the close
of each fiscal year of the Consolidated Parties, a
consolidated balance sheet and income statement of the
Consolidated Parties, as of the end of such fiscal year,
together with related consolidated statements of operations
and retained earnings and of cash flows for such fiscal
year, setting forth in comparative form consolidated figures
for the preceding fiscal year, all such financial
information described above to be in reasonable form and
detail and audited by independent certified public
accountants of recognized national standing reasonably
acceptable to the Administrative Agent and whose opinion
shall be to the effect that such financial statements have
been prepared in accordance with GAAP (except for changes
with which such accountants concur) and shall not be limited
as to the scope of the audit or qualified as to the status
of the Consolidated Parties as a going concern.
(b) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the close
of each fiscal quarter of the Consolidated Parties (other
than the fourth fiscal quarter, in which case 90 days after
the end thereof) a consolidated and consolidating balance
sheet and income statement of the Consolidated Parties, as
of the end of such fiscal quarter, together with related
consolidated and consolidating statements of operations and
of cash flows for such fiscal quarter, in each case setting
forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such
financial information described above to be in reasonable
form and detail and reasonably acceptable to the
Administrative Agent, and accompanied by a certificate of
the chief financial officer of the Borrower to the effect
that such quarterly financial statements fairly present in
all material respects the financial condition of the
Consolidated Parties and have been prepared in accordance
with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of
the financial statements provided for in Sections 7.1(a) and
7.1(b) above, a certificate of the chief financial officer
of the Borrower substantially in the form of Exhibit 7.1(c),
(i) demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof as of the
end of each such fiscal period and (ii) stating that no
Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and
extent thereof and what action the Credit Parties propose to
take with respect thereto.
(d) Borrowing Base Certificates. Within 15 days after
the end of each fiscal month, a Borrowing Base Certificate
as of the end of the immediately preceding month,
substantially in the form of Exhibit 7.1(d) and certified by
the chief financial officer of the Borrower to be true and
correct as of the date thereof.
(e) Annual Business Plan and Budgets. As soon as
available, and in any event within 30 days after the close
of each fiscal year of the Consolidated Parties beginning
with the fiscal year ending June 27, 1998, an annual
business plan and budget of the Consolidated Parties
containing, among other things, projected financial
statements for the next fiscal year.
(f) Compliance With Certain Provisions of the Credit
Agreement. Within 90 days after the end of each fiscal year
of the Borrower, a certificate containing information
regarding the amount of all Asset Dispositions, Debt
Issuances and Equity Issuances that were made during the
prior fiscal year.
(g) Accountant's Certificate. Within the period for
delivery of the annual financial statements provided in
Section 7.1(a), a certificate of the accountants conducting
the annual audit stating that they have reviewed this Credit
Agreement and stating further whether, in the course of
their audit, they have become aware of any Default or Event
of Default and, if any such Default or Event of Default
exists, specifying the nature and extent thereof.
(h) Auditor's Reports. Promptly upon receipt thereof,
a copy of any other report or "management letter" submitted
by independent accountants to any Consolidated Party in
connection with any annual, interim or special audit of the
books of such Person.
(i) Reports. Promptly upon transmission or receipt
thereof, (i) copies of any filings and registrations with,
and reports to, the Securities and Exchange Commission, or
any successor agency, and copies of all financial
statements, proxy statements, notices and reports as any
Consolidated Party shall file with the Securities and
Exchange Commission or shall send to a holder of any
Indebtedness owed by any Consolidated Party in its capacity
as such a holder and (ii) upon the request of the
Administrative Agent, all reports and written information to
and from the United States Environmental Protection Agency,
or any state or local agency responsible for environmental
matters, the United States Occupational Health and Safety
Administration, or any state or local agency responsible for
health and safety matters, or any successor agencies or
authorities concerning environmental, health or safety
matters.
(j) Notices. Upon obtaining knowledge thereof, the
Borrower will give written notice to the Administrative
Agent immediately of (i) the occurrence of an event or
condition consisting of a Default or Event of Default,
specifying the nature and existence thereof and what action
the Credit Parties propose to take with respect thereto, and
(ii) the occurrence of any of the following with respect to
any Consolidated Party (A) the pendency or commencement of
any litigation, arbitral or governmental proceeding against
such Person which if adversely determined reasonably likely
to have a Material Adverse Effect, (B) the institution of
any governmental proceedings against such Person with
respect to, or the receipt of notice by such Person of
potential liability or responsibility for, violation or
alleged violation of any federal, state or local law, rule
or regulation, including but not limited to, Environmental
Laws, the violation of which could reasonably be expected to
have a Material Adverse Effect, or (C) any notice or
determination concerning the imposition of any withdrawal
liability by a Multiemployer Plan against such Person or any
ERISA Affiliate, the determination that a Multiemployer Plan
is, or is expected to be, in reorganization within the
meaning of Title IV of ERISA or the termination of any Plan.
(k) ERISA. Upon obtaining knowledge thereof, the
Borrower will give written notice to the Administrative
Agent promptly (and in any event within five business days)
of: (i) of any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or might
reasonably lead to, an ERISA Event; (ii) with respect to any
Multiemployer Plan, the receipt of notice as prescribed in
ERISA or otherwise of any withdrawal liability assessed
against the Borrower or any of its ERISA Affiliates, or of a
determination that any Multiemployer Plan is in
reorganization or insolvent (both within the meaning of
Title IV of ERISA); (iii) the failure to make full payment
on or before the due date (including extensions) thereof of
all amounts which any Consolidated Party or any ERISA
Affiliate is required to contribute to each Plan pursuant to
its terms and as required to meet the minimum funding
standard set forth in ERISA and the Code with respect
thereto; or (iv) any change in the funding status of any
Plan that could have a Material Adverse Effect, together
with a description of any such event or condition or a copy
of any such notice and a statement by the chief financial
officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action,
if any, which has been or is being taken or is proposed to
be taken by the Credit Parties with respect thereto.
Promptly upon request, the Credit Parties shall furnish the
Administrative Agent and the Lenders with such additional
information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all
schedules and attachments thereto required to be filed with
the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan
year" (within the meaning of Section 3(39) of ERISA).
(l) Environmental.
(i) Upon the reasonable written request of the
Administrative Agent, the Credit Parties will furnish
or cause to be furnished to the Administrative Agent,
at the Borrower's reasonable expense, a report of an
environmental assessment of reasonable scope, form and
depth, (including, where appropriate, invasive soil or
groundwater sampling) by a consultant reasonably
acceptable to the Administrative Agent as to the nature
and extent of the presence of any Materials of
Environmental Concern on any Properties (as defined in
Section 6.16) and as to the compliance by any
Consolidated Party with Environmental Laws at such
Properties. If the Credit Parties fail to deliver such
an environmental report within seventy-five (75) days
after receipt of such reasonable written request then
the Administrative Agent may arrange for same, and the
Consolidated Parties hereby grant to the Administrative
Agent and their representatives access to the
Properties to reasonably undertake such an assessment
(including, where appropriate, invasive soil or
groundwater sampling). The reasonable cost of any
assessment arranged for by the Administrative Agent
pursuant to this provision will be payable by the
Borrower on demand and added to the obligations secured
by the Collateral Documents.
(ii) The Consolidated Parties will conduct and
complete all investigations, studies, sampling, and
testing and all remedial, removal, and other actions
necessary to address all Materials of Environmental
Concern on , from or affecting any of the Properties to
the extent necessary to be in compliance with all
Environmental Laws and with the validly issued orders
and directives of all Governmental Authorities with
jurisdiction over such Properties to the extent any
failure could have a Material Adverse Effect.
(m) Additional Trademarks. At the time of delivery of
the financial statements and reports provided for in Section
7.1(a), a report signed by the chief financial officer or
treasurer of the Borrower setting forth (i) a list of
registration numbers for all material trademarks, service
marks and tradenames awarded to any Consolidated Party since
the last day of the immediately preceding fiscal year and
(ii) a list of all material trademark applications, service
mark applications and trade name applications submitted by
any Consolidated Party since the last day of the immediately
preceding fiscal year and the status of each such
application, all in such form as shall be reasonably
satisfactory to the Administrative Agent.
(n) Other Information. With reasonable promptness
upon any such request, such other information regarding the
business, properties or financial condition of any
Consolidated Party as the Administrative Agent or the
Required Lenders may reasonably request.
7.2 Preservation of Existence and Franchises.
Except as a result of or in connection with a dissolution,
merger or disposition of a Subsidiary permitted under Section 8.4
or Section 8.5, each Credit Party will, and will cause each of
its Subsidiaries to, do all things necessary to preserve and keep
in full force and effect its existence, rights, franchises and
authority.
7.3 Books and Records.
Each Credit Party will, and will cause each of its
Subsidiaries to, keep complete and accurate books and records of
its transactions in accordance with good accounting practices on
the basis of GAAP (including the establishment and maintenance of
appropriate reserves).
7.4 Compliance with Law.
Each Credit Party will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its Property if
noncompliance with any such law, rule, regulation, order or
restriction is reasonably likely to have a Material Adverse
Effect.
7.5 Payment of Taxes and Other Indebtedness.
Each Credit Party will, and will cause each of its
Subsidiaries to, pay and discharge (a) all taxes, assessments and
governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they
shall become delinquent, (b) all lawful claims (including claims
for labor, materials and supplies) which, if unpaid, might give
rise to a Lien upon any of its properties, and (c) except as
prohibited hereunder, all of its other Indebtedness as it shall
become due; provided, however, that no Consolidated Party shall
be required to pay any such tax, assessment, charge, levy, claim
or Indebtedness which is being contested in good faith by
appropriate proceedings and as to which adequate reserves
therefor have been established in accordance with GAAP, unless
the failure to make any such payment (i) is reasonably likely to
give rise to an immediate right to foreclose on a Lien securing
such amounts or (ii) is reasonably likely to have a Material
Adverse Effect.
7.6 Insurance.
Each Credit Party will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect
insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption
insurance) in such amounts, covering such risks and liabilities
and with such deductibles or self-insurance retentions as are in
accordance with normal industry practice (or as otherwise
required by the Collateral Documents). The Collateral Agent
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 Collateral Agent,
that it will give the Collateral Agent thirty (30) days prior
written notice before any such policy or policies shall be
canceled, and that no act or default of any Consolidated Party or
any other Person shall affect the rights of the Collateral Agent
or the Lenders under such policy or policies.
7.7 Maintenance of Property.
Each Credit Party will, and will cause each of its
Subsidiaries to, maintain and preserve its properties and
equipment material to the conduct of its business in good repair,
working order and condition, normal wear and tear and casualty
and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs,
renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent
and in the manner customary for companies in similar businesses.
7.8 Performance of Obligations.
Each Credit Party will, and will cause each of its
Subsidiaries to, perform in all material respects all of its
obligations under the terms of all material agreements,
indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound.
7.9 Use of Proceeds.
The Borrower will use the proceeds of the Loans and will use
the Letters of Credit solely for the purposes set forth in
Section 6.15.
7.10 Audits/Inspections.
Upon reasonable notice and during normal business hours (and
without any unreasonable interference with the business of the
Consolidated Parties), each Credit Party will, and will cause
each of its Subsidiaries to, permit representatives appointed by
the Administrative Agent and/or the Collateral Agent, including,
without limitation, independent accountants, agents, attorneys,
and appraisers to visit and inspect its property, including its
books and records, its accounts receivable and inventory, its
facilities and its other business assets, and to make photocopies
or photographs thereof and to write down and record any
information such representative obtains and shall permit the
Administrative Agent and/or the Collateral Agent and/or their
respective representatives to investigate and verify the accuracy
of information provided to the Lenders and to discuss all such
matters with the officers, employees and representatives of such
Person. The Credit Parties agree that the Administrative Agent
and/or the Collateral Agent and/or their respective
representatives may, at the expense of the Credit Parties,
conduct an audit of the Collateral (i) annually and (ii) at any
reasonable time and from time to time during the continuance of
any Event of Default.
7.11 Financial Covenants.
(a) Interest Coverage Ratio. The Interest Coverage
Ratio, as of the last day of each fiscal quarter of the
Consolidated Parties, shall be greater than or equal to:
(i) for the period from the Closing Date to
and including the next to last day of fiscal year 1998
of the Consolidated Parties, 2.50 to 1.00;
(ii) for the period from the last day of
fiscal year 1998 to and including the next to last day
of fiscal year 1999 of the Consolidated Parties, 2.90
to 1.00;
(iii) for the period from the last day of
fiscal year 1999 to and including the next to last day
of fiscal year 2000 of the Consolidated Parties, 3.30
to 1.00;
(iv) for the period from the last day of
fiscal year 2000 to and including the next to last day
of fiscal year 2001 of the Consolidated Parties, 3.60
to 1.00;
(v) for the period from the last day of
fiscal year 2001 to and including the next to last day
of fiscal year 2002 of the Consolidated Parties, 3.90
to 1.00; and
(vi) for the period from the last day of
fiscal year 2002 and thereafter, 4.00 to 1.00.
(b) Current Ratio. The Current Ratio, as of the last
day of each fiscal quarter of the Consolidated Parties,
shall be greater than or equal to 3.00 to 1.00.
(c) Leverage Ratio. The Leverage Ratio, as of the
last day of each fiscal quarter of the Consolidated Parties,
shall be less than or equal to:
(i) for the period from the Closing Date to
and including the next to last day of fiscal year 1998
of the Consolidated Parties, 4.50 to 1.00;
(ii) for the period from the last day of
fiscal year 1998 to and including the next to last day
of fiscal year 1999 of the Consolidated Parties, 3.80
to 1.00;
(iii) for the period from the last day of
fiscal year 1999 to and including the next to last day
of fiscal year 2000 of the Consolidated Parties, 3.30
to 1.00;
(iv) for the period from the last day of
fiscal year 2000 to and including the next to last day
of fiscal year 2001 of the Consolidated Parties, 3.00
to 1.00;
(v) for the period from the last day of
fiscal year 2001 to and including the next to last day
of fiscal year 2002 of the Consolidated Parties, 2.80
to 1.00; and
(vi) for the period from the last day of
fiscal year 2002 and thereafter, 2.60 to 1.00.
(d) Consolidated Tangible Net Worth. At all times the
Consolidated Tangible Net Worth shall be greater than or
equal to:
(i) for the period from the Closing Date to
and including the next to last day of fiscal year 1998
of the Consolidated Parties, $50,000,000;
(ii) for the period from the last day of
fiscal year 1998 to and including the next to last day
of fiscal year 1999 of the Consolidated Parties,
$60,000,000;
(iii) for the period from the last day of
fiscal year 1999 to and including the next to last day
of fiscal year 2000 of the Consolidated Parties,
$75,000,000;
(iv) for the period from the last day of
fiscal year 2000 to and including the next to last day
of fiscal year 2001 of the Consolidated Parties,
$90,000,000;
(v) for the period from the last day of
fiscal year 2001 to and including the next to last day
of fiscal year 2002 of the Consolidated Parties,
$105,000,000; and
(vi) for the period from the last day of
fiscal year 2002 and thereafter, $120,000,000.
7.12 Additional Credit Parties.
As soon as practicable and in any event within 30 days after
any Person becomes a Subsidiary of any Credit Party, the Borrower
shall provide the Administrative Agent with written notice
thereof and shall (i) if such Person is a Domestic Subsidiary of
a Credit Party, cause such Person to execute a Joinder Agreement
in substantially the same form as Exhibit 7.12, (ii) cause
certificates representing 100% (if such Person is a Domestic
Subsidiary of a Credit Party) or 65% (if such Person is a direct
Foreign Subsidiary of a Credit Party) of the Capital Stock of
such Person to be delivered to the Collateral Agent (together
with undated stock powers signed in blank (unless, with respect
to a Foreign Subsidiary, such stock powers are deemed unnecessary
by the Administrative Agent in its reasonable discretion under
the law of the jurisdiction of incorporation of such Person)) and
pledged to the Collateral Agent pursuant to an appropriate pledge
agreement(s) in substantially the form of the Pledge Agreement
and otherwise in form acceptable to the Administrative Agent and
(iii) deliver such other documentation as the Administrative
Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing
statements, environmental reports, landlord's waivers, certified
resolutions and other organizational and authorizing documents of
such Person, favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above
and the perfection of the Administrative Agent's liens
thereunder) and other items of the types required to be delivered
pursuant to Section 5.1(e), all in form, content and scope
reasonably satisfactory to the Administrative Agent.
7.13 Pledged Assets; Release of Collateral.
(a) Each Credit Party will, and will cause each of its
Subsidiaries to, (i) cause all of its Trading Assets located
in the United States to be subject at all times to first
priority and perfected Liens in favor of the Collateral
Agent pursuant to the terms and conditions of the Collateral
Documents and (ii) cause 100% of the Capital Stock in each
Credit Party (including the Borrower) and each direct or
indirect Domestic Subsidiary of the Borrower and 65% of the
Capital Stock in each direct Foreign Subsidiary of the
Borrower and its Domestic Subsidiaries to be subject at all
times to a first priority, perfected Lien in favor of the
Collateral Agent pursuant to the terms and conditions of the
Collateral Documents or such other security documents as the
Administrative Agent shall reasonably request.
(b) Each Credit Party shall, and shall cause each of
its Subsidiaries to, take such action (including but not
limited to the actions set forth in Sections 5.1(e)) at its
own expense as requested by the Administrative Agent to
ensure that the Collateral Agent has a first priority
perfected Lien to secure the Credit Party Obligations in all
Trading Assets of the Credit Parties located in the United
States, subject only to Permitted Liens. Each Credit Party
shall, and shall cause each of its Subsidiaries to, adhere
to the covenants regarding the location of Collateral as set
forth in the Collateral Documents.
(c) In the event that the Borrower shall concurrently
obtain an investment grade long-term senior debt rating from
any two of Moody's, S&P, Duff & Phelps Credit Rating Company
or Fitch Investors Service, then the Administrative Agent
and/or the Collateral Agent, as applicable, shall deliver to
the Borrower, upon the Borrower's request and at the
Borrower's expense, such documentation as is reasonably
necessary to evidence the release of the Collateral Agent's
security interest, if any, in all or any portion of the
Collateral, including, without limitation, terminations of
UCC financing statements and the return of stock
certificates.
7.14 Factoring Agreements.
Promptly upon the Borrower or any Material Subsidiary
entering into a Factoring Agreement, deliver or cause such Person
to deliver an assignment of factoring proceeds, consented to in
writing by the applicable Factor and otherwise in form and
substance satisfactory to the Administrative Agent, with respect
to such Factoring Agreement.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long
as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain
outstanding, and until all of the Commitments hereunder shall
have terminated:
8.1 Indebtedness.
The Credit Parties will not permit any Consolidated Party to
contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement
and the other Credit Documents;
(b) Indebtedness of the Borrower existing as of the
Closing Date and set forth in Schedule 8.1 (and renewals,
refinancings and extensions thereof on terms and conditions
no less favorable to such Person than such existing
Indebtedness);
(c) purchase money Indebtedness (including Capital
Leases and Synthetic Leases) hereafter incurred by the
Borrower to finance the purchase of fixed assets provided
that (i) the total of all such Indebtedness shall not exceed
an aggregate principal amount of $2,500,000 at any one time
outstanding (including any such Indebtedness referred to in
subsection (b) above); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s)
financed; and (iii) no such Indebtedness shall be refinanced
for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(d) obligations of the Borrower or any of its
Subsidiaries in respect of Hedging Agreements entered into
in order to manage existing or anticipated interest rate or
exchange rate risks and not for speculative purposes;
(e) intercompany Indebtedness arising out of loans and
advances permitted under Section 8.6; and
(f) Indebtedness of the Borrower arising under the
Senior Note Indenture and the Senior Notes and Guaranty
Obligations of any Guarantor with respect thereto.
Notwithstanding anything to the contrary set forth in this
Section 8.1 or in any other provision of this Credit Agreement,
none of the Consolidated Parties shall be permitted to contract,
create, incur, assume or permit to exist any Guaranty Obligations
in respect of any Indebtedness of Delta Woodside or any of its
Subsidiaries other than Guaranty Obligations arising in
connection with standby letters of credit or surety bonds issued
to satisfy workers' compensation requirements.
8.2 Liens.
The Credit Parties will not permit any Consolidated Party to
contract, create, incur, assume or permit to exist any Lien
except for Permitted Liens with respect to (i) any of its
Property, whether now owned or after acquired, or (ii) the South
Carolina Bond Property.
8.3 Nature of Business.
The Credit Parties will not permit any Consolidated Party to
substantively alter the character or fields of the business
conducted by such Person as of the Closing Date.
8.4 Consolidation, Merger, Dissolution, etc.
Except in connection with an Asset Disposition permitted by
the terms of Section 8.5, the Credit Parties will not permit any
Consolidated Party to enter into any transaction of merger or
consolidation or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution); provided that, notwithstanding
the foregoing provisions of this Section 8.4, (a) the Borrower
may merge or consolidate with any of its Subsidiaries provided
that (i) the Borrower shall be the continuing or surviving
corporation, (ii) the Credit Parties shall cause to be executed
and delivered such documents, instruments and certificates as the
Administrative Agent may reasonably request so as to cause the
Credit Parties to be in compliance with the terms of Section 7.13
after giving effect to such transaction and (iii) the Borrower
shall have delivered to the Administrative Agent a certificate
demonstrating that after giving effect to such transaction no
Default or Event of Default would exist, (b) any Credit Party
other than the Borrower may merge or consolidate with any other
Credit Party other than the Borrower provided that (i) the Credit
Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Administrative Agent may
reasonably request so as to cause the Credit Parties to be in
compliance with the terms of Section 7.13 after giving effect to
such transaction and (ii) the Borrower shall have delivered to
the Administrative Agent a certificate demonstrating that after
giving effect to such transaction no Default or Event of Default
would exist, (c) any Consolidated Party which is not a Credit
Party may be merged or consolidated with or into any Credit Party
provided that (i) such Credit Party shall be the continuing or
surviving corporation, (ii) the Credit Parties shall cause to be
executed and delivered such documents, instruments and
certificates as the Administrative Agent may reasonably request
so as to cause the Credit Parties to be in compliance with the
terms of Section 7.13 after giving effect to such transaction and
(iii) the Borrower shall have delivered to the Administrative
Agent a certificate demonstrating that after giving effect to
such transaction no Default or Event of Default would exist, (d)
any Consolidated Party which is not a Credit Party may be merged
or consolidated with or into any other Consolidated Party which
is not a Credit Party provided the Borrower shall have delivered
to the Administrative Agent a certificate demonstrating that
after giving effect to such transaction no Default or Event of
Default would exist, and (e) any Wholly-Owned Subsidiary of the
Borrower may dissolve, liquidate or wind up its affairs at any
time.
8.5 Asset Dispositions.
The Credit Parties will not permit any Consolidated Party to
make any Asset Disposition (including, without limitation, any
Sale and Leaseback Transaction) other than Excluded Asset
Dispositions unless (a) the consideration paid in connection
therewith is cash or Cash Equivalents, (b) if such transaction is
a Sale and Leaseback Transaction, such transaction is permitted
by the terms of Section 8.13, (c) such transaction does not
involve the sale or other disposition of a minority equity
interest in any Consolidated Party, (d) the aggregate net book
value of all of the assets sold or otherwise disposed of by the
Consolidated Parties in all such transactions after the Closing
Date shall not exceed $5,000,000, (e) no Default or Event of
Default shall have occurred and be continuing or would occur as a
consequence thereof, (f) if the aggregate net book value of all
of the assets sold or otherwise disposed such transaction exceeds
$500,000, then no later than 30 days prior to such Asset
Disposition, the Administrative Agent and the Lenders shall have
received a certificate of an officer of the Borrower specifying
the anticipated or actual date of such Asset Disposition, briefly
describing the assets to be sold or otherwise disposed of and
setting forth the net book value of such assets, the aggregate
consideration and the Net Cash Proceeds to be received for such
assets in connection with such Asset Disposition and (g) within
the period of 60 days following the consummation of such Asset
Disposition (with respect to any such Asset Disposition, the
"Application Period"), the Borrower shall apply (or cause to be
applied) an amount equal to the Net Cash Proceeds of such Asset
Disposition to (i) the purchase, acquisition or, in the case of
improvements to real property, construction of Eligible Assets or
(ii) to the prepayment of the Loans in accordance with the terms
of Section 3.3(b)(ii).
Upon a sale of assets or the sale of Capital Stock of a
Consolidated Party permitted by this Section 8.5, the
Administrative Agent and/or the Collateral Agent shall (to the
extent applicable) deliver to the Borrower, upon the Borrower's
request and at the Borrower's expense, such documentation as is
reasonably necessary to evidence the release of the Collateral
Agent's security interest, if any, in such assets or Capital
Stock, including, without limitation, amendments or terminations
of UCC financing statements, if any, the return of stock
certificates, if any, and the release of such Subsidiary from all
of its obligations, if any, under the Credit Documents.
8.6 Investments.
The Credit Parties will not permit any Consolidated Party to
make Investments in or to any Person, except for Permitted
Investments.
8.7 Restricted Payments.
The Credit Parties will not permit any Consolidated Party
to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment, except (a) to make
dividends payable solely in the same class of Capital Stock of
such Person, (b) to make dividends or other distributions payable
to the Borrower (directly or indirectly through Subsidiaries),
(c) as permitted by Section 8.8 or Section 8.9, (d) Investments
in Delta Woodside and its Subsidiaries that do not, taken
together with Investments made pursuant to Section 8.6 and clause
(vii) of the definition of "Permitted Investments" set forth in
Section 1.1, exceed $500,000 in the aggregate at any one time
outstanding for all of the Consolidated Parties and (e) any other
Restricted Payment provided that (x) no Default or Event of
Default shall have occurred and be continuing or would occur as a
consequence thereof, (y) such Restricted Payment would be
permitted under the Indenture and (z) such Restricted Payment,
together with the aggregate of all other Restricted Payments
declared or made by the Consolidated Parties after the Closing
Date (excluding Restricted Payments permitted by clause (a), (b),
(c) or (d) of this paragraph or clause (ii) of the next
succeeding paragraph), is less than the sum of (1) $12.5 million,
plus (2) 50% of Consolidated Net Income for the period (taken as
one accounting period) from the beginning of the fiscal quarter
commencing June 29, 1997 to the last day of the most recently
ended fiscal quarter with respect to which the Administrative
Agent shall have received the financial statements required to be
delivered pursuant to Section 7.1(a) or (b) (or, if Consolidated
Net Income for such period is a deficit, less 100% of such
deficit), plus (3) 100% of the aggregate Net Cash Proceeds
received by the Consolidated Parties from any Excluded Equity
Issuance after the Closing Date and 50% of the aggregate Net Cash
Proceeds received by the Consolidated Parties from any Equity
Issuance which is not an Excluded Equity Issuance after the
Closing Date.
The foregoing provisions shall not prohibit (i) the payment of
any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have
complied with this Section 8.7 and (ii) the repayment by the
Borrower on the Closing Date of up to $219 million in aggregate
principal amount of Indebtedness owed by the Borrower to Delta
Woodside and its Subsidiaries provided, that upon such repayment,
all remaining Indebtedness owed by the Borrower to Delta Woodside
and its Subsidiaries shall be contributed to the Borrower's
capital and thereby canceled.
The amount of any Restricted Payments (other than cash Restricted
Payments) shall be equal to the fair market value (evidenced by a
resolution of the board of directors of the applicable
Consolidated Party delivered together with the certificate
referred to below) on the date of the Restricted Payment of the
asset(s) proposed to be transferred by the Borrower or such
Subsidiary, as the case may be, pursuant to such Restricted
Payment. Not later than the date of making any Restricted
Payment, the Borrower shall deliver to the Administrative Agent a
certificate executed by an Executive Officer of the Borrower
stating that such Restricted Payment is permitted and setting
forth the basis upon which the calculations required by this
Section 8.7 were computed, which calculations may be based upon
the Borrower's latest available financial statements.
8.8 Prepayments of Indebtedness, etc.
If any Default or Event of Default has occurred and is
continuing or would be directly or indirectly caused as a result
thereof, the Credit Parties will not permit any Consolidated
Party to (a) after the issuance thereof, amend or modify (or
permit the amendment or modification of) any of the terms of any
Indebtedness if such amendment or modification would add or
change any terms in a manner adverse to the issuer of such
Indebtedness, or shorten the final maturity or average life to
maturity or require any payment to be made sooner than originally
scheduled or increase the interest rate applicable thereto or
change any subordination provision thereof, or (b) make (or give
any notice with respect thereto) any voluntary or optional
payment or prepayment or redemption or acquisition for value of
(including without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for
the purpose of paying when due), refund, refinance or exchange of
any other Indebtedness (including without limitation any
Indebtedness arising under the Senior Note Indenture and the
Senior Notes).
8.9 Transactions with Affiliates.
The Credit Parties will not permit any Consolidated Party to
enter into or permit to exist any transaction or series of
transactions with any officer, director, shareholder, Subsidiary
or Affiliate of such Person other than (a) advances of working
capital to any Credit Party, (b) transfers of cash and assets to
any Credit Party, (c) transactions permitted by Section 8.1,
Section 8.4, Section 8.5, Section 8.6, or Section 8.7, (d) normal
compensation and reimbursement of expenses of officers and
directors, (e) any payment by a Consolidated Party for management
services pursuant to the Management Services Agreement dated as
of August 1, 1997, as the same may be amended from time to time,
between the Borrower and Delta Woodside provided that such
payments shall not exceed $5,000,000 in the aggregate for any
fiscal year, (f) any payment by the Borrower pursuant to the Tax
Sharing Agreement dated as of August 1, 1997, as the same may be
amended from time to time, between the Borrower and Delta
Woodside and (g) except as otherwise specifically limited in this
Credit Agreement, other transactions which are entered into in
the ordinary course of such Person's business on terms and
conditions substantially as favorable to such Person as would be
obtainable by it in a comparable arms-length transaction with a
Person other than an officer, director, shareholder, Subsidiary
or Affiliate.
8.10 Fiscal Year.
The Credit Parties will not permit any Consolidated Party to
change its fiscal year.
8.11 Limitation on Restricted Actions.
The Credit Parties will not permit any Consolidated Party
to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on
the ability of any such Person to (a) pay dividends or make any
other distributions to any Credit Party on its Capital Stock or
with respect to any other interest or participation in, or
measured by, its profits, (b) pay any Indebtedness or other
obligation owed to any Credit Party, (c) make loans or advances
to any Credit Party, (d) sell, lease or transfer any of its
properties or assets to any Credit Party, or (e) act as a
Guarantor and pledge its assets pursuant to the Credit Documents
or any renewals, refinancings, exchanges, refundings or extension
thereof, except (in respect of any of the matters referred to in
clauses (a)-(d) above) for such encumbrances or restrictions
existing under or by reason of (i) this Credit Agreement and the
other Credit Documents, (ii) the Senior Note Indenture and the
Senior Notes, in each case as in effect as of the Closing Date,
(iii) applicable law, (iv) any document or instrument governing
Indebtedness incurred pursuant to Section 8.1(c), provided that
any such restriction contained therein relates only to the asset
or assets constructed or acquired in connection therewith or (v)
any Permitted Lien or any document or instrument governing any
Permitted Lien, provided that any such restriction contained
therein relates only to the asset or assets subject to such
Permitted Lien.
8.12 Ownership of Subsidiaries.
The Credit Parties will not permit any Consolidated Party to
(i) permit any Person (other than the Borrower or any Wholly-
Owned Subsidiary of the Borrower) to own any Capital Stock of any
Subsidiary of the Borrower, (ii) permit any Subsidiary of the
Borrower to issue Capital Stock (except to the Borrower or to a
Wholly-Owned Subsidiary of the Borrower), (iii) permit, create,
incur, assume or suffer to exist any Lien on any Capital Stock of
any Subsidiary of the Borrower, in each case except (A) to
qualify directors where required by applicable law or to satisfy
other requirements of applicable law with respect to the
ownership of Capital Stock of Foreign Subsidiaries, (B) as a
result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4 or
Section 8.5 or (C) for Permitted Liens and (iv) notwithstanding
anything to the contrary contained in clause (ii) above, permit
any Subsidiary of the Borrower to issue any shares of preferred
Capital Stock.
8.13 Sale Leasebacks.
Except for transactions entered into prior to the Closing
Date, the Credit Parties will not permit any Consolidated Party
to, directly or indirectly, become or remain liable as lessee or
as guarantor or other surety with respect to any lease, whether
an Operating Lease or a Capital Lease, of any Property (whether
real, personal or mixed), whether now owned or hereafter
acquired, (a) which such Consolidated Party has sold or
transferred or is to sell or transfer to a Person which is not a
Consolidated Party or (b) which such Consolidated Party intends
to use for substantially the same purpose as any other Property
which has been sold or is to be sold or transferred by such
Consolidated Party to another Person which is not a Consolidated
Party in connection with such lease.
8.14 Capital Expenditures.
The Credit Party will not permit Consolidated Capital
Expenditures for any fiscal year to exceed an amount equal to
150% of depreciation expense of the Borrower and its Subsidiaries
on a consolidated basis for the immediately preceding fiscal year
as determined in accordance with GAAP.
8.15 No Further Negative Pledges.
Except (a) pursuant to this Credit Agreement and the other
Credit Documents, (b) pursuant to the Senior Note Indenture and
the Senior Notes, in each case as in effect as of the Closing
Date and (c) pursuant to any document or instrument governing
Indebtedness incurred pursuant to Section 8.1(c), provided that
any such restriction contained therein relates only to the asset
or assets constructed or acquired in connection therewith, the
Credit Parties will not permit any Consolidated Party to enter
into, assume or become subject to any agreement prohibiting or
otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter
acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation.
8.16 Operating Lease Obligations.
The Credit Parties will not permit any Consolidated Party to
enter into, assume or permit to exist any obligations for the
payment of rental under Operating Leases which in the aggregate
for all such Persons would exceed $5,000,000 in any fiscal year.
8.17 Limitation on Foreign Operations.
The Credit Parties will not permit (i) the Borrower and its
Domestic Subsidiaries to own at any time less than 95% of
Consolidated Total Assets or (ii) as of as of the last day of
each fiscal quarter, the portion attributable to the Borrower and
its Domestic Subsidiaries of Consolidated Net Income for the four
quarters then ended to be less than 95% of Consolidated Net
Income for such period.
8.18 Factoring Agreements.
The Credit Parties will not permit any Consolidated Party to
incur or permit to exist any loans or advances from a Factor
(excluding charges, fees and interest accruing in the ordinary
course of business) under any Factoring Agreement.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any
of the following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any
principal of any of the Loans or of any reimbursement
obligations arising from drawings under Letters of
Credit, or
(ii) default, and such default shall continue
for three (3) or more Business Days, in the payment
when due of any interest on the Loans or on any
reimbursement obligations arising from drawings under
Letters of Credit, or of any Fees or other amounts
owing hereunder, under any of the other Credit
Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or
statement made or deemed to be made by Alchem or any Credit
Party herein, in any of the other Credit Documents, or in
any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in
any material respect on the date as of which it was deemed
to have been made; or
(c) Covenants.
(i) Any Credit Party shall default in the
due performance or observance of any term, covenant or
agreement contained in Sections 7.2, 7.9, 7.11, 7.12,
7.13 or 8.1 through 8.18, inclusive;
(ii) Any Credit Party shall default in the
due performance or observance of any term, covenant or
agreement contained in Sections 7.1(a), (b) (c) or (d)
and such default shall continue unremedied for a period
of at least 5 days after the earlier of a responsible
officer of a Credit Party becoming aware of such
default or notice thereof by the Administrative Agent;
or
(iii) Any Credit Party shall default in
the due performance or observance by it of any term,
covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section
9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at
least 30 days after the earlier of a responsible
officer of a Credit Party becoming aware of such
default or notice thereof by the Administrative Agent;
or
(d) Other Credit Documents. (i) Alchem or any Credit
Party shall default in the due performance or observance of
any term, covenant or agreement in any of the other Credit
Documents (subject to applicable grace or cure periods, if
any), or (ii) except as a result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted
under Section 8.4 or Section 8.5, any Credit Document shall
fail to be in full force and effect or to give the
Administrative Agent and/or the Lenders the Liens, rights,
powers and privileges purported to be created thereby, or
Alchem or any Credit Party, as applicable, shall so state in
writing; or
(e) Guaranties. Except as the result of or in
connection with a dissolution, merger or disposition of a
Subsidiary permitted under Section 8.4 or Section 8.5, the
guaranty given by any Guarantor hereunder (including any
Additional Credit Party) or any provision thereof shall
cease to be in full force and effect, or any Guarantor
(including any Additional Credit Party) hereunder or any
Person acting by or on behalf of such Guarantor shall deny
or disaffirm such Guarantor's obligations under such
guaranty, or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to any
guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur
with respect to Alchem or any Consolidated Party; or
(g) Defaults under Other Agreements.
(i) Any Consolidated Party shall default in
the performance or observance (beyond the applicable
grace period with respect thereto, if any) of any
material obligation or condition of any contract or
lease material to the Consolidated Parties and the
other Person party to such contract or lease shall have
notified the applicable Consolidated Party that such
other Person considers such Consolidated Party to be in
default of such contract or lease; or
(ii) With respect to any Indebtedness (other
than Indebtedness outstanding under this Credit
Agreement) in excess of $250,000 in the aggregate for
the Consolidated Parties taken as a whole, (A) any
Consolidated Party shall (1) default in any payment
(beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness,
or (2) the occurrence and continuance of a default in
the observance or performance relating to such
Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or condition
exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders
of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to
whether any notice or lapse of time is required), any
such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be
declared due and payable, or required to be prepaid
other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall
be entered against one or more of the Consolidated Parties
involving a liability of $250,000 or more in the aggregate
(to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage and has
the ability to perform) and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded
pending appeal within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions,
if such event or condition could have a Material Adverse
Effect: (i) any "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, shall exist with respect to
any Plan, or any lien shall arise on the assets of any
Consolidated Party or any ERISA Affiliate in favor of the
PBGC or a Plan; (ii) an ERISA Event shall occur with respect
to a Single Employer Plan, which is, in the reasonable
opinion of the Administrative Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA;
(iii) an ERISA Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in
the reasonable opinion of the Administrative Agent, likely
to result in (A) the termination of such Plan for purposes
of Title IV of ERISA, or (B) any Consolidated Party or any
ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency or (within the meaning
of Section 4245 of ERISA) such Plan; or (iv) any prohibited
transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject any
Consolidated Party or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Code, or under any agreement or other
instrument pursuant to which any Consolidated Party or any
ERISA Affiliate has agreed or is required to indemnify any
person against any such liability; or
(j) Senior Note Indenture. There shall occur and be
continuing any Event of Default under and as defined in the
Senior Note Indenture; or
(k) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived
by the requisite Lenders (pursuant to the voting requirements of
Section 11.6) or cured to the reasonable satisfaction of the
requisite Lenders (pursuant to the voting procedures in Section
11.6), the Administrative Agent shall, upon the request and
direction of the Required Lenders, by written notice to the
Credit Parties take any of the following actions:
(a) Termination of Commitments. Declare the
Commitments terminated whereupon the Commitments shall be
immediately terminated.
(b) Acceleration. Declare the unpaid principal of and
any accrued interest in respect of all Loans, any
reimbursement obligations arising from drawings under
Letters of Credit and any and all other indebtedness or
obligations of any and every kind owing by the Borrower to
the Administrative Agent and/or any of the Lenders hereunder
to be due whereupon the same shall be immediately due and
payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower.
(c) Cash Collateral. Direct the Borrower to pay (and
the Borrower agrees that upon receipt of such notice, or
upon the occurrence of an Event of Default under Section
9.1(f), it will immediately pay) to the Administrative Agent
or the Collateral Agent (as determined by the Administrative
Agent) additional cash, to be held by the Administrative
Agent or the Collateral Agent, as applicable, for the
benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of
subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount
which may be drawn under all Letters of Credits then
outstanding.
(d) Enforcement of Rights. Enforce (or, in the case
of any Collateral Documents, direct the Collateral Agent to
enforce) any and all rights and interests created and
existing under the Credit Documents including, without
limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a
Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default
specified in Section 9.1(f) shall occur, then the Commitments
shall automatically terminate and all Loans, all reimbursement
obligations arising from drawings under Letters of Credit, all
accrued interest in respect thereof, all accrued and unpaid Fees
and other indebtedness or obligations owing to the Administrative
Agent, the Collateral Agent and/or any of the Lenders hereunder
automatically shall immediately become due and payable without
the giving of any notice or other action by the Administrative
Agent, the Collateral Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment, Powers and Immunities.
Each Lender hereby irrevocably appoints and authorizes (1)
the Administrative Agent to act as its Administrative Agent under
this Credit Agreement and the other Credit Documents with such
powers and discretion as are specifically delegated to the
Administrative Agent by the terms of this Credit Agreement and
the other Credit Documents, together with such other powers as
are reasonably incidental thereto and (2) the Collateral Agent to
act as its Collateral Agent under this Credit Agreement and the
other Credit Documents with such powers and discretion as are
specifically delegated to the Collateral Agent by the terms of
this Credit Agreement and the other Credit Documents, together
with such other powers as are reasonably incidental thereto. The
Administrative Agent and the Collateral Agent (which terms as
used in this sentence and in Section 10.5 and the first sentence
of Section 10.6 hereof shall include their respective Affiliates
and its own and its Affiliates' officers, directors, employees,
and agents): (a) shall not have any duties or responsibilities
except those expressly set forth in this Credit Agreement and
shall not be a trustee or fiduciary for any Lender; (b) shall not
be responsible to the Lenders for any recital, statement,
representation, or warranty (whether written or oral) made in or
in connection with any Credit Document or any certificate or
other document referred to or provided for in, or received by any
of them under, any Credit Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any
Credit Document, or any other document referred to or provided
for therein or for any failure by any Credit Party or any other
Person to perform any of its obligations thereunder; (c) shall
not be responsible for or have any duty to ascertain, inquire
into, or verify the performance or observance of any covenants or
agreements by Alchem or any Credit Party or the satisfaction of
any condition or to inspect the property (including the books and
records) of Alchem or any Credit Party or any of its Subsidiaries
or Affiliates; (d) shall not be required to initiate or conduct
any litigation or collection proceedings under any Credit
Document; and (e) shall not be responsible for any action taken
or omitted to be taken by it under or in connection with any
Credit Document, except for its own gross negligence or willful
misconduct. The Administrative Agent and the Collateral Agent
may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care.
10.2 Reliance by Administrative Agent and the Collateral
Agent.
The Administrative Agent and the Collateral Agent shall be
entitled to rely upon any certification, notice, instrument,
writing, or other communication (including, without limitation,
any thereof by telephone or telecopy) believed by it to be
genuine and correct and to have been signed, sent or made by or
on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for Alchem or any
Credit Party), independent accountants, and other experts
selected by the Administrative Agent. The Administrative Agent
may deem and treat the payee of any Note as the holder thereof
for all purposes hereof unless and until the Administrative Agent
receives and accepts an Assignment and Acceptance executed in
accordance with Section 11.3(b) hereof. As to any matters not
expressly provided for by this Credit Agreement, neither the
Administrative Agent nor the Collateral Agent shall be required
to exercise any discretion or take any action, but shall each be
required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall
be binding on all of the Lenders; provided, however, that neither
the Administrative Agent nor the Collateral Agent shall be
required to take any action that exposes such Person to personal
liability or that is contrary to any Credit Document or
applicable law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking any such
action.
10.3 Defaults.
Neither the Administrative Agent nor the Collateral Agent
shall be deemed to have knowledge or notice of the occurrence of
a Default or Eveynt of Default unless such Person has received
written notice from a Lender or the Borrower specifying such
Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent
or the Collateral Agent receives such a notice of the occurrence
of a Default or Event of Default, such Person receiving notice
shall promptly notify the Lenders thereof. The Administrative
Agent or the Collateral Agent shall each (subject to Section 10.2
hereof) take such action with respect to such Default or Event of
Default as shall reasonably be directed by the Required Lenders,
provided that, unless and until the Administrative Agent or the
Collateral Agent shall have received such directions, such Person
may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the
Lenders.
10.4 Rights as a Lender.
With respect to its Commitment and the Loans made by it,
each of NationsBank (and any successor acting as Administrative
Agent) and BNY Financial (and any successor acting as Collateral
Agent) in its capacity as a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Administrative Agent
or the Collateral Agent (as applicable), and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include
each of the Administrative Agent and the Collateral Agent in its
individual capacity. NationsBank (and any successor acting as
Administrative Agent) and its Affiliates and BNY Financial (and
any successor acting as Collateral Agent) and its Affiliates may
(without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide
services to, and generally engage in any kind of lending, trust,
or other business with any Credit Party or any of its
Subsidiaries or Affiliates as if it were not acting as
Administrative Agent or the Collateral Agent (as applicable), and
NationsBank (and any successor acting as Administrative Agent)
and its Affiliates and BNY Financial (and any successor acting as
Collateral Agent) and its Affiliates may accept fees and other
consideration from any Credit Party or any of its Subsidiaries or
Affiliates for services in connection with this Credit Agreement
or otherwise without having to account for the same to the
Lenders.
10.5 Indemnification.
The Lenders agree to indemnify the Administrative Agent and
the Collateral Agent (to the extent not reimbursed under Section
11.5 hereof, but without limiting the obligations of the Borrower
under such Section) ratably in accordance with their respective
Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys' fees), or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted
against the Administrative Agent or the Collateral Agent, as the
case may be (including by any Lender) in any way relating to or
arising out of any Credit Document or the transactions
contemplated thereby or any action taken or omitted by the
Administrative Agent or the Collateral Agent, as the case may be,
under any Credit Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Administrative Agent or the Collateral
Agent, as the case may be, promptly upon demand for its ratable
share of any costs or expenses payable by the Borrower under
Section 11.5, to the extent that the Administrative Agent or the
Collateral Agent, as the case may be, is not promptly reimbursed
for such costs and expenses by the Borrower. The agreements in
this Section 10.5 shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents and
the termination of the Commitments hereunder.
10.6 Non-Reliance on Administrative Agent, Collateral Agent
and Other Lenders.
Each Lender agrees that it has, independently and without
reliance on the Administrative Agent, the Collateral Agent or any
other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the
Credit Parties and their Subsidiaries and Affiliates and made its
own decision to enter into this Credit Agreement and that it
will, independently and without reliance upon the Administrative
Agent, the Collateral 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 analysis and decisions in
taking or not taking action under the Credit Documents. Except
for notices, reports, and other documents and information
expressly required to be furnished hereunder to the Lenders by
the Administrative Agent or the Collateral Agent, as the case may
be, such Person shall not have any duty or responsibility to
provide any Lender with any credit or other information
concerning the affairs, financial condition, or business of any
Credit Party or any of its Subsidiaries or Affiliates that may
come into the possession of the Administrative Agent, the
Collateral Agent or any of their Affiliates.
10.7 Successor Administrative Agent.
The Administrative Agent and the Collateral Agent may each
resign at any time by giving notice thereof to the Lenders and
the Borrower (each a "Retiring Agent"). Upon any such
resignation, the Required Lenders shall have the right to appoint
a successor Administrative Agent or the Collateral Agent, as the
case may be. If no successor Administrative Agent or Collateral
Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days
after the Retiring Agent's giving of notice of resignation, then
the Retiring Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent or the Collateral Agent, as the
case may be, which shall be a commercial bank organized under the
laws of the United States of America having combined capital and
surplus of at least $100,000,000. Upon the acceptance of any
appointment as Administrative Agent or the Collateral Agent
hereunder by a successor, such successor shall thereupon succeed
to and become vested with all the rights, powers, discretion,
privileges, and duties of the Retiring Agent, and the Retiring
Agent shall be discharged from its duties and obligations
hereunder. After any Retiring Agent's resignation hereunder as
Administrative Agent or Collateral Agent, as the case may be, the
provisions of this Section 10 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Administrative Agent or Collateral
Agent, as the case may be.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be
effective (a) when delivered, (b) upon acknowledgement of
receipt, when transmitted via telecopy (or other facsimile
device) to the number set out below, (c) the Business Day
following the day on which the same has been delivered prepaid to
a reputable national overnight air courier service, or (d) the
third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to
the respective parties at the address, in the case of the
Borrower, Guarantors and the Administrative Agent, set forth
below, and, in the case of the Lenders, set forth on Schedule
2.1(a), or at such other address as such party may specify by
written notice to the other parties hereto:
if to the Borrower or the Guarantors:
Delta Mills, Inc.
1082 Court House Square
Post Office Box 388
Edgefield, South Carolina 29824
Attn: Bettis C. Rainsford
Telephone: 803-637-5304
Telecopy: 803-637-6066)
with a copy to:
Eric B. Amstutz, Esq.
Wyche, Burgess, Freeman & Parham, P.A.
44 East Camperdown Way
Greenville, South Carolina 29601
Post Office Box 728 (29602-0728)
Greenville, South Carolina 29602
Telephone: 864-242-8201
Telecopy: 864-235-8900
if to the Administrative Agent:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-8958
Telecopy: (704) 388-9436
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center, 8th Floor
100 North Tryon Street
Charlotte, North Carolina 28255
Attn: E. Phifer Helms
Telephone: (704) 386-5358
Telecopy: (704) 386-1270
11.2 Right of Set-Off; Adjustments.
Upon the occurrence and during the continuance of any Event
of Default, each Lender (and each of its Affiliates) is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Lender (or any of its Affiliates) to or for the credit or
the account of any Credit Party against any and all of the
obligations of such Person now or hereafter existing under this
Credit Agreement, under the Notes, under any other Credit
Document or otherwise, irrespective of whether such Lender shall
have made any demand under hereunder or thereunder and although
such obligations may be unmatured. Each Lender agrees promptly
to notify any affected Credit Party after any such set-off and
application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Lender under this
Section 11.2 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that
such Lender may have.
11.3 Benefit of Agreement.
(a) This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided that
none of the Credit Parties may assign or transfer any of its
interests and obligations without prior written consent of
the Lenders; provided further that the rights of each Lender
to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth
in this Section 11.3.
(b) Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations
under this Credit Agreement (including, without limitation,
all or a portion of its Loans, its Notes, and its
Commitment); provided, however, that
(i) each such assignment shall be to an
Eligible Assignee;
(ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender's
rights and obligations under this Credit Agreement, any
such partial assignment shall be in an amount at least
equal to $5,000,000 (or, if less, the remaining amount
of the Commitment being assigned by such Lender) or an
integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender
shall be of a constant, and not varying, percentage of
all of its rights and obligations under this Credit
Agreement and the Notes; and
(iv) the parties to such assignment shall
execute and deliver to the Administrative Agent for its
acceptance an Assignment and Acceptance in the form of
Exhibit 11.3(b) hereto, together with any Note subject
to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment
and Acceptance, the assignee thereunder shall be a party
hereto and, to the extent of such assignment, have the
obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its
obligations under this Credit Agreement. Upon the
consummation of any assignment pursuant to this Section
11.3(b), the assignor, the Administrative Agent and the
Borrower shall make appropriate arrangements so that, if
required, new Notes are issued to the assignor and the
assignee. If the assignee is not incorporated under the
laws of the United States of America or a state thereof, it
shall deliver to the Borrower and the Administrative Agent
certification as to exemption from deduction or withholding
of Taxes in accordance with Section 3.11.
(c) The Administrative Agent shall maintain at its
address referred to in Section 11.1 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 owing 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 Administrative Agent
and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of
this Credit 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.
(d) Upon its receipt of an Assignment and Acceptance
executed by the parties thereto, together with any Note
subject to such assignment and payment of the processing
fee, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the
form of Exhibit 11.3(b) hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof
to the parties thereto.
(e) Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations
under this Credit Agreement (including all or a portion of
its Commitment and its Loans); provided, however, that (i)
such Lender's obligations under this Credit Agreement shall
remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance
of such obligations, (iii) the participant shall be
entitled to the benefit of the yield protection provisions
contained in Sections 3.7 through 3.12, inclusive, and the
right of set-off contained in Section 11.2, and (iv) the
Borrower shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and
obligations under this Credit Agreement, and such Lender
shall retain the sole right to enforce the obligations of
the Borrower relating to its Loans and its Notes and to
approve any amendment, modification, or waiver of any
provision of this Credit Agreement (other than amendments,
modifications, or waivers decreasing the amount of principal
of or the rate at which interest is payable on such Loans or
Note, extending any scheduled principal payment date or date
fixed for the payment of interest on such Loans or Note, or
extending its Commitment).
(f) Notwithstanding any other provision set forth in
this Credit Agreement, any Lender may at any time assign and
pledge all or any portion of its Loans and its Notes to any
Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the
assigning Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning
the Borrower or any of its Subsidiaries in the possession of
such Lender from time to time to assignees and participants
(including prospective assignees and participants), subject,
however, to the provisions of Section 11.14 hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Administrative Agent
or any Lender in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of
dealing between the Administrative Agent or any Lender and Alchem
and any of the Credit Parties shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Administrative
Agent or any Lender would otherwise have. No notice to or demand
on Alchem or any Credit Party in any case shall entitle Alchem or
any other Credit Party to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the
rights of the Administrative Agent or the Lenders to any other or
further action in any circumstances without notice or demand.
11.5 Expenses; Indemnification.
(a) The Borrower agrees to pay on demand all
reasonable costs and expenses of the Administrative Agent
and the Collateral Agent in connection with the syndication,
preparation, execution, delivery, administration,
modification, and amendment of this Credit Agreement, the
other Credit Documents, and the other documents to be
delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for the
Administrative Agent and the Collateral Agent (including the
cost of internal counsel) with respect thereto and with
respect to advising the Administrative Agent and the
Collateral Agent as to their respective rights and
responsibilities under the Credit Documents. The Borrower
further agrees to pay on demand all reasonable costs and
expenses of the Administrative Agent, the Collateral Agent
and the Lenders, if any (including, without limitation,
reasonable attorneys' fees and expenses and the cost of
internal counsel), in connection with the enforcement
(whether through negotiations, legal proceedings, or
otherwise) of the Credit Documents and the other documents
to be delivered hereunder.
(b) The Borrower agrees to indemnify and hold harmless
the Administrative Agent and each Lender and each of their
Affiliates and their respective officers, directors,
employees, agents, and advisors (each, an "Indemnified
Party") from and against any and all claims, damages,
losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred
by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason
of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of
defense in connection therewith) the Credit Documents, any
of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans, except to the
extent such claim, damage, loss, liability, cost, or expense
is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct.
In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 11.5
applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by
the Borrower, its directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified
Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. The
Borrower agrees not to assert any claim against the
Administrative Agent, the Collateral Agent, any Lender, any
of their Affiliates, or any of their respective directors,
officers, employees, attorneys, agents, and advisers, on any
theory of liability, for special, indirect, consequential,
or punitive damages arising out of or otherwise relating to
the Credit Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the
Loans. The Administrative Agent, the Collateral Agent and
the Lenders agree not to assert any claim against any of the
Credit Parties, or any of their respective directors,
officers, employees, attorneys, agents, and advisers, on any
theory of liability, for special, indirect, consequential,
or punitive damages arising out of or otherwise relating to
the Credit Documents or any of the transactions contemplated
herein.
(c) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 11.5
shall survive the repayment of the Loans, LOC Obligations
and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document
nor any of the terms hereof or thereof may be amended, changed,
waived, discharged or terminated unless such amendment, change,
waiver, discharge or termination is in writing entered into by,
or approved in writing by, the Required Lenders and the Borrower,
provided, however, that:
(a) without the consent of each Lender affected
thereby, neither this Credit Agreement nor any other Credit
Document may be amended to
(i) extend the final maturity of any Loan or
the time of payment of any reimbursement obligation, or
any portion thereof, arising from drawings under
Letters of Credit,
(ii) reduce the rate or extend the time of
payment of interest (other than as a result of waiving
the applicability of any post-default increase in
interest rates) thereon or Fees hereunder,
(iii) reduce or waive the principal
amount of any Loan or of any reimbursement obligation,
or any portion thereof, arising from drawings under
Letters of Credit,
(iv) increase the Commitment of a Lender over
the amount thereof in effect (it being understood and
agreed that a waiver of any Default or Event of Default
or mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of
any Lender),
(v) except as the result of or in connection
with an Asset Disposition permitted by Section 8.5,
release all or substantially all of the Collateral,
(vi) except as the result of or in connection
with a dissolution, merger or disposition of a
Subsidiary permitted under Section 8.4, release the
Borrower or substantially all of the other Credit
Parties from its or their obligations under the Credit
Documents,
(vii) amend, modify or waive any
provision of this Section 11.6 or Section 3.6, 3.7,
3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 9.1(a),
11.2, 11.3, 11.5 or 11.9,
(viii) reduce any percentage specified in,
or otherwise modify, the definition of Required
Lenders, or
(ix) consent to the assignment or transfer by
the Borrower or all or substantially all of the other
Credit Parties of any of its or their rights and
obligations under (or in respect of) the Credit
Documents except as permitted thereby;
(b) without the consent of the Administrative Agent,
no provision of Section 10 may be amended;
(c) without the consent of the Issuing Lenders, no
provision of Section 2.2 may be amended; and
(d) without the consent of the Swingline Lender, no
provision of Section 2.3 may be amended.
Notwithstanding the fact that the consent of all the Lenders
is required in certain circumstances as set forth above, (x)
each Lender is entitled to vote as such Lender sees fit on
any bankruptcy reorganization plan that affects the Loans,
and each Lender acknowledges that the provisions of Section
1126(c) of the Bankruptcy Code supersedes the unanimous
consent provisions set forth herein and (y) the Required
Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency
proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall
be an original, but all of which shall constitute one and the
same instrument. It shall not be necessary in making proof of
this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by
facsimile by any of the parties hereto of an executed counterpart
of this Credit Agreement shall be as effective as an original
executed counterpart hereof and shall be deemed a representation
that an original executed counterpart hereof will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Credit
Agreement.
11.9 Survival.
All indemnities set forth herein, including, without
limitation, in Section 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall
survive the execution and delivery of this Credit Agreement, the
making of the Loans, the issuance of the Letters of Credit, the
repayment of the Loans, LOC Obligations and other obligations
under the Credit Documents and the termination of the Commitments
hereunder, and all representations and warranties made by the
Credit Parties herein shall survive delivery of the Notes and the
making of the Loans hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA. Any legal action or proceeding with respect
to this Credit Agreement or any other Credit Document may be
brought in the courts of the State of North Carolina in
Mecklenburg County, or of the United States for the Western
District of North Carolina, and, by execution and delivery
of this Credit Agreement, each of the Credit Parties hereby
irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive
jurisdiction of such courts. Each of the Credit Parties
further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set
out for notices pursuant to Section 11.1, such service to
become effective three (3) days after such mailing. Nothing
herein shall affect the right of the Administrative Agent or
any Lender to serve process in any other manner permitted by
law or to commence legal proceedings or to otherwise proceed
against any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably
waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Credit
Agreement or any other Credit Document brought in the courts
referred to in subsection (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LENDERS, THE
BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT
AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is
determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit
Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at
such time on or after the Closing Date when it shall have
been executed by the Borrower, the Guarantors and the
Administrative Agent, and the Administrative Agent shall
have received copies hereof (telefaxed or otherwise) which,
when taken together, bear the signatures of each Lender, and
thereafter this Credit Agreement shall be binding upon and
inure to the benefit of the Borrower, the Guarantors, the
Administrative Agent and each Lender and their respective
successors and assigns.
(b) The term of this Credit Agreement shall be until
no Loans, LOC Obligations or any other amounts payable
hereunder or under any of the other Credit Documents shall
remain outstanding, no Letters of Credit shall be
outstanding, all of the Credit Party Obligations have been
irrevocably satisfied in full and all of the Commitments
hereunder shall have expired or been terminated.
11.14 Confidentiality.
The Administrative Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or
made available to it by the Borrower pursuant to this Credit
Agreement that is marked confidential; provided that nothing
herein shall prevent any Lending Party from disclosing such
information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or
advisor of any Lending Party or Affiliate of any Lending Party,
(b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as
required by any law, rule, or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request or
demand of any regulatory agency or authority, (f) that is or
becomes available to the public or that is or becomes available
to any Lending Party other than as a result of a disclosure by
any Lending Party prohibited by this Credit Agreement, (g) in
connection with any litigation to which such Lending Party or any
of its Affiliates may be a party, (h) to the extent necessary in
connection with the exercise of any remedy under this Credit
Agreement or any other Credit Document, and (i) subject to
provisions substantially similar to those contained in this
Section 11.14, to any actual or proposed participant or assignee.
11.15 Conflict.
To the extent that there is a conflict or inconsistency
between any provision hereof, on the one hand, and any provision
of any Credit Document, on the other hand, this Credit Agreement
shall control.
[Signature Pages to Follow]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and
delivered as of the date first above written.
BORROWER: DELTA MILLS, INC.,
a Delaware corporation
By: /s/ Bettis C. Rainsford
Name: Bettis C. Rainsford
Title: Executive Vice President,
Treasurer and Chief Financial Officer
GUARANTOR: DELTA MILLS MARKETING, INC.,
a Delaware corporation
By: /s/ Bettis C. Rainsford
Name: Bettis C. Rainsford
Title: Executive Vice President,
Treasurer and Chief Financial Officer
[Signatures Continued]
LENDERS: NATIONSBANK, N.A.
By: /s/ E. Phifer Helms
Name: E. Phifer Helms
Title: Senior Vice President
BNY FINANCIAL CORPORATION
By: /s/ Joseph A. Grimaldi
Name: Joseph A. Grimaldi
Title: President
GENERAL ELECTRIC
CAPITAL CORPORATION
By: /s/ Elaine L. Moore
Name: Elaine L. Moore
Title: Senior Vice President, Manager
Commercial Finance
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH
By: /s/ Theodore w. Cox
Name: Theodore W. Cox
Title: Vice President
By: /s/ W. Jeffrey Vollack
Name: W. Jeffrey Vollack
Title: Vice President
[Signatures Continued]
ADMINISTRATIVE
AGENT: NATIONSBANK, N.A.
By: /s/ E. Phifer Helms
Name: E. Phifer Helms
Title: Senior Vice President
COLLATERAL
AGENT: BNY FINANCIAL CORPORATION
By: /s/ Joseph A. Grimaldi
Name: Joseph A. Grimaldi
Title: President
Exhibit 1.1A
FORM OF PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered
into as of August 25, 1997 among DELTA MILLS, INC., a Delaware
corporation (the "Borrower"), ALCHEM CAPITAL CORPORATION, a
Delaware corporation (the "Parent"), certain Subsidiaries of the
Borrower (individually a "Guarantor", and collectively the
"Guarantors"; together with the Borrower and the Parent,
individually a "Pledgor", and collectively the "Pledgors") and
BNY FINANCIAL CORPORATION (the "Collateral Agent") for the
lenders from time to time party to the Credit Agreement described
below (the "Lenders"); and NATIONSBANK, N.A., in its capacity as
administrative agent (in such capacity, the "Administrative
Agent"; together with the Collateral Agent, the "Agents") for the
Lenders.
RECITALS
WHEREAS, pursuant to that certain Credit Agreement dated as
of the date hereof (as amended, modified, extended, renewed or
replaced from time to time, the "Credit Agreement") among the
Borrower, the Guarantors, the Lenders, the Administrative Agent
and the Collateral Agent, the Lenders have agreed to make Loans
and issue Letters of Credit upon the terms and subject to the
conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of
the Credit Agreement and the obligations of the Lenders to make
their respective Loans and to issue Letters of Credit under the
Credit Agreement that the Pledgors shall have executed and
delivered this Pledge Agreement to the Agent for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to
such terms in the Credit Agreement. For purposes of this Pledge
Agreement, the term "Lender" shall include any Issuing Lender.
2. Pledge and Grant of Security Interest. To secure the
prompt payment and performance in full when due, whether by lapse
of time or otherwise, of the Pledgor Obligations (as defined in
Section 3 hereof), each Pledgor hereby pledges and assigns to the
Collateral Agent, for the benefit of the Lenders, and grants to
the Collateral Agent, for the benefit of the Lenders, a
continuing security interest in any and all right, title and
interest of such Pledgor in and to the following, whether now
owned or existing or owned, acquired, or arising hereafter
(collectively, the "Pledged Collateral"):
(a) Pledged Shares. (i) 100% (or, if less, the
full amount owned by such Pledgor) of the issued and
outstanding shares of capital stock owned by such Pledgor of
each Domestic Subsidiary set forth on Schedule 2(a) attached
hereto and (ii) 65% (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding shares of each
class of capital stock or other ownership interests entitled
to vote (within the meaning of Treas. Reg. Section 1.956-
2(c)(2)) ("Voting Equity") and 100% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding
shares of each class of capital stock or other ownership
interests not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) ("Non-Voting Equity") owned by
such Pledgor of each Foreign Subsidiary set forth on
Schedule 2(a) attached hereto, in each case together with
the certificates (or other agreements or instruments), if
any, representing such shares, and all options and other
rights, contractual or otherwise, with respect thereto
(collectively, together with the shares of capital stock
described in Section 2(b) and 2(c) below, the "Pledged
Shares"), including, but not limited to, the following:
(y) all shares or securities representing a
dividend on any of the Pledged Shares, or representing
a distribution or return of capital upon or in respect
of the Pledged Shares, or resulting from a stock split,
revision, reclassification or other exchange therefor,
and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of,
the Pledged Shares; and
(z) without affecting the obligations of
such Pledgor under any provision prohibiting such
action hereunder, in the event of any consolidation or
merger in which a Pledgor is not the surviving
corporation, all shares of each class of the capital
stock of the successor corporation formed by or
resulting from such consolidation or merger.
(b) Additional Shares. 100% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding
shares of capital stock owned by such Pledgor of any Person
which hereafter becomes a Domestic Subsidiary and 65% (or,
if less, the full amount owned by such Pledgor) of the
Voting Equity and 100% (or, if less, the full amount owned
by such Pledgor) of the Non-Voting Equity owned by such
Pledgor of any Person which hereafter becomes a Foreign
Subsidiary, including, without limitation, the certificates
representing such shares.
(c) Other Equity Interests. Any and all other Capital
Stock of each Pledgor in any Domestic Subsidiary or any
Foreign Subsidiary.
(d) Proceeds. All proceeds of the foregoing, however
and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is
hereby specifically understood and agreed that a Pledgor may from
time to time hereafter deliver additional shares of stock to the
Collateral Agent as collateral security for the Pledgor
Obligations. Upon delivery to the Collateral Agent, such
additional shares of stock shall be deemed to be part of the
Pledged Collateral of such Pledgor and shall be subject to the
terms of this Pledge Agreement whether or not Schedule 2(a) is
amended to refer to such additional shares.
3. Security for Pledgor Obligations. The security
interest created hereby in the Pledged Collateral of each Pledgor
constitutes continuing collateral security for all of the
following, whether now existing or hereafter incurred (the
"Pledgor Obligations"):
(a) In the case of the Borrower, the prompt
performance and observance by the Borrower of all
obligations of the Borrower under the Credit Agreement, the
Notes, this Pledge Agreement and the other Credit Documents
to which the Borrower is a party;
(b) In the case of the Guarantors, the prompt
performance and observance by such Guarantor of all
obligations of such Guarantor under the Credit Agreement,
this Pledge Agreement and the other Credit Documents to
which such Guarantor is a party, including, without
limitation, its guaranty obligations arising under Section 4
of the Credit Agreement;
(c) In the case of the Parent, (i) the prompt
performance and observance by the Borrower of all
obligations of the Borrower under the Credit Agreement, the
Notes, this Pledge Agreement and the other Credit Documents
to which the Borrower is a party and (ii) the prompt
performance and observance by the Parent of all obligations
of the Pledgor under the this Pledge Agreement; and
(d) All other indebtedness, liabilities and
obligations of any kind or nature owing from any Pledgor to
any Lender or the Agent arising under the Credit Agreement
or the other Credit Documents, and all obligations and
liabilities incurred in connection with collecting and
enforcing the Pledgor Obligations.
4. Delivery of the Pledged Collateral. Each Pledgor
hereby agrees that:
(a) Each Pledgor shall deliver to the Collateral Agent
(i) simultaneously with or prior to the execution and
delivery of this Pledge Agreement, all certificates
representing the Pledged Shares of such Pledgor and (ii)
promptly upon the receipt thereof by or on behalf of a
Pledgor, all other certificates and instruments constituting
Pledged Collateral of a Pledgor. Prior to delivery to the
Collateral Agent, all such certificates and instruments
constituting Pledged Collateral of a Pledgor shall be held
in trust by such Pledgor for the benefit of the Collateral
Agent pursuant hereto. All such certificates shall be
delivered in suitable form for transfer by delivery or shall
be accompanied by duly executed instruments of transfer or
assignment in blank, with signature guaranties substantially
in the form provided in Exhibit 4(a) attached hereto.
(b) Additional Securities. If such Pledgor shall
receive by virtue of its being or having been the owner of
any Pledged Collateral, any (i) stock certificate, including
without limitation, any certificate representing a stock
dividend or distribution in connection with any increase or
reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock
splits, spin-off or split-off, promissory notes or other
instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral
or otherwise; (iii) dividends payable in securities; or
(iv) distributions of securities in connection with a
partial or total liquidation, dissolution or reduction of
capital, capital surplus or paid-in surplus, then such
Pledgor shall receive such stock certificate, instrument,
option, right or distribution in trust for the benefit of
the Collateral Agent, shall segregate it from such Pledgor's
other property and shall deliver it forthwith to the
Collateral Agent in the exact form received together with
any necessary endorsement and/or appropriate stock power
duly executed in blank, substantially in the form provided
in Exhibit 4(a), to be held by the Collateral Agent as
Pledged Collateral and as further collateral security for
the Pledgor Obligations.
(c) Financing Statements. Each Pledgor shall execute
and deliver to the Administrative Agent such UCC or other
applicable financing statements as may be reasonably
requested by the Administrative Agent in order to perfect
and protect the security interest of the Collateral Agent
created hereby in the Pledged Collateral of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby
represents and warrants to the Agents, for the benefit of the
Lenders, that so long as any of the Pledgor Obligations remain
outstanding or any Credit Document is in effect or any Letter of
Credit shall remain outstanding, and until all of the Commitments
shall have been terminated:
(a) Authorization of Pledged Shares. The Pledged
Shares are duly authorized and validly issued, are fully
paid and nonassessable and are not subject to the preemptive
rights of any Person. All other shares of stock
constituting Pledged Collateral will be duly authorized and
validly issued, fully paid and nonassessable and not subject
to the preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible
title to the Pledged Collateral of such Pledgor and will at
all times be the legal and beneficial owner of such Pledged
Collateral free and clear of any Lien, other than Permitted
Liens. There exists no "adverse claim" within the meaning
of Section 8-302 of the Uniform Commercial Code as in effect
in the State of North Carolina (the "UCC") with respect to
the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Agents
of their rights and remedies hereunder will not violate any
law or governmental regulation or any material contractual
restriction binding on or affecting a Pledgor or any of its
property.
(d) Pledgor's Authority. No authorization, approval
or action by, and no notice or filing with any Governmental
Authority or with the issuer of any Pledged Stock is
required either (i) for the pledge made by a Pledgor or for
the granting of the security interest by a Pledgor pursuant
to this Pledge Agreement or (ii) for the exercise by the
Agents or the Lenders of their rights and remedies hereunder
(except as may be required by laws affecting the offering
and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement
creates a valid security interest in favor of the Collateral
Agent for the benefit of the Lenders, in the Pledged
Collateral. The taking possession by the Collateral Agent
of the certificates representing the Pledged Shares and all
other certificates and instruments constituting Pledged
Collateral will perfect and establish the first priority of
the Collateral Agent's security interest in the Pledged
Shares and, when properly perfected by filing or
registration, in all other Pledged Collateral represented by
such Pledged Shares and instruments securing the Pledgor
Obligations. Except as set forth in this Section 5(e), no
action is necessary to perfect or otherwise protect such
security interest.
(f) No Other Shares. No Pledgor owns any shares of
stock other than as set forth on Schedule 2(a) attached
hereto.
6. Covenants. Each Pledgor hereby covenants, that so long
as any of the Pledgor Obligations remain outstanding or any
Credit Document is in effect or any Letter of Credit shall remain
outstanding, and until all of the Commitments shall have been
terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records
(and shall cause the issuer of the Pledged Shares of such
Pledgor to mark its books and records) to reflect the
security interest granted to the Collateral Agent, for the
benefit of the Lenders, pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its
own expense against the claims and demands of all other
parties claiming an interest therein, keep the Pledged
Collateral free from all Liens, except for Permitted Liens,
and not sell, exchange, transfer, assign, lease or otherwise
dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit
Agreement and the other Credit Documents.
(c) Further Assurances. Promptly execute and deliver
at its expense all further instruments and documents and
take all further action that may be necessary and desirable
or that the Administrative Agent may reasonably request in
order to (i) perfect and protect the security interest of
the Collateral Agent created hereby in the Pledged
Collateral of such Pledgor (including without limitation any
and all action necessary to satisfy the Administrative Agent
that the Collateral Agent has obtained a first priority
perfected security interest in any capital stock); (ii)
enable the Agents to exercise and enforce their rights and
remedies hereunder in respect of the Pledged Collateral of
such Pledgor; and (iii) otherwise effect the purposes of
this Pledge Agreement, including, without limitation and if
requested by the Administrative Agent, delivering to the
Collateral Agent irrevocable proxies in respect of the
Pledged Collateral of such Pledgor.
(d) Amendments. Not make or consent to any amendment
or other modification or waiver with respect to any of the
Pledged Collateral of such Pledgor or enter into any
agreement or allow to exist any restriction with respect to
any of the Pledged Collateral of such Pledgor other than
pursuant hereto or as may be permitted under the Credit
Agreement.
(e) Compliance with Securities Laws. File all reports
and other information now or hereafter required to be filed
by such Pledgor with the United States Securities and
Exchange Commission and any other state, federal or foreign
agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
7. Advances by Lenders. On failure of any Pledgor to
perform any of the covenants and agreements contained herein, the
Administrative Agent may, at its sole option and in its sole
discretion, or the Collateral Agent shall, at the direction of
the Administrative Agent, perform the same and in so doing may
expend such sums as the Administrative Agent may reasonably deem
advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of
any taxes, a payment to obtain a release of a Lien or potential
Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Agents or the Lenders may
make for the protection of the security hereof or which may be
compelled to make by operation of law. All such sums and amounts
so expended shall be repayable by the Pledgors on a joint and
several basis promptly upon timely notice thereof and demand
therefor, shall constitute additional Pledgor Obligations and
shall bear interest from the date said amounts are expended at
the default rate specified in Section 3.1 of the Credit Agreement
for Base Rate Loans. No such performance of any covenant or
agreement by the Agents or the Lenders on behalf of any Pledgor,
and no such advance or expenditure therefor, shall relieve the
Pledgors of any default under the terms of this Pledge Agreement
or the other Credit Documents. The Lenders may make any payment
hereby authorized in accordance with any bill, statement or
estimate procured from the appropriate public office or holder of
the claim to be discharged without inquiry into the accuracy of
such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to
the extent such payment is being contested in good faith by a
Pledgor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which
under the Credit Agreement would constitute an Event of Default
shall be an Event of Default hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event
of Default and during the continuation thereof, the Agents
and the Lenders shall have, in respect of the Pledged
Collateral of any Pledgor, in addition to the rights and
remedies provided herein, in the Credit Documents or by law,
the rights and remedies of a secured party under the UCC or
any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence
of an Event of Default and during the continuation thereof,
without limiting the generality of this Section and without
notice, the Collateral Agent shall, at the direction of the
Administrative Agent, sell or otherwise dispose of or
realize upon the Pledged Collateral, or any part thereof, in
one or more parcels, at public or private sale, at any
exchange or broker's board or elsewhere, at such price or
prices and on such other terms as the Administrative Agent
may deem commercially reasonable, for cash, credit or for
future delivery or otherwise in accordance with applicable
law. To the extent permitted by law, any Lender may in such
event, bid for the purchase of such securities. Each
Pledgor agrees that, to the extent notice of sale shall be
required by law and has not been waived by such Pledgor, any
requirement of reasonable notice shall be met if notice,
specifying the place of any public sale or the time after
which any private sale is to be made, is personally served
on or mailed, postage prepaid, to such Pledgor, in
accordance with the notice provisions of Section 11.1 of the
Credit Agreement at least 10 days before the time of such
sale. The Collateral Agent shall not be obligated to make
any sale of Pledged Collateral of such Pledgor regardless of
notice of sale having been given. The Collateral Agent at
the direction of the Administrative Agent may adjourn any
public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to
which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of
Default and during the continuation thereof, the Pledgors
recognize that the Administrative Agent may deem it
impracticable for the Collateral Agent to effect a public
sale of all or any part of the Pledged Shares or any of the
securities constituting Pledged Collateral and that the
Administrative Agent may, therefore, direct the Collateral
Agent to make one or more private sales of any such
securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such
securities for their own account, for investment and not
with a view to the distribution or resale thereof. Each
Pledgor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the
prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that
such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Agents shall
have no obligation to delay sale of any such securities for
the period of time necessary to permit the issuer of such
securities to register such securities for public sale under
the Securities Act of 1933. Each Pledgor further
acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general
circulation in the financial community of New York, New York
(to the extent that such offer may be advertised without
prior registration under the Securities Act of 1933), or
(ii) made privately in the manner described above shall be
deemed to involve a "public sale" under the UCC,
notwithstanding that such sale may not constitute a "public
offering" under the Securities Act of 1933, and either Agent
may, in such event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. In addition to
the rights and remedies hereunder, upon the occurrence of an
Event of Default, the Collateral Agent shall at the
direction of the Administrative Agent, after providing the
notices required by Section 9-505(2) of the UCC or otherwise
complying with the requirements of applicable law of the
relevant jurisdiction, retain all or any portion of the
Pledged Collateral in satisfaction of the Pledgor
Obligations. Unless and until the Collateral Agent shall
have provided such notices, however, the Collateral Agent
shall not be deemed to have retained any Pledged Collateral
in satisfaction of any Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all
amounts to which the Agents or the Lenders are legally
entitled, the Borrower and the Guarantors shall be jointly
and severally liable for the deficiency, together with
interest thereon at the default rate specified in Section
3.1 of the Credit Agreement for Base Rate Loans, together
with the costs of collection and the reasonable fees of any
attorneys employed by the Collateral Agent at the direction
of the Administrative Agent to collect such deficiency. Any
surplus remaining after the full payment and satisfaction of
the Pledgor Obligations shall be returned to the Pledgors or
to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
10. Rights of the Agents.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Pledgor hereby designates
and appoints the Collateral Agent, on behalf of the Lenders,
and each of its designees or agents as attorney-in-fact of
such Pledgor, irrevocably and with power of substitution,
with authority to take any or all of the following actions
upon the occurrence and during the continuance of an Event
of Default (the taking of any such action shall be at the
direction of the Administrative Agent):
(i) to demand, collect, settle,
compromise, adjust and give discharges and releases
concerning the Pledged Collateral of such Pledgor, all
as the Administrative Agent may reasonably determine;
(ii) to commence and prosecute any
actions at any court for the purposes of collecting any
of the Pledged Collateral of such Pledgor and enforcing
any other right in respect thereof;
(iii) to defend, settle or
compromise any action brought and, in connection
therewith, give such discharge or release as the
Administrative Agent may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens,
security interests, or other encumbrances levied or
placed on or threatened against the Pledged Collateral
of such Pledgor;
(v) to direct any parties liable for
any payment under any of the Pledged Collateral to make
payment of any and all monies due and to become due
thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct;
(vi) to receive payment of and receipt
for any and all monies, claims, and other amounts due
and to become due at any time in respect of or arising
out of any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any
drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to
the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or
adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges
or releases as the Administrative Agent may deem
reasonably appropriate;
(ix) execute and deliver all
assignments, conveyances, statements, financing
statements, renewal financing statements, pledge
agreements, affidavits, notices and other agreements,
instruments and documents that the Administrative Agent
may determine necessary in order to perfect and
maintain the security interests and liens granted in
this Pledge Agreement and in order to fully consummate
all of the transactions contemplated therein;
(x) to exchange any of the Pledged
Collateral of such Pledgor or other property upon any
merger, consolidation, reorganization, recapitalization
or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Pledged
Collateral of such Pledgor with any committee,
depository, transfer agent, registrar or other
designated agency upon such terms as the Administrative
Agent may determine;
(xi) to vote for a shareholder
resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged
Shares of such Pledgor into the name of an Agent or one
or more of the Lenders or into the name of any
transferee to whom the Pledged Shares of such Pledgor
or any part thereof may be sold pursuant to Section 10
hereof; and
(xii) to do and perform all such
other acts and things as the Administrative Agent may
reasonably deem to be necessary, proper or convenient
in connection with the Pledged Collateral of such
Pledgor.
This power of attorney is a power coupled with an interest
and shall be irrevocable (i) for so long as any of the
Pledgor Obligations remain outstanding, any Credit Document
is in effect or any Letter of Credit shall remain
outstanding and (ii) until all of the Commitments shall have
been terminated. The Collateral Agent shall be under no
duty, unless directed by the Administrative Agent, to
exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly
granted to the Collateral Agent in this Pledge Agreement,
and shall not be liable for any failure to do so or any
delay in doing so. The Agents shall not be liable for any
act or omission or for any error of judgment or any mistake
of fact or law in their individual capacities or for the
Collateral Agent in its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or
willful misconduct. This power of attorney is conferred on
the Collateral Agent solely to protect, preserve and realize
upon the Collateral Agent's security interest in Pledged
Collateral.
(b) Performance by the Collateral Agent of Pledgor's
Obligations. If any Pledgor fails to perform any agreement
or obligation contained herein, the Collateral Agent at the
direction of the Administrative Agent shall perform, or
cause performance of, such agreement or obligation, and the
expenses of the Agents incurred in connection therewith
shall be payable by the Borrower and Guarantors on a joint
and several basis pursuant to Section 13 hereof.
(c) Assignment by the Collateral Agent. The
Collateral Agent shall at the direction of the
Administrative Agent from time to time assign the Pledgor
Obligations and any portion thereof and/or the Pledged
Collateral and any portion thereof, and the assignee shall
be entitled to all of the rights and remedies of the
Collateral Agent under this Pledge Agreement in relation
thereto.
(d) Voting Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default
shall have occurred and be continuing, to the extent
permitted by law, each Pledgor may exercise any and all
voting and other consensual rights pertaining to the
Pledged Collateral of such Pledgor or any part thereof
for any purpose not inconsistent with the terms of this
Pledge Agreement or the Credit Agreement; and
(ii) Upon the occurrence and during the
continuance of an Event of Default and the Collateral
Agent has given notice to the Pledgors that the
Collateral Agent has elected, at the direction of the
Required Lenders, to exercise its rights and remedies
under this Agreement all rights of a Pledgor to
exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to
paragraph (i) of this Section shall cease and all such
rights shall thereupon become vested in the Collateral
Agent which shall then have the sole right to exercise
such voting and other consensual rights at the
direction of the Administrative Agent.
(e) Dividend Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default
shall have occurred and be continuing and subject to
Section 4(b) hereof, each Pledgor may receive and
retain any and all dividends (other than stock
dividends and other dividends constituting Pledged
Collateral which are addressed hereinabove) or interest
paid in respect of the Pledged Collateral to the extent
they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the
continuance of an Event of Default:
(A) all rights of a Pledgor to
receive the dividends and interest payments which
it would otherwise be authorized to receive and
retain pursuant to paragraph (i) of this Section
shall cease and all such rights shall thereupon be
vested in the Collateral Agent which shall then
have the sole right to receive and hold as Pledged
Collateral, at the instruction of the
Administrative Agent, such dividends and interest
payments; and
(B) all dividends and interest
payments which are received by a Pledgor contrary
to the provisions of paragraph (A) of this Section
shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other
property or funds of such Pledgor, and shall be
forthwith paid over to the Collateral Agent as
Pledged Collateral in the exact form received, to
be held by the Collateral Agent at the direction
of the Administrative Agent as Pledged Collateral
and as further collateral security for the Pledgor
Obligations.
(f) Release of Pledged Collateral. The Collateral
Agent at the direction of the Administrative Agent shall
release any of the Pledged Collateral from this Pledge
Agreement or may substitute any of the Pledged Collateral
for other Pledged Collateral without altering, varying or
diminishing in any way the force, effect, lien, pledge or
security interest of this Pledge Agreement as to any Pledged
Collateral not expressly released or substituted, and this
Pledge Agreement shall continue as a first priority lien on
all Pledged Collateral not expressly released or
substituted.
11. Exercise of Remedies. Notwithstanding anything herein
to the contrary, each of the Agents shall exercise, or refrain
from exercising, its rights and remedies (including the right of
the Administrative Agent to direct the Collateral Agent to take,
or refrain from taking, action) only in accordance with the
instructions of the Required Lenders.
12. Rights of Required Lenders. All rights of the Agents
hereunder, if not exercised by the Agents, may be exercised by
the Required Lenders.
13. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any payments in
respect of the Pledgor Obligations and any proceeds of any
Pledged Collateral, when received by an Agent or any of the
Lenders in cash or its equivalent, will be applied in reduction
of the Pledgor Obligations in the order set forth in Section
3.14(b) of the Credit Agreement, and each Pledgor irrevocably
waives the right to direct the application of such payments and
proceeds and acknowledges and agrees that the Administrative
Agent shall have the continuing and exclusive right to apply and
reapply any and all such payments and proceeds in the
Administrative Agent's sole discretion, notwithstanding any entry
to the contrary upon any of its books and records.
14. Costs of Counsel. At all times hereafter, the Borrower
and Guarantors agree to promptly pay upon demand any and all
reasonable costs and expenses of the Agents or the Lenders, (a)
as required under Section 11.5 of the Credit Agreement and (b) as
necessary to protect the Pledged Collateral or to exercise any
rights or remedies under this Pledge Agreement or with respect to
any Pledged Collateral. All of the foregoing costs and expenses
shall constitute Pledgor Obligations hereunder.
15. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing
agreement in every respect and shall remain in full force
and effect so long as any of the Pledgor Obligations remain
outstanding or any Credit Document is in effect or any
Letter of Credit shall remain outstanding, and until all of
the Commitments thereunder shall have terminated (other than
any obligations with respect to the indemnities and the
representations and warranties set forth in the Credit
Documents). Upon such payment and termination, this Pledge
Agreement shall be automatically terminated and the Agents
and the Lenders shall, upon the request and at the expense
of the Pledgors, forthwith release all of their liens and
security interests hereunder and shall executed and deliver
all UCC termination statements and/or other documents
reasonably requested by the Pledgors evidencing such
termination. Notwithstanding the foregoing all releases and
indemnities provided hereunder shall survive termination of
this Pledge Agreement.
(b) This Pledge Agreement shall continue to be
effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of
the Pledgor Obligations is rescinded or must otherwise be
restored or returned by either Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event
payment of all or any part of the Pledgor Obligations is
rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by either
Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of
the Pledgor Obligations.
16. Amendments; Waivers; Modifications. This Pledge
Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth
in Section 11.6 of the Credit Agreement.
17. Successors in Interest. This Pledge Agreement shall
create a continuing security interest in the Collateral and shall
be binding upon each Pledgor, its successors and assigns and
shall inure, together with the rights and remedies of the Agents
and the Lenders hereunder, to the benefit of the Agents and the
Lenders and their successors and permitted assigns; provided,
however, that none of the Pledgors may assign its rights or
delegate its duties hereunder without the prior written consent
of each Lender or the Required Lenders, as required by the Credit
Agreement. To the fullest extent permitted by law, each Pledgor
hereby releases each Agent and each Lender, and its successors
and assigns, from any liability for any act or omission relating
to this Pledge Agreement or the Collateral, except for any
liability arising from the gross negligence or willful misconduct
of such Agent, or such Lender, or its officers, employees or
agents.
18. Notices. All notices required or permitted to be given
under this Pledge Agreement shall be in conformance with
Section 11.1 of the Credit Agreement.
19. Counterparts. This Pledge Agreement may be executed in
any number of counterparts, each of which where so executed and
delivered shall be an original, but all of which shall constitute
one and the same instrument. It shall not be necessary in making
proof of this Pledge Agreement to produce or account for more
than one such counterpart.
20. Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this
Pledge Agreement.
21. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NORTH CAROLINA. Any legal action or proceeding
with respect to this Security Agreement may be brought in
the courts of the State of North Carolina, or of the United
States for the Western District of North Carolina, and, by
execution and delivery of this Security Agreement, each
Pledgor hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the
jurisdiction of such courts. Each Pledgor further
irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices
pursuant to Section 11.1 of the Credit Agreement, such
service to become effective 30 days after such mailing.
Nothing herein shall affect the right of the Administrative
Agent or the Collateral Agent at the direction of the
Administrative Agent to serve process in any other manner
permitted by law or to commence legal proceedings or to
otherwise proceed against any Pledgor in any other
jurisdiction.
(b) Each Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Pledge Agreement
brought in the courts referred to in subsection (a) hereof
and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum.
22. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS PLEDGE AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
23. Severability. If any provision of any of the Pledge
Agreement is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
24. Entirety. This Pledge Agreement and the other Credit
Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
25. Survival. All representations and warranties of the
Pledgors hereunder shall survive the execution and delivery of
this Pledge Agreement and the other Credit Documents, the
delivery of the Notes and the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement.
26. Other Security. To the extent that any of the Pledgor
Obligations are now or hereafter secured by property other than
the Pledged Collateral (including, without limitation, real and
other personal property owned by a Pledgor), or by a guarantee,
endorsement or property of any other Person, then the Agents and
the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any
Event of Default, and the Administrative Agent and the Lenders
have the right, in their sole discretion, to determine which
rights, security, liens, security interests or remedies the
Agents and the Lenders shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in any
way modifying or affecting any of them or any of the Agents' and
the Lenders' rights or the Pledgor Obligations under this Pledge
Agreement or under any other of the Credit Documents.
27. Joint and Several Obligations of Parent; Limitation on
Liability.
(a) To the extent of its obligations arising under
this Pledge Agreement, the Parent is accepting joint and
several liability hereunder with the other Pledgors in
consideration of the financial accommodation to be provided
by the Lenders under the Credit Agreement.
(b) To the extent of its obligations arising under
this Pledge Agreement but only to the extent of the shares
pledged by the Parent, the Parent jointly and severally
hereby irrevocably and unconditionally accepts, not merely
as a surety but also as a co-debtor, joint and several
liability with the other Pledgors with respect to the
payment and performance of all of the Pledgor Obligations
arising under this Pledge Agreement and the other Credit
Documents.
(c) Notwithstanding any provision to the contrary
contained herein or in any other of the Credit Documents, to
the extent the obligations of a Guarantor shall be
adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable
state or federal law relating to fraudulent conveyances or
transfers) then the obligations of each Guarantor hereunder
shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
(d) Notwithstanding any provision to the contrary
contained herein or in any other Credit Document, the
Parent's liability is nonrecourse and shall be limited to
the Pledged Shares delivered by it hereunder. No deficiency
arising out of the Pledgor Obligations may be recovered
against the Parent.
28. Rights of Required Lenders. All rights of the Agents
hereunder, if not exercised by the Agents, may be exercised by
the Required Lenders. Notwithstanding anything herein to the
contrary, each of the Agents shall exercise, or refrain from
exercising, its rights and remedies (including the right of the
Administrative Agent to direct the Collateral Agent to take, or
refrain from taking, an action) only in accordance with the
instructions of the Required Lenders.
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this
Pledge Agreement to be duly executed and delivered as of the date
first above written.
BORROWER: DELTA MILLS, INC.,
a Delaware corporation
By:
Name:
Title:
PARENT: ALCHEM CAPITAL CORPORATION,
a Delaware corporation
By:
Name:
Title:
GUARANTOR: DELTA MILLS MARKETING, INC.,
a Delaware corporation
By:
Name:
Title:
Accepted and agreed to in Charlotte, North Carolina as of
the date first above written.
NATIONSBANK, N.A.
as Administrative Agent
By:
Name:
Title:
BNY FINANCIAL CORPORATION,
as Collateral Agent
By:
Name:
Title:
Schedule 2(a)
to
Pledge Agreement
dated as of August 25, 1997
in favor of NationsBank, N.A.
as Administrative Agent
and
BNY Financial Corporation
as Collateral Agent
PLEDGED STOCK
Pledgor: ALCHEM CAPITAL CORPORATION
Name of Subsidiary Certificate Percentage
Number of Shares Number Ownership
Delta Mills, Inc. 100%
Pledgor: DELTA MILLS, INC.
Name of Subsidiary CertificateN Percentage
Number of Shares Number Ownership
Delta Mills Marketing, Inc. 100%
Exhibit 4(a)
to
Pledge Agreement
dated as of August 25, 1997
in favor of NationsBank, N.A.
as Administrative Agent
and
BNY Financial Corporation
as Collateral Agent
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers to the following shares of capital stock of
, a corporation:
No. of Shares Certificate No.
and irrevocably appoints BNY Financial Corporation its agent and
attorney-in-fact to transfer all or any part of such capital
stock and to take all necessary and appropriate action to effect
any such transfer. The Administrative agent and attorney-in-fact
may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power
shall be subject to any and all transfer restrictions referenced
on the face of the certificates evidencing such interest or in
the certificate of incorporation or bylaws of the subject
corporation, to the extent they may from time to time exist.
_______________,
a ______________ corporation
By:
Name:
Title:
Exhibit 1.1B
FORM OF SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is
entered into as of August 25, 1997 among DELTA MILLS, INC., a
Delaware corporation (the "Borrower"), certain Subsidiaries of
the Borrower (individually a "Guarantor" and collectively the
"Guarantors"; together with the Borrower, individually an
"Obligor", and collectively the "Obligors"), BNY FINANCIAL
CORPORATION (the "Collateral Agent") for the lenders from time to
time party to the Credit Agreement described below (the
"Lenders") and NATIONSBANK, N.A., in its capacity as
administrative agent (in such capacity, the "Administrative
Agent"; together with the Collateral Agent, the "Agents" ) for
the Lenders.
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as
of the date hereof (as amended, modified, extended, renewed or
replaced from time to time, the "Credit Agreement"), among the
Borrower, the Guarantors, the Lenders, the Administrative Agent
and the Collateral Agent, the Lenders have agreed to make Loans
and issue Letters of Credit upon the terms and subject to the
conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of
the Credit Agreement and the obligations of the Lenders to make
their respective Loans and to issue Letters of Credit under the
Credit Agreement that the Obligors shall have executed and
delivered this Security Agreement to the Collateral Agent for the
ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms
in the Credit Agreement, and the following terms which are
defined in the Uniform Commercial Code in effect in the
State of North Carolina on the date hereof are used herein
as so defined: Accounts, Chattel Paper, Deposit Accounts,
Documents, Farm Products, General Intangibles, Instruments,
Inventory and Proceeds. For purposes of this Security
Agreement, the term "Lender" shall include any Issuing
Lender.
(b) In addition, the following terms shall have the
following meanings:
"Secured Obligations": the collective reference to the
following:
(a) In the case of the Borrower, the prompt
performance and observance by the Borrower of all
obligations of the Borrower under the Credit Agreement, the
Notes, this Security Agreement and the other Credit
Documents to which the Borrower is a party;
(b) In the case of the Guarantors, the prompt
performance and observance by such Guarantor of all
obligations of such Guarantor under the Credit Agreement,
this Security Agreement and the other Credit Documents to
which such Guarantor is a party, including, without
limitation, its guaranty obligations arising under Section 4
of the Credit Agreement; and
(c) All other indebtedness, liabilities and
obligations of any kind or nature owing from any Obligor to
any Lender, the Administrative Agent or the Collateral Agent
arising under the Credit Agreement or the Credit Documents
and all obligations and liabilities incurred in connection
with collecting and enforcing the Secured Obligations.
2. Grant of Security Interest in the Collateral. To
secure the prompt payment and performance in full when due,
whether by lapse of time, acceleration or otherwise, of the
Secured Obligations, each Obligor hereby grants to the Collateral
Agent, for the benefit of the Lenders, a continuing security
interest in, and a right to set off against, any and all right,
title and interest of such Obligor in and to the following,
whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the "Collateral"):
(a) all Accounts;
(b) all Inventory;
(c) all Deposit Accounts, General
Intangibles, Chattel Paper, Documents, and
Instruments to the extent arising out of or
resulting from the sale or lease of inventory or
the rendering of services by Debtor;
(d) all rights to receive payments under the
Factoring Agreements; and
(e) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks,
and related data processing software (owned by
such Obligor or in which it has an interest) that
at any time evidence or contain information
relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or
realization thereupon; and
(f) to the extent not otherwise included,
all Proceeds of any and all of the foregoing.
The Obligors and the Agents, on behalf of the Lenders,
hereby acknowledge and agree that the security interest created
hereby in the Collateral constitutes continuing collateral
security for all of the Secured Obligations, whether now existing
or hereafter arising.
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding,
each of the Obligors shall remain liable under each of the
Accounts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving
rise to each such Account. Neither the Administrative
Agent, the Collateral Agent nor any Lender shall have any
obligation or liability under any Account (or any agreement
giving rise thereto) by reason of or arising out of this
Security Agreement or the receipt by the Administrative
Agent, the Collateral Agent or any Lender of any payment
relating to such Account pursuant hereto, nor shall the
Administrative Agent, the Collateral Agent or any Lender be
obligated in any manner to perform any of the obligations of
an Obligor under or pursuant to any Account (or any
agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take
any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(b) Once during each calendar year or at any time
after the occurrence and during the continuation of an Event
of Default, the Agents or their representative shall have
the right, but not the obligation, to make test
verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable, and the
Obligors shall furnish all such assistance and information
as such Agent or its representative may require in
connection with such test verifications. At any time and
from time to time, upon an Agent's request and at the
expense of the Obligors, the Obligors shall cause
independent public accountants or others satisfactory to
such Agent to furnish to such Agent or its representative
reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts.
Each Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify
with them to such Agent's satisfaction the existence, amount
and terms of any Accounts.
4. Representations and Warranties. Each Obligor hereby
represents and warrants to the Agents, for the benefit of the
Lenders, that so long as any of the Secured Obligations remain
outstanding or any Credit Document is in effect or any Letter of
Credit shall remain outstanding, and until all of the Commitments
shall have been terminated:
(a) Chief Executive Office; Books & Records. Each
Obligor's chief executive office and chief place of business
is (and for the prior four months have been) located at the
locations set forth on Schedule 4(a) hereto, and each
Obligor keeps its books and records at such locations.
(b) Location of Collateral. The location of all
Collateral owned by each Obligor is as shown on Schedule
4(b) hereto.
(c) Ownership. Each Obligor is the legal and
beneficial owner of its Collateral and has the right to
pledge, sell, assign or transfer the same. Each Obligor's
legal name is as shown in this Security Agreement and no
Obligor has in the past four months changed its name, been
party to a merger, consolidation or other change in
structure or used any tradename except as set forth in
Schedule 4(c) attached hereto.
(d) Security Interest/Priority. This Security
Agreement creates a valid security interest in favor of the
Collateral Agent, for the benefit of the Lenders, in the
Collateral of such Obligor and, when properly perfected by
filing, shall constitute a valid perfected security interest
in such Collateral, to the extent such security can be
perfected by filing under the UCC, free and clear of all
Liens except for Permitted Liens.
(e) Farm Products. None of the Collateral
constitutes, or is the Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Obligors and
the papers and documents relating thereto are genuine and in
all material respects what they purport to be, (ii) each
Account arises out of (A) a bona fide sale of goods sold and
delivered by such Obligor (or is in the process of being
delivered) or (B) services theretofore actually rendered by
such Obligor to, the account debtor named therein, (iii) no
Account or other right of an Obligor to payment for goods
sold and delivered or services rendered is evidenced by any
Instrument or Chattel Paper unless such Instrument or
Chattel Paper has been theretofore endorsed over and
delivered to the Collateral Agent and (iv) no surety bond
was required or given in connection with any Account of an
Obligor or the contracts or purchase orders out of which
they arose.
(g) Inventory. No Inventory is held by an Obligor
pursuant to consignment, sale or return, sale on approval or
similar arrangement.
5. Covenants. Each Obligor covenants that, so long as any
of the Secured Obligations remain outstanding or any Credit
Document is in effect or any Letter of Credit shall remain
outstanding, and until all of the Commitments shall have been
terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the
claims and demands of all other parties claiming an interest
therein, keep the Collateral free from all Liens, except for
Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of the Collateral or any interest
therein, except as permitted under the Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral
in good order, condition and repair and not use the
Collateral in violation of the provisions of this Security
Agreement or any other agreement relating to the Collateral
or any policy insuring the Collateral or any applicable
statute, law, bylaw, rule, regulation or ordinance.
(c) Instruments/Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be
or become evidenced by any Instrument or Chattel Paper,
immediately deliver such Instrument or Chattel Paper to the
Collateral Agent, duly indorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant
to this Security Agreement.
(d) Change in Location. Not, without providing 30
days prior written notice to the Administrative Agent and
without filing such amendments to any previously filed
financing statements as the Administrative Agent may
require, (a) change the location of its chief executive
office and chief place of business (as well as its books and
records) from the locations set forth on Schedule 4(a)
hereto, (b) change the location of its Collateral from the
locations set forth for such Obligor on Schedule 4(b)
hereto, or (c) change its name, be party to a merger,
consolidation or other change in structure or use any
tradename other than as set forth on Schedule 4(c) attached
hereto.
(e) Inspection. Upon reasonable notice, and during
reasonable hours, at all times allow the Administrative
Agent or its representatives to visit and inspect the
Collateral as set forth in Section 7.10 of the Credit
Agreement.
(f) Perfection of Security Interest. Execute and
deliver to the Administrative Agent such agreements,
assignments or instruments (including affidavits, notices,
reaffirmations and amendments and restatements of existing
documents, as the Administrative Agent may reasonably
request) and do all such other things as the Administrative
Agent may reasonably deem necessary or appropriate (i) to
assure to the Administrative Agent the Collateral Agent's
security interests hereunder, including (A) such financing
statements (including renewal statements) or amendments
thereof or supplements thereto or other instruments as the
Administrative Agent may from time to time reasonably
request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC, (ii)
to consummate the transactions contemplated hereby and (iii)
to otherwise protect and assure the Administrative Agent of
the Collateral Agent's rights and interests hereunder. To
that end, each Obligor agrees that the Administrative Agent
may file one or more financing statements disclosing the
Collateral Agent's security interest in any or all of the
Collateral of such Obligor without, to the extent permitted
by law, such Obligor's signature thereon, and further each
Obligor also hereby irrevocably makes, constitutes and
appoints the Administrative Agent, its nominee or any other
person whom the Administrative Agent may designate, as such
Obligor's attorney in fact with full power and for the
limited purpose to sign in the name of such Obligor any such
financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices
or any similar documents which in the Administrative Agent's
reasonable discretion would be necessary, appropriate or
convenient in order to perfect and maintain perfection of
the security interests granted hereunder, such power, being
coupled with an interest, being and remaining irrevocable so
long as the Credit Agreement is in effect or any amounts
payable thereunder or under any other Credit Document or any
Letter of Credit shall remain outstanding, and until all of
the Commitments thereunder shall have terminated. Each
Obligor hereby agrees that a carbon, photographic or other
reproduction of this Security Agreement or any such
financing statement is sufficient for filing as a financing
statement by the Administrative Agent without notice thereof
to such Obligor wherever the Administrative Agent may in its
sole discretion desire to file the same. In the event for
any reason the law of any jurisdiction other than North
Carolina becomes or is applicable to the Collateral of any
Obligor or any part thereof, or to any of the Secured
Obligations, such Obligor agrees to execute and deliver all
such instruments and to do all such other things as the
Administrative Agent in its sole discretion reasonably deems
necessary or appropriate to preserve, protect and enforce
the security interests of the Collateral Agent under the law
of such other jurisdiction (and, if an Obligor shall fail to
do so promptly upon the request of the Administrative Agent,
then the Administrative Agent may execute any and all such
requested documents on behalf of such Obligor pursuant to
the power of attorney granted hereinabove). If any
Collateral is in the possession or control of an Obligor's
agents and the Administrative Agent so requests, such
Obligor agrees to notify such agents in writing of the
Collateral Agent's security interest therein and, upon the
Administration Agent's request, instruct them to hold all
such Collateral for the Lenders' account and subject to the
Administrative Agent's instructions. Each Obligor agrees to
mark its books and records to reflect the security interest
of the Collateral Agent in the Collateral.
(g) Treatment of Accounts. Not grant or extend the
time for payment of any Account, or compromise or settle any
Account for less than the full amount thereof, or release
any person or property, in whole or in part, from payment
thereof, or allow any credit or discount thereon, other than
as normal and customary in the ordinary course of an
Obligor's business.
(h) Insurance. Insure, repair and replace the
Collateral of such Obligor as set forth in the Credit
Agreement. All insurance proceeds shall be subject to the
security interest of the Collateral Agent hereunder.
6. Advances by Lenders. On failure of any Obligor to
perform any of the covenants and agreements contained herein, the
Administrative Agent may, at its sole option and in its sole
discretion, perform the same and in so doing may expend such sums
as the Administrative Agent may reasonably deem advisable in the
performance thereof, including, without limitation, the payment
of any insurance premiums, the payment of any taxes, a payment to
obtain a release of a Lien or potential Lien, expenditures made
in defending against any adverse claim and all other expenditures
which the Administrative Agent or the Lenders may make for the
protection of the security hereof or which may be compelled to
make by operation of law. All such sums and amounts so expended
shall be repayable by the Obligors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest
from the date said amounts are expended at the default rate
specified in Section 3.1 of the Credit Agreement for Base Rate
Loans. No such performance of any covenant or agreement by the
Administrative Agent or the Lenders on behalf of any Obligor, and
no such advance or expenditure therefor, shall relieve the
Obligors of any default under the terms of this Security
Agreement or the other Credit Documents. The Lenders may make
any payment hereby authorized in accordance with any bill,
statement or estimate procured from the appropriate public office
or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity
of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good
faith by an Obligor in appropriate proceedings and against which
adequate reserves are being maintained in accordance with GAAP.
7. Events of Default.
The occurrence of an event which under the Credit Agreement
would constitute an Event of Default shall be an Event of Default
hereunder (an "Event of Default").
8. Remedies.
(a) General Remedies. Upon the occurrence of an Event
of Default and during continuation thereof, the Lenders
shall have, in addition to the rights and remedies provided
herein, in the Credit Documents or by law (including, but
not limited to, the rights and remedies set forth in the
Uniform Commercial Code of the jurisdiction applicable to
the affected Collateral), the rights and remedies of a
secured party under the UCC (regardless of whether the UCC
is the law of the jurisdiction where the rights and remedies
are asserted and regardless of whether the UCC applies to
the affected Collateral), and further, the Collateral Agent
shall at the direction of the Administrative Agent, with or
without judicial process or the aid and assistance of
others, (i) enter on any premises on which any of the
Collateral may be located and, without resistance or
interference by the Obligors, take possession of the
Collateral, (ii) dispose of any Collateral on any such
premises, (iii) require the Obligors to assemble and make
available to the Administrative Agent at the expense of the
Obligors any Collateral at any place and time designated by
the Administrative Agent which is reasonably convenient to
both parties, (iv) remove any Collateral from any such
premises for the purpose of effecting sale or other
disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of
which each of the Obligors hereby waives to the fullest
extent permitted by law, at any place and time or times,
sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or
more parcels, for cash, upon credit or otherwise, at such
prices and upon such terms as the Administrative Agent deems
advisable, in its sole discretion (subject to any and all
mandatory legal requirements). In addition to all other
sums due the Agents and the Lenders with respect to the
Secured Obligations, the Obligors shall pay the Agents and
each of the Lenders all reasonable documented costs and
expenses incurred by the Agents or any such Lender,
including, but not limited to, reasonable attorneys' fees
and court costs, in obtaining or liquidating the Collateral,
in enforcing payment of the Secured Obligations, or in the
prosecution or defense of any action or proceeding by or
against the Agents or the Lenders or the Obligors concerning
any matter arising out of or connected with this Security
Agreement, any Collateral or the Secured Obligations,
including, without limitation, any of the foregoing arising
in, arising under or related to a case under the Bankruptcy
Code. To the extent the rights of notice cannot be legally
waived hereunder, each Obligor agrees that any requirement
of reasonable notice shall be met if such notice is
personally served on or mailed, postage prepaid, to the
Borrower in accordance with the notice provisions of Section
11.1 of the Credit Agreement at least 10 days before the
time of sale or other event giving rise to the requirement
of such notice. The Agents and the Lenders shall not be
obligated to make any sale or other disposition of the
Collateral regardless of notice having been given. To the
extent permitted by law, any Lender may be a purchaser at
any such sale. To the extent permitted by applicable law,
each of the Obligors hereby waives all of its rights of
redemption with respect to any such sale. Subject to the
provisions of applicable law, the Administrative Agent and
the Lenders may postpone or cause the postponement of the
sale of all or any portion of the Collateral by announcement
at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be
made at the time and place to which the sale was postponed,
or the Administrative Agent and the Lenders may further
postpone such sale by announcement made at such time and
place.
(b) Remedies relating to Accounts. Subject to the
limitations set forth in any assignment of factoring
proceeds with respect to any Factoring Agreement, upon the
occurrence of an Event of Default and during the
continuation thereof, whether or not the Collateral Agent at
the direction of the Administrative Agent has exercised any
or all of its rights and remedies hereunder, each Obligor
will promptly upon request of the Administrative Agent
instruct all account debtors or the applicable Factor to
remit all payments in respect of the Accounts or the
receivables to a mailing location selected by the
Administrative Agent, provided that, in accordance with the
applicable assignment of factoring proceeds, the
Administrative Agent shall also be entitled to give such
instruction directly to the Factor. In addition, the
Collateral Agent at the direction of the Administrative
Agent may notify any Obligor's customers and account debtors
that the Accounts of such Obligor have been assigned to the
Collateral Agent or of the Collateral Agent's security
interest therein, and may (either in its own name or in the
name of an Obligor or both) demand, collect (including
without limitation by way of a lockbox arrangement),
receive, take receipt for, sell, sue for, compound, settle,
compromise and give acquittance for any and all amounts due
or to become due on any Account, and, in the Administrative
Agent's discretion, file any claim or take any other action
or proceeding to protect and realize upon the security
interest of the Lenders in the Accounts. Each Obligor
acknowledges and agrees that the Proceeds of its Accounts
remitted to or on behalf of the Collateral Agent in
accordance with the provisions hereof shall be solely for
the Collateral Agent's own convenience and that such Obligor
shall not have any right, title or interest in such Accounts
or in any such other amounts except as expressly provided
herein. The Agents and the Lenders shall have no liability
or responsibility to any Obligor for acceptance of a check,
draft or other order for payment of money bearing the legend
"payment in full" or words of similar import or any other
restrictive legend or endorsement or be responsible for
determining the correctness of any remittance. Each Obligor
hereby agrees to indemnify the Agents and the Lenders from
and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable
attorneys' fees suffered or incurred by the Agents or the
Lenders (each, an "Indemnified Party") because of the
maintenance of the foregoing arrangements except as relating
to or arising out of the gross negligence or willful
misconduct of an Indemnified Party or its officers,
employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity
shall be effective whether or not such investigation,
litigation or proceeding is brought by an Obligor, its
directors, shareholders or creditors or an Indemnified Party
or any other Person or any other Indemnified Party is
otherwise a party thereto.
(c) Access. In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and
during the continuance thereof, the Collateral Agent shall
upon the instruction of the Administrative Agent have the
right to enter and remain upon the various premises of the
Obligors without cost or charge to the Agents, and use the
same, together with materials, supplies, books and records
of the Obligors for the purpose of collecting and
liquidating the Collateral, or for preparing for sale and
conducting the sale of the Collateral, whether by
foreclosure, auction or otherwise. In addition, the
Collateral Agent at the direction of the Administrative
Agent shall remove Collateral, or any part thereof, from
such premises and/or any records with respect thereto, in
order to effectively collect or liquidate such Collateral.
(d) Factoring Agreements. In addition to the remedies
identified above, if any Event of Default has occurred and
is continuing, the Collateral Agent shall upon the
instruction of the Administrative Agent exercise all of the
rights of the Borrower to receive payments under the
Factoring Agreements. Anything contained herein or in the
Factoring Agreements to the contrary notwithstanding, the
Borrower shall at all times remain liable under the
Factoring Agreements to perform all of the duties and
obligations of the Borrower thereunder to the same extent as
if this Agreement had not been executed, and the Agents and
the Lenders shall not have any obligation or liability under
the Factoring Agreements by reason of or arising out of this
Agreement, nor shall the Agents or any of the Lenders be
required or obligated in any manner to perform or fulfill
any obligation of the Borrower under or pursuant to the
Factoring Agreements or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment
received by it, or to present or file any claim, or take any
action to collect or enforce the payment of any amounts
which have been assigned to it or to which it may be
entitled at any time or times.
(e) Nonexclusive Nature of Remedies. Failure by the
Agents or the Lenders to exercise any right, remedy or
option under this Security Agreement, any other Credit
Document or as provided by law, or any delay by the Agents
or the Lenders in exercising the same, shall not operate as
a waiver of any such right, remedy or option. No waiver
hereunder shall be effective unless it is in writing, signed
by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated,
which in the case of the Agents or the Lenders shall only be
granted as provided herein. To the extent permitted by law,
neither the Agents, the Lenders, nor any party acting as
attorney for the Agents or the Lenders, shall be liable
hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross
negligence or willful misconduct hereunder. The rights and
remedies of the Agents and the Lenders under this Security
Agreement shall be cumulative and not exclusive of any other
right or remedy which the Agents or the Lenders may have.
(f) Retention of Collateral. The Collateral Agent
shall at the direction of the Administrative Agent, after
providing the notices required by Section 9-505(2) of the
UCC or otherwise complying with the requirements of
applicable law of the relevant jurisdiction, to the extent
the Collateral Agent is in possession of any of the
Collateral, retain the Collateral in satisfaction of the
Secured Obligations. Unless and until the Collateral Agent
shall have provided such notices, however, the Collateral
Agent shall not be deemed to have retained any Collateral in
satisfaction of any Secured Obligations for any reason.
(g) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all
amounts to which the Agents or the Lenders are legally
entitled, the Obligors shall be jointly and severally liable
for the deficiency, together with interest thereon at the
default rate specified in Section 3.1 of the Credit
Agreement for Base Rate Loans, together with the costs of
collection and the reasonable fees of any attorneys employed
by the Agents to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the
Secured Obligations shall be returned to the Obligors or to
whomsoever a court of competent jurisdiction shall determine
to be entitled thereto.
9. Rights of the Agents.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Obligor hereby designates
and appoints the Collateral Agent, on behalf of the Lenders,
and each of its designees or agents, as attorney-in-fact of
such Obligor, irrevocably and with power of substitution,
with authority to take any or all of the following actions
upon the occurrence and during the continuance of an Event
of Default subject to other provisions hereof and as set
forth in any assignment of factoring proceeds with respect
to any Factoring Agreement (the taking of any such action
shall be at the direction of the Administrative Agent):
(i) to demand, collect, settle,
compromise, adjust, give discharges and releases,
all as the Administrative Agent may reasonably
determine;
(ii) to commence and prosecute any
actions at any court for the purposes of
collecting any Collateral and enforcing any other
right in respect thereof;
(iii) to defend, settle or
compromise any action brought and, in connection
therewith, give such discharge or release as the
Administrative Agent may deem reasonably
appropriate;
(iv) receive, open and dispose of mail
addressed to an Obligor and endorse checks, notes,
drafts, acceptances, money orders, bills of
lading, warehouse receipts or other instruments or
documents evidencing payment, shipment or storage
of the goods giving rise to the Collateral of such
Obligor on behalf of and in the name of such
Obligor, or securing, or relating to such
Collateral;
(v) sell, assign, transfer, make any
agreement in respect of, or otherwise deal with or
exercise rights in respect of, any Collateral or
the goods or services which have given rise
thereto, as fully and completely as though the
Administrative Agent were the absolute owner
thereof for all purposes;
(vi) adjust and settle claims under any
insurance policy relating thereto;
(vii) execute and deliver all
assignments, conveyances, statements, financing
statements, renewal financing statements, security
agreements, affidavits, notices and other
agreements, instruments and documents that the
Administrative Agent may determine necessary in
order to perfect and maintain the security
interests and liens granted in this Security
Agreement and in order to fully consummate all of
the transactions contemplated therein;
(viii) institute any foreclosure
proceedings that the Administrative Agent may deem
appropriate; and
(ix) do and perform all such other acts
and things as the Administrative Agent may
reasonably deem to be necessary, proper or
convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest
and shall be irrevocable (i) for so long as any of the
Secured Obligations remain outstanding, any Credit Document
is in effect or any Letter of Credit shall remain
outstanding and (ii) until all of the Commitments shall have
been terminated. The Collateral Agent shall be under no
duty, unless directed by the Administrative Agent, to
exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly
granted to the Collateral Agent in this Security Agreement,
and shall not be liable for any failure to do so or any
delay in doing so. The Agents shall not be liable for any
act or omission or for any error of judgment or any mistake
of fact or law in their individual capacities or for the
Collateral Agent in its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or
willful misconduct. This power of attorney is conferred on
the Collateral Agent solely to protect, preserve and realize
upon the Collateral Agent's security interest in the
Collateral.
(b) Performance by the Collateral Agent of
Obligations. If any Obligor fails to perform any agreement
or obligation contained herein, the Collateral Agent at the
direction of the Administrative Agent may perform, or cause
performance of, such agreement or obligation, and the
expenses of the Agents incurred in connection therewith
shall be payable by the Obligors on a joint and several
basis pursuant to Section 11 hereof.
(c) Assignment by the Collateral Agent. The
Collateral Agent shall at the direction of the
Administrative Agent from time to time assign the Secured
Obligations or any portion thereof and/or the Collateral or
any portion thereof, and the assignee shall be entitled to
all of the rights and remedies of the Collateral Agent under
this Security Agreement in relation thereto.
10. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any payments in
respect of the Secured Obligations and any proceeds of the
Collateral, when received by an Agent or any of the Lenders in
cash or its equivalent, will be applied in reduction of the
Secured Obligations in the order set forth in Section 3.15(b) of
the Credit Agreement, and each Obligor irrevocably waives the
right to direct the application of such payments and proceeds and
acknowledges and agrees that the Administrative Agent shall have
the continuing and exclusive right to apply and reapply any and
all such payments and proceeds in the Administrative Agent's sole
discretion, notwithstanding any entry to the contrary upon any of
its books and records.
11. Costs of Counsel. If at any time hereafter, whether
upon the occurrence of an Event of Default or not, the
Administrative Agent or the Collateral Agent at the direction of
the Administrative Agent employs counsel to prepare or consider
amendments, waivers or consents with respect to this Security
Agreement, or to take action or make a response in or with
respect to any legal or arbitral proceeding relating to this
Security Agreement or relating to the Collateral, or to protect
the Collateral or exercise any rights or remedies under this
Security Agreement or with respect to the Collateral, then the
Obligors agree to promptly pay upon demand any and all such
reasonable documented costs and expenses of the Agents or the
Lenders, all of which costs and expenses shall constitute Secured
Obligations hereunder.
12. Continuing Agreement.
(a) This Security Agreement shall be a continuing
agreement in every respect and shall remain in full force
and effect so long as any of the Secured Obligations remain
outstanding or any Credit Document is in effect or any
Letter of Credit shall remain outstanding, and until all of
the Commitments thereunder shall have terminated (other than
any obligations with respect to the indemnities and the
representations and warranties set forth in the Credit
Documents). Upon such payment and termination, this
Security Agreement shall be automatically terminated and the
Agents and the Lenders shall, upon the request and at the
expense of the Obligors, forthwith release all of their
liens and security interests hereunder and shall execute and
deliver all UCC termination statements and/or other
documents reasonably requested by the Obligors evidencing
such termination. Notwithstanding the foregoing all
releases and indemnities provided hereunder shall survive
termination of this Security Agreement.
(b) This Security Agreement shall continue to be
effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of
the Secured Obligations is rescinded or must otherwise be
restored or returned by either Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event
payment of all or any part of the Secured Obligations is
rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by either
Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of
the Secured Obligations.
13. Amendments; Waivers; Modifications. This Security
Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth
in Section 11.6 of the Credit Agreement.
14. Successors in Interest. This Security Agreement shall
create a continuing security interest in the Collateral and shall
be binding upon each Obligor, its successors and assigns and
shall inure, together with the rights and remedies of the Agents
and the Lenders hereunder, to the benefit of the Agents and the
Lenders and their successors and permitted assigns; provided,
however, that none of the Obligors may assign its rights or
delegate its duties hereunder without the prior written consent
of each Lender or the Required Lenders, as required by the Credit
Agreement. To the fullest extent permitted by law, each Obligor
hereby releases each Agent and each Lender, and its successors
and assigns, from any liability for any act or omission relating
to this Security Agreement or the Collateral, except for any
liability arising from the gross negligence or willful misconduct
of such Agent, or such Lender, or its officers, employees or
agents.
15. Notices. All notices required or permitted to be given
under this Security Agreement shall be in conformance with
Section 11.1 of the Credit Agreement.
16. Counterparts. This Security Agreement may be executed
in any number of counterparts, each of which where so executed
and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be
necessary in making proof of this Security Agreement to produce
or account for more than one such counterpart.
17. Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this
Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA. Any legal action
or proceeding with respect to this Security Agreement
may be brought in the courts of the State of North
Carolina, or of the United States for the Western
District of North Carolina, and, by execution and
delivery of this Security Agreement, each Obligor
hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the
jurisdiction of such courts. Each Obligor further
irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at
the address for notices pursuant to Section 11.1 of the
Credit Agreement, such service to become effective 30
days after such mailing. Nothing herein shall affect
the right of the Administrative Agent or the Collateral
Agent at the direction of the Administrative Agent to
serve process in any other manner permitted by law or
to commence legal proceedings or to otherwise proceed
against any Obligor in any other jurisdiction.
(b) Each Obligor hereby irrevocably waives any
objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this
Security Agreement brought in the courts referred to in
subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS SECURITY AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of any of the Security
Agreement is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement and the other Credit
Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
22. Survival. All representations and warranties of the
Obligors hereunder shall survive the execution and delivery of
this Security Agreement and the other Credit Documents, the
delivery of the Notes and the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement.
23. Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than
the Collateral (including, without limitation, securities owned
by an Obligor), or by a guarantee, endorsement or property of any
other Person, then the Agents and the Lenders shall have the
right to proceed against such other property, guarantee or
endorsement upon the occurrence of any Event of Default, and the
Administrative Agent and the Lenders have the right, in their
sole discretion, to determine which rights, security, liens,
security interests or remedies the Agents and the Lenders shall
at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of
them or any of the Agents' and the Lenders' rights or the Secured
Obligations under this Security Agreement or under any other of
the Credit Documents.
24. Limitation on Liability. Notwithstanding any provision
to the contrary contained herein or in any other of the Credit
Documents, to the extent the obligations of a Guarantor shall be
adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers)
then the obligations of each Guarantor hereunder shall be limited
to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
25. Rights of Required Lenders. All rights of the Agents
hereunder, if not exercised by the Agents, may be exercised by
the Required Lenders. Notwithstanding anything herein to the
contrary, each of the Agents shall exercise, or refrain from
exercising, its rights and remedies (including the right of the
Administrative Agent to direct the Collateral Agent to take, or
refrain from taking, an action) only in accordance with the
instructions of the Required Lenders.
Each of the parties hereto has caused a counterpart of this
Security Agreement to be duly executed and delivered as of the
date first above written.
BORROWER: DELTA MILLS, INC.,
a Delaware corporation
By:
Name:
Title:
GUARANTOR: DELTA MILLS MARKETING, INC.,
a Delaware corporation
By:
Name:
Title:
Accepted and agreed to in Charlotte, North Carolina as of
the date first above written.
NATIONSBANK, N.A.,
as Administrative Agent
By:
Name:
Title:
BNY FINANCIAL CORPORATION,
as Collateral Agent
By:
Name:
Title:
SCHEDULE 4(a)
CHIEF EXECUTIVE OFFICE
SCHEDULE 4(b)
LOCATIONS OF COLLATERAL
SCHEDULE 4(c)
MERGERS, CONSOLIDATIONS, CHANGE IN STRUCTURE OR USE OF TRADENAMES
Exhibit 2.1(b)(i)
FORM OF NOTICE OF BORROWING
NationsBank, N.A.,
as Administrative Agent
for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, DELTA MILLS, INC. (the "Borrower"), refers
to the Credit Agreement dated as of August 25, 1997 (as amended,
modified, restated or supplemented from time to time, the "Credit
Agreement"), among the Borrower, the Guarantors, the Lenders,
NationsBank, N.A., as Administrative Agent, and BNY Financial
Corporation, as Collateral Agent. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned
to such terms in the Credit Agreement. The Borrower hereby gives
notice pursuant to Section 2.1 of the Credit Agreement that it
requests a Revolving Loan advance under the Credit Agreement, and
in connection therewith sets forth below the terms on which such
Revolving Loan advance is requested to be made:
(A) Date of Borrowing (which is a Business Day)
(B) Principal Amount of Borrowing
(C) Interest rate basis
(D) Interest Period and the last day thereof
In accordance with the requirements of Section 5.2, the
Borrower hereby reaffirms the representations and warranties set
forth in the Credit Agreement as provided in subsection (b) of
such Section, and confirms that the matters referenced in
subsections (c), (d), (e) and (f) of such Section, are true and
correct.
DELTA MILLS, INC.
By:
Name:
Title:
Exhibit 2.1(e)
FORM OF REVOLVING NOTE
$ August 25, 1997
FOR VALUE RECEIVED, DELTA MILLS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order
of , its successors and assigns (the
"Lender"), at the office of NationsBank, N.A., as Administrative
Agent (the "Administrative Agent"), at 101 North Tryon Street,
Independence Center, NC1-001-15-04, Charlotte, North Carolina
28255 (or at such other place or places as the holder hereof may
designate), at the times set forth in the Credit Agreement dated
as of the date hereof among the Borrower, the Guarantors, the
Lenders, the Administrative Agent and BNY Financial Corporation,
as Collateral Agent (as it may be as amended, modified, restated
or supplemented from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event
later than the Maturity Date, in Dollars and in immediately
available funds, the principal amount of
DOLLARS $ or, if less than
such principal amount, the aggregate unpaid principal amount of
all Revolving Loans made by the Lender to the Borrower pursuant
to the Credit Agreement, and to pay interest from the date hereof
on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with
Section 2.1(d) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event
of Default, the balance outstanding hereunder shall bear interest
as provided in Section 3.1 of the Credit Agreement. Further, in
the event the payment of all sums due hereunder is accelerated
under the terms of the Credit Agreement, this Revolving Note, and
all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the
Borrower.
In the event this Revolving Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in
addition to the principal and interest, all costs of collection,
including reasonable attorneys' fees.
All borrowings evidenced by this Revolving Note and all
payments and prepayments of the principal hereof and interest
hereon and the respective dates thereof shall be endorsed by the
holder hereof on Schedule A attached hereto and incorporated
herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that
any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect the
obligation of the Borrower to make payments of principal and
interest in accordance with the terms of this Revolving Note.
This Revolving Note and the Revolving Loans evidenced hereby
may be transferred in whole or in part only by registration of
such transfer on the Register maintained by or on behalf of the
Borrower as provided in Section 11.3(c) of the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Revolving
Note to be duly executed by its duly authorized officer as of the
day and year first above written.
DELTA MILLS, INC.
By:
Name:
Title:
SCHEDULE A TO THE
REVOLVING NOTE
OF
DATED AUGUST 25, 1997
Unpaid Name of
Principal Person
Type of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
Exhibit 2.3(d)
FORM OF SWINGLINE NOTE
$10,000,000 August 25, 1997
FOR VALUE RECEIVED, DELTA MILLS, INC., a Delaware
corporation(the "Borrower"), hereby promises to pay to the order
of NATIONSBANK, N.A., its successors and assigns (the "Swingline
Lender"), at the office of NationsBank, N.A., as Administrative
Agent (the "Administrative Agent"), at 101 N. Tryon Street,
Independence Center, NC1-001-15-04, Charlotte, North Carolina
28255 (or at such other place or places as the holder hereof may
designate), at the times set forth in the Credit Agreement dated
as of the date hereof among the Borrower, the Swingline Lender
and other Lenders, the Administrative Agent and and BNY Financial
Corporation, as Collateral Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement";
all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event
later than the Maturity Date, in Dollars and in immediately
available funds, the principal amount of TEN MILLION DOLLARS
($10,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Swingline Loans made by
the Swingline Lender to the Borrower pursuant to the Credit
Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the
dates and at the rates selected in accordance with Section 2.3(c)
of the Credit Agreement.
Upon the occurrence and during the continuance of an Event
of Default, the balance outstanding hereunder shall bear interest
as provided in Section 3.1 of the Credit Agreement. Further, in
the event the payment of all sums due hereunder is accelerated
under the terms of the Credit Agreement, this Note, and all other
indebtedness of the Borrower to the Swingline Lender shall become
immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the
Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to
the principal and interest, all costs of collection, including
reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the
respective dates thereof shall be endorsed by the holder hereof
on Schedule A attached hereto and incorporated herein by refer
ence, or on a continuation thereof which shall be attached hereto
and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof
shall not in any manner affect the obligation of the Borrower to
make payments of principal and interest in accordance with the
terms of this Note.
This Note and the Loans evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the
Register maintained by or on behalf of the Borrower as provided
in Section 11.3(c) of the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
duly executed by its duly authorized officer as of the day and
year first above written.
DELTA MILLS, INC.
By:
Name:
Title:
SCHEDULE A TO THE
SWINGLINE NOTE
OF NATIONSBANK, N.A.
DATED AUGUST 25, 1997
Unpaid Name of
Principal Person
Type of Interest Payments Balance Making
Date Loan Period Principa Interest of Note Notation
Exhibit 3.2
FORM OF NOTICE OF EXTENSION/CONVERSION
NationsBank, N.A.,
as Administrative Agent
for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, DELTA MILLS, INC. (the "Borrower"), refers
to the Credit Agreement dated as of August 25, 1997 (as amended,
modified, restated or supplemented from time to time, the "Credit
Agreement"), among the Borrower, the Guarantors, the Lenders,
NationsBank, N.A., as Administrative Agent, and BNY Financial
Corporation, as Collateral Agent. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned
to such terms in the Credit Agreement. The Borrower hereby gives
notice pursuant to Section 3.2 of the Credit Agreement that it
requests an extension or conversion of a Revolving Loan
outstanding under the Credit Agreement, and in connection
therewith sets forth below the terms on which such extension or
conversion is requested to be made:
(A) Date of Extension or Conversion
(which is the last day of the
the applicable Interest Period)
(B) Principal Amount of Extension or Conversion
(C) Interest rate basis
(D) Interest Period and the last day thereof
In accordance with the requirements of Section 5.2, the
Borrower hereby reaffirms the representations and warranties set
forth in the Credit Agreement as provided in subsection (b) of
such Section, and confirms that the matters referenced in
subsections (c), (d), (e) and (f) of such Section, are true and
correct.
DELTA MILLS, INC.
By:
Name:
Title:
Exhibit 7.1(c)
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
For the fiscal quarter ended , 19 .
I, , [Title] of DELTA MILLS, INC. (the
"Borrower") hereby certify that, to the best of my knowledge and
belief, with respect to that certain Credit Agreement dated as of
August 25, 1997 (as amended, modified, restated or supplemented
from time to time, the "Credit Agreement"; all of the defined
terms in the Credit Agreement are incorporated herein by
reference) among the Borrower, the Guarantors, the Lenders,
NationsBank, N.A., as Administrative Agent, and BNY Financial
Corporation, as Collateral Agent:
a. The company-prepared financial statements which
accompany this certificate are true and correct in all
material respects and have been prepared in accordance
with GAAP applied on a consistent basis, subject to
changes resulting from normal year-end audit
adjustments.
b. Since (the date of the last similar
certification, or, if none, the Closing Date) no
Default or Event of Default has occurred under the
Credit Agreement; and
Delivered herewith are detailed calculations demonstrating
compliance by the Credit Parties with the financial covenants
contained in Section 7.11 of the Credit Agreement as of the end
of the fiscal period referred to above.
This day of , 19 .
DELTA MILLS, INC.
By:
Name:
Title:
Attachment to Officer's Certificate
Computation of Financial Covenants
Exhibit 7.1(d)
FORM OF
BORROWING BASE CERTIFICATE
For the calendar month ended 19 .
I, , Chief Financial Officer of DELTA
MILLS, INC. (the "Borrower") hereby certify that, to the best of
my knowledge and belief, with respect to that certain Credit
Agreement dated as of August 25, 1997 (as amended, modified,
restated or supplemented from time to time, the "Credit
Agreement"; all of the defined terms in the Credit Agreement are
incorporated herein by reference) among the Borrower, the
Guarantors, the Lenders, NationsBank, N.A., as Administrative
Agent, and BNY Financial Corporation, as Collateral Agent:
RECEIVABLES
1. Amounts owing to any Borrowing Base
Party under any 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 any Factoring Agreement
and (ii) owing by accounts debtors located
outside of the United States or Canada* $
2. Receivables (as defined in the
definition of Eligible Receivables in
Section 1.1 of the Credit Agreement)
subject to a perfected, first priority
Lien in favor of the Collateral Agent,
for the benefit of the Lenders $
3. (i) Receivables subject to any
Lien, other than Liens in favor
of the Collateral Agent, for the
benefit of the Lenders $
(ii) Receivables which are more
than 60 days past due (net of
reserves for bad debts in
connection with any such Receivables $
(iii) Receivables evidenced by notes,
chattel paper or other instruments
(unless such notes, chattel paper
or instruments have been delivered
to and are in the possession of
the Collateral Agent) $
(iv) 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) $
(v) 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 Administrative Agent) $
(vi) 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 $
(vii) Receivables for which any direct
or indirect Subsidiary of the Borrower
or any Affiliate of the Borrower is the
account debtor $
(viii) 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 Administrative 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) $
(ix) Receivables which fail to meet
such other specifications and requirements
as have been established by the
Administrative Agent in its reasonable
discretion $
(x) Receivables arising from the sale to
an account debtor on a bill-and-hold, guaranteed
sale, sale or return, sale on approval, consignment
or any other repurchase or return basis $
(xi) Sum of lines (i) through (x) $
4. Eligible Receivables
(Line 1 plus Line 2 less Line 3(xi)) $
5. Eligible Receivables Borrowing
Base (85% of Eligible Receivables) $
INVENTORY
6. Inventory (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
Collateral Agent, for the benefit
of the Lenders $
7. (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 salable at prices approximating
their cost in the ordinary course of
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
Administrative 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 $
(viii) Inventory which fails to meet
such other specifications and
requirements as have been established
by the Administrative Agent in its
reasonable discretion $
(ix) Sum of lines (i) through (viii) $
8. Eligible Inventory
(Line 6 less Line 7(ix)) $
9. Eligible Inventory Borrowing
Base (60% of Eligible Inventory) $
BORROWING BASE
10. Total Borrowing Base availability
(Line 5 plus Line 9) $
11. Aggregate Outstanding Revolving Loans,
LOC Obligations and Swingline Loans under
the Credit Agreement $
12. If Line #10 is greater than Line #11, then
the difference ($ ) (or, if less,
the remaining amount of the Revolving
Committed Amount) is available for
extensions of credit under the Revolving
Commitments, the LOC Commitment (subject
to the terms of Section 2.2(a)) and the Swingline
Commitment (subject to the terms of
Section 2.3(a)); if Line #11 is greater than Line #10,
then the Borrower shall prepay or otherwise reduce
so much of the outstanding Revolving
Loans and LOC Obligations as shall be
necessary to eliminate such excess ($ ).
With reference to this Borrowing Base certificate, I hereby
certify that the above statements are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this day of , 19 .
DELTA MILLS, INC.
By:
Name:
Title:
Exhibit 7.12
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Agreement"), dated as of
, 19 is by and between , a
(the "Subsidiary"), and NATIONSBANK, N.A., in
its capacity as Administrative Agent under that certain Credit
Agreement (as it may be amended, modified, restated or
supplemented from time to time, the "Credit Agreement"), dated as
of August 25, 1997, by and among Delta Mills, Inc., a Delaware
corporation (the "Borrower"), the Guarantors, the Lenders,
NationsBank, N.A., as Administrative Agent, and BNY Financial
Corporation, as Collateral Agent. All of the defined terms in
the Credit Agreement are incorporated herein by reference.
The Subsidiary is an Additional Credit Party, and,
consequently, the Credit Parties are required by Section 7.12 of
the Credit Agreement to cause the Subsidiary to become a
"Guarantor".
Accordingly, the Subsidiary hereby agrees as follows with
the Administrative Agent, for the benefit of the Lenders:
1. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Credit Agreement and a "Guarantor"
for all purposes of the Credit Agreement, and shall have all of
the obligations of a Guarantor thereunder as if it had executed
the Credit Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms,
provisions and conditions applicable to the Guarantors contained
in the Credit Agreement. Without limiting the generality of the
foregoing terms of this paragraph 1, the Subsidiary hereby (i)
jointly and severally together with the other Guarantors,
guarantees to each Lender and the Administrative Agent, as
provided in Section 4 of the Credit Agreement, the prompt payment
and performance of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by
acceleration or otherwise) strictly in accordance with the terms
thereof.
2. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Security Agreement, and shall have
all the obligations of an "Obligor" (as such term is defined in
the Security Agreement) thereunder as if it had executed the
Security Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Security Agreement.
Without limiting generality of the foregoing terms of this
paragraph 2, the Subsidiary hereby grants to the Collateral
Agent, for the benefit of the Lenders and the Senior Noteholders,
a continuing security interest in, and a right of set off against
any and all right, title and interest of the Subsidiary in and to
the Collateral (as such term is defined in Section 2 of the
Security Agreement) of the Subsidiary. The Subsidiary hereby
represents and warrants to the Administrative Agent that:
(i) The Subsidiary's chief executive office and chief
place of business are (and for the prior four months have
been) located at the locations set forth on Schedule 1
attached hereto and the Subsidiary keeps its books and
records at such locations.
(ii) The location of all Collateral owned by the
Subsidiary is as shown on Schedule 2 attached hereto.
(iii) The Subsidiary's legal name is as shown in
this Agreement and the Subsidiary has not in the past four
months changed its name, been party to a merger,
consolidation or other change in structure or used any
tradename except as set forth in Schedule 3 attached hereto.
3. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Pledge Agreement, and shall have all
the obligations of a "Pledgor" thereunder as if it had executed
the Pledge Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all the terms, provisions
and conditions contained in the Pledge Agreement. Without
limiting the generality of the foregoing terms of this paragraph
3, the Subsidiary hereby pledges and assigns to the Collateral
Agent, for the benefit of the Lenders, and grants to the
Collateral Agent, for the benefit of the Lenders, a continuing
security interest in any and all right, title and interest of the
Subsidiary in and to Pledged Shares (as such term is defined in
Section 2 of the Pledge Agreement) listed on Schedule 5 attached
hereto and the other Pledged Collateral (as such term is defined
in Section 2 of the Pledge Agreement).
4. The address of the Subsidiary for purposes of all
notices and other communications is ,
, Attention of
(Facsimile No. ).
5. The Subsidiary hereby waives acceptance by the
Administrative Agent and the Lenders of the guaranty by the
Subsidiary under Section 4 of the Credit Agreement upon the
execution of this Agreement by the Subsidiary.
6. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all
of which when taken together shall constitute one contract.
7. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of North
Carolina.
IN WITNESS WHEREOF, the Subsidiary has caused this Joinder
Agreement to be duly executed by its authorized officers, and
each of the Administrative Agent and the Collateral Agent has for
the benefit of the Lenders, caused the same to be accepted by its
authorized officer, as of the day and year first above written.
[SUBSIDIARY]
By:
Name:
Title:
Acknowledged and accepted:
NATIONSBANK, N.A.,
as Administrative Agent
By:
Name:
Title:
BNY FINANCIAL CORPORATION,
as Collateral Agent
By:
Name:
Title:
Schedule 1
TO FORM OF JOINDER AGREEMENT
[Chief Executive Office and
Chief Place of Business of Subsidiary]
Schedule 2
TO FORM OF JOINDER AGREEMENT
Schedule 3
TO FORM OF JOINDER AGREEMENT
[Tradenames]
Schedule 5
TO FORM OF JOINDER AGREEMENT
[Pledged Shares]
Exhibit 11.3(b)
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August
25, 1997, as amended and modified from time to time thereafter
(the "Credit Agreement") among DELTA MILLS, INC., the other
Credit Parties party thereto, the Lenders party thereto,
NationsBank, N.A., as Administrative Agent, and BNY Financial
Corporation, as Collateral Agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
The "Assignor" and the "Assignee" referred to on Schedule 1
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
without recourse and without representation or warranty except as
expressly set forth herein, and the Assignee hereby purchases and
assumes from the Assignor, an interest in and to the Assignor's
rights and obligations under the Credit Agreement and the other
Credit Documents as of the date hereof equal to the percentage
interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Credit
Documents. After giving effect to such sale and assignment, the
Assignee's Commitment and the amount of the Loans owing to the
Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit
Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Documents or any
other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its
obligations under the Credit Documents or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Notes
held by the Assignor and requests that the Administrative Agent
exchange such Notes for new Notes payable to the order of the
Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto and to the Assignor in an amount equal
to the Commitment retained by the Assignor, if any, as specified
on Schedule 1.
3. The Assignee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial
statements referred to in Section 7.1 thereof and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Administrative Agent,
the Assignor 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 the Credit Agreement; (iii) confirms that it is an Eligible
Assignee; (iv) appoints and authorizes the Administrative Agent
and the Collateral Agent to take such action as administrative
agent and collateral agent, respectively, on its behalf and to
exercise such powers and discretion under the Credit Agreement as
are delegated to the Administrative Agent or the Collateral
Agent, as the case may be, by the terms thereof, together with
such powers and discretion as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms
all of the obligations that by the terms of the Credit Agreement
are required to be performed by it as a Lender; and (vi) attaches
any U.S. Internal Revenue Service or other forms required under
Section 3.11.
4. Following the execution of this Assignment and
Acceptance, it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent. The
effective date for this Assignment and Acceptance (the "Effective
Date") shall be the date of acceptance hereof by the
Administrative Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the
Administrative Agent, as of the Effective Date, (i) the Assignee
shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under
the Credit Agreement.
6. Upon such acceptance and recording by the
Administrative Agent, from and after the Effective Date, the
Administrative Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned
hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the
Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes
for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the laws of the State of North
Carolina.
8. This Assignment and Acceptance 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 all of which taken together shall
constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed
counterpart of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have
caused this Assignment and Acceptance to be executed by their
officers thereunto duly authorized as of the date hereof.
, as Assignor
By:
Name:
Title:
, as Assignee
By:
Name:
Title:
Notice address of Assignee:
<<Assignee>>
Attn:
Telephone: ( )
Telecopy: ( )
CONSENTED TO:
NATIONSBANK, N.A., *
as Administrative Agent
By:
Name:
Title:
DELTA MILLS, INC.*
By:
Name:
Title:
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment*
(e) Revolving Commitment Percentage Assigned
(expressed as a percentage set forth to at
least 8 decimals)
(f) Revolving Commitment Percentage of Assignee
after giving effect to this Assignment and
Acceptance as of the Effective
Date (set forth to at least 8 decimals) %
(g) Revolving Commitment Percentage of Assignor
after giving effect to this Assignment and
Acceptance as of the Effective
Date (set forth to at least 8 decimals) %
(h) Revolving Committed Amount as of Effective Date $______
(i) Dollar Amount of Assignor's Revolving Commitment
Percentage as of the Effective Date (the amount
set forth in (h) multiplied by the percentage
set forth in (g)) $______
(j) Dollar Amount of Assignee's Revolving Commitment
Percentages as of the Effective Date (the amount
set forth in (h) multiplied by the percentage
set forth in (f)) $______
_______________________________
* 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.
*Provided, however, that, after the date 60 days from the
Closing Date, inventory located at the South Carolina Bond
Property shall not be Eligible Inventory unless and until the
Administrative Agent shall have received a satisfactory
landlord's waiver with respect to such inventory.
* Required if the Assignee is an Eligible Assignee solely by
reason of clause (iii) of the definition of "Eligible Assignee."
* Required if the Assignee is an Eligible Assignee solely by
reason of clause (iii) of the definition of "Eligible Assignee."
* This date should be no earlier than five Business Days after
delivery of this Assignment and Acceptance to the Agent.
Delta Mills, Inc.
As Issuer
Delta Mills Marketing, Inc.,
As Guarantor
$150,000,000
SERIES A AND SERIES B
9_% SENIOR NOTES DUE 2007
INDENTURE
Dated as of August 25, 1997
The Bank of New York
As Trustee
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture
Section
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) 11.03
(c) 11.03
313 (a) 7.06
(b)(2) 7.07
(c) 7.06;11.02
(d) 7.06
314 (a) 4.03;11.02
(c)(1) 11.04
(c)(2) 11.04
(c)(3) N.A.
(e) 11.05
(f) N.A.
315 (a) 7.01
(b) 7.05,11.02
(c) 7.01
(d) 7.01
(e) 6.11
316 (a)(last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 2.12
317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318 (a) 11.01
(b) N.A.
(c) 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the
Indenture.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions 1
Section 1.02. Other Definitions 13
Section 1.03. Incorporation by Reference of
Trust Indenture Act 13
Section 1.04. Rules of Construction 14
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating 14
Section 2.02. Execution and Authentication 15
Section 2.03. Registrar and Paying Agent 15
Section 2.04. Paying Agent to Hold Money in
Trust 16
Section 2.05. Holder Lists 16
Section 2.06. Transfer and Exchange 16
Section 2.07. Replacement Notes 21
Section 2.08. Outstanding Notes 22
Section 2.09. Treasury Notes 22
Section 2.10. Temporary Notes 22
Section 2.11. Cancellation 22
Section 2.12. Defaulted Interest 23
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee 23
Section 3.02. Selection of Notes to Be Re
deemed 23
Section 3.03. Notice of Redemption 24
Section 3.04. Effect of Notice of Redemption 24
Section 3.05. Deposit of Redemption Price 25
Section 3.06. Notes Redeemed in Part 25
Section 3.07. Optional Redemption 25
Section 3.08. Mandatory Redemption 26
Section 3.09. Offer to Purchase by
Application of Excess Proceeds 26
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes 27
Section 4.02. Maintenance of Office or Agency 28
Section 4.03. Reports 28
Section 4.04. Compliance Certificate 29
Section 4.05. Taxes 29
Section 4.06. Stay, Extension and Usury Laws 29
Section 4.07. Restricted Payments 30
Section 4.08. Dividend and Other Payment
Restrictions Affecting
Subsidiaries 31
Section 4.09. Incurrence of Indebtedness and
Issuance of Preferred Stock 32
Section 4.10. Asset Sales 33
Section 4.11. Transactions with Affiliates 34
Section 4.12. Liens 35
Section 4.13. Sale and Leaseback Transactions 35
Section 4.14. Corporate Existence 36
Section 4.15. Offer to Repurchase Upon Change
of Control 36
Section 4.16. Limitation on Issuances and
Sales of Capital Stock of
Wholly-Owned Subsidiaries 37
Section 4.17. Payments for Consent 37
Section 4.18. Limitation on Investment
Company Status 38
Section 4.19. Additional Subsidiary Guarantees 38
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale
of Assets 38
Section 5.02. Successor Corporation Substituted 39
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default 39
Section 6.02. Acceleration 41
Section 6.03. Other Remedies 41
Section 6.04. Waiver of Past Defaults 42
Section 6.05. Control by Majority 42
Section 6.06. Limitation on Suits 42
Section 6.07. Rights of Holders of Notes to
Receive Payment 43
Section 6.08. Collection Suit by Trustee 43
Section 6.09. Trustee May File Proofs of
Claim 43
Section 6.10. Priorities 43
Section 6.11. Undertaking for Costs 44
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee 44
Section 7.02. Rights of Trustee 45
Section 7.03. Individual Rights of Trustee 46
Section 7.04. Trustee's Disclaimer 46
Section 7.05. Notice of Defaults 47
Section 7.06. Reports by Trustee to Holders
of the Notes 47
Section 7.07. Compensation and Indemnity 47
Section 7.08. Replacement of Trustee 48
Section 7.09. Successor Trustee by Merger, etc. 49
Section 7.10. Eligibility; Disqualification 49
Section 7.11. Preferential Collection of
Claims Against Company 49
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defasance
or Covenant Defeasance 49
Section 8.02. Legal Defeasance and Discharge 50
Section 8.03. Covenant Defeasance 50
Section 8.04. Conditions to Legal or Covenant
Defeasance 50
Section 8.05. Deposited Money and Government
Securities to be Held in Trust;
Other Miscellaneous Provisions. 52
Section 8.06 Repayment to Company 52
Section 8.07. Reinstatement 53
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of
Notes 53
Section 9.02. With Consent of Holders of Notes 54
Section 9.03. Compliance with Trust Indenture
Act 55
Section 9.04. Revocation and Effect of Consents 55
Section 9.05. Notation on or Exchange of Notes 55
Section 9.06. Trustee to Sign Amendments, etc 55
ARTICLE 10
SUBSIDIARY GUARANTEES
Section 10.01. Subsidiary Guarantees 56
Section 10.02. Execution and Delivery of
Subsidiary Guarantees 57
Section 10.03. Guarantors May Consolidate,
etc., on Certain Terms 57
Section 10.04. Releases Following Sale of
Assets 58
Section 10.05. Limitation on Guarantor Liability 58
Section 10.06. "Trustee" to Include Paying Agent 59
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls 59
Section 11.02. Notices 59
Section 11.03. Communication by Holders of
Notes with Other Holders of Notes 60
Section 11.04. Certificate and Opinion as to
Conditions Precedent 60
Section 11.05. Statements Required in Certificate
or Opinion 61
Section 11.06. Rules by Trustee and Agents 61
Section 11.07. No Personal Liability of
Directors, Officers, Employees or
Stockholders 61
Section 11.08. Governing Law 61
Section 11.09. No Adverse Interpretation of
Other Agreements 61
Section 11.10. Successors 61
Section 11.11. Severability 61
Section 11.12. Counterpart Originals 62
Section 11.13. Table of Contents, Headings, etc 62
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF SUBSIDIARY GUARANTEE
INDENTURE dated as of August 25, 1997 among Delta Mills, Inc., a
Delaware corporation (the "Company"), Delta Mills Marketing,
Inc., a Delaware corporation (together with all other Persons who
execute a Subsidiary Guarantee pursuant to the terms of this
Indenture, the "Guarantors") and The Bank of New York, as trustee
(the "Trustee").
The Company, the Guarantors and the Trustee agree as
follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the 9_% Series A Senior Notes
due 2007 (the "Series A Notes") and the 9_% Series B Senior Notes
due 2007 (the "Series B Notes" and, together with the Series A
Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"accreted value" means, with respect to discount
Indebtedness, as of any date of determination prior to the end of
the "discount" or "zero coupon" period for such discount
Indebtedness, the sum of (a) the initial offering price of such
Indebtedness and (b) that portion of the excess of the principal
amount at maturity of such Indebtedness over such initial
offering price as shall have been accreted thereon from the date
of issuance of such discount Indebtedness through the date of
determination.
"Acquired Debt" means, with respect to any specified
Person, (i) Indebtedness of any other Person existing at the
time such other Person is merged with or into or became a
Subsidiary of such specified Person which was not incurred in
connection with, or in contemplation of, such other Person
merging with or into or becoming a Subsidiary of such specified
Person, and (ii) Indebtedness secured by a Lien encumbering any
asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person.
For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that, for
purposes of Section 4.11, beneficial ownership of 10% or more of
the voting securities of a Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer
or exchange of or for beneficial interests in any Global Note,
the rules and procedures of the Depository that apply to such
transfer or exchange.
"Approved Lender" means (i) any domestic commercial bank
having capital and surplus in excess of $100.0 million and a
Keefe Bank Watch Rating of "B" or better and (ii) any bank whose
short term commercial paper rating by Standard & Poor's Ratings
Services is A-1 or better or whose short term commercial paper
rating by Moody's Investors Service is P-1 or better.
"Asset Sale" means the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way
of a sale and leaseback and the receipt of proceeds of insurance
(excluding business interruption insurance)) paid on account of
the loss of or damage to any asset and awards of compensation for
any asset taken by condemnation, eminent domain or similar
proceeding, but excluding the granting of any Lien, in each case,
in one or a series of related transactions (a) that have a fair
market value in excess of $1,000,000 or (b) yield Net Proceeds in
excess of $1,000,000. Notwithstanding the foregoing, the term
"Asset Sale" shall not include (i) any sale, lease, conveyance or
other disposition that constitutes a Restricted Payment or an
Investment permitted to be made under the Indenture, (ii) any
transaction governed by Section 5.01, (iii) the sale or lease of
equipment, inventory, accounts receivable or other assets in the
ordinary course of business, (iv) the transfer of assets by the
Company to a Wholly-Owned Subsidiary of the Company (other than a
Receivables Subsidiary) or by a Wholly-Owned Subsidiary of the
Company (other than a Receivables Subsidiary) to the Company or
another Wholly-Owned Subsidiary of the Company (other than a
Receivables Subsidiary), (v) the sale or other disposition of
cash or Cash Equivalents, or (vi) the sale of accounts
receivables and related assets customarily transferred in an
asset securitization transaction involving accounts receivable to
a Receivables Subsidiary or by a Receivables Subsidiary, in each
case, in connection with a Qualified Receivables Transaction.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present
value (discounted at the rate of interest implicit in such
transaction, determined in accordance with GAAP) of the
obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback
transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar
or successor federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors or other
governing body charged with the ultimate management of any
Person, or any duly authorized committee thereof.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability
in respect of a capital lease that would at such time be required
to be capitalized on a balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business
entity, any and all shares, interests, participations, rights or
other equivalents (however designated) of corporate stock, (iii)
in the case of a partnership, partnership interests (whether
general or limited) and (iv) any other interest or participation
that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means (i) United States dollars,
(ii) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality thereof (provided, that the full faith and credit
of the United States is pledged in support thereof) having
maturities of not more than twelve months from the date of
acquisition, (iii) time deposits and certificates of deposit
(United States dollar, eurodollar or fully hedged into United
States Dollars if denominated in a currency other than United
States Dollars) with maturities of twelve months or less from the
date of acquisition, in each case with an Approved Lender, and
(iv) commercial paper issued by any Approved Lender (or by the
corporate parent of such Approved Lender) or any variable rate
note issued or guaranteed by a corporation organized under the
laws of the United States, any state thereof, the District of
Columbia or any territory thereof and rated A-2 or better by
Standard & Poor's Investors Services or P-2 or better by Moody's
Investor Services, in each case maturing within six months after
the date of acquisition.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially
all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3)
of the Exchange Act) other than the Principals, (ii) the adoption
of a plan relating to the liquidation or dissolution of the
Company or Delta Woodside Industries, Inc., (iii) the
consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals, becomes
the "beneficial owner" (as such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act), directly or indirectly, of
more than 50% of the Voting Stock of Delta Woodside Industries,
Inc., (iv) the first day on which a majority of the members of
the Board of Directors of the Company or Delta Woodside
Industries, Inc. are not Continuing Directors or (v) the first
day on which the Company ceases to be a Subsidiary of Delta
Woodside Industries, Inc. For purposes of this definition, any
transfer of an equity interest of an entity that was formed for
the purpose of acquiring Voting Stock of the Company shall be
deemed to be a transfer of such portion of such Voting Stock as
corresponds to the portion of the equity of such entity that has
been so transferred.
"Consolidated Cash Flow" means, with respect to any Person
for any period, the Consolidated Net Income of such Person for
such period plus (i) an amount equal to any extraordinary loss
plus any net loss realized in connection with an Asset Sale (to
the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of such Person and its Subsidiaries for such
period, to the extent that such provision for taxes was included
in computing such Consolidated Net Income, plus (iii)
consolidated interest expense of such Person and its Subsidiaries
for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings,
and net payments (if any) pursuant to Hedging Obligations), to
the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in
a prior period) and other non-cash charges (excluding any such
non-cash charge to the extent that it represents an accrual of or
reserve for cash charges in any future period or amortization of
a prepaid cash expense that was paid in a prior period) of such
Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash charges were
deducted in computing such Consolidated Net Income minus (v) non-
cash items of such Person and its Subsidiaries increasing
Consolidated Net Income for such period, in each case, on a
consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the
income or profits of, and the depreciation and amortization and
other non-cash charges of, a Subsidiary of the referent Person
shall be added to Consolidated Net Income to compute Consolidated
Cash Flow only to the extent (and in same proportion) that the
Net Income of such Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained),
and without direct or indirect restriction pursuant to the terms
of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person
and its Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that (i) the Net
Income (but not loss) of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly-
Owned Subsidiary thereof that is a Guarantor, (ii) the Net Income
of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by
that Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its
stockholders, shall be excluded, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded
and (iv) the cumulative effect of a change in accounting
principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person
as of any date, the sum of (i) the consolidated equity of the
common stockholders of such Person and its consolidated
Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified
Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out
of net earnings, but only to the extent of any cash received by
such Person upon issuance of such preferred stock, less (a) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such
business) subsequent to the date of the Indenture in the book
value of any asset owned by such Person or a consolidated
Subsidiary of such Person, (b) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not
Subsidiaries (except, in each case, Permitted Investments), and
(c) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined
in accordance with GAAP.
"Continuing Directors" means, as of any date of
determination, any member of the Board of Directors who (i) was a
member of such Board of Directors on the date of the Indenture or
(ii) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 11.02 or such other
address as to which the Trustee may give notice to the Company.
"Default" means any event that is or with the passage of
time or the giving of notice or both would be an Event of
Default.
"Definitive Note" means a certificated Note registered in
the name of the Holder thereof and issued in accordance with this
Indenture, substantially in the form of Exhibit A hereto, except
that such Note shall not have the information called for by
footnotes 1 and 2 thereof.
"Depository" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified
in Section 2.03 as the Depository with respect to the Notes,
until a successor shall have been appointed and become such
pursuant to the applicable provision of this Indenture, and,
thereafter, "Depository" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the
Notes mature.
"Eligible Inventory" means, as of any date of
determination, all inventory of the Company and its Subsidiaries,
wherever located, valued in accordance with GAAP and reflected on
the most recent balance sheet of the Company prior to such date
of determination for which financial statements of the Company
are available.
"Eligible Receivables" means, as of any date of
determination, all accounts receivable of the Company and its
Subsidiaries (including amounts denominated as due from factor)
arising out of the sale of inventory or manufacturing services in
the ordinary course of business, valued in accordance with GAAP
and reflected on the most recent balance sheet of the Company
prior to such date of determination for which financial
statements of the Company are available.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding
any debt security that is convertible into, or exchangeable for,
Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Exchange Offer" has the meaning set forth in the
Registration Rights Agreement.
"Fixed Charges" means, with respect to any Person for any
period, the sum of (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of original
issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings,
and net payments (if any) pursuant to Hedging Obligations, but
excluding amortization of deferred financing charges incurred in
connection with the Refinancing) and (ii) the consolidated
interest expense of such Person and its Subsidiaries that was
capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is guaranteed by such Person
or one of its Subsidiaries or secured by a Lien on assets of such
Person or one of its Subsidiaries (whether or not such guarantee
or Lien is called upon) and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of
a Person that is a Subsidiary), other than dividends paid to
such Person or a Wholly-Owned Subsidiary of such Person, on any
series of preferred stock of such Person, times (b) a fraction,
the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any
Person for any period, the ratio of the Consolidated Cash Flow of
such Person for such period to the Fixed Charges of such Person
for such period. In the event that the Company or any of its
Subsidiaries incurs, assumes, guarantees or redeems or otherwise
repays any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the
event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to
such incurrence, assumption, guarantee, redemption or repayment
of Indebtedness, or such issuance or redemption of preferred
stock, as if the same had occurred at the beginning of the
applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-
quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period,
and Consolidated Cash Flow for such reference period shall be
calculated on such pro forma basis without giving effect to
clause (iii) of the proviso set forth in the definition of
Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed
Charges shall not be obligations of the referent Person or any of
its Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of
the accounting profession which are in effect on the date of the
Indenture.
"Global Note" means the global note in the form of Exhibit
A hereto bearing the Private Placement Legend and deposited with
and registered in the name of the Depository or its nominee that
will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the
payment of which guarantee or obligations the full faith and
credit of the United States is pledged.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Guarantor" means each of (i) Delta Mills Marketing, Inc.
and (ii) any other subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of the Indenture, and
their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person,
the obligations of such Person under (i) interest rate swap
agreements, interest rate cap agreements and interest rate collar
agreements and (ii) other agreements or arrangements designed to
protect such Person against fluctuations in interest rates, the
value of foreign currencies and the value of commodities
purchased by the Company or any of its Subsidiaries in the
ordinary course of business.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the
balance deferred and unpaid of the purchase price of any property
or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters
of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with
GAAP, as well as all indebtedness of others secured by a Lien on
any asset of such Person (whether or not such indebtedness is
assumed by such Person) and, to the extent not otherwise
included, the guarantee by such Person of any Indebtedness of any
other Person and the Attributable Debt of such Person relating to
any sale and leaseback transaction.
"Indenture" means this Indenture, as amended or
supplemented from time to time.
"Indirect Participant" means a Person who holds a
beneficial interest in a Global Note through a Participant.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including
Affiliates) in the forms of direct or indirect loans (including
guarantees of Indebtedness or other obligations), advances or
capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of
business), or purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP; provided that
an acquisition of assets, Equity Interests or other securities by
the Company or a Subsidiary of the Company for consideration
consisting of common equity securities or preferred stock (not
constituting Disqualified Stock) of the Company shall not be
deemed to be an Investment.
"Legal Holiday" means a Saturday, a Sunday or a day on
which banking institutions in the City of New York or at a place
of payment are authorized by law, regulation or executive order
to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law (including any
conditional sale or other title retention agreement, any capital
lease and any other preferential arrangement that has
substantially the same practical effect as a security interest in
any asset).
"Liquidated Damages" means, at any time, all liquidated
damages then owing pursuant to Section 5 of the Registration
Rights Agreement.
"Net Income" means, with respect to any Person, the net
income (loss) of such Person, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends,
excluding, however, (i) any gain (but not loss), together with
any related provision for taxes on such gain (but not loss),
realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such
Person or any of its Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received
by the Company or any of its Subsidiaries in respect of any Asset
Sale (including, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration received
in any Asset Sale), net of the direct costs relating to such
Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions), any relocation
expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), and any
reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"New Credit Facility" means that certain Credit Agreement,
dated as of the date of the Indenture, by and among the Company
and NationsBank, N.A., as administrative agent, and BNY Financial
Corporation, as collateral agent, including any related notes,
guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to
time.
"Note Custodian" means the Trustee, as custodian with
respect to the Notes in global form, or any successor entity
thereto.
"Obligations" means any principal, interest, penalties,
fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any
Indebtedness.
"Offering" means the Offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman
of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary
or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on
behalf of the Company by two Officers of the Company, one of whom
must be the principal executive officer, a vice chairman, the
principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of
Section 11.05.
"Opinion of Counsel" means an opinion from legal counsel
who is reasonably acceptable to the Trustee, that meets the
requirements of Section 11.05. The counsel may be an employee of
or counsel to the Company or any Subsidiary of the Company.
"Participant" means, with respect to DTC, a Person who has
an account with DTC.
"Permitted Investments" means any Investments (i) made in
the Company, a Wholly-Owned Subsidiary of the Company (other than
a Receivables Subsidiary) or any other entity that (a) is engaged
in the same or a similar line of business as the Company or any
of its Subsidiaries was engaged in as of the date of the
Indenture or any reasonable extensions or expansions thereof and
(b) as a result of such Investment becomes a Wholly-Owned
Subsidiary of the Company (other than a Receivables Subsidiary);
(ii) made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance
with Sections 3.09 and 4.10, (iii) outstanding as of the date of
the Indenture; (iv) made in cash or Cash Equivalents; or (v) by
the Company or a Wholly-Owned Subsidiary of the Company in a
Receivables Subsidiary or any Investment by a Receivables
Subsidiary in any other Person or assets, in each case, in
connection with a Qualified Receivables Transaction; provided
that any Investment in any such Person is in the form of a
Purchase Money Note, any equity interest or interests in accounts
receivable generated by the Company or a Subsidiary of the
Company and transferred to any Person in connection with a
Qualified Receivables Transaction or any such Person owning such
accounts receivable.
"Permitted Liens" means (i) Liens existing on the date of
the Indenture; (ii) Liens to secure the performance of the Notes
and the Subsidiary Guarantees; (iii) Liens in favor of the
Company; (iv) Liens to secure Indebtedness (including Capital
Lease Obligations) permitted by clause (iii) of the second
paragraph of Section 4.09 covering only those assets acquired,
constructed or improved with such Indebtedness; provided that
such Liens do not extend to any assets of the Company or its
Subsidiaries other than such acquired, constructed or improved
assets; (v) Liens on property securing Acquired Debt existing at
the time of acquisition of such property by the Company or any
Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition and do
not extend to any assets of the Company or its Subsidiaries other
than the acquired property; (vi) Liens on property of a Person
securing Acquired Debt existing at the time such Person is merged
into or consolidated with the Company or any Subsidiary of the
Company or otherwise becomes a Subsidiary of the Company;
provided that such Liens were in existence prior to the
contemplation of such merger or consolidation or acquisition and
do not extend to any assets other than those of the Person merged
into, consolidated or otherwise acquired; (vii) Liens on (x) the
accounts receivable and inventory (and related property) (and
proceeds thereof) of the Company or any Subsidiary of the Company
and (y) Capital Stock of the Company's Subsidiaries, in each
case, to secure Indebtedness incurred under the New Credit
Facility; (viii) Liens on assets of a Receivables Subsidiary
securing Indebtedness incurred in connection with a Qualified
Receivables Transaction, provided that such Indebtedness was
incurred in connection with such Qualified Receivables
Transaction; (ix) Liens to secure Permitted Refinancing Debt
incurred to refinance the Indebtedness referred to in the
preceding clauses (i), (iv), (v), (vi) and (vii); provided that
such Liens do not extend to any assets other than those specified
in clauses (i), (iv), (v), (vi) and (vii); (x) Liens to secure
the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred
in the ordinary course of business; (xi) Liens for taxes,
assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently
concluded; provided, that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have
been made therefor; (xii) Liens incurred or deposits made to
secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, government contracts,
performance and return of money bonds and other obligations of a
like nature, in each case incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed
money); (xiii) Liens encumbering customary initial deposits and
margin deposits, and other Liens incurred in the ordinary course
of business that are within the general parameters customary in
the industry, in each case securing Indebtedness under Hedging
Obligations; and (xiv) easements, right-of-ways, municipal and
zoning ordinances and similar charges, encumbrances, title
defects or other irregularities that do not materially interfere
with the ordinary course of business of the Company and its
Subsidiaries.
"Permitted Refinancing Debt" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the
Net Proceeds of which are used to extend, refinance, renew,
replace, defease or refund, other Indebtedness of the Company or
any of its Subsidiaries (other than Indebtedness described in
clauses (i), (v), (vi), (vii) and (viii) of the second paragraph
of Section 4.09); provided that: (i) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Debt
does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable
expenses incurred in connection therewith); (ii) such Permitted
Refinancing Debt has a final maturity date not earlier than the
final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Debt has a final maturity date
later than the final maturity date of, and is subordinated in
right of payment to, the Notes on terms at least as favorable to
the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is
incurred either by the Company or by the Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" means an individual, partnership, corporation,
limited liability company, limited liability partnership,
unincorporated organization, trust, joint venture, or a
governmental agency or political subdivision thereof.
"Principals" means E. Erwin Maddrey, II, Bettis C.
Rainsford, any spouse or lineal descendant of either of them, and
any Related Party of any such Person.
"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this
Indenture except as otherwise permitted by the provisions of this
Indenture.
"Purchase Money Note" means a promissory note evidencing a
line of credit, which may be irrevocable, from, or evidencing
other Indebtedness owed to, the Company or any Subsidiary of the
Company in connection with a Qualified Receivables Transaction,
which note shall be repaid from cash available to the maker of
such note, other than amounts required to be established as
reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such
investors and amounts paid in connection with the purchase of
newly generated receivables.
"Qualified Receivables Transaction" means any transaction
or series of transactions that may be entered into by the Company
or any Subsidiary of the Company pursuant to which the Company or
any Subsidiary of the Company may sell, convey or otherwise
transfer to (a) a Receivables Subsidiary (in the case of a
transfer by the Company or any Subsidiary of the Company) and (b)
any other Person (in the case of a transfer by a Receivables
Subsidiary), or may grant a security interest in, any accounts
receivable (whether now existing or arising in the future) of the
Company or any Subsidiary of the Company, and any asset related
thereto including, without limitation, all collateral securing
such accounts receivable, all contracts and all guarantees or
other obligations in respect of such accounts receivable,
proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests
are customarily granted in connection with asset securitization
transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly-Owned Subsidiary of
the Company (other than a Subsidiary Guarantor) which engages in
no activities other than in connection with the financing of
accounts receivable and which is designated by the Board of
Directors of the Company (as provided below) as a Receivables
Subsidiary (a) no portion of the Indebtedness or any other
Obligations (contingent or otherwise) of which (i) is guaranteed
by the Company or any other Subsidiary of the Company (excluding
guarantees of Obligations (other than the principal of, and
interest on, Indebtedness)) pursuant to Standard Securitization
Undertakings, (ii) is recourse to or obligates the Company or any
other Subsidiary of the Company in any way other than pursuant to
Standard Securitization Undertakings or (iii) subjects any
property or asset of the Company or any other Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to
the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings, (b) with which neither the Company
nor any other Subsidiary of the Company has any material
contract, agreement, arrangement or understanding (except in
connection with a Purchase Money Note or Qualified Receivables
Transaction) other than on terms no less favorable to the Company
or such other Subsidiary of the Company than those that might be
obtained at the time from persons that are not Affiliates of the
Company, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable, and
(c) to which neither the Company nor any other Subsidiary of the
Company has any obligation to maintain or preserve such entity's
financial condition or cause such entity to achieve certain
levels of operating results. Any such designation by the Board
of Directors of the Company shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying, to the best
of such officer's knowledge and belief after consulting with
counsel, that such designation complied with the foregoing
conditions.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated as of the date of this Indenture, by and
among the Company, the Guarantor and the other parties named on
the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Related Party" with respect to any Principal means (A) any
controlling stockholder or majority owned Subsidiary of such
Principal or (B) any trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or
Persons beneficially holding a 51% or more controlling interest
of which consist of such Principal and/or such other Persons
referred to in the immediately preceding clause (A).
"Responsible Officer," when used with respect to the
Trustee, means any officer within the Corporate Trust
Administration department of the Trustee (or any successor group
of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the
above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity
with the particular subject.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Standard Securitization Undertakings" means
representations, warranties, covenants and indemnities entered
into by the Company or any Subsidiary of the Company which are
reasonably customary in an accounts receivable transaction.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on
which such payment of interest or principal was scheduled to be
paid in the original documentation governing such Indebtedness,
and shall not include any contingent obligations to repay, redeem
or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by
such Person and/or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a)
the sole general partner or the managing general partner of which
is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person and/or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the guarantee of the Notes by
each of the Guarantors pursuant to Article 10 hereof and in the
form of Subsidiary Guarantee attached hereto as Exhibit C and any
additional guarantee of the Notes to be executed by any
Subsidiary pursuant to Section 4.19.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
77aaa-77bbbb) as in effect on the date on which this Indenture
is qualified under the TIA.
"Transfer Restricted Securities" means securities that bear
or are required to bear the legend set forth in Section 2.06(g).
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor
serving hereunder.
"Unrestricted Global Note" means one or more global Notes
that do not and are not required to bear the Private Placement
Legend and are deposited with and registered in the name of the
Depository or its nominee.
"Unrestricted Definitive Note" means one or more Definitive
Notes that do not and are not required to bear the Private
Placement Legend.
"Voting Stock" of any Person as of any date means the
Capital Stock of such Person that is at the time entitled to vote
in the election of the Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to
any Indebtedness at any date, the number of years obtained by
dividing (i) the sum of the products obtained by multiplying (a)
the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal,
including payment at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such
payment, by (ii) the then outstanding principal amount of such
Indebtedness.
"Wholly-Owned Subsidiary" of any Person means a Subsidiary
of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying
shares) shall at the time be owned by such Person or by one or
more Wholly-Owned Subsidiaries of such Person or by such Person
and one or more Wholly-Owned Subsidiaries of such Person.
Section 1.02. Other Definitions.
Defined in
Term Section
"Affiliate Transaction" 4.11
"Asset Sale Offer" 3.09
"Change of Control Offer" 4.15
"Change of Control Payment" 4.15
"Change of Control Payment Date" 4.15
"Covenant Defeasance" 8.03
"DTC" 2.03
"Event of Default" 6.01
"Excess Proceeds" 4.10
"incur" 4.09
"insolvent" 10.05
"Legal Defeasance" 8.02
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
"Payment Default" 6.01
"Permitted Debt" 4.09
"Purchase Date" 3.09
"Registrar" 2.03
"Restricted Payments" 4.07
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of
this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
All other terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined
by SEC rule under the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions;
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by the SEC
from time to time; and
(7) masculine pronouns include the feminine and neutral
genders.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The
Notes may be issued in the form of Definitive Notes or Global
Notes, as specified by the Company. The Notes may have
notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000
and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this
Indenture and the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and
be controlling.
Notes issued in global form shall be substantially in the
form of Exhibit A attached hereto (including the text referred to
in footnote 1 and 2 thereto). Notes issued in definitive form
shall be substantially in the form of Exhibit A attached hereto
(but without including the text referred to in footnote 1 and 2
thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall
provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the
Trustee or the Note Custodian, at the direction of the Trustee,
in accordance with instructions given by the Holder thereof as
required by Section 2.06.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual
or facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive
evidence that the Note has been authenticated under this
Indenture.
The Trustee shall, upon a written order of the Company
signed by two Officers, authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the
Notes. Notes to be so issued shall be either Definitive Notes or
Global Notes, as specified by the Company in such order. The
aggregate principal amount of Notes outstanding at any time may
not exceed such amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Notes. An authenticating agent
may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes
may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep
a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with
respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in
trust for the benefit of Holders or the Trustee all money held by
the Paying Agent for the payment of principal, premium or
Liquidated Damages, if any, or interest on the Notes, and will
notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the
Trustee. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If
the Company or a Subsidiary acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company,
the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of all Holders and shall otherwise comply
with TIA 312(a). If the Trustee is not the Registrar, the
Company shall furnish to the Trustee at least seven Business Days
before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company shall otherwise
comply with TIA 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When
Definitive Notes are presented by a Holder to the Registrar with
a request:
(x) to register the transfer of the
Definitive Notes; or
(y) to exchange such Definitive Notes for an
equal principal amount of Definitive Notes of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met;
provided, however, that the Definitive Notes presented or
surrendered for register of transfer or exchange:
(i) shall be duly endorsed or
accompanied by a written instruction of transfer
in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly
authorized in writing; and
(ii) in the case of a Definitive Note
that is a Transfer Restricted Security, such
request shall be accompanied by the following
additional information and documents, as
applicable:
(A) if such Transfer Restricted
Security is being delivered to the Registrar by
a Holder for registration in the name of such
Holder, without transfer, a certification to
that effect from such Holder (in substantially
the form of Exhibit B hereto); or
(B) if such Transfer Restricted
Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with
Rule 144A under the Securities Act or pursuant
to an exemption from registration in accordance
with Rule 144 or Rule 904 under the Securities
Act or pursuant to an effective registration
statement under the Securities Act, a
certification to that effect from such Holder
(in substantially the form of Exhibit B
hereto); or
(C) if such Transfer Restricted
Security is being transferred in reliance on
another exemption from the registration
requirements of the Securities Act, a
certification to that effect from such Holder
(in substantially the form of Exhibit B hereto)
and an Opinion of Counsel from such Holder or
the transferee reasonably acceptable to the
Company and to the Registrar to the effect that
such transfer is in compliance with the
Securities Act and applicable state securities
laws.
(b) Transfer of a Definitive Note for a Beneficial
Interest in a Global Note. A Definitive Note may not be
exchanged for a beneficial interest in a Global Note except upon
satisfaction of the requirements set forth below. Upon receipt
by the Trustee of a Definitive Note, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to
the Trustee, together with:
(i) if such Definitive Note is a Transfer
Restricted Security, a certification from the Holder
thereof (in substantially the form of Exhibit B hereto)
to the effect that such Definitive Note is being
transferred by such Holder to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities
Act) in accordance with Rule 144A under the Securities
Act; and
(ii) whether or not such Definitive Note is a
Transfer Restricted Security, written instructions from
the Holder thereof directing the Trustee to make, or to
direct the Note Custodian to make, an endorsement on the
Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global
Note,
in which case the Trustee shall cancel such Definitive Note in
accordance with Section 2.11 and cause, or direct the Note
Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Note
Custodian, the aggregate principal amount of Notes represented by
the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and, upon receipt
of an authentication order in accordance with Section 2.02, the
Trustee shall authenticate a new Global Note in the appropriate
principal amount.
(c) Transfer and Exchange of Global Notes. The transfer
and exchange of Global Notes or beneficial interests therein
shall be effected through the Depository, in accordance with this
Indenture and the procedures of the Depository therefor, which
shall include restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global
Note for a Definitive Note.
(i) Any Person having a beneficial interest
in a Global Note may upon request to the Trustee
exchange such beneficial interest for a Definitive
Note. Upon receipt by the Trustee of written
instructions or such other form of instructions as is
customary for the Depository, from the Depository or
its nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in the
case of a Transfer Restricted Security, the following
additional information and documents (all of which
may be submitted by facsimile):
(A) if such beneficial interest
is being transferred to the Person designated
by the Depository as being the beneficial
owner, a certification to that effect from such
Person (in substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest
is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with
Rule 144A under the Securities Act or pursuant
to an exemption from registration in accordance
with Rule 144 or Rule 904 under the Securities
Act or pursuant to an effective registration
statement under the Securities Act, a
certification to that effect from the
transferor (in substantially the form of
Exhibit B hereto); or
(C) if such beneficial interest
is being transferred in reliance on another
exemption from the registration requirements of
the Securities Act, a certification to that
effect from the transferor (in substantially
the form of Exhibit B hereto) and an Opinion of
Counsel from the transferee or transferor
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is
in compliance with the Securities Act and
applicable state securities laws,
in which case the Trustee or the Note
Custodian, at the direction of the Trustee, shall, in
accordance with the standing instructions and
procedures existing between the Depository and the
Note Custodian, cause the aggregate principal amount
of Global Notes to be reduced accordingly and,
following such reduction, the Company shall execute
and, upon receipt of an authentication order in
accordance with Section 2.02, the Trustee shall
authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a
beneficial interest in a Global Note pursuant to this
Section 2.06(d) shall be registered in such names and
in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect
Participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive
Notes to the Persons in whose names such Notes are so
registered.
(e) Restrictions on Transfer and Exchange of Global
Notes. Notwithstanding any other provision of this Indenture
(other than the provisions set forth in subsection (f) of this
Section 2.06), a Global Note may not be transferred as a whole
except by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of
the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence
of Depository. If at any time:
(i) the Depository for the Notes notifies the
Company that the Depository is unwilling or unable to
continue as Depository for the Global Notes and a
successor Depository for the Global Notes is not
appointed by the Company within 90 days after
delivery of such notice; or
(ii) the Company, at its sole discretion,
notifies the Trustee in writing that it elects to
cause the issuance of Definitive Notes under this
Indenture,
then the Company shall execute, and the Trustee shall, upon
receipt of an authentication order in accordance with Section
2.02, authenticate and deliver, Definitive Notes in an aggregate
principal amount equal to the principal amount of the Global
Notes in exchange for such Global Notes.
(g) Legends. The following legend shall appear on the
face of all Global Notes and Definitive Notes issued under this
Indenture unless specifically stated otherwise in the applicable
provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by
subparagraphs (ii) and (iii) below, each Global
Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution
thereof) shall bear the legend in substantially
the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO
DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE
INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER JURISDICTION."
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer
Restricted Security represented by a Global Note)
pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under
the Securities Act:
(A) in the case of any Transfer
Restricted Security that is a Definitive Note, the
Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a
Definitive Note that does not bear the legend set
forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Security;
and
(B) in the case of any Transfer
Restricted Security represented by a Global Note,
such Transfer Restricted Security shall not be
required to bear the legend set forth in (i)
above, but shall continue to be subject to the
provisions of Section 2.06(c); provided, however,
that with respect to any request for an exchange
of a Transfer Restricted Security that is
represented by a Global Note for a Definitive Note
that does not bear the legend set forth in (i)
above, which request is made in reliance upon Rule
144, the Holder thereof shall certify in writing
to the Registrar that such request is being made
pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon
consummation of the Exchange Offer, the Company shall
issue and, upon receipt of an authentication order in
accordance with Section 2.02, the Trustee shall
authenticate Series B Notes in exchange for Series A
Notes accepted for exchange in the Exchange Offer,
which Series B Notes shall not bear the legend set
forth in (i) above, and the Registrar shall rescind
any restriction on the transfer of such Notes, in
each case unless the Holder of such Series A Notes is
either (A) a broker-dealer, (B) a Person
participating in the distribution of the Series A
Notes or (C) a Person who is an affiliate (as defined
in Rule 144A) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At
such time as all beneficial interests in Global Notes have been
exchanged for Definitive Notes, redeemed, repurchased or
cancelled, all Global Notes shall be returned to or retained and
cancelled by the Trustee in accordance with Section 2.11. At any
time prior to such cancellation, if any beneficial interest in a
Global Note is exchanged for Definitive Notes, redeemed,
repurchased or cancelled, the principal amount of Notes
represented by such Global Note shall be reduced accordingly and
an endorsement shall be made on such Global Note, by the Trustee
or the Note Custodian, at the direction of the Trustee, to
reflect such reduction.
(i) General Provisions Relating to Transfers and
Exchanges.
(i) To permit registrations of
transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Definitive
Notes and Global Notes at the Registrar's request.
(ii) No service charge shall be made to
a Holder for any registration of transfer or
exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or
similar governmental charge payable in connection
therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange
or transfer pursuant to Sections 3.07, 4.10, 4.15
and 9.05 hereto).
(iii) The Registrar shall not be
required to register the transfer of or exchange
any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note
being redeemed in part.
(iv) All Definitive Notes and Global
Notes issued upon any registration of transfer or
exchange of Definitive Notes or Global Notes shall
be the valid obligations of the Company,
evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Definitive
Notes or Global Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the
transfer of or to exchange Notes during a
period beginning at the opening of business 15
days before the day of any selection of Notes
for redemption under Section 3.02 and ending at
the close of business on the day of selection;
or
(B) to register the transfer of
or to exchange any Note so selected for
redemption in whole or in part, except the
unredeemed portion of any Note being redeemed
in part; or
(C) to register the transfer of
or to exchange a Note between a record date and
the next succeeding interest payment date.
(vi) Prior to due presentment for the
registration of a transfer of any Note, the
Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is
registered as the absolute owner of such Note for
the purpose of receiving payment of principal of
and interest on such Notes, and neither the
Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate
Definitive Notes and Global Notes in accordance
with the provisions of Section 2.02.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receives evidence to its satisfaction of
the destruction, loss or theft of any Note, the Company shall
issue and the Trustee, upon the written order of the Company
signed by two Officers of the Company, shall authenticate a
replacement Note and cancel the Note with respect to which the
replacement Note is issued if the Trustee's requirements are met.
If required by the Trustee or the Company, an indemnity bond must
be supplied by the Holder that is sufficient in the judgment of
the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of
them may suffer if a Note is replaced. The Company may charge
for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this
Indenture equally and proportionately with all other Notes duly
issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation, those reductions in the
interest in a Global Note effected by the Trustee in accordance
with the provisions hereof, and those described in this Section
as not outstanding. Except as set forth in Section 2.09, a Note
does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee receives proof satisfactory
to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid
under Section 4.01, it ceases to be outstanding and interest on
it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary
or an Affiliate of any thereof) holds, on a redemption date or
maturity date, money sufficient to pay Notes payable on that
date, then on and after that date such Notes shall be deemed to
be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required
principal amount of Notes have concurred in any direction, waiver
or consent, Notes owned by the Company, or by any Person directly
or indirectly controlling or controlled by or under direct or
indirect common control with the Company, shall be disregarded,
except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or
consent, only Notes that a Trustee knows are so owned shall be so
disregarded.
Section 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Notes
upon a written order of the Company signed by two Officers of the
Company. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable
delay, the Company shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee
for cancellation. The Registrar and Paying Agent shall forward
to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall return
such cancelled Notes to the Company. Certification of the
destruction of all cancelled Notes shall be delivered to the
Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the
Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special
record date, in each case at the rate provided in the Notes and
in Section 4.01. The Company shall notify the Trustee in writing
of the amount of defaulted interest proposed to be paid on each
Note and the date of the proposed payment. The Company shall
fix or cause to be fixed each such special record date and
payment date, provided that no such special record date shall be
less than 10 days prior to the related payment date for such
defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company,
the Trustee in the name and at the expense of the Company) shall
mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of
such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 3.07, it shall furnish
to the Trustee, at least 45 days but not more than 60 days before
a redemption date, an Officers' Certificate setting forth (a) the
clause of this Indenture pursuant to which the redemption shall
occur, (b) the redemption date, (c) the principal amount of Notes
to be redeemed, (d) the redemption price and (e) the CUSIP
numbers of the Notes to be redeemed.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any
time, the Trustee shall select the Notes to be redeemed among the
Holders of the Notes in compliance with the requirements of the
principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro
rata basis, by lot or in accordance with any other method the
Trustee considers fair and appropriate. In the event of partial
redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor
more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to
be redeemed. Notes and portions of Notes selected shall be in
amounts of $1,000 or whole multiples of $1,000; except that if
all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a
multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes
called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09, at least 30 days
but not more than 60 days before a redemption date, the Company
shall mail or cause to be mailed, by first class mail, a notice
of redemption to each Holder whose Notes are to be redeemed at
its registered address.
The notice shall identify the Notes to be redeemed,
including CUSIP numbers, and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that,
after the redemption date upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed
portion shall be issued upon cancellation of the original
Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption
ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption
are being redeemed; and
(h) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice
or printed on the Notes.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at its expense; provided,
however, that the Company shall have delivered to the Trustee, at
least 45 days prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as
provided in the preceding paragraph (except information with
respect to the selection of Notes to be redeemed, which
information will be determined by the Trustee under Section
3.02).
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with
Section 3.03, Notes called for redemption become irrevocably due
and payable on the redemption date at the redemption price. A
notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption Price.
Before 10:00 a.m. (New York Time) on the redemption date,
the Company shall deposit with the Trustee or with the Paying
Agent money sufficient to pay the redemption price of and accrued
interest on all Notes to be redeemed on that date. The Trustee
or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption
price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the
preceding paragraph, on and after the redemption date, interest
shall cease to accrue on the Notes or the portions of Notes
called for redemption. If a Note is redeemed on or after an
interest record date but on or prior to the related interest
payment date, then on such payment date any accrued and unpaid
interest shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender
for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall be paid on the
unpaid principal, from the redemption date until such principal
is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the
Notes and in Section 4.01.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the
Company shall issue and, upon the Company's written request, the
Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed
portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) The Company shall not have the option to redeem the
Notes pursuant to this Section 3.07 prior to September 1, 2002.
Thereafter the Notes shall be subject to redemption at the option
of the Company, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month
period beginning on September 1 of the years indicated below:
Year Percentage
2002 104.8125%
2003 103.2083%
2004 101.6041%
2005 and thereafter 100.0000%
(b) Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Section 3.01 through 3.06.
Section 3.08. Mandatory Redemption.
Except as set forth under Sections 4.10 and 4.15, the
Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess
Proceeds.
In the event that, pursuant to Section 4.10, the Company
shall be required to commence an offer to all Holders to purchase
Notes (an "Asset Sale Offer"), it shall follow the procedures
specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to
the extent that a longer period is required by applicable law
(the "Offer Period"). No later than five Business Days after the
termination of the Offer Period (the "Purchase Date"), the
Company shall purchase the principal amount of Notes required to
be purchased pursuant to Section 4.10 (the "Offer Amount") or, if
less than the Offer Amount has been tendered, all Notes tendered
in response to the Asset Sale Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments
are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued
and unpaid interest shall be paid to the Person in whose name a
Note is registered at the close of business on such record date,
and no additional interest shall be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each
of the Holders, with a copy to the Trustee. The notice shall
contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The
Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant
to this Section 3.09 and Section 4.10 and the length of time
the Asset Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the
Purchase Date;
(c) that any Note not tendered or accepted for payment
shall continue to accrue interest;
(d) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest after the Purchase
Date;
(e) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer may only elect to have all of
such Note purchased and may not elect to have only a portion
of such Note purchased;
(f) that Holders electing to have a Note purchased
pursuant to any Asset Sale Offer shall be required to
surrender the Note, with the form entitled "Option of Holder
to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depository,
if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the
Purchase Date;
(g) that Holders shall be entitled to withdraw their
election if the Company, the depository or the Paying Agent,
as the case may be, receives, not later than the expiration of
the Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have
such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company
shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in
part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the
extent necessary, the Offer Amount of Notes or portions thereof
tendered pursuant to the Asset Sale Offer, or if less than the
Offer Amount has been tendered, all Notes tendered, and shall
deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.09. The
Company, the Depository or the Paying Agent, as the case may be,
shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Company
shall promptly issue a new Note, and the Trustee, upon written
request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so
accepted shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company shall publicly announce the
results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09,
any purchase pursuant to this Section 3.09 shall be made pursuant
to the provisions of Sections 3.01 through 3.06.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in
the manner provided in the Notes. Principal, premium, if any,
and interest shall be considered paid on the date due if the
Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Company in immediately available funds and desig
nated for and sufficient to pay all principal, premium, if any,
and interest then due. The Company shall pay all Liquidated
Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate equal to 1% per annum in excess of the then
applicable interest rate on the Notes to the extent lawful; it
shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable
grace period) at the same rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of
the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or
more other offices or agencies where the Notes may be presented
or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough
of Manhattan, the City of New York for such purposes. The
Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location
of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in
accordance with Section 2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations
of the SEC, so long as any Notes are outstanding, the Company
shall furnish to the Holders of Notes (i) all quarterly and
annual financial information (excluding schedules) that would be
required to be contained in a filing with the SEC on Forms 10-Q
and 10-K (excluding exhibits) if the Company were required to
file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by
the Company's independent certified public accountants, (ii) all
current reports that would be required to be filed with the SEC
on Form 8-K if the Company were required to file such reports
(excluding exhibits) and (iii) any other reports (excluding
exhibits) that may by specified in Sections 13 and 15(d) of the
Exchange Act that would be required to be filed with the SEC, if
the Company were required to file such reports. In addition,
whether or not required by the rules and regulations of the SEC,
the Company shall file a copy of all such information (including
exhibits) and reports (including exhibits) with the SEC for
public availability (unless the SEC will not accept such a
filing) and make such information available to securities
analysts and prospective investors upon request.
(b) For so long as any Notes remain outstanding, to
furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under
the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that
to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant
contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or
Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event
has occurred and remains in existence by reason of which payments
on account of the principal of or interest, if any, on the Notes
is prohibited or if such event has occurred, a description of the
event and what action the Company is taking or proposes to take
with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered pursuant
to Section 4.03(a) above shall be accompanied by a written
statement of the Company's independent certified public
accountants (who shall be a firm of established national
reputation) that in making the examination necessary for opining
upon such financial statements, nothing has come to their
attention that would lead them to believe that the Company has
violated any provisions of Article 4 or Article 5 hereof as it
relates to accounting matters or, if any such violation has
occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect
thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested
in good faith and by appropriate proceedings or where the failure
to effect such payment is not adverse in any material respect to
the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each Guarantor covenants (to the extent
that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and
the Company and each Guarantor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it shall not, by resort to
any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been
enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution of any kind or
character on account of the Equity Interests of the Company or
any of its Subsidiaries (including, without limitation, any
payment in connection with any merger or consolidation involving
the Company or any of its Subsidiaries) or to the direct or
indirect holders of the Equity Interests of the Company or any of
its Subsidiaries in their capacity as such, except (a) dividends
or distributions payable solely in Equity Interests (other than
Disqualified Stock) of the Company or (b) dividends or
distributions payable to the Company or any Wholly-Owned
Subsidiary of the Company; (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the Company,
any Subsidiary of the Company or any direct or indirect parent of
the Company, except any such Equity Interests owned by the
Company or any Wholly-Owned Subsidiary of the Company; (iii) make
any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value, any Indebtedness that is
subordinated to the Notes prior to the Stated Maturity of such
Indebtedness; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv)
above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the
applicable four-quarter period, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09; and
(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments declared or made by the
Company and its Subsidiaries after the date of this Indenture
(excluding Restricted Payments permitted by clauses (ii),
(iii), (iv) and (v) of the next succeeding paragraph), is less
than the sum of (1) $12.5 million, plus (2) 50% of the
Consolidated Net Income of the Company for the period (taken
as one accounting period) from the beginning of the fiscal
quarter commencing June 29, 1997 to the end of the Company's
most recently ended fiscal quarter for which internal
financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such deficit), plus (3)
100% of the aggregate cash portion of the Net Proceeds
received by the Company from a contribution to its common
equity capital or the issue or sale since the date of this
Indenture of Equity Interests of the Company or of debt
securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or convertible
debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or debt securities that have been
converted into Disqualified Stock), plus (4) to the extent
that any Restricted Investment that was made after the date of
this Indenture is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such
Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment
of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture; (ii) the making
of any Restricted Investment in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company
(other than any Disqualified Stock); provided that the amount of
any such net cash proceeds that are utilized for any such
Restricted Investment, redemption, repurchase, retirement or
other acquisition shall be excluded from clause (3) of the
preceding paragraph (c); (iii) the redemption, repurchase,
retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than
Disqualified Stock); provided that any net cash proceeds that are
utilized for such redemption, repurchase, retirement or other
acquisition, and any Net Income resulting therefrom, shall be
excluded from clauses (3) and (2) of the preceding paragraph (c)
respectively; (iv) the defeasance, redemption, repayment or
repurchase of subordinated Indebtedness in exchange for, or out
of the net cash proceeds from, an incurrence of Permitted
Refinancing Debt or the substantially concurrent sale (other than
to a Subsidiary of the Company) of Equity Interests of the
Company (other than Disqualified Stock); provided that the amount
of any such net cash proceeds that are utilized for any such
redemption, repayment, repurchase, retirement or other
acquisition shall be excluded from clause (3) of the preceding
paragraph (c); and (v) the repayment by the Company on the date
of this Indenture of up to $219.0 million in aggregate principal
amount of Indebtedness owed by the Company to Delta Woodside
Industries, Inc. or any Subsidiary thereof; provided, that upon
such repayment, all remaining Indebtedness owed by the Company to
Delta Woodside Industries, Inc. or any Subsidiary thereof shall
be contributed to the Company's capital and thereby cancelled.
The amount of all Restricted Payments (other than cash)
shall be the fair market value (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) on the date of the Restricted Payment
of the asset(s) proposed to be transferred by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by
this Section 4.07 were computed, which calculations may be based
upon the Company's latest available financial statements.
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or
restriction of any kind on the ability of any Subsidiary to (i)
pay dividends or make any other distributions to the Company or
any of its Subsidiaries on its Capital Stock or with respect to
any other interest or participation in, or measured by, its
profits; (ii) pay any Indebtedness or other obligation owed to
the Company or any of its Subsidiaries; (iii) make loans or
advances to the Company or any of its Subsidiaries; (iv) sell,
lease or transfer any of its properties or assets to the Company
or any of its Subsidiaries; or (v) guarantee the obligations of
the Company evidenced by the Notes or any renewals, refinancings,
exchanges, refundings or extensions thereof, except for such
encumbrances or restrictions existing under or by reason of (a)
applicable law, (b) any instrument governing Indebtedness or
Capital Stock of a Person or any property or other asset acquired
by the Company or any of its Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so
acquired, (c) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent
with past practices, (d) purchase money obligations for property
acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iv) above on the
property so acquired, (e) Permitted Refinancing Debt; provided
that the restrictions contained in the agreements governing such
Permitted Refinancing Debt are no more restrictive than those
contained in the agreements governing the Indebtedness being
refinanced, or (f) any Purchase Money Note, or other Indebtedness
or contractual requirements incurred with respect to a Qualified
Receivables Transaction relating to a Receivables Subsidiary.
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not
permit any of its Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness
(including Acquired Debt) or issue shares of Disqualified Stock
and a Guarantor may incur Acquired Debt, in each case if (i) the
Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters (taken as one accounting period) for
which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro
forma application of the Net Proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified
Stock had been issued, as the case may be, at the beginning of
such four-quarter period and (ii) no Default or Event of Default
has occurred and is continuing or would occur as a consequence
thereof;
The foregoing provisions shall not apply to the incurrence
of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company and/or its Subsidiaries
of Indebtedness under the New Credit Facility in an aggregate
principal amount at any time outstanding (with letters of credit
being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Subsidiaries
thereunder) not to exceed the greater of (x) $100.0 million and
(y) the sum of 85% of Eligible Receivables and 60% of Eligible
Inventory, less in each case the aggregate amount of all Net
Proceeds of Asset Sales applied to permanently reduce the
outstanding amount of such Indebtedness and the lending
commitments with respect thereto pursuant to Section 4.10;
(ii) the incurrence by the Company of Indebtedness
represented by the Notes and the incurrence by the Guarantors of
Indebtedness represented by the Subsidiary Guarantees;
(iii) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by Capital Lease
Obligations (whether or not incurred pursuant to sale and
leaseback transactions), mortgage financing or purchase money
obligations, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business
of the Company or such Subsidiary, in an aggregate principal
amount not to exceed $5.0 million at any time outstanding;
(iv) the incurrence by the Company or any of its
Subsidiaries of Permitted Refinancing Debt;
(v) the incurrence by the Company or any of its Wholly-
Owned Subsidiaries (other than a Receivables Subsidiary) of
intercompany Indebtedness between or among the Company and any of
its Wholly-Owned Subsidiaries (other than a Receivables
Subsidiary) or between or among any of the Company's Wholly-Owned
Subsidiaries (other than a Receivables Subsidiary); provided,
however, that (a) if the Company is the obligor on such
Indebtedness, such Indebtedness is unsecured and expressly
subordinate to the payment in full of all Obligations with
respect to the Notes and (b)(1) any subsequent issuance or
transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a
Wholly-Owned Subsidiary (other than a Receivables Subsidiary) and
(2) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Wholly-Owned
Subsidiary (other than a Receivables Subsidiary) shall be deemed,
in each case, to constitute an incurrence of such Indebtedness by
the Company or such Subsidiary, as the case may be;
(vi) the incurrence by the Company of Hedging Obligations
that are incurred for the purpose of fixing or hedging interest
rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be incurred;
(vii) Indebtedness of a Receivables Subsidiary that is not
recourse to the Company or any other Subsidiary of the Company
(other than Standard Securitization Undertakings) incurred in
connection with a Qualified Receivables Transaction; and
(viii) the incurrence by the Company and its Subsidiaries
of Indebtedness (in addition to Indebtedness permitted by any
other clause of this paragraph) in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding not to
exceed $10.0 million.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its
Subsidiaries to, consummate an Asset Sale unless (i) the Company
(or the Subsidiary, as the case may be) receives consideration at
the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of
the assets sold or otherwise disposed of and (ii) at least 75%
(100% in the case of lease payments) of the consideration
therefor received by the Company or such Subsidiary is in the
form of cash or Cash Equivalents; provided that the amount of
(a) any liabilities (as shown on the Company's, or such
Subsidiary's, most recent balance sheet) of the Company or any
Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the Notes or any
guarantee thereof) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases
the Company or such Subsidiary from further liability and (b) any
notes or other obligations received by the Company or any such
Subsidiary from such transferee that are immediately converted by
the Company or such Subsidiary into cash (to the extent of the
cash received), shall be deemed to be cash for purposes of this
provision.
Within 365 days after the receipt of any Net Proceeds from
an Asset Sale, the Company may apply such Net Proceeds, at its
option, to (i) permanently reduce Indebtedness under the New
Credit Facility; provided that such permanent reduction is
accompanied by a corresponding reduction in the lending
commitments under the New Credit Facility, (ii) acquire another
business or other long-term assets, in each case, in, or used or
useful in, the same or a similar line of business as the Company
or any of its Subsidiaries was engaged in on the date of this
Indenture or any reasonable extension or expansion thereof
(including the Capital Stock of another Person engaged in such
business; provided such other Person is, or immediately after and
giving effect to such acquisition shall become, a Wholly-Owned
Subsidiary of the Company (other than a Receivables Subsidiary)),
or (iii) reimburse the Company or any of its Subsidiaries for
expenditures made, and costs incurred, to repair, rebuild,
replace or restore property subject to loss, damage or taking to
the extent that the Net Proceeds consist of insurance or
condemnation or similar proceeds received on account of such
loss, damage or taking. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce revolving
Indebtedness under the New Credit Facility or otherwise invest
such Net Proceeds in cash or Cash Equivalents. Any Net Proceeds
from Asset Sales that are not applied as provided in the first
sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Company shall be required to make an Asset Sale
Offer to purchase the maximum principal amount (that is an
integral multiple of $1,000) of Notes that may be purchased out
of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the
date of purchase, in accordance with the procedures set forth in
Article 3 hereof. To the extent that the aggregate amount of
Notes tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company (or such Subsidiary) may use any
remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that
only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased). Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
Notwithstanding the foregoing, the Company and its
Subsidiaries shall be permitted to consummate one or more Asset
Sales with respect to assets or properties with an aggregate fair
market value (evidenced by a resolution of the Board of Directors
set forth in an Officers' Certificate delivered to the Trustee)
not in excess of $5.0 million with respect to all such Asset
Sales made subsequent to the date of this Indenture without
complying with the provisions of the preceding paragraphs.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or
amend any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Company
or the relevant Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) (a) with respect to
any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0
million the Company delivers to the Trustee a resolution of the
Board of Directors (including a majority of the disinterested
directors, if any) set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause
(i) above and that such Affiliate Transaction has been approved
by a majority of the disinterested members, if any, of the Board
of Directors or (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million the Company delivers to
the Trustee an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
investment banking firm of national standing; provided that (1)
any employment agreement entered into by the Company or any of
its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such
Subsidiary, (2) transactions between or among the Company and/or
its Wholly-Owned Subsidiaries (other than a Receivables
Subsidiary), (3) Restricted Payments (other than Investments)
that are permitted by Section 4.07, (4) any payment by the
Company for management services pursuant to the Management
Services Agreement, dated as of August 1, 1997, by and among
Delta Woodside Industries, Inc. and the Company as such
Management Services Agreement is in effect on the date of this
Indenture, (5) any payment by the Company pursuant to the Tax
Sharing Agreement, dated as of August 1, 1997, by and among Delta
Woodside Industries, Inc. and the Company as such Tax Sharing
Agreement is in effect on the date of this Indenture, (6) sales
of goods and manufacturing services in the ordinary course of
business and otherwise in compliance with the terms of this
Indenture which are, in the reasonable determination of the Board
of Directors of the Company, for fair market value and on terms
at least as favorable to the Company and its Subsidiaries as
might have been obtained at such time from an unaffiliated party
and (7) sales of accounts receivable and other related assets
customarily transferred in an asset securitization transaction
involving accounts receivable to a Receivables Subsidiary, and
any agreement related thereto, in a Qualified Receivables
Transaction, in each case shall not be deemed Affiliate
Transactions.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness on any asset
(including Capital Stock of any Subsidiary of the Company) now
owned or hereafter acquired, or any income or profits therefrom,
or assign or convey any right to receive income therefrom, except
Permitted Liens unless all payments due under this Indenture and
the Notes are secured on an equal and ratable basis with the
Indebtedness so secured until such time as such is no longer
secured by a Lien; provided that if such Indebtedness is by its
terms expressly subordinated to the Notes or any Subsidiary
Guarantee the Lien securing such Indebtedness shall be
subordinate and junior to the Lien securing the Notes and the
Subsidiary Guarantees with the same relative priority as such
subordinate or junior Indebtedness shall have with respect to the
Notes and the Subsidiary Guarantees.
Section 4.13. Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company or any Subsidiary may enter into a sale
and leaseback transaction if (i) the Company or such Subsidiary
could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction
pursuant to Section 4.09 and (b) incurred a Lien to secure such
Indebtedness pursuant to Section 4.12, (ii) the Net Proceeds of
such sale and leaseback transaction are at least equal to the
fair market value (as determined in good faith by the Board of
Directors and set forth in an Officers' Certificate delivered to
the Trustee) of the property that is the subject of such sale and
leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the Company
or the Subsidiary, as the case may be, applies the proceeds of
such transaction in compliance with Sections 3.09 and 4.10.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause
to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Subsidiaries, in
accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Subsidiaries; provided,
however, that the Company shall not be required to preserve any
such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole, and that the loss thereof
is not adverse in any material respect to the Holders of the
Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price
in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase (the "Change of Control
Payment"). Within ten days following any Change of Control, the
Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control
and offering to repurchase Notes on the date specified in such
notice, which date shall be no earlier than 30 days and no later
than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"). Such notice, which shall govern the
terms of the Change of Control offer, shall state: (i) that the
Change of Control Offer is being made pursuant to this Section
4.15 and that all Notes tendered will be accepted for payment;
(ii) the purchase price and the purchase date; (iii) that any
Note not tendered will continue to accrue interest; (iv) that,
unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date; (v) that Holders electing to have
any Notes purchased pursuant to a Change of Control Offer will be
required to surrender the Notes, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date; (vi) that Holders
will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and (vii) that Holders
whose Notes are being purchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the
Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof. The
Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable
in connection with the repurchase of the Notes as a result of a
Change of Control.
(b) On the Change of Control Payment Date, the Company
will, to the extent lawful, (i) accept for payment all Notes or
portions thereof properly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent an amount equal
to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of
Notes or portions thereof being purchased by the Company. The
Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the
Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note shall be in
a principal amount of $1,000 or an integral multiple thereof.
The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(c) The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise
in compliance with the requirements set forth in this Indenture
applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
Section 4.16. Limitation on Issuances and Sales of Capital Stock
of Wholly-Owned Subsidiaries.
The Company (i) shall not, and shall not permit any
Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Subsidiary of the
Company to any Person (other than the Company or a Wholly-Owned
Subsidiary of the Company (other than a Receivables Subsidiary)),
unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Subsidiary and
(b) the aggregate cash portion of the Net Proceeds from such
transfer, conveyance, sale, lease or other disposition is applied
in accordance with Sections 3.09 and 4.10, and (ii) shall not
permit any Subsidiary of the Company to issue any of its Equity
Interests (other than (1), if necessary, shares of its Capital
Stock constituting directors' qualifying shares or (2) shares of
Capital Stock issued prior to the time such Person became a
Subsidiary of the Company; provided that such Capital Stock was
not issued in anticipation of such transaction) to any Person
other than to the Company or a Wholly-Owned Subsidiary of the
Company (other than a Receivables Subsidiary).
Section 4.17. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to
any Holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be
paid or is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
Section 4.18. Limitation on Investment Company Status.
The Company and its Subsidiaries shall not take any action,
or otherwise permit to exist any circumstance, that would require
the Company to register as an "investment company" under the
Investment Company Act of 1940, as amended.
Section 4.19. Additional Subsidiary Guarantees.
If the Company or any of its Subsidiaries shall acquire or
create another Subsidiary after the date of this Indenture (other
than a Receivables Subsidiary that does not guarantee or
otherwise provide credit support (pursuant to a security interest
or otherwise) in respect of any Indebtedness of the Company or
any Subsidiary Guarantor), then such newly acquired or created
Subsidiary shall execute a Subsidiary Guarantee and deliver an
opinion of counsel, in accordance with the terms of this
Indenture.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, and shall not permit any of its
Subsidiaries to, consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company and
its Subsidiaries (determined on a consolidated basis for the
Company and its Subsidiaries taken as a whole) in one or more
related transactions, to another Person unless: (i) either (a)
the Company, in the case of a transaction involving the Company,
or a Subsidiary which is a party to the transaction, in the case
of a transaction involving a Subsidiary of the Company, is the
surviving corporation or (b) in the case of a transaction
involving the Company, the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which
such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof
or the District of Columbia and expressly assumes all of the
obligations of the Company under the Notes and this Indenture
pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (ii) immediately after such
transaction no Default or Event of Default exists; (iii) in the
case of a transaction involving the Company (except in the case
of a merger of the Company with or into a Wholly-Owned Subsidiary
of the Company (other than a Receivables Subsidiary)), the Person
formed by or surviving any such consolidation or merger (if other
than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made, (a)
shall have a Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth
of the Company immediately preceding the transaction and (b)
will, at the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph
of Section 4.09; (iv) if, as a result of any such transaction,
property or assets of the Company or any Subsidiary of the
Company would become subject to a Lien securing Indebtedness not
excepted from Section 4.12, the Company or its successor, as the
case may be, shall have otherwise complied with such Section
4.12; and (v) the Company shall have delivered to the Trustee an
Officers' Certificate and, except in the case of a merger of a
Subsidiary of the Company into the Company or into a Wholly-Owned
Subsidiary of the Company, an opinion of counsel, each stating
that such consolidation, merger, conveyance, lease or disposition
and any supplemental indenture with respect thereto, comply with
all of the terms of this Section 5.01 and that all conditions
precedent provided for in this Section 5.01 relating to such
transaction, or series of transactions, have been complied with.
For the purposes of the foregoing, the transfer (by sale,
lease, assignment or otherwise, in a single transaction or series
of transactions) of all or substantially all of the properties or
assets of one or more Subsidiaries of the Company, the Capital
Stock of which constitutes all or substantially all of the
properties or assets of the Company, shall be deemed to be the
transfer of all or substantially all of the properties and assets
of the Company.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company in accordance with
Section 5.01, the successor corporation formed by such
consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so
that from and after the date of such consolidation, merger, sale,
lease, conveyance or other disposition, the provisions of this
Indenture referring to the "Company" shall refer instead to the
successor corporation and not to the Company), and may exercise
every right and power of the Company under this Indenture with
the same effect as if such successor Person had been named as the
Company herein; provided, however, that the predecessor Company
shall not be relieved from the obligation to pay the principal of
and interest on the Notes except in the case of a sale of all or
substantially all of the Company's assets that meets the
requirements of Section 5.01.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following constitutes an "Event of Default:"
(i) default for 30 days in the payment when due of
interest on, or Liquidated Damages with respect to, the
Notes;
(ii) default in payment when due of the principal of or
premium, if any, on the Notes;
(iii) failure by the Company to comply with the
provisions of Sections 3.09, 4.07, 4.09, 4.10, 4.15, 4.16
and 5.01;
(iv) failure by the Company for 30 days after notice
from the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding to
comply with any of its other agreements in this Indenture
or the Notes;
(v) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Subsidiaries (or the payment of
which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of this Indenture,
which default:
(a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness at its
final Stated Maturity (a "Payment Default"), or
(b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each
case, the principal amount of which Indebtedness,
together with the principal amount of any other unpaid
Indebtedness under which there has been a Payment
Default or the express maturity of which has been so
accelerated, aggregates $5.0 million or more;
(vi) failure by the Company or any of its Subsidiaries
to pay final judgments (other than judgments fully covered
by insurance) aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period
of 45 days;
(vii) the Company or any of its Subsidiaries pursuant to
or within the meaning of Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a
custodian of it or for all or substantially all of
its property,
(d) makes a general assignment for the benefit
of its creditors, or
(e) generally is not paying its debts as they become
due; or
(viii) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(a) is for relief against the Company or any of
its Subsidiaries in an involuntary case;
(b) appoints a custodian of the Company or any
of its Subsidiaries or for all or substantially all of
the property of the Company or any of its Subsidiaries;
or
(c) orders the liquidation of the Company or any
of its Subsidiaries;
and the order or decree remains unstayed and in effect
for 60 consecutive days; or
(ix) the Subsidiary Guarantee of any Guarantor is held
in judicial proceedings to be unenforceable or invalid or
ceases for any reason to be in full force and effect (other
than in accordance with the terms of this Indenture) or any
Guarantor or any Person acting on behalf of any Guarantor
denies or disaffirms such Guarantor's obligations under its
Subsidiary Guarantee (other than by reason of a release of
such Guarantor from its Subsidiary Guarantee in accordance
with the terms of this Indenture).
The Holders of a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf
of the Holders of all of the Notes waive any existing Default or
Event of Default and its consequences under this Indenture except
a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
Section 6.02. Acceleration.
If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the
then outstanding Notes may declare all the Notes to be due and
payable immediately. Notwithstanding the foregoing, in the case
of an Event of Default arising under clauses (vii) and (viii) of
Section 6.01, with respect to the Company or any Subsidiary, all
outstanding Notes shall become due and payable without further
action or notice. Holders of the Notes may not enforce this
Indenture or the Notes except as provided in this Indenture.
Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or premium, if any, or
interest or Liquidated Damages, if any) if it determines that
withholding notice is in their interest.
In the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding payment of
the premium that the Company would have had to pay if the Company
then had elected to redeem the Notes pursuant to the optional
redemption provisions of this Indenture, an equivalent premium
shall also become and be immediately due and payable to the
extent permitted by law upon the acceleration of the Notes. If
an Event of Default occurs prior to September 1, 2002 by reason
of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to September 1,
2002, then the premium specified below shall also become
immediately due and payable to the extent permitted by law upon
the acceleration of the Notes during the twelve-month period
ending immediately prior to September 1 of the years indicated
below.
Year Percentage
1997 114.4377%
1998 112.8335%
1999 111.2293%
2000 109.6251%
2001 108.0209%
2002 106.4167%
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of
principal, premium, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of
a Note in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may
on behalf of the Holders of all of the Notes waive an existing
Default or Event of Default and its consequences hereunder,
except a continuing Default or Event of Default in the payment of
the principal of, or interest on, the Notes (including in
connection with an offer to purchase) (provided, however, that
the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its
consequences, including any related payment default that resulted
from such acceleration). Upon any such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to
the Trustee or exercising any trust or power conferred on it.
However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes
or that may involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the
Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if
requested, the provision of indemnity; and
(e) during such 60-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give
the Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or
priority over another Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal,
premium, if any, and Liquidated Damages, if any, and interest on
the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without
the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(i) or (ii)
occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust
against the Company for the whole amount of principal of,
premium, if any, and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as
shall be sufficient to cover the reasonable costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Holders of the
Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive
and distribute any money or other property payable or deliverable
on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07. To the extent that the payment of
any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 out of the estate in any such
proceeding, shall be denied for any reason, payment of the same
shall be secured by a Lien on, and shall be paid out of, any and
all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorgan
ization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent
to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting
the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for
amounts due under Section 7.07, including payment of all
compensation, expense and liabilities reasonably incurred, and
all advances made, by the Trustee and, the reasonable costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on
the Notes for principal, premium, if any, and Liquidated Damages,
if any, and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Notes
for principal, premium, if any, and Liquidated Damages, if any,
and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Note
pursuant to Section 6.07, or a suit by Holders of more than 10%
in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of
care and skill in its exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the
Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and
no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the state
ments and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.05.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), and (c) of this
Section 7.01.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability.
The Trustee shall be under no obligation to exercise any of its
rights and powers under this Indenture at the request of any
Holders, unless such Holders shall have offered to the Trustee
security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing
with the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document
reasonably believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or
both. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of
any agent appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be
authorized or within the rights or powers conferred upon it by
this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the
Company.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders unless such Holders
shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expenses that
might be incurred by it in compliance with such request or
direction.
(g) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of Indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records
and premises of the Company, personally or by agent at the sole
cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.
(h) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
(i) The Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Indenture.
(j) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof unless written notice of any
event which is in fact such a default is received by the Trustee
at the Corporate Trust Office of this Trustee and such notice
references the Notes and this Indenture.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with
the Company or any Affiliate of the Company with the same rights
it would have if it were not Trustee. However, in the event that
the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture
or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company
or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application
of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital
herein or any statement in the Notes or any other document in
connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to
Holders of Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default
or Event of Default in payment of principal of, premium, if any,
or interest on, any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests
of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes
remain outstanding, the Trustee shall mail to the Holders of the
Notes a brief report dated as of such reporting date that
complies with TIA 313(a) (but if no event described in TIA
313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also
shall comply with TIA 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with
the SEC and each stock exchange on which the Notes are listed in
accordance with TIA 313(d). The Company shall promptly notify
the Trustee when the Notes are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services
hereunder as the parties shall agree from time to time. The
Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or
in connection with the acceptance or administration of its duties
under this Indenture, including the reasonable costs and expenses
of enforcing this Indenture against the Company (including this
Section 7.07) and defending itself against any claim (whether
asserted by the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any
of its powers or duties hereunder, except to the extent any such
loss, liability or expense may be attributable to its negligence
or bad faith. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder; provided, that the Company's
obligations under this Section 7.07 shall be relieved to the
extent, and only to the extent, that such failure to notify
promptly has materially prejudiced the Company. The Company
shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company shall not, in connection with any one suit or proceeding
or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys (in addition to one local counsel) at any one time for
the Trustee. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this
Section, the Trustee shall have a Lien prior to the Notes on all
money or property held or collected by the Trustee, except that
held in trust to pay principal and interest on particular Notes.
Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Sections 6.01(viii) or 6.01(ix)
occurs, the reasonable expenses and the compensation for the
services (including the reasonable fees and expenses of its
agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA
313(b)(2) to the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment as provided in this
Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the
Company. The Holders of Notes of a majority in principal amount
of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee
under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in
principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring
Trustee, the Company, or the Holders of Notes of at least 10% in
principal amount of the then outstanding Notes may petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a
Note who has been a Holder of a Note for at least six months,
fails to comply with Section 7.10, such Holder of a Note may
petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Thereupon, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all
the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the
successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in
Section 7.07. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under
Section 7.07 shall continue for the benefit of the retiring
Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the
United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at
least $100.0 million as set forth in its most recent published
annual report of condition.
This Indenture shall always have a Trustee who satisfies
the requirements of TIA 310(a)(1), (2) and (5). The Trustee is
subject to TIA 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA 311(a), excluding any
creditor relationship listed in TIA 311(b). A Trustee who has
resigned or been removed shall be subject to TIA 311(a) to the
extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate,
at any time, elect to have either Section 8.02 or 8.03 be applied
to all outstanding Notes upon compliance with the conditions set
forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 of the
option applicable to this Section 8.02, the Company shall,
subject to the satisfaction of the conditions set forth in
Section 8.04, be deemed to have been discharged from its
obligations with respect to all outstanding Notes on the date the
conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall
thereafter be deemed to be "outstanding" only for the purposes of
Section 8.05 and the other Sections of this Indenture referred to
in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee,
on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described
in Section 8.04, and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and
interest on such Notes when such payments are due, (b) the
Company's obligations with respect to such Notes under Article 2
and Section 4.02, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations
in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 of the
option applicable to this Section 8.03, the Company shall,
subject to the satisfaction of the conditions set forth in
Section 8.04, be released from its obligations under the
covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11,
4.12, 4.13, 4.15, 4.16 and 5.01 with respect to the outstanding
Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all
other purposes hereunder (it being understood that such Notes
shall not be deemed outstanding for accounting purposes). For
this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly,
by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default
under Section 6.01, but, except as specified above, the remainder
of this Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.01 of the
option applicable to this Section 8.03, subject to the
satisfaction of the conditions set forth in Section 8.04,
Sections 6.01(iii) through 6.01(vii) shall not constitute Events
of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 to the outstanding Notes:
(a) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders, cash in
United States dollars, non-callable Government Securities,
or a combination thereof, in such amounts as shall be
sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of,
premium, if any, and Liquidated Damages, if any, and
interest on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as
the case may be and shall specify whether the Notes are
being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02,
the Company shall have delivered to the Trustee an Opinion
of Counsel in the United States reasonably acceptable to
the Trustee confirming that (A) the Company has received
from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture,
there has been a change in the applicable federal income
tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the
Holders of the outstanding Notes shall not recognize
income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03,
the Company shall have delivered to the Trustee an Opinion
of Counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders of the outstanding
Notes shall not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance
and shall be subject to federal income tax on the same
amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from
the incurrence of Indebtedness all or a portion of the
proceeds of which shall be used to defease the Notes
pursuant to this Article 8 concurrently with such
incurrence) or insofar as Sections 6.01(vii) or 6.01(viii)
is concerned, at any time in the period ending on the 91st
day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute
a default under, any material agreement or instrument
(other than this Indenture) to which the Company or any of
its Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound;
(f) the Company shall have delivered to the
Trustee an Opinion of Counsel to the effect that on the
91st day following the deposit, the trust funds shall not
be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the
Trustee an Officers' Certificate stating that the deposit
was not made by the Company with the intent of preferring
the Holders over any other creditors of the Company or any
Guarantor or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company
or any Guarantor; and
(h) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance
have been complied with.
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06, all money and non-callable
Government Securities (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 8.05, the "Trustee") pursuant to
Section 8.04 in respect of the outstanding Notes shall be held in
trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the
Company acting as Paying Agent) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, Liquidated
Damages, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash
or non-callable Government Securities deposited pursuant to
Section 8.04 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law
is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time
upon the request of the Company any money or non-callable
Government Securities held by it as provided in Section 8.04
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.04(a)), are in excess of the
amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the
principal of, premium, if any, Liquidated Damages, if any, or
interest on any Note and remaining unclaimed for two years after
such principal, and premium, if any, Liquidated Damages, if any,
or interest has become due and payable shall be paid to the
Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the reasonable
expense of the Company cause to be published once, in the New
York Times and The Wall Street Journal (national edition), notice
that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance
of such money then remaining shall be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
United States dollars or non-callable Government Securities in
accordance with Section 8.02 or 8.03, as the case may be, by
reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture
and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 until such
time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.02 or 8.03, as the case
may be; provided, however, that, if the Company makes any payment
of principal of, premium, if any, Liquidated Damages, if any, or
interest on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the
Company, the Guarantors and the Trustee may amend or supplement
this Indenture, the Notes or the Subsidiary Guarantees without
the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's or a
Guarantor's obligations to the Holders of the Notes in the
case of a merger or consolidation pursuant to Article 5
hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does
not adversely affect the legal rights hereunder of any Holder
of the Notes; or
(e) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under
the TIA.
Upon the request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon receipt by the
Trustee of the documents described in Section 7.02, the Trustee
shall join with the Company in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental
Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company
and the Trustee may amend or supplement this Indenture (including
Section 3.09, 4.10 and 4.15), the Subsidiary Guarantees and the
Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or
exchange offer for the Notes), and, subject to Sections 6.04 and
6.07, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture, the
Subsidiary Guarantees or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with
a purchase of, or tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the
Trustee of evidence reasonably satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02, the
Trustee shall join with the Company in the execution of such
amended or supplemental Indenture unless such amended or
supplemental Indenture affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of
any proposed amendment or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes
affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07, the
Holders of a majority in aggregate principal amount of the Notes
then outstanding may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed
maturity of any Note or alter or waive any of the
provisions with respect to the redemption or repurchase of
the Notes except as provided above with respect to Sections
3.09, 4.10 and 4.15;
(c) reduce the rate of or change the time for payment
of premium, if any, or interest, including default
interest, on any Note;
(d) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on
the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver
of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that
stated in the Notes;
(f) make any change in the provisions of this
Indenture relating to waivers of past Defaults or the
rights of Holders of Notes to receive payments of principal
of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any
Note other than a payment required by Sections 3.09, 4.10
and 4.15;
(h) release any Guarantor from any of its
obligations under its Subsidiary Guarantee or this
Indenture except in accordance with Article 10 hereof; or
(i) make any change in the foregoing amendment and
waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture, the
Subsidiary Guarantees or the Notes shall be set forth in an
amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective,
a consent to it by a Holder of a Note is a continuing consent by
the Holder of a Note and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of
a Note may revoke the consent as to its Note if the Trustee
receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its
terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue
and the Trustee shall authenticate new Notes that reflect the
amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new
Note shall not affect the validity and effect of such amendment,
supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental
Indenture authorized pursuant to this Article 9 if the amendment
or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not
sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject
to Section 7.01) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized
or permitted by this Indenture.
ARTICLE 10
SUBSIDIARY GUARANTEES
Section 10.01. Subsidiary Guarantees.
Each of the Guarantors hereby, jointly and severally,
unconditionally guarantees to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the Obligations of
the Company hereunder or thereunder, that: (a) the principal of
and interest, premium, if any, and Liquidated Damages, if any, on
the Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption, repurchase or otherwise,
and interest on the overdue principal of and interest, premium,
if any, and Liquidated Damages, if any, on the Notes, if lawful,
and all other Obligations of the Company to the Holders or the
Trustee hereunder or thereunder shall be promptly paid in full or
performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other Obligations, that same shall be
promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at Stated
Maturity, by acceleration, redemption, repurchase or otherwise.
Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same
immediately. The Guarantors hereby agree that their Obligations
hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof
or thereof, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of
a Guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right
to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenant that this
Subsidiary Guarantee shall not be discharged except by complete
performance of the Obligations contained in the Notes and this
Indenture. If any Holder of Notes or the Trustee is required by
any court or otherwise to return to the Company or Guarantors, or
any custodian, Trustee, liquidator or other similar official
acting in relation to either the Company or Guarantors, any
amount paid either to the Trustee or such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that
it shall not be entitled to any right of subrogation in relation
to the Holders of Notes in respect of any Obligations guaranteed
hereby until payment in full of all Obligations guaranteed
hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article 6 hereof for the
purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in
respect of the Obligations guaranteed hereby and (y) in the event
of any declaration of acceleration of such Obligations as
provided in Article 6 hereof, such Obligations (whether or not
due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Subsidiary
Guarantees.
Section 10.02. Execution and Delivery of Subsidiary Guarantees.
To evidence its Subsidiary Guarantee set forth in
Section 10.01, each Guarantor hereby agrees that a notation of
such Subsidiary Guarantee substantially in the form of Exhibit C
(executed by the manual or facsimile signature of one of its
Officers) shall be endorsed by an Officer of such Guarantor on
each Note authenticated and delivered by the Trustee and that
this Indenture shall be executed on behalf of such Guarantor by
an Officer of such Guarantor.
Each Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 10.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of
such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on
the Subsidiary Guarantee no longer holds that office at the time
the Trustee authenticates the Note on which a Subsidiary
Guarantee is endorsed, the Subsidiary Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery
of the Subsidiary Guarantee set forth in this Indenture on behalf
of the Guarantors.
Section 10.03. Guarantors May Consolidate, etc., on Certain
Terms.
(a) Except as set forth in Articles 4 and 5 hereof,
nothing contained in this Indenture or in any of the Notes shall
prevent any consolidation or merger of a Guarantor with or into
the Company or another Guarantor or shall prevent any sale or
conveyance of the property of a Guarantor, as an entirety or
substantially as an entirety, to the Company or to another
Guarantor.
(b) Except as provided in Section 10.03(a) or in a
transaction referred to in Section 10.04, no Guarantor may
consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another corporation, Person or
entity whether or not affiliated with such Guarantor, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another corporation, Person
or entity unless: (i) subject to the provisions of Section 10.04,
the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) shall assume all the
Obligations of such Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes and this Indenture; and (ii) immediately
after giving effect to such transaction, no Default or Event of
Default exists. Subject to Section 10.04, in case of any such
consolidation, merger, sale or conveyance and upon the assumption
by the successor corporation, by supplemental indenture, executed
and delivered to the Trustee and reasonably satisfactory in form
to the Trustee, of the Subsidiary Guarantee endorsed upon the
Notes and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the
Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had
been named herein as a Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Subsidiary
Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Subsidiary
Guarantees so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Subsidiary
Guarantees theretofore and thereafter issued in accordance with
the terms of this Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.
Section 10.04. Releases Following Sale of Assets.
Concurrently with any sale or other disposition of assets
of any Guarantor (including, if applicable, all of the Capital
Stock of any Guarantor), any Liens in favor of the Trustee in the
assets sold thereby shall be released; provided that in the event
of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of
Section 4.10. In the event of a sale or other disposition of all
of the assets of any Guarantor, by way of merger, consolidation
or otherwise, or a sale or other disposition of all of the
Capital Stock of any Guarantor, then such Guarantor (in the event
of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the Capital Stock of such
Guarantor in accordance with the provisions of this Indenture) or
the Person acquiring the property (in the event of a sale or
other disposition of all of the assets of such Guarantor), shall
be released and relieved of its Obligations under its Subsidiary
Guarantee and Section 10.03; provided that in the event of an
Asset Sale, the Net Proceeds from such sale or other disposition
are treated in accordance with the provisions of Section 4.10.
Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in accordance
with the provisions of this Indenture, including, without
limitation, Section 4.10, the Trustee shall execute any documents
reasonably required in order to evidence the release of any
Guarantor from its Obligations under its Subsidiary Guarantee.
Any Guarantor not released from its Obligations under its
Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest and Liquidated Damages, if any, on the
Notes and for the other Obligations of any Guarantor under this
Indenture as provided in this Article 10. The release of any
Guarantor pursuant to this Section 10.04 shall be effective
whether or not such release shall be noted on any Note then
outstanding or thereafter authenticated and delivered.
Section 10.05. Limitation on Guarantor Liability.
For purposes hereof, each Guarantor's liability shall be
that amount from time to time equal to the aggregate liability of
such Guarantor thereunder, but shall be limited to the lesser of
(i) the aggregate amount of the Obligations of the Company under
the Notes and this Indenture and (ii) the amount, if any, which
would not have (A) rendered such Guarantor "insolvent" (as such
term is defined in the federal Bankruptcy Law and in the debtor
and creditor law of the State of New York) or (B) left it with
unreasonably small capital at the time its Subsidiary Guarantee
was entered into, after giving effect to the incurrence of
existing Indebtedness immediately prior to such time; provided,
that it shall be a presumption in any lawsuit or other proceeding
in which such Guarantor is a party that the amount guaranteed
pursuant to its Subsidiary Guarantee is the amount set forth in
clause (i) above unless any creditor, or representative of
creditors of such Guarantor, or debtor in possession or trustee
in bankruptcy of such Guarantor, otherwise proves in such a
lawsuit that the aggregate liability of such Guarantor is limited
to the amount set forth in clause (ii). In making any
determination as to the solvency or sufficiency of capital of a
Guarantor in accordance with the previous sentence, the right of
such Guarantor to contribution from other Guarantors and any
other rights such Guarantor may have, contractual or otherwise,
shall be taken into account.
Section 10.06. "Trustee" to Include Paying Agent.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article 10 shall in
such case (unless the context shall otherwise require) be
construed as extending to and including such Paying Agent within
its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article 10 in place of the
Trustee.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA 318(c), the imposed
duties shall control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee
to the others is duly given if in writing and delivered in person
or mailed by first class mail (registered or certified, return
receipt requested), telecopier or overnight air courier
guaranteeing next day delivery, to the others' address:
If to the Company or any Guarantor:
Delta Mills, Inc.
108 1/2 Courthouse Square
Edgefield, South Carolina
Telecopier No.: (864) 637-6066
Attention: Chief Financial Officer
With a copy to:
Wyche, Burgess, Freeman & Parham, P.A.
44 East Camperdown Way
Greenville, South Carolina
Telecopier No.: (864) 235-8900
Attention: Eric Amstutz
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent
notices or communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt
requested, or by overnight air courier guaranteeing next day
delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed
to any Person described in TIA 313(c), to the extent required
by the TIA. Failure to mail a notice or communication to a
Holder or any defect in it shall not affect its sufficiency with
respect to other Holders or as to any Holder who actually
received such communication.
If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given,
whether or not the addressee receives it.
If the Company mails a notice or communication to Holders,
it shall mail a representative copy to the Trustee and each Agent
at the same time.
Section 11.03. Communication by Holders of Notes with Other
Holders of Notes.
Holders may communicate pursuant to TIA 312(b) with other
Holders with respect to their rights under this Indenture or the
Notes. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA 312(c).
Section 11.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include
the statements set forth in Section 11.05) stating that, in
the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to
the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include
the statements set forth in Section 11.05) stating that, in
the opinion of such counsel, all such conditions precedent and
covenants have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (other
than a certificate provided pursuant to TIA 314(a)(4)) shall
comply with the provisions of TIA 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been satisfied;
and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its
functions.
Section 11.07. No Personal Liability of Directors, Officers,
Employees or Stockholders.
No director, officer, employee, incorporator or stockholder
of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or any Guarantor
under the Notes, the Subsidiary Guarantees, this Indenture or for
any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the SEC that such a
waiver is against public policy.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND
BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY
GUARANTEES.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidi
aries or of any other Person. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 11.10. Successors.
All agreements of the Company and each Guarantor in this
Indenture and the Notes shall bind their respective successors,
except as expressly provided otherwise herein. All agreements of
the Trustee in this Indenture shall bind its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings
of the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a
part of this Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.
[signature page follows]
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
Delta Mills, Inc.
By /s/ Bettis C. Rainsford
Bettis C. Rainsford
Executive Vice President, Chief Financial Officer
and Treasurer
Delta Mills Marketing, Inc.
By /s/ Bettis C. Rainsford
Bettis C. Rainsford
Executive Vice President, Chief Financial Officer
and Treasurer
The Bank of New York,
as Trustee
By /s/ Timothy J. Shea
Name Timothy J. Shea
Title Assistant Treasurer
EXHIBIT A
(Face of Note)
CUSIP/CINS
9_% [Series A] [Series B] Senior Notes due 2007
No. $
Delta Mills, Inc.
promises to pay to or registered assigns,
the principal sum of
Dollars on September 1, 2007.
Interest Payment Dates: March 1 and September 1
Record Dates: February 15, and August 15
Delta Mills, Inc.
By:
Name:
Title:
By:
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
Dated: , 199
By:
Name:
Title:
(Back of Note)
9_% [Series A] [Series B] Senior Notes due 2007
[Unless and until it is exchanged in whole or in part for
Notes in definitive form, this Note may not be transferred except
as a whole by the Depository to a nominee of the Depository or by
a nominee of the Depository to the Depository or another nominee
of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street,
New York, New York) ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or
such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest
herein.]/1
[Insert the Private Placement Legend, if applicable pursuant to
the provisions of the Indenture]
Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless
otherwise indicated.
1. Interest. Delta Mills, Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount
of this Note at 9_% per annum from and including August 25, 1997
until maturity and shall pay the Liquidated Damages, if any,
payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and
Liquidated Damages, if any, semi-annually on March 1 and
September 1 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Notes shall accrue from the most
recent date to which interest has been paid or, if no interest
has been paid, from the date of issuance; provided that if there
is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the
face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date
shall be March 1, 1998. The Company shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from
time to time on demand at a rate that is 1% per annum in excess
of the rate then in effect; it shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages, if any,
(without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest
shall be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment. The Company shall pay interest on
the Notes (except defaulted interest) and Liquidated Damages, if
any, to the Persons who are registered Holders of Notes at the
close of business on the February 15 or August 15 next preceding
the Interest Payment Date, even if such Notes are cancelled after
such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Notes shall be payable as to
principal, premium, if any, and Liquidated Damages, if any, and
interest at the office or agency of the Company maintained for
such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the
Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately
available funds shall be required with respect to principal of
and interest, premium, if any, and Liquidated Damages, if any,
on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or
the Paying Agent. Such payment shall be in such coin or currency
of the United States of America as at the time of payment is
legal tender for payment of public and private debts
3. Paying Agent and Registrar. Initially, The Bank of New
York, the Trustee under the Indenture, shall act as Paying Agent
and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of
its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an
Indenture dated as of August 25, 1997 ("Indenture") between the
Company, the Guarantors named therein and the Trustee. The terms
of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code 77aaa-77bbbb). The Notes are
subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Notes are general unsecured
obligations of the Company limited to $150.0 million in aggregate
principal amount, plus amounts, if any, sufficient to pay
interest, premium, if any, and Liquidated Damages, if any, on
outstanding Notes as set forth in Paragraph 2 hereof.
5. Optional Redemption.
The Company shall not have the option to redeem the Notes
pursuant to Section 3.07 of the Indenture prior to September 1,
2002. Thereafter the Notes shall be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on September 1 of the years
indicated below:
Year Percentage
2002 104.8125%
2003 103.2083%
2004 101.6041%
2005 and thereafter 100.0000%
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to
repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of each Holder's Notes at a purchase price
equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase. Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder as
required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset
Sales and the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall commence an offer to all Holders of
Notes (an "Asset Sale Offer") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that
may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any,
to the date of purchase, in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company (or such Subsidiary) may use any
remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes to be purchased on a pro rata basis. Holders of
Notes that are the subject of an offer to purchase shall receive
an Asset Sale Offer from the Company prior to any related
purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
(c) The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise
in compliance with the requirements set forth in the Indenture
applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
8. Notice of Redemption. Notice of redemption shall be
mailed at least 30 days but not more than 60 days before the
redemption date to each Holder whose Notes are to be redeemed at
its registered address. Notes in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to
accrue on Notes or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and
integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note
may be treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or
supplemented by the Company, the Guarantor and the Trustee with
the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes, and any existing default or
compliance with any provision of the Indenture or the Notes may
be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Subsidiary Guarantees, the
Indenture or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or a Guarantor's
obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of
any such Holder, or to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. Defaults and Remedies. Each of the following
constitutes an Event of Default: (i) default for 30 days in the
payment when due of interest on, or Liquidated Damages with
respect to, the Notes; (ii) default in payment when due of the
principal of or premium, if any, on the Notes; (iii) failure by
the Company to comply with its obligations under covenants and
agreements set forth in Sections 3.09, 4.07, 4.09, 4.10, 4.15,
4.16 or 5.01 of the Indenture; (iv) failure by the Company for 30
days after notice from the Trustee or the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding to
comply with any of the other covenants or agreements in the
Indenture; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Subsidiaries) whether
such Indebtedness or guarantee now exists, or is created after
the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on
such Indebtedness at its final Stated Maturity (a "Payment
Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been
a Payment Default or the express maturity of which has been so
accelerated, aggregates $5.0 million or more; (vi) failure by the
Company or any of its Subsidiaries to pay final judgments (other
than judgements fully covered by insurance) aggregating in excess
of $5.0 million, which judgments are not paid, discharged or
stayed for a period of 45 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of
its Subsidiaries; and (viii) any Subsidiary Guarantee shall be
held in an judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect (other
than in accordance with the terms of the Indenture) or any
Guarantor, or any Person acting in behalf of any Guarantor, shall
deny or disaffirm its obligations under its Subsidiary Guarantee
(other, in either case, than by reason of a release of such
Guarantor from its Subsidiary Guarantee in accordance with the
terms of the Indenture). If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all
the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the
Company or any Subsidiary, all outstanding Notes shall become due
and payable without further action or notice. Holders of the
Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice
of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal or
interest, or premium, if any, or Liquidated Damages, if any) if
it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event
of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest
on, or the principal of, the Notes. The Company is required to
deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required, upon becoming
aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
13. Trustee Dealings with Company. Subject to certain
conditions set forth in the Indenture, the Trustee, in its
individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer,
employee, incorporator or stockholder, of the Company or any
Guarantor, as such, shall not have any liability for any
obligations of the Company or any Guarantor under the Notes, the
Subsidiary Guarantees or the Indenture or for any claim based on,
in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
16. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
17. Additional Rights of Holders of Transfer Restricted
Securities. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Transferred Restricted
Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of the date of this
Indenture, between the Company, the Guarantors and the other
parties named on the signature pages thereof (the "Registration
Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on
the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is
made as to the accuracy of such numbers either as printed on the
Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed
thereon.
The Company shall furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the
Registration Rights Agreement. Requests may be made to:
Delta Mills, Inc.
108 1/2 Courthouse Square
Edgefield, South Carolina 29824
Attention: Chief Financial Officer
Assignment Form
To assign this Note, fill in the form below: (I) or (we)
assign and transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the [Registrar], which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("Stamp") or such other
"signature guarantee program" as may be determined by the
[Registrar] in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check
the box below:
Section 4.10 Section 4.15
If you want to elect to have only part of the Note
purchased by the Company pursuant to Section 4.15 of the
Indenture, state the amount you elect to have purchased:
$
Date: Your Signature:
(Sign exactly as your name appears on the Note)
Tax Identification No.:
Signature Guarantee.
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the [Registrar], which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("Stamp") or such other
"signature guarantee program" as may be determined by the
[Registrar] in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/2
The following exchanges of a part of this Global Note for
an interest in another Global Note or for a Definitive Note, or
exchanges of a part of another Global Note or Definitive Note for
an interest in this Global Note, have been made:
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized
Date Principal Amount Principal Amount Note following officer of
of of this Global of this Global such decrease Trustee of Note
Exchange Note Note (or increase) Custodian
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF NOTES
Re: 9_% Senior Notes due 2007 of Delta Mills, Inc.
This Certificate relates to $ principal amount of
Notes held in * book-entry or * definitive form
by (the "Transferor").
The Transferor*:
has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Global Note held by
the Depository a Note or Notes in definitive, registered form of
authorized denominations in an aggregate principal amount equal
to its beneficial interest in such Global Note (or the portion
thereof indicated above); or
has requested the Trustee by written order to exchange or
register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify that Transferor is
familiar with the Indenture relating to the above captioned Notes
and as provided in Section 2.06 of such Indenture, the transfer
of this Note does not require registration under the Securities
Act (as defined below) because:*
Such Note is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section
2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of the Indenture).
Such Note is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act")) in
reliance on Rule 144A (in satisfaction of Section 2.06(a)(ii)(B),
Section 2.06(b)(i) or Section 2.06(d)(i) (B) of the Indenture) or
pursuant to an exemption from registration in accordance with
Rule 904 under the Securities Act (in satisfaction of Section
2.06(a)(ii)(B) or Section 2.06(d)(i)(B) of the Indenture.)
_______________
*Check applicable box.
Such Note is being transferred in accordance with Rule 144
under the Securities Act, or pursuant to an effective
registration statement under the Securities Act (in satisfaction
of Section 2.06(a)(ii)(B) or Section 2.06(d)(i)(B) of the
Indenture).
Such Note is being transferred in reliance on and in
compliance with an exemption from the registration requirements
of the Securities Act, other than Rule 144A, 144 or Rule 904
under the Securities Act. An Opinion of Counsel to the effect
that such transfer does not require registration under the
Securities Act or applicable state securities laws accompanies
this Certificate (in satisfaction of Section 2.06(a)(ii)(C) or
Section 2.06(d)(i)(C) of the Indenture).
[INSERT NAME OF TRANSFEROR]
By:
Date:
*Check applicable box.
EXHIBIT C
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of Notes authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture,
the Notes or the Obligations of the Company to the Holders or the
Trustee under the Notes or under the Indenture, that: (a) the
principal of, and premium, if any, and Liquidated Damages, if
any, and interest on the Notes shall be promptly paid in full
when due, whether at maturity, by acceleration, redemption,
repurchase or otherwise, and interest on overdue principal of and
interest and Liquidated Damages if any, on any Note, if any, if
lawful and all other Obligations of the Company to the Holders or
the Trustee under the Indenture or under the Notes shall be
promptly paid in full or performed, all in accordance with the
terms thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations,
the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration, redemption, repurchase or
otherwise. Failing payment when due of any amount so guaranteed,
or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the
same immediately.
The Obligations of the Guarantors to the Holders of Notes and
to the Trustee pursuant to this Subsidiary Guarantee and the
Indenture are expressly set forth in Article 10 of the Indenture,
and reference is hereby made to such Indenture for the precise
terms of this Subsidiary Guarantee. The terms of Article 10 of
the Indenture are incorporated herein by reference.
No director, officer, employee, incorporator or stockholder,
as such, past, present or future, of each of the Guarantors shall
have any personal liability under this Subsidiary Guarantee by
reason of its status as such director, officer, employee,
incorporator or stockholder.
This is a continuing Subsidiary Guarantee and shall remain in
full force and effect and shall be binding upon each Guarantor
and its respective successors and assigns to the extent set forth
in the Indenture until full and final payment of all of the
Company's Obligations under the Notes and the Indenture and shall
inure to the benefit of the successors and assigns of the Trustee
and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the
rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof.
In certain circumstances more fully described in the
Indenture, any Guarantor may be released from its liability under
this Subsidiary Guarantee, and any such release shall be
effective whether or not noted hereon.
This Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Note
upon which this Subsidiary Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
For purposes hereof, each Guarantor's liability shall be that
amount from time to time equal to the aggregate liability of such
Guarantor hereunder, but shall be limited to the lesser of (i)
the aggregate amount of the Obligations of the Company under the
Notes and the Indenture and (ii) the amount, if any, which would
not have (A) rendered such Guarantor "insolvent" (as such term is
defined in the federal Bankruptcy Law and in the debtor and
creditor law of the State of New York) or (B) left it with
unreasonably small capital at the time its Subsidiary Guarantee
of the Notes was entered into, after giving effect to the
incurrence of existing Indebtedness immediately prior to such
time; provided, that it shall be a presumption in any lawsuit or
other proceeding in which such Guarantor is a party that the
amount guaranteed pursuant to its Subsidiary Guarantee is the
amount set forth in clause (i) above unless any creditor, or
representative of creditors of such Guarantor, or debtor in
possession or trustee in bankruptcy of such Guarantor, otherwise
proves in such a lawsuit that the aggregate liability of such
Guarantor is limited to the amount set forth in clause (ii). The
Indenture provides that, in making any determination as to the
solvency or sufficiency of capital of a Guarantor in accordance
with the previous sentence, the right of such Guarantor to
contribution from other Guarantors and any other rights such
Guarantor may have, contractual or otherwise, shall be taken into
account.
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
[Guarantor]
By
[Name]
[Title]
_______________________________
1. This paragraph should be included only if the Note is issued
in global form.
2. This schedule should be included only if the Note is issued in
global form.
